As a full time singer and songwriter I’ve known that there are multiple ways to make money from your music for a number of years now. It wasn’t until I started to write them down however, that I realised how many sources there are.
So imagine this for a second:
- You start out with a dream to become rich and famous. A reasonable enough dream 🙂
- You get to work and eventually you write and record a hit song and release it to the masses
- All of a sudden money starts to fall from the sky and your goal of fame and fortune is finally a reality
Oddly enough the first 2 parts of that story are surprisingly easy for dreamers (like myself) to imagine . It’s that last one that usually gets us scratching our heads in confusion. How do artistes get paid when they have a hit song and where does this money magically appear from?
Some of the answers to these questions will probably surprise you if you’re completely new to the music business. Truth be told the answers still surprise me but there’s no questioning money in the bank.
Of course, as I’m hoping you already know, success in the music business is rarely if ever quite as simple as I described above. There are a LOT of pieces to get right which of course means there is a high chance of failure. And as singers, songwriters and producers we have to get used to the idea that our success rate is typically quite low.
I don’t say this to discourage you. I simply want to help keep your expectations realistic so you don’t give up too quickly. Disappointments are an integral part of this industry - and in case you’re wondering those of us who have had a fair amount of success with our music aren’t immune either.
Many of us have had to work for many years with no success at all. It can be incredibly frustrating. It may be a long time before you get to the point where you’re able to actually make money from your music on an ongoing basis.
This is the music business. If you’re looking to get rich quick look elsewhere.
If you’re going to have any chance of success you have no choice but to write and record as much as you can (following songwriting best practices of course). If things go well you may eventually find that magic. No guarantees but when it works one song can literally change your life.
And when that happens money can flow from all over the place. Where on Earth does the money come from? Keep reading and I’ll unpack this mystery for you…
1. Live Shows
I’m sure this one doesn’t surprise you. Getting paid to perform in front of audiences isn’t revolutionary by any stretch of the imagination. What you may not know is how widely the income can vary depending on a couple of factors.
The Complete Newcomer
If you’re a brand new band performing in front of club goers or bar patrons you might not get paid a red cent. It sucks I know but this is precisely why you need to evaluate every chance to perform live in terms of the opportunity it presents.
A new act needs to get used to performing in front of an audience filled with people they’ve never met. This is VERY different from performing in front of friends and family who will love you no matter how you sound. Getting used to and good at performing live can only be learned one way - practice. In the beginning this is the perfect time to make your mistakes and work out the kinks in your show until you get it just right.
At this stage of your journey bar/club owners are essentially letting you start your career at their expense. Not because they owe you anything but because either you or someone else convinced them to give you a chance. I’ve said this before and I’ll say it again…
“The music business is a relationship business. The stronger your relationships, the greater your success. Period”
- Ricky Ducent -
Not New But Not Huge… Yet
If you’ve been performing for a while and you have a bit of a following you now have some leverage. By “leverage” I don’t mean you now have the right to act like an idiot and ruin the relationships you’ve built up to this point. I mean you now have something of value to bargain with.
If every time word gets out that you’re going to be performing people show up in droves, then it’s totally justifiable to charge for your performance. This can be anywhere from a couple hundred bucks to a few thousand depending on what’s reasonable.
Always remember though, the most important thing here is to build and maintain a great relationship between you and the show promoter. Whatever you agree to must benefit ALL involved.
Got Yourself A Huge Hit
If you ever find yourself in the enviable position where you have an enormous hit and you’re getting a ton of exposure from TV and Radio then you should now be able to get paid gigs on much larger stages than before. At this level, like the previous one, the amount you can charge will probably be tied to the size of the audience you can attract.
In addition to this however it can also be tied to the amount of corporate sponsorship you can help the show promoter get. Large advertisers will only sponsor events that can get them high visibility. Sponsorship is basically another word for advertising and so companies will typically expect a return on this investment.
