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revenue streams for musicians

New technology may have had a negative effect on traditional music sales, but it also opened up a ton of other potential revenue streams for musicians who are dedicated. Of course, the digital product options are endless, ranging from digital downloads, to streams, to digital sheet music and photos. You can also connect with millions of people through the internet by streaming live shows, filming daily video-logs, raising money via crowd funding, and even giving online lessons!

Dave Cool from CD Baby create a great list of 18 revenue streams available to musicians today. Of course there are a ton of other possibilities if you get creative with it! This is just a short excerpt of the list. You can check out all 18 revenue streams over on the CD Baby Blog!

1. CD Sales: If you’re going to be playing live shows, having CDs on hand is still a good idea. They make great takeaway souvenirs that can easily be signed by band members.

2. Vinyl Sales: Vinyl sales surged 30% in 2013. Again, if you’ll be playing live shows, printing a small batch to have at your merch table can help generate extra income.

3. Live Shows: Money made from live shows can vary greatly, but it’s still one of the best ways to earn income. Not only can you make money from selling tickets, but it’s also one of the best ways to sell merch. Be sure to read our blog series “The 4 P’s of Playing Live” to make sure you’re getting the most out of your gigs.

4. YouTube: On YouTube, whenever your music is used in videos that are running ads, YouTube pays a portion of that advertising money to the rights holders of the song. Digital distributors like TuneCore and CD Baby can help you collect that money, as well as Audiam.

5. Sponsorships: If you’ve built up a fan base, some companies are willing to sponsor musicians to reach those fans. Sponsorships can range from cash, to free products, services, and gear. Read this excellent guest post from Dave Huffman about sponsorships: Musicians: How to Get Sponsored

6. Session Work: Another way to make some extra money is to put yourself out there as a session musician. As a singer or instrumentalist, you could do session work for other musical projects, or even in advertising.

7. Cover Gigs: Playing cover gigs at bars, restaurants, weddings and other private events is frowned upon by some musicians. But those shows can pay really well, and allow you to get paid to play your instrument. There’s no shame in that.

Do you draw from any of these revenue streams for musicians? Any revenue streams not mentioned on this list?

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There’s more revenue streams out there for musicians than just album sales. Check out some of these alternative revenue streams.

Article by Mackenzie Carlin via Music Think Tank. Check out the full article here.

Offer VIP Packages for Concerts

Critics of social media may complain of young people wasting their lives behind computer screens, but the truth is, music fans still love attending live shows. You still can profit handsomely off of traditional concerts, but if you’re looking to amp up returns on your tour, consider throwing in VIP concert options. These could include special meet-and-greets before or after shows, or even private performances for your most dedicated fans. Many will gladly pay two, three, even four times the going rate for your concert if it means getting up close and personal.

Sell Merchandise at Live Shows

Music fans love showing off their favorites, be it through social media or old-fashioned band tees. The great thing about old school merchandise sales is that they can be incredibly profitable, particularly if you take on a multi-faceted approach including both online and in-person sales. Selling band merch is easier than ever, thanks to useful services such asIntuit QuickBooks, and the various on-the-fly payment systems that are available in the form of an app. Be sure to offer a wide array of products, so as to entice as many fans as possible to invest in the cause. These could include posters, clothing or vinyl records, which still retain a surprising level of popularity among music aficionados. A Music Think Tank post from last year suggests asking fans on Twitter and Facebook for merchandise suggestions, and then holding a poll to determine which options would garner the most interest.

Build a Dedicated Following With Social Media

The greater your social media following, the better chance you stand of benefiting from merch sales and VIP packages. Examples of musicians building dedicated fan bases through social media include Justin Bieber and Lily Allen serving as two of the most successful MySpace musicians. Today, the focus is on Facebook and Twitter, with several musicians also benefiting from the use of Soundcloud, a social network aimed directly at ‘sound creators.’ According to “Tech Crunch,” Soundcloud currently boasts over 250 million users, many of whom share their favorite bands and singers with their friends through the site’s popular social networking setup.

If you’re looking to make more money as a musician, check out the New Artist Model online courses.

Photo credit: http://bit.ly/1cZVSGs

Photo credit: http://bit.ly/1cZVSGs

“The Buyer and the Beats,” a study unveiled by Nielsen at SXSW 2013, cites between $450 million and $2.6 billion incremental revenue in the music industry.  While the industry has already begun the shift towards models such as crowdfunding and direct to fan, this study suggests a demand for additional experiences, content, and engagement not yet available.  This study presents much-needed optimism for indie musicians trying to make a living off their art.

