As strange as it might sound, different rules can apply to different styles of music. For instance, where I live in Calgary, Alberta, country gigs tend to pay a lot more than rock gigs. I know this from personal experience, as well as talking to fellow guitarists. You can easily earn four times as much per gig if you’re playing country.
The rap space is one where unique rules certainly can apply. When you have artists like Jay Z starting up their own streaming platforms and clothing lines, it’s not hard to see that revenue streams can be varied and diverse.
But it’s also fair to say Jay Z is the exception and not the rule. Not every rapper has – or will have – so many ventures and revenue streams to draw from. You need capital to start a business, and you must have the smarts to run it or put the right people in place to run it for you if you want it to be successful.
So, how do rappers make money?
Facts Are Hard To Find
If you do a bit of your own digging, I think you’ll come to the same conclusion I did, that it’s hard to find hard stats and figures connected to how rappers make money.
This is because:
- The music industry isn’t exactly the most transparent out there. Even with newer industries like content marketing, it’s much easier to find relevant stats and figures.
- Rappers make money the same way other artists do – digital and physical sales, streaming, tours, merchandise, and so on. I know I talked about the fact that some unique rules can apply to rappers, and that is true, but their bread and butter revenue streams aren’t remarkably different from any other musician in any genre.
Still, I did come across a couple of interesting findings, so let’s explore how rappers are making money.
The decline of album sales is something you’re surely aware of, even if you aren’t actively selling CDs or digital copies of your album.
But it can still prove to be an important revenue stream for rappers, even if touring is where the real money is made (by the way, I don’t entirely agree with this sentiment, but for now I’ll let it stand).
In an article on Doolid, it points out that the best-selling hip hop albums in 2013 averaged 304,400 units, with Kendrick Lamar’s Good Kid Maad City coming out on top at 746,000 units.
I’m sure you can do the math. If you’re mainstream rapper, and you’re moving 304,400 units of your album at $15 each, you’re making about $4,566,000. But we all know signed artists don’t get to keep all that money. Much of it goes towards the label, distributor, manufacturer, retailer, and studio or production costs. We’ll be generous and say they get to keep 10% (you’d better have an incredible contract), so that’s $456,600.
That’s not a figure to sneeze at, obviously, but if you’re pulling five million and keeping half a million, you’re probably not feeling like a superstar about that. It is, however, the cost of being a signed artist.
What about independents? Well, I’m not sure how many albums independent rappers sell, but I know it can be tough enough just moving 1,000 units as an independent artist in any genre. So, we’ll say you’re selling 1,000 units at $10 each. That’s $10,000 in revenue.
But even as an independent, you have certain costs. CD printing and replication, as well as distribution and studio production costs can add up. Independents must work towards a “breakeven” point before their album project begins to generate profit.
CD printing and replication costs have gone down, but you can still expect to pay at least $1.60 per CD. So, 1,000 CDs will cost you $1,600. Graphic design and studio production could easily cost another $2,000. So, with your expenses at $3,600, you would need to sell 360 units just to break even.
As an independent, as a general rule of thumb, you’ll move fewer units than a signed artist, but keep a larger percentage of the revenue. I’m not saying it’s impossible to sell a lot of albums as an independent, but that’s not generally how it works.
Everywhere I look, people are saying tours are where the real money is made in the music industry.
True, concert attendance and participation is up. But we live in a time when even the tours of mainstream artists can bomb and backfire. And, when it comes to performing as an independent artist, it could prove hard enough to break even let alone make money (but more on that in a moment).
The Doolid article I mentioned earlier notes that the average concert attendance in 2013 was 9,109 people.
Concert tickets can run a hefty sum these days, especially if you’re going to see a mainstream artist. Let’s say you sell 9,000 tickets at $60 each. That’s $540,000 per show. So, if you’re playing a lot of shows, that number can add up fast. At 60 shows per year, you’d be earning $32,400,000.
As with recording and selling music, however, there are certain costs associated with performing. You’re not going to be keeping 100% of what you make in ticket sales. Expenses include: Food and drink, gas, lodging, equipment, transportation, road crew, rental, and more. Depending on your record contract, your label is probably keeping a sizable slice of the pie too.
Again, we’ll be generous and say your take home is 10%. So, you’d make $3,240,000.
These figures are probably slightly unrealistic, but they do give you a ballpark idea of how much a mainstream rapper stands to make on tour.
What about independent rappers? Again, I find it difficult to attract 50 or 60 people to a show on any given night. But we’ll be generous and say you’re able to bring out 55 people to every show you play.
If you’re a rapper with a serious work ethic and major label ambitions, you’re probably touring at least twice per year. We’ll say you’re playing 80 shows total.