One of the easiest ways to ensure this is to book popular acts. At this level I’ve seen performers get paid sums varying from $10,000 all the way up to $200,000 and beyond for a 1 hour performance. The variation typically lines up with the level of success (I.e pulling power) of the particular act being hired.
Oddly enough the acts making much larger amounts are usually people like Billy Joel and not necessarily the more current acts on the scene. Billy did a series of shows in Long Island a few years ago that he allegedly collected $1M a night for.
As you can imagine the income potential at this level can be staggering but even here the relationships drive the success - noticing a theme here?
2. Sponsorships & Product Endorsements
Separate from the indirect income from concert sponsorships, an artiste or band can get paid (sometimes quite handsomely) to endorse a product or brand. This can take multiple formats which can include:
- Ads played during intermission at a live show
- TV commercials
- Print ads
- Being photographed using a product made by a particular company
- Adding logos to tour buses
These deals can come in various formats depending on the objective and are usually only attractive to companies when the artiste has achieved a certain minimum level of success and by extension exposure to a large audience.
In terms of income this can vary quite widely. A newer company with limited cash can simply offer their products for free in exchange for photographs while using the product.
A larger company will usually offer a cash payment but will probably require a commitment to a photo shoot for print ads and maybe even a full on ad campaign involving public appearances, music videos or TV commercials etc.
Each deal is different so the income can vary but even if the money is small the added TV exposure can also be great for the artiste so, as long as everyone is reasonable, an agreement can be reached where everyone wins.
3. Music Sales - Mechanical Royalties
When CDs and vinyl were a thing this was pretty straight forward. A portion of the income from the sale of these items went to the performer. This is called a mechanical royalty.
In this new era of digital music the principle remains the same but the delivery format has changed. When you buy music from a service like iTunes or Amazon Music you are essentially doing the same thing you did when you bought a CD. A portion of this sale goes to the performers of the song and this is the mechanical royalty.
I guess you could call this Royalty 2.0.
It’ll catch on you’ll see 😛
The amount of money will often come down to negotiation. If you have a direct deal with iTunes the approximate income from a 99¢ sale is somewhere around 55¢ for the song creators. I’m not 100% sure but I believe this money is split between the performer and the copyright owner(s). Not bad right?
(I told you this stuff still surprises me)
The problem however, is iTunes isn’t in a hurry to do deals directly with artistes so you’ll probably have to go through an intermediary like CD Baby or be signed to a label.
This of course will take a big bite out of that 55¢ and will again come down to negotiation. So remember when I said this is a relationship business? Well it applies here too.
4. Online Streaming
This is quickly becoming THE way music is consumed especially among younger audiences. While the 0.04¢ per stream (or whatever the number is) doesn’t seem like much, when you have a huge song getting millions of streams per day it can add up to a nice amount of money.
This income is a separate income from digital SALES and is probably more like the income from radio airplay which I’ll talk about below. Listeners don’t get to keep a copy of the song they streamed like they do with a one off digital sale. This means that they have to pay EVERY TIME they stream a song.
Now I’m assuming the math wizards at streaming companies like Spotify and Apple Music calculated the number of songs someone could actually stream in a month. Using this info you can bet they’ve ensured that the $5 monthly subscription cost would easily cover it all no matter how much of a music fanatic one of their subscribers is.
Whatever is left is split between the performer and songwriter and of course the streaming service. I don’t know what the specific percentages are but I think that should give you a good enough idea of how it works.
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5. Radio Airplay
Did you know radio stations are required to pay you every time they play one of your songs? It’s true and I’ve got the checks to prove it. Even if your song never sells a copy, if it gets a ton of radio airplay you have money to collect.
I guess you could say this is a literal example of “Pay to play”.
This is called Performance Income and you are essentially being paid because you own (or co-own) the Performance Rights to the song. It’s shockingly cool.
In order to receive this money you have to join one of the performing rights societies responsible for collecting this money on your behalf and sending you your portion.
The major ones are:
- the American Society of Composer, Authors and Publishers (ASCAP)
- Broadcast Music Inc. (BMI)
- Society of European Stage Authors and Composers (SESAC)
- Phonographic Performance Limited (PPL UK).
