Things are tough out there.
There are still many ways to make money as a musician, but if you aren’t proactive and innovative in your approach, you could easily find yourself without sufficient income to sustain your art.
To avoid this situation, you should educate yourself on the various income streams available – not just those that are obvious, like live performance and streaming royalties, but also those that are less obvious, like blogging or affiliate marketing.
Why? As you learn about some of the headlines that have been popping up – not just on music sites, but also on publications like Forbes – you’ll see why. Let’s have a look.
If after reading this you want to learn about some of the best ways to monetize your music career, you should definitely check out The IMA Music Business Academy.
BandPage Got Swallowed Up By YouTube
If you were an active user of BandPage, then you already know – they were acquired by YouTube, and since March 2017, they’ve been revamping their platform.
If you’ve never heard of BandPage, it was effectively a tool that allowed you to share your songs, photos, videos, and touring schedule on Facebook. It was the go-to Facebook app for musicians, but even more than that, it helped you get your information out to many sites. You could get your tour dates on lyric sites, for instance.
Now, before you get excited about Google owning BandPage, let me remind you that YouTube takes a 45% cut of advertising on your videos. So, if you were making $5,000 gross, you would be making $2,250 net. You can see why Jack Conte started Patreon. YouTube has also been in the news recently, and apparently, they’ve been exploiting legal loopholes to pay artists poorly.
Ultimately, this could still go either way. BandPage could improve as result of collaborating with YouTube. But it also might not reclaim its former glory.
Does this change represent a major loss for musicians? That depends on who you ask. What I will say is this – both social media platforms and tools will continue to change.
It’s fun to be on the cutting-edge of social media, because being first to a platform can have its advantages. But as we’re seeing from this example, that rug can be pulled out from under you, just like that.
So, if your traffic and audience-building strategy isn’t diversified, you could find it difficult to recover from a loss like this (remember Vine?).
Becoming too reliant on any tool can be a problem.
Microsoft Groove Music Isn’t Paying $4 Per Stream Anymore
That is, of course, if they ever were. I’ve done quite a bit of experimenting myself, and my reports do show a higher payout from Groove compared to other streaming platforms. But never have I seen numbers as high as $4 per stream. If you can get your fans to stream you on Groove versus other sites, though, that is the best bang for your buck.
If you hadn’t noticed, there was a bit of a stir on Digital Music News about this last summer.
If you’ve never heard of Groove Music, it’s Microsoft’s music streaming platform. It used to be called Xbox Music (among other things). In the wake of Spotify, Google Play, Apple Music, TIDAL, and others, it got overshadowed. Unsurprising.
But reportedly, some labels were seeing an average of $4.67 per stream from Groove in their reports. It’s possible that this was Microsoft’s ploy to attract more artists to their streaming platform, but there’s surprisingly little information out there about this. It may have also been a mistake or a glitch.
There was a follow-up article on the topic that also came out last summer, indicating that you could earn more from streams on Xbox gaming versus streams on the Android or desktop app, though earnings from the apps were still higher than most other streaming sites (I can confirm that much).
Bottom line, it doesn’t matter whether anyone ever got an average of $5 per stream. What matters is that it’s a false economy. I can’t see why Microsoft, or for that matter any streaming platform, would want to sustain something like this over the long haul.
Should artists earn more per stream? There’s no question in my mind. But we can’t count on exploits, glitches, or short-term campaigns to sustain us. Streaming needs to improve as a whole. We need to see all sites adopting a transparent (and potentially uniform) compensation scheme.
Standardization is a bit of a scary word in context of what I’m talking about here, but would it be so bad, especially if it meant that we all got paid 20 to 30 cents per stream or something like that? Maybe I’m dreaming, but that’s what I would like to see happen.
One stream may not equal a digital sale, but you can’t convince me it’s worth less than 1% of song that can sell for 99 cents.
Radio Is Looking To Pay Songwriters Lower Rates
According to an article published on Forbes in November 2016, the Radio Music Licensing Committee (RMLC) sued Global Music Rights (GMR) to reduce the amount they’re paying to music composition creators and rights owners.
RMLC claimed that GRM had created an artificial monopoly over works in their catalog.
Sure, but even if RMLC is right, they aren’t the only ones looking to reduce payments to songwriters. Even online companies, visual productions, and smaller bars or restaurants are either lowballing licensing fees or just trying to get away with paying less. Some probably haven’t even purchased their blanket license and are playing music in their venues illegally.
I’m not sure how much money we’re talking about here, and there are a lot of intricacies involved in the amount songwriters are paid, which is a combination of mechanical royalties, performance royalties, and synch fees.
But I also happen to have met Bob Halligan, Jr., who wrote “Some Heads Are Gonna Roll” by Judas Priest. He said the royalty checks were “nice, but not enough to pay the bills.” Bob wasn’t complaining or anything, but this says a lot.