Nielsen surveyed 4,000 music consumers of different degrees of dedication.  “Aficionado fans” are the big-spending music connoisseurs, dedicated to many genres of music ranging from popular to obscure, with an understanding of the music industry. They are your superfans.  “Digital fans” are fanatic social media users with a tendency to use the free versions of internet radios and other similar services.  “Big box fans” generally associate themselves with pop and country and are strongly influenced by discounts and deals.  Together these groups account for 40% of music consumers, but are responsible for 75% of all music spending!

Despite the groups’ purchasing differences, across the board fans expressed a willingness to pay for content given the opportunity. Nielsen concluded that if music fans were to buy additional exclusive content from one band the music industry stands to make $564 million, but if these fans buy content from all their favorite bands, there is a possibility for $2.6 billion.  The true number probably lies somewhere in the middle, but either way, you can and harness this unmet demand.

According to Chief Analytics Officer at Nielsen Entertainment Measurement, Barara Zack, “Fans want more… There is a desire to engage at a different level than what they have.”  So where are you going to find this untapped revenue?  Crowdfunding and direct-to-fan platforms have shown that “fans really want are 55-dollar signed CD’s, hand-written lyric sheets, and access to the making of the album.”

The recent overwhelming success of artists like Amanda Palmer has solidified crowdfunding as a viable fund raising platform, however, it’s related functions as a direct-to-fan platform, presale tool, and exclusive content provider are often overlooked.  Currently, many artists view crowdfunding as a tool to fund the creation of an album, and any presales are just an added bonus.  This is methodology backwards and not sustainable.

CEO of Pledge Music, Benji Rogers believes fans will begin to suffer from “donor fatigue” if donations are constantly requested of them and time sensitive goals are pushed in consumers faces like big flashy advertisements.  If this path is pursued, crowdfunding has the potential to follow advertisements down the road of consumer indifference.  For this reason, Pledge Music does not display any financial target.

Nielsen reported that 53% of aficionado fans and 34% of digital fans are willing to pay for content and access, meaning many indie musicians miss out on potential income when content is given out free.  Additionally, 59% of aficionados and 55% of digital fans want to know more about their favorite musicians.  “What really kills me is that I watch these big artists tell the story, and give it away through Facebook posts and on Twitter, but I can’t buy in and be a part of it,” says Benji Rogers.  While many “aficionado fans” may find this pay-for-content model is perfectly viable, it has the potential to alienate the average music consumer – a balance must be met between free and paid content in order to target and monetize both casual and dedicated fans. Every one of your fans are different, so different products will appeal to each.

Crowdfunding’s true calling lies in its ability to sell many different products at many different price points at an earlier stage than a typical release.  You can target more casual fans and begin bringing in presale money earlier on, while simultaneously offering hardcore fans exclusive access to the making of the album.  Effectively executed crowdfunding not only brings in money earlier, it keeps you at the front of fan’s minds through constant updates and interactions.

Direct-to-fan bundling is also emerging as a viable model for tapping into additional revenue.  Fans have expressed a want for additional content, and in many cases that content exists but fans are unaware.  For example, 35% of aficionado fans and 25% of digital fans were interested in crowdfunding, but unaware of its existence. How can indie artists tie in direct-to-fan notifications for new products and live shows into the platforms their fans spend their time on like Spotify and YouTube?

Since 1999, the music industry has lost billions in revenue, falling from $27.8 billion to $16.5 billion in 2012.  While many blame the internet, it has perhaps added more value than it has taken in the form of exclusive content and more personal relationships between fans and artists.  Today fans have the opportunity to see what goes on behind the album, and fans are proving time and time again that they are willing to pay for this content and information on their favorite bands.  Crowdfunding and direct-to-fan platforms are certainly steps in the right direction, but fans are indicating that they still want more, and that is an encouraging thought for the music industry.

(Check out an article from Nielson here.)

How will you harness this untapped revenue potential? What can you sell to your superfans?

 

To learn more about the revenue streams available to you, subscribe to the New Artist Model mailing list and get access to free lessons.

The live show and merchandise are becoming more important in the music industry. On top of that, there has been a surge in small indie musicians trying to make it on their own. Many think that merch is out of their budget, but with the right planning and strategy merch can become a profitable revenue stream for anyone.