It doesn’t seem to matter which one you join as they all do the same thing - collect money owed to you for public performances of your works.
Now you might be wondering why a radio station would pay you for the right to play your music. The reasoning is similar to “live band in a club” scenario.
Music on a radio station is content just like the news or a talk show is. They hire a talk show host or a newscaster to provide information and/or entertain the listening audience. In the same way you get paid for providing the 3 minutes and 24 seconds of entertainment that your song provides.
The radio station passes on this expense to advertisers who pay to have ads played on the station so it’s a win-win situation that everyone benefits from.
6. Music Publishing
With this income source we’ve now returned from the land of pulling money out of thin air and landed back where income is tied directly to the sale of music you own the rights to.
A portion of the income from the sale of any song is assigned to the copyright owner(s) of the song. This is called publishing income and can be a very lucrative source of income for the original creators of a piece of music.
Collecting this money yourself requires a LOT of paperwork so most creative types just sign this responsibility over to a Music Publisher. Such publishing deals often include a cash advance so the writer doesn’t get paid again until this advance is recouped from future earnings.
Once recouped however, if you have a song that’s doing well you can look forward to typically twice yearly checks. Once the momentum of the song dies down you can expect the check amounts to shrink accordingly.
I should note here that you don’t have to sign to a publisher. You can actually start your own publishing company and keep the publisher’s share of your song’s income for yourself. Again be warned that this can be a lot of tedious and boring work that many songwriters would rather avoid.
The coolest thing about publishing income though is the unexpected surge that can occur if someone samples or remakes one of your songs. If this re-interpreted version of your original becomes a big hit you are entitled to a part of the publishing income proportionate to your share of the copyright ownership.
This is essentially free money and it’s awesome.
7. Sync Licence Fees
Your publisher’s job is to exploit your creative works in an effort to make as much money from them as possible (for both of you). One way he/she can do this is by placing your songs in movies and TV shows.
When such deals are brokered there is what’s called a sync licence fee. This is money paid to the copyright owner(s) in exchange for the right to use the song in the movie or TV show.
These amounts aren’t always huge but the cash comes in handy and of course if the movie becomes a huge hit your music gets more exposure. This can easily translate to more paid gigs so if you’re the one writing the songs for your band it can be indirectly lucrative for you.
The final income source I’ll talk about is merchandise. You can sell t-shirts, hats and all kinds of other stuff at your live shows that can be a great source of additional income and branding.
If you go all in you can even come up with an entire line of products that become a major source of supplemental income. This is a lot of work though and doing it by yourself can end up being a full time, high risk proposition.
Many acts do merchandising deals with companies who specialise in this sort of thing. If you decide to go this route be careful about doing your due diligence first. While there are some great companies out there, you have to be on the look out for the shady ones.
These are the companies who will claim they sold 10 shirts when in fact they sold 80. Not cool at all. And you’ll have no way to track what actually happened especially since you’ll be busy making music.
So if you go down this path tread carefully.
Is Your Head Spinning Yet?
So that ended up being a much longer article than I expected and I’m sure I didn’t cover everything. You could actually create entire books and training programs on just this topic alone.
There are a ton of different ways you can make money from your music and some don’t even require you to sell a single song. This is pretty exciting stuff but I have to warn you
“Thar be sharks in them thar waters”
If you’re going to be making deals and signing contracts DO NOT depend solely on what you learned from this article. Seek the advice of professionals before making these kinds of moves. A lawyer, accountant or manager may seem expensive at first, but by helping you do things the right way the first time they can save you a ton of money and regret.
If you’re a singer, musician, songwriter or combination of all three focus on that for now. Make the best music you’ve ever heard so you have something to generate multiple income streams from. Then and only then will you be able to pursue and hopefully take advantage of the opportunities that await.
If this was helpful (or complete unhelpful) please let me now in the comments below. Looking forward to hearing from you.
Want A Shortcut To Making Money From Your Music?
Watch the Music Industry Expert Interviews below