To be fair, we’re not talking about the world’s biggest hit. But it was a hit nonetheless.
Are there benefits to being a songwriter? There’s no question. But if someone who wrote a Judas Priest song isn’t making the big bucks in the music industry, who exactly is robbing radio stations of all this money?
I don’t know much about GMR (except that they’re a performance rights organization founded by Irving Azoff), but if they’re working to get songwriters paid more, that’s a good thing. Naturally, commercial radio stations wouldn’t agree with this though.
My point here is that I doubt we’ve heard the end of this. We’re probably going to see more lawsuits and attempts to undercut artists in the future. This is happening under our noses, and if we don’t do anything about it, the suits are going to have the final say.
Music Streaming Is Now Generating More Revenue Than Digital Downloads
The latest data is showing that digital sales in the U.S. peaked in 2012 at just over $3 billion. Last year, in 2016, streaming generated $3.93 billion.
This is great news, right? Well, I don’t see artists celebrating. If anything, they’re more cynical and skeptical than they ever were. Where is all this money going? Not to the artists, apparently.
Additionally, in the context of business, it’s important to understand that revenue and profit are two different things. In terms of revenue, streaming may be generating more than digital sales ever did. But what about profit? What are tech companies making after expenses? Are they making money, losing money, breaking even? It seems to me some of the most important data is missing.
If profit isn’t the issue, then there’s only one way of looking at this: Artists are getting ripped off. No, I’m serious.
Remember iTunes? When people buy my music on iTunes, I still see at least 48 cents per sale in my reporting, and sometimes over a dollar if it’s an international sale (I have some friends in Japan). So, iTunes may be taking 40 to 50% off the top, but at least they’re taking a cut of a real dollar value.
$0.0015 isn’t a real monetary value as far as I’m concerned (thanks, Spotify). In Canada, where I live, they aren’t putting new pennies into circulation anymore. This tells me that anything less than a penny could just as easily be rounded down.
How much are streaming sites making per stream? Why are these numbers not readily available? Oh, that’s right, they don’t charge per stream. They make money on ads and subscriptions. But I’m sure a smart person could figure out how to divide the total revenue by the total number of streams, because every stream is already being tracked.
I understand the math. I know that one stream does not equal a sale. I know that it doesn’t equal a single play on the radio either (where you have the potential to be heard by hundreds or thousands of people). But that doesn’t mean I like where things are going or how artists are being compensated.
There would be no streaming without artists, and yet we’re treated like an afterthought. And again, if tech companies have their way, this situation won’t improve.
We Live In Tumultuous Times
This is the number one reason to diversify.
Emerging technologies like the blockchain promises to be a game-changer. Streaming is quickly becoming the go-to method for listening to music, and audio consumption is on the rise. New tools and apps aim to disrupt conventional thinking and traditional marketing tactics.
Anybody that says they know exactly what’s going to happen next isn’t telling the whole truth. Will things improve? It’s possible. Will things get worse? This is also possible.
So, if you don’t want to be subject to the whims of the constantly changing tides, you need revenue streams you control. It’s fine to distribute your music to popular outlets. But since you don’t control any of these sites or platforms, it doesn’t make sense to rely on them for your total income.
You should come up with creative ideas that help you bring in income from different sources. I’m not anti-establishment like some music entrepreneurs, because an entrepreneur is ultimately looking to create an establishment all their own. So, to me that’s a contradiction of terms.
I believe a smart entrepreneur leverages the existing establishment while building their own. Let me put it this way – if you’re planning to sell a book, wouldn’t you take advantage of Amazon’s distribution? It would be silly not to, because it’s going to help you get your message out to a bigger audience.
Meanwhile, you could also create a deluxe package on your website that people can buy for more, and your die-hard fans would. You could apply the same strategy to your music.
We can’t base the entire future of the music industry on a few news items. But I don’t think major labels have any interest in releasing the chokehold they have on music, despite what it could mean for artists and businesses alike – more profit. That’s right, if they just did what they did best instead of exerting control over everything, we’d all be making more money.
You could curse the darkness and get back on the endless treadmill of getting Spotify followers, playing shows, and putting out more digital releases. I’m not saying these are bad things to do. But if you aren’t innovating and thinking outside the box, then you’re just doing what you’ve always done expecting different results. It’s called insanity.
What about creating special editions for your releases? What about value-added products and services? And what about eBooks, courses, blogging, affiliate marketing, fan clubs, and so on?
Look, I’m not telling you these are great options for everybody. What I’m saying is that you can make way more money when you control the terms. When you distribute your music to major services and outlets, they control the terms, and there isn’t much you can do about that.
The reality is that you probably need to create more income streams. There are many ways to do this, but if you stubbornly insist on doing things a certain way, you’re not open to them to begin with.