Tag Archives: Revenue
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A big part of my blog, How To Run A Band, is to figure out how to actually make money with music. However, I’ve been talking about giving music away for free, buying fancy tablets, and paying for web hosting. If you look at my “financials” page, you’ll notice a downward trend in money for my guinea pig band Shiplosion.
How does a musician make money? Honestly, I don’t know for certain. But, I think I have a couple of ideas. However, these ideas are based more on the individual musician, and not the band as a whole. Why? The individual can make more money and have more control over their finances than an entire band.
Start Earning One Dollar A Day
Every day, grab an acoustic guitar and head down to the street corner. Start playing songs and singing with the case open to take tips. Don’t stop until you have at least one dollar.
There you go. $365 for the year.
Are you a drummer? Grab some drums and set up shop on that street corner. I’ve seen kids playing with buckets busking for money. There’s no reason a drummer with a minimal drum kit can’t do the same. (Even though we all know drummers are “special”…)
“$365 a year? That sucks!”, you say.
Yep, that does suck. But that’s $365 more a year than you were previously earning. Being in a band over a 6 year period, I’ve lost way more than $365. Busking every day will earn you more than my band that was playing multiple cities in multiple states 3 days a week for 6 years.
But earning a dollar a day is not the end goal. Once you can successfully earn one dollar a day, how much effort will it take to get to $2 a day? Maybe busk at one additional location? Do some cover tunes? Play for 30 more minutes?
“But I feel like a hippy dumbass. Isn’t this for homeless drug users and not the awesome caliber of musician that I am?”, you ask. (Okay, I asked but pretended it was you.)
If you don’t feel comfortable doing something, don’t do it. However, there’s money on the table that you are ignoring. If you are on tour, busking could be the deciding factor for being able to afford dinner or gas money. Or, more importantly, beer money.
Busking also gives you the coldest, most disinterested crowd on Earth. What better way to learn how to be positive and entertaining regardless of the situation? And if you think you are too great of a musician to resort to busking, I’d say it’s about time you learned some humility. If you’re not completely self-sufficient as a musician, there is plenty of humility yet to be had.
Sweeten The Deal
Don’t go crazy on this. In fact, I’d argue you record, mix, and master it yourself. As cheaply as possible. Your busking isn’t your main musical career, but an additional revenue source. Use CDBaby to print out a limited run of CDs.
With the addition of CD sales, you are now making $5 to $10 a day. You also have an extra CD to add to the merch booth of your main band.
See the pattern?
Start small and constantly add value and content. Don’t overlook small price points. 25 cents from a few thousand people adds up. There is no purchase too small.
Do it every day. Daily. Every day is an opportunity. It’s yours to have or not.
Photo by codenamecueballPhysically busking in one area is limited to only that one city and the people only walking by at that particular time. YouTube is global and timeless. Record yourself playing your music daily and throw it out to the world on YouTube. Hell, record yourself while you’re busking on the street.
At the end of your YouTube busking, add a call to action. Give a link to your website and ask for 25 cents. On your site, provide people a way to donate a small amount of money to you. PayPal has options for micro transactions. Use it! The good ol’ long tail theory could net you a bit of cash over the life of this YouTube post.
On top of the daily busking, this additional outlet “could” provide additional revenue. It’s not guaranteed it will, though, so be prepared. However, make your videos interesting enough, you can gain a large following. At that point, you can become a “YouTube Partner” and earn money through ads.
Breaking Down The Numbers
So, doing the above, you’re going to be earning about $5 to $10 a day. You’re going to bitch and whine that that’s impossible to live off of. What you’re not realizing is that I just taught you how to make around $1825 to $3650 extra a year on your music.
It’s not glamorous. It’s not sexy. But it’s money in your pocket.
But, I know you are not satisfied. You want to quit your job. I’m with you on this. I wish I could quit mine. I’m not there yet. However, we need to know the numbers that we need to achieve to quit our day jobs. For me, I’d like $50,000 a year. I’ll use this number to calculate what it would take to be a financially independent musician.
$50,000 divided by 365 days = $137 a day.
That’s it. Earn $137 a day, and you can quit your day job. You are a fraction of the way there using the above techniques, but you will definitely need more money per day to accomplish this task. This figure shows why you can’t entirely rely on your band by itself to generate the income you need.
Your Band Won’t Make The Dough
This point I know you will rail against. “My band will make it! We will become famous.” That’s your ego talking and not your brain. Your band will most likely, by itself, not produce the money you need to get by.
WhiteI was following one of the members of GWAR on Twitter. I was surprised to find that he is a bartender after the GWAR tours end. GWAR packs an awesome crowd at venues and has been doing so for 25 years. Still…bartender. One of his tweets was “I always wanted to be rich and famous. I have one of the two.”