This is where things can get a little confusing. Venues don’t always pay independent artists, and even when they do, the amount they pay is variable. There are no standard rates. Shows can get cancelled, organizers can pull the plug, a blown tire can inhibit your ability to get to the next venue on time (it happens every tour), and soon you find yourself making less than originally projected.
Let’s say you’re somehow able to make $10 per body. You’d be making $550 per show, and $44,000 per year based on the numbers already mentioned. Again, independent artists have many of the same expenses mainstream ones do, so your earning power is going to be limited. As with album sales, we’ll say you keep 60% of the revenue, so your net earnings would be a whopping $26,400.
That might be an okay amount for a solo artist to earn, but not great if you’re splitting it between two other rappers and a DJ, for example.
And, I know I’m repeating myself, but since you’re not guaranteed merch sales, a base rate guarantee, or even ticket sales, you might play shows where you don’t make a cent or even lose money. Breaking even on tour can be difficult enough as an independent.
How Does Chance The Rapper Make Money?
There’s an article on DJBooth called “Chance The Rapper Breaks Down His Revenue Streams”.
As you may already know, Chance gives away his music instead of selling it, so he certainly makes for an interesting case study.
So, how does he make any money without selling his music? He says, very plainly, that his primary revenue stream is merchandise. Surprised?
As I pointed out earlier, the “bread and butter” revenue streams apply to rappers as much as they do to any other artist in a given genre – album sales, touring, and merchandise.
What does Chance sell? Pretty much everything – hats, t-shirts, patches, lighters, posters, stickers, and more.
Chance says he’s also had some success with his VIP packages, including concert tickets and meet-and-greets.
It helps that Chance has done something special with his branding. He stands for the DIY musician, and a lot of people see no problem investing in their favorite artist who won’t just treat them like a herd of sheep.
How Does Rich The Kid Make Money?
There’s an article on Forbes titled “Rising Star Rich The Kid Explains How To Make Money As A Rapper”. It was published in early 2016.
He notes that one of his major sources of income is appearing on other people’s recordings. The commissions he earns from featuring on an up-and-coming artist’s song can be as much as $10,000 to $15,000.
Rich The Kid is a hard worker, appearing on as many recordings as he possibly can. He built his fame the old-fashioned way – through hard work.
Do Rappers Make Money In Other Ways?
The short answer is “yes”. The longer answer is that artists can leverage dozens of revenue streams if they’re hardworking, smart, and aware of the opportunities available.
Here are several categories to think about:
- Licensing and placements. Getting your music placed in commercials, TV shows, movies, and video games can help it gain a lot of exposure, and therefore sales. You’ll also earn royalties whenever the programs are aired.
- Publishing royalties. Performance Rights Organizations (or PROs) such as ASCAP and SOCAN will collect royalties on your behalf. They collect public performance royalties, mechanical royalties, and sync royalties when your music is used. Don’t forget to sign up with an applicable PRO and register your songs to get the money you are owed.
- Live performance royalties. You can go through a PRO to earn live performance royalties whenever you perform original material. To claim your live performance royalties, you’ll need to report to your PRO and prove to them that you performed your material.
- Digital royalties. PROs collect many types of royalties, but not all. Digital royalties are collected by SoundExchange, whenever your music is played on satellite radio, Pandora, or other webcasts. Creating an account with them is free, though the activation process can be long if you’re signing up from outside the U.S.
- Advertising on YouTube. It’s possible to earn money from the videos you upload to YouTube by allowing them to place ads on your videos. The challenge, of course, is building a big enough following to where you can generate a significant amount of money. Keep in mind that YouTube keeps a larger slice of the pie than you do, even though you’re doing all the work.
- Crowdfunding. I don’t think of crowdfunding as a revenue stream as much as a vote of confidence from your fans. They’ll give you money if they believe in you and your project, but it’s then up to you to deliver on your campaign promise.
- Sponsorships. Again, I don’t think of a sponsorship deal as a revenue stream as much as a vote of confidence from brands and businesses that could benefit from partnering with you. This is all about building a large following that a specific brand would love to reach.
For most rappers, starting their own enterprise, clothing line, fragrance, or other venture may prove out of reach. Not that you can’t if you have the determination to do it, but artists usually branch out into other endeavors after succeeding in one arena, instead of the other way around. And, even then, success is not assured.
If you’re serious about making it as a rapper, you should focus on building your fan base and email list, making great music to sell and promote, touring as far and wide as you can, and selling great merchandise along the way. The formula for success is persistence and hard work. It’s simple, but it isn’t easy.
It is possible to make a lot of money as a rapper. But there aren’t a lot of rappers who make it to the top, and even if they do, they don’t necessarily stay at the top for long. Getting discovered and signed is unlikely. Keeping a larger slice of the pie as an independent may be one of the more viable opportunities available to aspiring rappers today.