September 11, 2014 Posted by Kevin in Announcements, Music Business

The Real Business of Music.

It's almost a rite of passage every artist goes through in the modern music industry. The moment he accepts that he will not be able to rely on music sales to sustain his career. That people are not buying music like they used to. And never will again.


Just a few years ago it seemed like every artist was passing around articles chastising fans for illegally downloading music. How it hurts the bands. The producers. The session musicians. The labels (well no fan cares about them). The songwriters. And the industry as a whole. We all remember the "illegally downloading music is the same as stealing a microwave from a store" argument. We all bought it. Well, musicians and the industry that is. Fans? Not so much.


The RIAA sued over 35,000 fans for illegally downloading music back in the mid 2000s. We heard of 12 year olds being sued for hundreds of thousands of dollars. Grandmas whose grandsons downloaded music on their computers were taken to court and forced to go bankrupt. A grandfather actually died while in litigation and the RIAA told his family they had 60 days to grieve and then they better pay up!Really great way to win over music's biggest fans. Sue them. That'll teach em!But it didn't. Sales never went back up. And now it's reported?that iTunes song downloads will drop 39% in five years.

Streaming revenue isn't making up for the loss in sales for musicians.

The jury is still out if it will in the long run. But, unfortunately, unlike sales, streaming revenue requires massive numbers to see significant income.

Previously, if an artist had 10,000 fans, she could rely on $70,000 ($10 album less iTunes 30% cut) in sales when a new album was released. However now, even if each fan listens to her (10 song) album on Spotify 10 times in the first few months (1,000,000 plays - impressive!), that would only earn her about $5,000 (and much much less if those plays were on YouTube). Even if she has 50,000 other fans who listen to the album only twice, that's just an additional $5,000.
No matter how you slice it, a small to mid level artist is not going to get by with streaming income the way the numbers work out currently. If we were talking about 5 cents a play versus a half a penny, then maybe.

I've been a strong supporter of streaming since its inception. I love that it rewards artist for creating great music that fans want to play over and over. There's much more potential for the long tail. The more someone likes your album, the more she will play it. And you will get paid for every play. Over time, sure, this could earn the artist much MORE money than sales.

+Why Withholding Your Music From Spotify Only Hurts You

Only the artists getting millions of plays are seeing significant, livable income solely from streaming. And most of them are with labels who take the majority (to all) of that income.

+How To Steal An Artist's Streaming Money In 3 Easy Steps

So what are the solutions?

You could scream about streaming and piracy until you're red in the face while fans and technology ignore the noise and move forward (this seems like a legitimate solution for quite a few). OR artists could look to diversify their income stream.

Companies are popping up every day that help artists make more money than ever before.

If 1,000 "true fans" previously spent $100 a year on an artist through CD/download sales, concert tickets and t-shirts and earned the artist $100,000 a year, what if, with new models, artists could get their "die hard" fans to spend $500 a year on them? What if it was a sliding scale? 200 fans at $500, 300 fans at $250, 500 fans at $100? Instead of artists earning about $100,000 a year on 1,000 fans, they could earn $225,000.

It may not be that fans didn't want to spend more than $100 a year on their favorite artist, it's just that they didn't have any attractive options to do so.

Kickstarter, PledgeMusic, Indiegogo and Patreon have allowed artists to offer high priced rewards/exclusives to die hard fans. Patreon's model allows artists to monetize these fans on an ongoing basis. BandPage offers experiences enabling artists to monetize their most die hard fans in creative ways while on tour. BandCamp and Loudr allow fans to 'name your price' for lossless (or mp3) downloads. Fanswell allows artists to easily setup house concert tours to make the most money from a small, but dedicated fanbase.

+How To Make Money From Your Music On An Ongoing Basis

Licensing companies are helping independent artists get high paying syncs on TV and in film and independent admin publishing companies like SongTrust, CD Baby and TuneCore are collecting royalties previously only available to those with publishing deals.

+CD Baby Pro vs. TuneCore Publishing (The Full Report)?

YouTube is now offering a tip feature on channel pages and Spotify has integrated merch to artist profiles (without taking a cut).

We have to start embracing alternative monetization opportunities and accept that the traditional way that fans support artists is over.

We need a new mindset. It's a new era. People ARE valuing artists - but in the way that makes sense to them (not you). What's wrong with a 23 year old who loves a band paying $250 for a PledgeMusic exclusive, $5 per video released on Patreon, an $18 ticket for their concert, a $25 t-shirt and a backstage "experience" for $50, but never download an album or buy a CD? What's wrong with that?

The album gets the fan in the door. Gets her hooked. The album is only the introduction. No longer the end game. The album is the gateway. And the album is found on Spotify, YouTube or ThePirateBay with a couple clicks.

And major label artists never made much from album sales anyways.

They always had to rely on alternative sources of income (like touring and merch) to offset what their labels didn't pay them in royalties. Lyle Lovett admitted that after selling over 4.6 million records he has received $0 in record royalties from his label. But he's had a very successful career. Why are people silent when record companies (legally) steal from artists, but raise hell when fans do it?

"I've never made a dime from a record sale in the history of my record deal. I've been very happy with my sales, and certainly my audience has been very supportive. I make a living going out and playing shows." - Lyle Lovett

So, your options. You can either bitch about the "decline of the music industry", exclaim that fans aren't true fans if they don't pay for recorded music, OR you can get creative, embrace the new technologies that build on the artist-fan relationship, and lead the pack in this beautiful new world full of alternative revenue sources. Your choice.

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