Here’s the breakdown. Let’s say your band plays every weekend, twice a week. That’s 104 shows a year. For you, personally, to make $50,000 a year, you’d need to make $481 a show. Now add your band mates that also want to make $50,000 a year. Total, the band would need to make $1924 a show. Yikes!
Even if you played every day of the year, your band would need to profit $548 per show for everyone to get paid. For every additional person in your band, that is another multiplier to the base salary and profit considerations. That 8 piece Ska band doesn’t sound so thrilling now, does it?
The point is, relying solely on your band to make you a financially independent musician is not feasible. The band is just one more revenue source for you. You need multiple, musical revenue sources to get where you need to be.
You Are Your Own Income Stream
On nights your band isn’t playing, you could hit up open mic nights. Bring your CDs along. Perform and sell. Give lessons for your instrument. I think the going rate for a half hour lesson is about $30. Giving a lesson a day at this price will get you over $10,000 a year. Add the busking, and you are approaching $14,000 a year.
Instead of all this daily working, what if you had some merchandise to sell that could do the trick? Easy. Get 365 avid fans. For them, make 365 items that cost $137. These items should be limited edition and never, ever hit the market again. There’s your $50,000.
Or, in the above example, just get 365 fans that are willing to pay $137 on you over the course of a year. Expand that to the popular 1000 True Fans model, and you would need to have each fan pay $50 a year. Do you have $50 worth of content, merchandise, or shows for the year?
This is why growing your e-mail list and treating e-mail like money is so important. Giving away a free CD for an e-mail can net you a positive income flow over a few year period. That network of fans can give you what you need to be successful. If you can grow that e-mail list to 50,000 people, all you would need is $1 a year from each person to quit that day job.
Exhaust All Possibilities
Busking. YouTubing. Lessons. What else can you do? Guitar tabs for 99 cents. Adsense for your free songs. PayPal donations.
What else? Do you have ideas on what can generate money on a daily basis? I think my ideas above could get an artist up to $10,000 a year. What would push it to $50,000?
It may not surprise you to know that tour merchandise (like concert t-shirts and stickers) are a significant source of income for many musicians, but what may shock you if you’re from an indie background is how complex tour merchandise deals can become. Instead of having a friend sell your t-shirts at the merch table in the back of club, major tours involve large music merchandising companies that license your band’s name and likeness and produce and sell your stuff, paying you a royalty. Merch deals can be like record label deals, but there are some important differences. Here’s a look a the major points in tour merchandise deals.
1. Tour Merchandise Royalties
Of course, the royalty you’ll be paid by the tour merchandise for selling goods featuring your name, face, album names, logos, artwork and so on is one of the most important points of any merch deal. There are two ways tour merch royalties can be calculated: percentage and splits.
With percentage deals, the musician simply gets a pre-determined percentage of gross sales of their goods. Gross sales usually mean sales minus any taxes and credit card fees paid by the merch manufacturers. In the US, musicians tend to get royalties in the 30% to 35% range, though it can vary, as do foreign royalties (which are usually a bit less than the US rate). If you receive a percentage for your royalties, you can sometimes work a provision into the contract that your royalty rate increase as you reach certain sales thresholds.
Profit splits are usually based on NET sales – so the merch company deducts all of their expenses from the sales income and then splits what is left with the musician at a pre-determined rate – often 85/15 (in the musician’s favor), though again, these rates can vary. Profits splits are common in foreign royalty deals as well as deals for stadium shows and festivals. Additionally, concert bills/programs are nearly always sold on a split, even if the rest of your merch is sold under a percentage deal.
Note that if you opt to have any merch that requires an the merch company to bring in an outside designer (like a jacket specially designed by a well known name in fashion), your royalty rate will be lower on these items than the rest of the merch. Why? Because the merch company has to bear the cost of the outside designer, and the lower royalty rate is their way of recouping the costs.
2. Tour Merchandise Advances
Yes, like a record deal, you DO get an advance on a tour merchandising deal. Before you get excited, you should know that the terms are much worse than record deal advances. Why? Because tour merch advances are usually recoupable by the merch company – meaning you could be on the hook to pay back the advance.
There are a number of circumstances that can put you in the unfortunate position of repaying your merch advance, but most of them are tied to you not touring within the time frame specified in your contract or not playing to audiences of the sizes expected when your deal was signed (we’ll get to performance minimums later, which is closely tied to this). If you decide you want out of the contract, you will have to pay back your advance with interest.
Advances vary in sized depending on your bargaining power, the length of your tour and the size of the venues/size of your fanbase.
Most tour merch advances are paid over the course of your tour, to help you meet your costs and to stop payment if you are failing to meet the terms set out in your contract. You’ll get a lump at the start and the end with one or two payments in the middle.
Your contract should state the amount of your advance and the terms of the advance clearly.
