When an artist gets into writing songs and playing gigs, typically they lead with their heart. It is a good thing these days, because it is even less of a guaranteed paycheck than before. That is saying great deal about the condition of the industry in general. Even as streaming is at an all-time high, musicians are making less and less. It does not really make sense, until you start shuffling through the information available.

 

According to Statista, the global statistics leader based in Germany, revenue is up 6.2% in 2019 with nearly 1.1 billion users. This amounts to 11 billion dollars of revenue. Seems like it would be a very lucrative time to go into this venture, but unless you are a key player, it really is not. It takes money to make money, and even though there are some exceptions, recording, production, distribution and marketing still require substantial investments to see impressive results. Larger labels, which hold contracts with Katy Perry, Lady Gaga, and other heavy hitting, high return artists can invest in smaller lesser known artists and get them on the charts. Smaller labels simply cannot do that, however. The downside is that they are constantly bombarded with acts, all wanting to be under their safety net, so they are nearly impossible to break into.

 

Quantity is not always quality. At all. With the boom in electronics and the ability to home produce high-level of a product, the music market has resulted in scores and scores of artists uploading millions of songs to streaming sites and platforms, such as Pandora and Spotify. Without the human disc jockey of yesterday, choosing and playing the songs, the market is saturated with more songs than anyone can hear in one lifetime. Placement on some streams and frequency also costs additional money, and it is a wash or even a high-risk gamble to get enough plays to make it worth-while.

 

Hence, equal work does not really mean equal share in the industry. While the breakdown is hugely skewed, it is important to remember, especially with the larger record companies, that quite often all studio time, production, distribution is handled by the label. Artists rehearse and record their songs, or another writer’s song, and the record company absorbs the additional costs associated with all the other factors.

In reality, a platinum selling track will only net an artist slightly less than two hundred thousand dollars. That is only if the same artist wrote the song. Shocking, isn’t it?

Streaming services pay even less. Previously, we wrote about how the streaming paid so little, but it bears revisiting. As of this writing, to make a minimum of only $1472, an artist would need 77,472 streams on Napster, 336,842 streams on Spotify or 2.133 million streams on YouTube. Yet, many streaming services are losing an average of $7.00 per month per customer. It is unclear how long they can keep this pace, since labels – technically - unless stated differently in the contracts, own the finished product, so the various services and platforms must negotiate directly with the labels. Artist considerations seem to be getting smaller. Are they really?

 

It depends on who you ask. Musicians’ income streams are so diverse, it is not easy to pin down exactly where the money comes from. In today’s world of music distribution, money flows through a third party back to the artist and each time this happens - the respective entity takes their cut. Asking other artists directly is the most reliable way to gage the actual payment received per stream or download, as the different audiences have different tendencies and approaches when it comes to their respective consuming behavior.

 

Each time you blink, something changes. Recent litigation and ongoing discussion changes and shapes the future so quickly, that it is difficult to measure day-to-day, precisely how much money is making it to the appropriate hands. It is constantly sliding from one distribution lane to the other.

Streaming, digital distribution and paid downloads are a necessity. Until artists are paid a better distribution and consumers are willing pay a higher price, it will remain a constant topic for debate in the music industry. However, one thing is for certain – it is getting extremely challenging for a music creator nowadays to receive a proper allocation of generated results and – thus – to establish a long-term, financially sustainable income, without appropriate actions. And this is the exact reason why every artist should be very well aware of the tendencies operating in the business side of the music industry and always consider them, when it comes to strategizing an activity of any sort.

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