Money is like oxygen for businesses. The flow of oxygen into the human body ensures survival. Similarly, businesses rely on revenue to ensure its functioning. In today's music industry, an artist is as much a brand and a business as they are an actual musician. Many artists are reluctant to admit this fact, however. And it is hurting their ability to generate income. For proper success in both the short and long term, artists must now view themselves in this light. Failure to do so will leave them in the dust of the competitive music industry landscape.
Overcoming lack of finances is often one of the biggest challenges for musicians. Lack of funds for the next release or show is often a reason why most artists decide to quit their music careers or put their career pursuits on halt.
Whether you are a solo artist or have a band, coming up with resources to move your music career forward is always a struggle. Many artists choose to be signed to record labels as they have funds to prop them up. Of course, the investment labels make is not merely a hand out and it must be recouped.
As it currently stands, the vast majority of artists still rely on additional sources of income to make their living. They do shift work, freelance or project work, which undoubtedly harms the artist's ability to put full focus into mastering their craft.
Artists today are forced to balance a heavier load than ever before with only few of them making a true life-long living as a musician. Paradoxical as it may seem, the music business is actually growing.
According to Statista, the global music industry revenue worldwide was $49.5 billion in 2017. And it grew by 8.1% in 2017 according to IFPI. By 2021 the industry is predicted to reach $57 billion (Statista). If these predictions are indeed true for 2021, this would be an increase of 25% since the year 2012.
The barriers that once existed to artists have all but vanished. The playing field has become level with the implementation of new technologies. Artists from all over the world can now write, record, and distribute their music from any corner of the globe to listeners worldwide. This change has brought forth totally new ways of bringing new music from musicians to their fans. The ways of music consumption by listeners have changed as well.
In 1992, compact discs (better known as CDs), surpassed cassette tapes for the first time. Just 11 years later in 2003, Apple opened its revolutionary music store, Apple iTunes. Within just 16 years, the mp3 giant is slated to close its store in 2019. Apple is closing the doors of iTunes in favor of its streaming platform, Apple Music. The industry is changing incredibly rapidly.
These swift and monumental changes have taken a toll on artists. This is especially true financially. At one time, artists used to primarily rely on the sale of their physical albums for income. Billboard did an article back in 2014 comparing the top 10 selling albums from 1994 and 2014. By September 4th of 1994, the top albums of the year had collectively 24,006,000 albums. In 2014, the top 10 albums had sold only 8,198,000 collectively by September 4th (Billboard). This is a decline of 65.9%. Absolutely staggering results, to say the least.
At one time, fans were buying physical albums to listen to their favorite artists. Once Apple launched iTunes in 2003, fans quickly began adopting mp3s in favor of CDs. Fans could buy singular songs for just $0.99. In moved the burst of singles. They could take their small mp3 devices like iPods anywhere they wanted. Mp3 downloads were a king for many years. Artist and labels had nothing left to do but adapt.
With the growth of smartphones, it became even easier for fans to consume music. Listeners did not have to lug around two separate devices anymore (mp3 player and phone). In marched the streaming platforms like Spotify. With Apple closing the iTunes store in favor of its streaming platform, we could watch streaming become king. This was the beginning of the new reality for artists.
Music streaming looked like a glimmer of hope at some point. By giving listeners the opportunity to stream for free or less than $10 per month on platforms like Spotify, it has reduced illegal music downloading. However, it was so until it turned out later that most artists get humiliatingly low payouts, meaning they actually give away their music for free. With Spotify paying as little as $0.0006 to $0.0084 per stream on the platform (CNBC), for an artist with 1,000,000 streams per year this equates to $600 on the low end and $8,400 on the high end. Which as you can tell proves that streaming is all about volumes. Even with the high number, is that alone enough to support a solo artist, let alone an entire group of 4 or more members? Absolutely not.
Touring is no doubt a great way for artists to earn money. In fact, ticket sale revenue is predicted to reach $9.1 billion in 2021. A growth of nearly $2 billion dollars since 2015 (IFPI). Not only this, but live events also sell more merchandise for artists. This also is a great benefit. Live shows are a two-pronged strategy for income as it pertains to the artist. Almost all passionate true music fans know the best way to support their favorite artist is attending live shows and buying merch. Artists are trying more and more to capitalize on this. But before artists go packing their bags for tour, there are some serious considerations to take into account.
Artists who already have established fan bases are the ones who will benefit the most from touring. When fans show up to venues and arenas the result is great. Artists make good money. Combine this with merch sales and it can prove to be extremely profitable. The key is that fans must actually show up. Regardless of the size of the venue, this fact remains true. Touring is a major expense. When done improperly, it can be the fatal blow to an artist's career and the pocket too.
This means that artists must first grow and cultivate a fan base before ever hitting the road. This is almost totally opposite in comparison to the older model of touring. Gone are the days when artists needed to hit the road to build their following.
Paradox is, with the increasingly large number of tools to grow artists’ fanbase, most artists still struggle to make income through music. Even artists with relatively large fan bases are struggling mightily.
That means musicians today must find innovative ways to generate profit.
Touring, merchandise, brand collaborations such as sponsorships and crowdfunding are key sources of income. Artists must now look at their releases as the means to grow and cultivate their fan bases. Marketing online with social media and advertisements is a far cheaper and smarter strategy for artists today. Touring must be secondary to this. Once an artist has established a following, then it makes more sense to tour.
There are other ways for musicians as it pertains to income. Crowdfunding seems to actually have multiple benefits for artists. The first and most obvious one is that it allows artists to directly receive financial support from their fans without middlemen taking a cut.
Crowdfunding is quite possibly one of the best ways to overcome lack of financial resources for emerging and major musicians. Music crowdfunding enables artists to raise funds for the next music album release fast and without risk of money losses or the need to pre-fund from their own or loaned money.
However, artists need to bear in mind that crowdfunding should be a win-win. It should be a win for you as an artist, so long as you meet your goals. However, it should be a win for your backers as well. The entire experience should feel extremely authentic to your admirers. It should make them feel special and unique. Artists need to be very attentive to rewards and ensure they reach the backers that have pledged for them.
A crowdfunding campaign can be a good way of shooting a high-quality music video that makes you and/or your band look larger than life. It can help you hire a PR team or provide the ad spend dollars for your next single or album.
The other benefit, although it is less obvious, is that crowdfunding albums with direct support from fans allows for deeper emotional connections to be established between the artist and their fans. This can result in a long-lasting success and therefore revenues.
Max out crowdfunding and let it work for you!
If artists are able to adapt, the present and future looks quite promising for them. With the unlimited opportunities for growing and cultivating fan bases online artists get a promising future with the ability to capitalize on crowdfunding, touring, and merchandise sales. Engaging with fans is the next big step in the artist’s adjustment to the new reality.
Musicians today must change the way they view their work, if they are to survive the changing music industry. They must look at crowdfunding, brand partnerships such as endorsements, touring, and merchandise bundles as the biggest income grabbers. The releases should support those activities, not the other way around.
Artists need to approach their craft in a Seth Godin, Linchpin way (we highly recommend this read for all artists). The Linchpin in this sense is a business-oriented approach added to the artist's ability to create great music. Those who are able to excel in both will find great success in the coming years, regardless of whatever changes are brought forth in the industry.
Although risks associated with being an artist are high, never before have artists had wider opportunities to honor their craft and finally get decent reward as full-time musicians.