The term of your deal is the length of your deal. For tour merch, you are usually tied down for one album cycle or until your advance has been repaid – whichever is LONGER. Technically speaking, that means if you repay your advance but never release another album, you’re under contract with a tour merch company forever. A good lawyer can help you negotiate exit strategies from the contract, but make sure you are very clear about where the finish line is, or you’ll be stuck with a merch deal for a very long time to come.
4. Hall Fees
Once you get off the bar circuit, you’ll find that many venues charge a percentage of profits for letting you sell your merch in their place – these are called hall fees. Agents negotiate hall fees with the venue when they book your tour, but tour merchandising companies usually put a cap on the hall fees they are willing to pay (often around 30% or so). If your agent negotiates a hall fee that is more than the cap your merch company set, they take the difference out of your royalties.
5. Performance Minimums
Basically, the performance minimum is the number of people that must attend each show to make you compliant with your tour merch deal. Where does the tour merch company get off telling you how many people need to be at your shows? Because the number of people through the door determines how much merch they can sell – more people, more merch sales. Tour merch deals usually measure this in how much they expect to sell “per head” – what is the average spend at the merch stand of each person through the door?
Merch companies don’t count every attendee at a show as counting towards your performance minimum. For instance, no one on your guest list counts. They also count people differently at different venues. Stadium shows are counted most harshly. Even though more people go to stadium shows, they tend to spend less, since they may attract casual fans who aren’t interested in buying anything. Some merch companies try not to count stadium shows towards your deal AT ALL, though a better compromise can usually be reached during the negotiation stage. Remember that falling before your performance minimum can trigger repayment of your advance, so be sure the numbers are realistic before you sign a deal.
6. Artwork Approval
Your deal should specify if (and how and when) you will get to approve the merch thecompany/designer is producing for your shows. Even up and coming artists with little touring track record can get full creative control in merch deals.
You can’t have a deal with two tour manufacturers at the same time, of course. Where exclusivity gets tricky is when you have a separate deal for retail merch and/or your label is planning some kind of merchandise promotion at your show. It is common for merch deals to exclude you from selling any merch within 48 hours of the show within two miles of your venue. You need to make sure that this clause leaves retail stores out of the equation, since you can’t control where a record store selling merch is located in relation to the venue.
Record label promotions, such as a concert shirt giveaway by the local radio station set up by the label, should also be allowed in your contract. However, the tour merch company can – and will – limit the amount of merch you or your label can give away for free before a show.
8. Selling Leftovers
What happens if you don’t sell everything the tour company produces during your tour? The merch company will try to sell it off. You have the right to limit where they can sell the merch and for how much. Your contract should provide you an opportunity to buy the leftover goods at cost plus a small markup (though be sure the contract doesn’t say you HAVE to buy it).
If you don’t want it, the merch company usually reserves the right to try to sell your good (often to a retail store) for up to six months after your tour ends. However, they can’t sell your goods at a cut price. They also can’t purposely manufacture more than you reasonably could have expected to sell on tour just so they have some leftover after the shows end, nor can they make new goods after the shows end. Further, their sell off of your merch should be on a non-exclusive basis, as long as the other terms of your deal have been met, so you are free to make new merch deals.
For all of you musicians, bands and solo artists that actually perform and even have regional tours, I located this great tool that can help you forecast how much you will gain, or lose, on any given gig. The Gig Profit Loss Calculator is easy to use, just plug in all the data requested like Expenses such as travel expenses, food, hired players, promotional costs, venue fees, and broker fees as well as Income such as tips, fees, revenue from door and merchandise sales. I hope this tool helps you figure out your music’s financial health to better help you understand the business part of the music industry and your career.
Knowing the difference between these licenses will affect how your revenue streams from these monies will play out. If you don’t know how money is received from your music then you are open to the possibility that you could enter into a bad contract that will not benefit you.
MC Lars: How An Indie Rap Artist Makes A Living [CHART]
MC Lars beleives in giving his music away free. “In 2006, I read a book by Berklee College of Music professor David Kusek (and Gerd Leonhard), The Future of Music,” wroteLars. “He described a “music as water” paradigm that has come to fruition in 2012 with cloud services… Since then, I’ve been an advocate of free downloading and streaming.”
“What this means then is that in order for artists like me to survive, I must be creative with how I let people hear my music,” he wrote in the Huffington Post. “47% of my income comes from merchandise, 40% from ticket sales, and13% comes from iTunes, Spotify or other paid music services through the internet. I used a crowdsourced funding site called Kickstarter to produce my last album, with added bonuses of drawings and personalized songs to the highest contributors.”
“Being a musician no longer means simply being a songwriter and performer. One must also know a little bit about business, branding, t-shirt design, social networking, production, publicity, accounting and tour managing.”