This article, written by Robal Johnson of PUMP Merch, was originally posted on Hypebot. To read the full article, click here. 

1. Decide what to sell

Where to begin? Start small, be patient, and analyze your early merchandise investments. Get creative. Have an artist friend design your logo: pay them in drinks and guestlist spots. Be conscious of your audience: determine what apparel and accessories are trendy. Understand the demographic: ask how they consume and share music, which can easily be done via social networking. Acknowledge your environment: if its hot, tank tops and ballcaps are essential; if it’s cold, hoodies and beanies are a must. At first, focus on selling more for less: keep designs to 1-3 colors, buy the inexpensive option, and charge fans as little as possible. Remember, you can always upgrade later.

Don’t be afraid to be aggressive. You’re not bothering anybody at the show. I guarantee most of the people there will be excited to meet you and honored you came up to talk to them. They know you’re just doing your job and they actually want to talk to you. I have approached the bar in a small town in Mississippi and sold $10 T-Shirts. I have wandered a club in Nashville asking folks if they’d like to buy $5 CDs. Merch is a souvenir purchased to commemorate a notable experience. Every music fan enjoys the pride that comes with seeing an act “back in the day” and you need to offer them something to take home that night.

2. Convenience

Once you have decided on the right products to sell on tour, your next focus should be on convenience. If you do not accept credit cards while on the road, you are leaving countless dollars on the table. Just ask Laura Keating, Melissa Garcia, and Emily White of Whitesmith Entertainment and Readymade Records: “We have been taking credit card payments in some form or another since 2005 and it always doubles our sales at the merch table.” Now THAT should motivate the hell out of all of you.

Companies like Square and PayPal Here have made it extremely simple for you to accept all major credit cards as long as you have a smartphone or tablet. If you have not already, stop reading this right now and order one of the FREE card readers from either of those companies immediately. It will take you a few short minutes and the results are literally priceless. I can not stress the importance of this enough. In this day and age, you MUST accept credit cards. You will not only sell your merch to more people, you will sell even more items.

At this time Square is only offered in the United States, Canada, and Japan. PayPal Here is available in the US, Japan, Hong Kong, and Australia. For acts touring the United Kingdom and Europe, Team Whitesmith/Readymade suggests using iZettle for your credit card processing needs. iZettle is now live in Sweden, Norway, Denmark, Finland, the UK, Germany, Spain, and Mexico.

3. Get organized!

Third on your to-do list while gearing up for tour should be organization and accounting for your merchandise while on the road. For decades this was done by either the merch guy or the tour manager in a looseleaf notebook with pencils and a whole lot of mistakes. Then came Microsoft Excel, which we ALL love to hate. But I have seen the future of tour merchandising and it comes to us via Orange County, California in an app called atVenu. These guys are changing the game and every single touring artist needs to take note.

I spoke with co-founder of atVenu, Ben Brannen, and he shared his story of what drove him and his partners to create the service. “While on the road, I experienced first hand the inefficiencies of existing methods by which we track and settle our touring merch. Too much money is lost due to inventory issues, poor nightly settlements, limited analysis, or one broken cell in an Excel sheet. atVenu solves these problems by empowering merch reps with a mobile app designed for their needs which syncs to the artist’s web-based account where merch company and management can login and easily access a robust suite of real time analytics and reports.”

This is a game-changer for many reasons, but most importantly it is something that will save artists time and money on the road. As a merch rep myself, I can attest to the great many headaches that go along with inventory, accounting, and restocking of products while a band is touring. It is all about organization and communication. With a system in place that knows when you’re getting low on the green v-necks in small and medium and your merch guy gets a notification, imagine how much money you’ll save on those rushed deliveries from halfway across the country that will hopefully make it to the venue on time. Envision how much easier it will be to do reorders for the next tour because you know exactly what you sold, when, and where.

My buddy Randy Nichols of Force Media Management, who represents The Almost and Bayside, among others, also works as Strategic Music Industry & Product Advisor with atVenu. He sums up the app perfectly, “A tool like atVenu shows me real time forecasting data for my tour so I can both improve my profit margins and be sure to maintain a healthy stock of my in demand items. This can easily mean the difference between 10 boxes of merch in the drummers garage at the end of the tour vs an extra $10,000 in profit.”

 

Today, indie and DIY artists have the potential to bring in more money than ever before, but sometimes all the potential revenue sources can be overwhelming and difficult to manage.  This article describes the three most profitable revenue sources for indie musicians.

