How Do Music Artists Make Money?
So, just how do music artists make money in the 2020s? The modern music landscape is challenging, to say the least. Low streaming royalties mean that even a large number of plays often results in only minimal revenue. With over 120,000 new releases dropping every day, cutting through the noise has become increasingly difficult.
Casual music fans often have a low value perception of music, making it even harder to monetize your art. Additionally, marketing costs can quickly add up, draining resources before you see any returns. However, despite these challenges, it is still possible to make money from your art. By following a few simple guidelines and staying adaptable, you can build a sustainable income from your music.
Live Shows
Live performances are essential for today’s music landscape, offering both financial and artistic benefits. Local tours are a great way to start building a loyal fanbase. By performing in front of live audiences, artists can focus on the quality of their music, improve their instrumental skills, and refine their stage presence. Live audience feedback is invaluable, giving artists insight into how their music resonates with fans.
Moreover, live performances create multiple income streams—from ticket sales to merchandise. These shows not only connect you with your audience on a deeper level but also help generate buzz, which can lead to more opportunities. Let’s look at how you might set up your live show revenues:
Performance revenue Splits for music artists
Understanding how various door split deals work is key to maximizing earnings from live shows.
Pay-as-you-feel Bucket Pitch
In this setup, the venue provides the space at no charge and takes the bar revenue. The audience is encouraged to donate what they can into a bucket. For example, in an 80-capacity venue, you might perform two one-hour sets. The “bucket” is taken around the venue at the end of each set. If the average donation is $5, this results in $400 for the artist. It is useful to have a mobile card transaction device as some people no longer carry cash.
Fixed Fee + Percentage of Door
Here, the venue underwrites an agreed fee to cover your basic costs, along with a lower percentage of the door take. For example, in a 250-capacity venue, you might receive $150 plus 20% of the door. If tickets are $10 and 150 customers attend, you make $450.
Percentage of Door Only
In this arrangement, you should negotiate a higher percentage of the door. For example, in a 100-capacity venue, you might agree to a 50/50 split with the venue, after marketing costs are deducted. If marketing costs $150 and entry is $10 tickets, you make $425 from a sold-out event.
Each of these systems has its merits. For popular venues with an established fanbase, you might accept smaller splits in exchange for exposure. Every new audience is a chance to gain new fans. For newer or less popular venues, more of the marketing burden will likely fall on you, so negotiate accordingly. To maximize every opportunity, always have a merchandise stall at your live events.
Merchandise
Merchandise is a critical aspect of an artist’s revenue stream, offering a tangible connection to fans while providing income. Merchandise often includes physical goods like clothing and accessories featuring your logo, album art, or tour details. The key is to offer high-quality items that fans will want to buy and wear proudly.
Clothing
Clothing items like t-shirts, hats, and hoodies are some of the most popular merchandise options. These items allow fans to show their support while giving you a platform to promote your brand. A mark-up of 60% over cost is generally a good target. In addition to selling at gigs, consider offering print-on-demand options via your website and social media platforms, so fans can purchase items anytime. Quality is paramount, Every item should be well designed and made of high quality materials. It is important that each item is “giftable”.
Accessories
Accessories like record bags, mugs, pen drives (loaded with your music catalog), pin badges, and stickers are great for rounding out your merchandise offerings. These items are usually affordable for fans and can yield a healthy profit with a minimum 60% mark-up. Like clothing, accessories can be sold at live events and online, expanding your reach and revenue.
Vinyl
Vinyl has made a strong comeback in recent years, and it’s an excellent format for artists to consider. Fans love the tactile experience of vinyl, and it offers you the chance to create limited editions, signed copies, or releases with exclusive artwork. Vinyl can be sold through platforms like Bandcamp or even directly on Spotify. There are different types of vinyl releases, such as acetates, which are unique test presses for select DJ’s to use, white labels that are often used for a wider run of test pressings, and fully finished releases that come complete with artwork. All of these options can appeal to collectors and superfans alike.
Cassettes
Cassettes have gained popularity, especially within niche music communities like ambient and electronica. The lo-fi quality of cassettes adds a unique aesthetic that resonates with certain audiences. Producing cassettes can be cost-effective and offers another way to diversify your merchandise and connect with fans who appreciate this format. Sleeve artwork can be a nice addition with a cassette release, as the format lends itself to booklet type covers.
Publishing Royalties
Publishing royalties are a vital income stream for music artists. In the UK, PPL and PRS handle different aspects of these royalties, while in the US, organizations like ASCAP, BMI, and SoundExchange serve a similar function. PPL collects royalties for the use of recorded music, including when your music is played on the radio, in public, or by DJs.
PRS handles royalties for songwriters and composers whenever their music is performed or broadcast. MCPS, on the other hand, deals with mechanical royalties, which cover the reproduction of your music on physical formats like CDs and vinyl. Together, these organizations ensure that artists receive income from various sources, including radio play, DJ sets, and live gigs. Registering with these organizations is crucial to ensuring you don’t miss out on these important revenue streams.
Sync Licensing
Sync licensing is another lucrative revenue stream for artists. This involves licensing your music for use in TV shows, films, advertisements, and even video games. The process typically involves a music supervisor selecting your track for a specific project. Depending on the scope of the use—such as background music in a commercial or a featured song in a movie—the fees can vary widely. Sync licensing can provide significant income while also exposing your music to new audiences, making it an attractive option for both emerging and established artists.
You can increase your chances of attaining a sync licence by carefully meta-tagging your music with appropriate mood descriptions and theme guides.
Crowdfunding
Crowdfunding has become a powerful tool for artists to finance their projects. Whether you’re looking to fund an album launch or a tour, platforms like Kickstarter, Indiegogo, and Patreon offer a way to engage directly with your fans. Successful crowdfunding campaigns often include tiered rewards, where fans receive exclusive content, merchandise, or experiences in exchange for their support. This not only helps you raise the funds needed but also strengthens your connection with your audience. The key to successful crowdfunding is clear communication, setting realistic goals, and offering rewards that genuinely excite your supporters.
Re-investing into a Back Catalogue
For legacy artists, re-investing in your back catalogue can generate new revenue streams. Remixing or remastering older tracks, updating them with Dolby Atmos for a modern, immersive sound, or creating box sets and limited-run products are all effective strategies. These approaches not only breathe new life into your older work but also offer your fanbase something special and exclusive. This strategy is particularly effective if you have a significant historic fanbase or a popular back catalogue, as it allows you to monetize your existing assets in creative and profitable ways.
Despite the challenges of the modern digital age, being a music artist today is far from a lost cause. Live performances, limited-edition merchandise, and physical media all remain vital ways to connect with fans and generate income. By embracing these aspects of the music business, you can add significant returns on your creative endeavours.
