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On this blog I’ve been focusing mostly on resources for grant writing, but I’d like to talk a bit more about the different revenue streams available to artists, of which grants are just one. As a business-minded artist you should be looking to maximize all the potential sources of revenue for your act. This will help you plan for what projects you can realistically carry out in your short and long-term visions,  as well as provide funders with information on how you will account for any budgetary shortfalls (this is a critical grant writing step that most artists miss).

I encourage all the artists I work with (and artists in general) to keep a separate set of accounts outlining projected and actual revenue earnings solely from your various music sources. This comes in handy when creating budgets for your grant applications as well as filing taxes for your music business activities.

Recording Revenue

cassettePhysical Sales
CD’s, vinyl, cassettes, compilations, etc., either through a distributor, your own web store, or off-stage. This might be your weakest source of revenue, or your strongest. It really depends on what genre and market you are in, and the strength of your sales strategy. Some artists still manage to make respectable sums from physical sales but that is not the case for the majority of emerging and mid-career artists.

ipodDigital Downloads
Single and album downloads via Amazon, iTunes, CDBaby, Tunecore, etc. While digital sales experienced a slight decline in 2013, they still account for 67% of all digital music sales (IFPI Digital Music Report). This is the most common vehicle for independent artists to distribute their music.

satelliteStreaming & Subscription-based Services
Internet radio platforms such as Pandora, Spotify, iTunes Radio, and others. Streaming and subscription services are the new force to be reckoned with in the digital music world. They grew by a staggering 51.3% in 2013, offsetting declining sales in other digital markets. While the pay-off from digital streaming is relatively small for unknown or emerging artists, the argument for placing your music how and where customers actually want to access it is compelling – and so far, the consumers have spoken on this one.

microphone1Neighboring Rights
If you have performed on a sound recording that has been released to the public, you may be able to collect royalties from Re:Sound, but you must register with one of Re:Sound’s partner organizations to access these funds. For artists, these are ACTRA, MROC and Artisti (Quebec). Record labels can access neighboring rights royalties by registering with AVLA or SOPROQ (Quebec).

copiesMechanical License Fees
A mechanical license refers to the agreement by which recorded material is placed on a physical carrier, like a CD or record. The owner of the copyright for said recorded material has to grant this permission on a song-by-song basis, and is entitled to receive a fee from the manufacturer of the physical medium on which the recording will be distributed. The organization responsible for administering these fees in Canada is the CMRRA, in the US it is the Harry Fox Agency. CMRRA collects mechanicals on physical mediums such as CD’s and records, but also on digital downloads, streaming, webcast, radio/broadcast mechanical licenses and private copying for Canadian Private Copying Collective (CPCC).

movie cameraFilm & TV Licensing
Licensing for Film & TV is one of the more lucrative and beneficial revenue streams available to artists, however – it is also one of the most challenging (and frustrating!) to access. The film & television industry thrives off of maintaining an air of mystery and glamour, and the practice of music licensing is no different. Accessing music supervisors directly is often not an option for artists, as most purposefully try to avoid contact with artists and go through trusted sources such as brokers (professional song “pitchers”) label & publisher reps and pre-cleared libraries (such as Rumblefish or Taxi). Licensing for Film & TV often consists of two distinct sources of revenue – upfront licensing and sync fees (which can vary from as little as $0 for an indie film and go up to the tens of thousands for television commercials and feature films,) and back-end royalties (resulting from performance rights — which we’ll get to in a second!)

Performance Revenue

microphone2Live Shows

Live performances generate revenue for artists by several methods.  The first is by a “guarantee” or share of ticket sales (or an agreed upon combination of both) from the venue or promoter of the show.  The second is via Performing Rights, or rights associated with the public performance of a copyrighted composition or musical work. Royalties are paid by venues to SOCAN (or BMI/ASCAP in the US) who then in turn distribute them to the registered owners of the copyright of the composition, which can be an individual artist if they are self-published, or a publishing company (who then hopefully pays the artists their share!). Anytime a work that you own the copyright to is performed in public (be it live on stage, broadcast on the radio or television, or as background music in a store or restaurant,) copyright law requires you be compensated.

Sales of hard goods such as t-shirts, posters, hoodies, keychains and other various items of merchandise can account for a sizable portion of artist revenue. The key is to determine who your audience is and what their buying habits are. Choosing the right merch items, and coming up with a realistic plan for marketing and sales (including recouping your costs) is vital. Merchandise can be sold online through intermediary vendors or your own web store, but the costs associated with shipping and customs brokering are often prohibitive. If you are a band who tours a lot and widely, having a good selection of merchandise is a key source of cash when you are on the road – it can often be the difference between breaking even and losing money.

 Other Sources of Revenue

If you have a popular Youtube channel or significant web traffic to your website, you might consider joining an ad network such as Youtube’s Partner program to monetize your channel or Google’s Adsense program to place ads on your website. If you blog about products such as instruments, recording gear, books, other music, etc. you can also join Amazon’s affiliate network and make money through referral-based sales.

headphonesSponsorships & Endorsements
Sponsorships and endorsements can take a number of different forms – they can be “in-kind” meaning you get free merchandise in exchange for using and promoting a certain product or they also can be straight-up cash sponsorships in exchange for endorsement. These often come with exclusivity clauses and a number of specific terms, as brands will want to get the maximum value from the agreement as possible.

One often-overlooked source of funding for musicians is the patron of the arts, or angel investors. These are usually very wealthy, influential professionals or heirs to fortunes who invest in the arts for a number of reasons. Getting in tight with this circle is difficult, but one way of getting to perform in proximity to potential investors is to volunteer your act for charity fundraisers or perform at high-end private functions.

cloudCrowd Funding
Another way artists fund their various ventures and purchases is through crowd-funding campaigns. Depending on your popularity and dedication of your fan-base, this can be a useful tool – although more funding campaigns fail than succeed, so it’s always a good idea to research into what makes a successful campaign before launching yours. Don’t assume just because you’re passionate about your music that other people will be too!

Here are some other revenue-related blogs you might want to check out:

5 ways to make more sync money from your music

Future of Music outlines 42 Revenue Streams

The New Artist Model Crowd Funding for Musicians

Music Think Tank How to Get Sponsorships for Your Band