Music Industry Revenue: How Much Do Artists Earn

A picture of someone holding up a bundle of notes: Music Industry Revenue
Image by Karolina Grabowska from Pexels

The question of how much music artists earn has been a controversial one over the years. A lot of people are curious about where the music industry revenue comes from. I would say that curiosity is justified. Most music artists we know today own big cars, fancy mansions, designer wears, with millions, even billions to their name. 

How much do music artists earn? It is hard to gauge how much music artists earn on average when it comes to music industry revenue. A lot of factors are determinants of the income status of music artists. One of the biggest challenges still remains making money as an artist.

In this article, we will explore the following: 

  • Do signed artists earn more than independent artists?
  • How much do artists earn?
  • How does the music industry get revenue? 

Do signed artists earn more than independent artists?

An artist is either signed to a label or a DIY artist. It is easier to gauge the income of artists signed to a label than that of DIY artists. The stark truth is that artists don’t earn equally. Of course, we can gauge the average, but the figures are not the same. So the question would be how much do musicians signed to labels make versus independent musicians. Recent data has revealed that unsigned artists made up 6.3% of all Spotify streams in 2020. 

Many artists think they will make more money when signed to a label; this is not necessarily the case. They have to pay back everything the label spends on their behalf. This being against the common belief that once a label signs an artist, they then start rolling in money. Musicians have to deal with copyright issues, where music revenue is split further among songwriters, publishing companies, and music labels.

What is the Average Music Artist Revenue?

There has been a significant misconception about how musicians earn their money. Some believe it’s all about creating a hit song that makes the top 40 music chart record. It’s actually not as simple as that. An artist’s financial liberation most times comes from revenue streams outside of streaming or downloads.

Erin M. Jacobson, a music industry lawyer based in Beverly Hills, said, “In the last several years, streaming revenue has increased, but it is still not enough on its own to financially support a career with longevity.” Technology advancement has brought ease when it comes to recording, producing, and distributing music outside of a record label. As streaming grows in popularity, the DIY segment and the amount of money DIY artists can earn have started to rise. These days, anyone can record and distribute their music to different platforms with innumerable listeners. Some DIY artists have a YouTube channel where they release their music and monetize.

According to recent statistics from Spotify, over 7,500 artists make about $100,000 annually with Spotify streams. This number has grown by 79 percent over the past four years. This implies that the number of artists making between $50,000 and $100,000 per year is even higher.

Music Industry Revenue Sources

Music artists have more control over their careers than in past times. They can now record, produce, distribute, stream, sell and promote their music through many affordable means and platforms. However, one of the biggest challenges remains making money as a musician. Even though we can’t specify how much music artists earn, we can determine how they get their money. The majority of an artist’s revenue comes from different sources. 

Below are some of the sources:

Live Shows

Live performance is conventionally one of the best ways musicians make money. It is also one of the best ways artists sell merchandise.  Live performance takes different forms. It could be hosted by an independent artist, organization, individual, or record label. When a music artist organizes a live show, he gets his money from sold tickets and from businesses and brands willing to sponsor the event for promotion and recognition. Whoever organized a music show, the performing artist gets a large share of the revenue.

Artists perform live shows through different avenues. 

These avenues include: 

  • Traditional music venues,
  • Bars and Restaurants, 
  • Clubs and Coffeehouses, 
  • House concerts and Music festivals
  • Colleges and Universities, 
  • Private events like weddings, corporate events,

other private parties. 

Public Performance Royalties

Artists and songwriters do sign up with a Performing Rights Organization (PRO). What a PRO does is collect royalties on behalf of songwriters and publishers. They do that to ensure that they receive payment from any person or group that uses their music. One of the royalties that PROs collect on behalf of artists is public performance royalties. 

PRO makes sure that it is appropriately paid for when a song is played on TV, the radio, restaurants, sports arenas, in music venues, shopping malls, or any other public place. The Performing Rights Organization collects those payments and distributes the money to the proper rights holders. These royalties contribute significantly to music industry revenue.