1) YouTube

Complain all you want about musicians making YouTube covers and goofy videos instead of being “serious”. The reality is many of them make a good living from this. Costs are minimal compared to professional studio time. Distribution costs are near zero. The casualness of the content also allows for more rapid creation than one might find for “official” recorded work.

Companies such as Maker Studios and Big Fra.me have grown to help these artists monetize their music with better-leveraged ad rates, production assistance, and channel cross-promotion. Once ramped up with a lot of content, successful artists in this area can clear mid-to-high five figures in revenue. Since they are often solo artists, they also don’t have to split it up much.

To find out the other two revenue streams, visit Music Think Tank.

A new survey from the Gartner group shows digital music revenues forecast to grow less than 5% per year.  This is close to flatlined if you factor in inflation.  Not good news for most of the world.

■ Online music revenue from end users will grow more than 31% by the end of the forecast period: from $5.9 billion in 2010 to $7.7 billion in 2015. By comparison, consumer spending on physical music (CDs and LPs) is expected to slide from around $15 billion in 2010 to around $10 billion in 2015.

■ Online music subscription services, such as Spotify, will be the main growth sector in this market, showing fivefold growth from 2010 to 2015. A la carte sales will drive the bulk of overall revenue.

■ The highest growth rates will be in regions such as Latin America and the Middle East and Africa, which have not historically been strong in paying for tracks or albums from online services or stores (although perhaps stronger in paid-for ringtones from their service providers).

digital music sales chart

Read more from Gartner here.

Artist Revenue Stream Poster

My friends at the Future of Music Coalition are conducting an online survey from Sept 6 – Oct 28th to determine the variety, depth and complexity of the ways that musicians are making money these days.  Not theoretically, but actually.  We are looking for performers, songwriters, composers, band members, session players, producers, MCs and anyone else making music to join in and take the survey.

A while ago, I posted this from my friend and Berkleemusic student David Sherbow showing a pretty comprehensive list of the different ways that musicians can make money.  This might give you food for thought on taking the survey and planning your career…

The artist music business model has been in flux for years. The record deal dream that most artists sought is no longer the viable alternative that it once was.  The leveling of the music distribution playing field by the Internet is virtually complete.  Terrestrial radio is on a path towards destruction that even the major labels can’t compete with.  People now access and download music from multiple sources, usually for free.  D.I. Y solutions are everywhere, but for many artists hard to integrate into their daily lives.

Where does this leave the average independent artist? At the beginning. Every artist wants to know how they can make music, make money and survive to write and play another day. Here, in no particular order, is a list of possible income streams.

• Publishing
• Mechanical royalties
• Performance Royalties from ASCAP and BMI
• Digital Performance Royalties from Sound Exchange
• Synch rights TV, Commercials, Movies, Video Games
• Digital sales – Individual or by combination
• Music (studio & live) Album – Physical & Digital, Single – Digital, • Ringtone, Ringback, Podcasts
• Instant Post Gig Live Recording via download, mobile streaming or flash drives
• Video – Live, concept, personal,  – Physical & Digital
• Video and Internet Games featuring or about the artist
• Photographs
• Graphics and art work, screen savers, wall paper
• Lyrics
• Sheet music
• Compilations
• Merchandise – Clothes, USB packs, Posters, other things
• Live Performances
• Live Show – Gig
• Live Show – After Party
• Meet and Greet
• Personal Appearance
• Studio Session Work
• Sponsorships, and endorsements
• Advertising
• Artist newsletter emails
• Artist marketing and promotion materials
• Blog/Website
• Videos
• Music Player
• Fan Clubs
• YouTube Subscription channel for more popular artists
• Artist programmed internet radio station or specialty playlist.
• Financial Contributions of Support – Tip Jar or direct donations, Sellaband or Kickstarter
• Patronage Model – Artist Fan Exclusives – e.g. paying to sing on a song in studio or have artist write a song for you
• Mobile Apps
• Artist Specific Revenue Stream –  unique streams customized to the specific artist, e.g Amanda Palmer
• Music Teaching – Lessons and Workshops
• Music Employment – orchestras, etc, choir directors, ministers of music, etc.
• Music Production – Studio and Live
• Any job available to survive and keep making music
• Getting Help From Other Artists and Helping Them –  Whatever goes around come around. – e.g. gig swapping, songwriting, marketing and promotion