Touring

Touring is another source of revenue for music artists. They move from one city to the other and perform as required.  Their tours are most times sponsored by record labels, brands, or businesses. People also pay to watch and listen to them; they get paid in every city they perform. 

Sales of digital downloads

Digital downloads are another source of revenue for many independent artists that sell music online. Bandzoogle users sold over $500,000 worth of digital albums direct-to-fan in 2020 through their websites. They also hit over 20,000 sales of singles.

Sales of CDs

As archaic as that might sound, it’s still a source of income for music artists. Do people still buy music CDs? While the number of purchases is less than it used to be, artists and record labels still sell millions of CDs every year. With the advent of live shows, selling CDs is a great, low-cost way to make extra money at gigs. Especially if musicians sign them at the merch table, it will be a nice souvenir from the show. 

Side Businesses

One thing most people don’t know is that most music artists have side hustles. Not all those fast cars and big mansions come from record labels and performances.  Oh! You don’t have to be disappointed. If you’re looking to make music, you need to admit that making music is your passion. You shouldn’t go into music because it’s a guarantee for getting rich or you think to make a living out of it. 

If you are pursuing music on a full-time basis, you must note that the economic reality of making only music for a living isn’t always rosy. You have to accept that and then move forward anyway. Many famous artists of today work part-time jobs and side hustle. There are also numerous ways to monetize your music aside from gigs and merchandise. 

Streaming 

This is how the majority of artists today make their money. Even though streaming music payouts are measured in fractions of pennies per stream, they add up to become a significant source of revenue over time. However, do not rely on streaming income if you are an unsigned, independent artist. 

People envision streaming as the future of music that can provide artists with a good source of income. But it isn’t nearly as lucrative for artists as other sources of revenue. The music industry has recovered from the era of piracy, thanks to the adoption of streaming services like Apple Music, Tidal, Spotify, etc.

The number of people using streaming as their primary method of listening to music has increased. This shift started around the turn of the last decade. Paying premium subscribers went up, and royalty revenues also started to grow. Hence, contributing to the music industry revenue. The industry entered its sixth year of growth as of 2020. 

Social Video Monetization

Artists earn money when people use their music in video content on social media platforms. These social media platforms include Facebook, TikTok, Instagram, and Triller. The amount they get varies depending on the platform. However, they need to opt into social video monetization with their digital distributor before they can start earning that revenue.

YouTube channel

When a piece of music is used in a YouTube video running ads, YouTube pays part of the ad money to the song’s rights holder. This includes videos on their own YouTube channel and other videos using their music but not on their channel. Digital distributors sometimes collect money from YouTube for the artists. 

Sponsorships

Artists with an extensive and established fanbase get sponsorship deals. Different local businesses, music companies, international organizations, and influential brands sponsor artists in a bid to reach their fans. The artists offer those brands and businesses visibility at their live shows, social media, YouTube channel, and more. Sponsorships are most times paid in cash. It is also possible that the payment would be in the form of free services, products, or gear. I know most persons sometimes get curious about how much music artists earn because of the designers they wear and the accessories they use. The reality is that most of the designers you see on artists are given to them for free by those brands to reach their fans.

Other sources include: Licensing Their Music for Like Television, Movies, Or Video Games, Selling Merchandise, Partnerships,

Conclusion

There is a famous saying that not all that glitters are gold. You shouldn’t go into the music industry because you see artists riding big cars, living in big houses, and hosting expensive parties. If all that drives you as an artist is money, you might be in for a great disappointment. Music is all about passion. You should enter the music industry because you love making music. Work diligently and focus on creating a mark and leaving a legacy. 

You will eventually realize that value attracts value. Remember that Rome wasn’t built in a day. When your music is good, people will pay you. It might not be easy at first, but you will have more than you needed with time. So, make a name for yourself, create an audience. Because most times, people pay for the name rather than the music. 

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Thomas Brownlees

Thomas Brownlees

Ever since I can remember, music has always been my passion.

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