For nearly 30 years, technology and greed made possible the model which fueled the explosive growth of the independent music industry. Prior to around 1985, making records was an expensive and complicated process. You needed to rent expensive studio time to record, mix and master your recordings. Records were manufactured in factories called pressing plants and required expensive mothers and stampers to create the finished recordings. 12” jackets, sleeves, and liner notes were expensive to design and print.
But in the mid ‘80’s the CD came out. They sounded better and lasted longer than vinyl albums, so the record companies decided to charge a premium for the format, but they cost less than half as much to manufacture. Meanwhile quality home recording studios were becoming affordable and desktop publishing put quality graphics design within reach of anyone who had the eye to create it.
And so the independent record labels and artists sprung into being. Radio and retail were still controlled by the Big 6 record distributors who hawked all the major labels, but the genie was out of the bottle and soon as many as 30% of record sales emanated from independents. Then the digital distribution sites like MP3.com and Napster were circumventing old school distribution entirely. It was an perfect storm of opportunity for the unsigned musician and they rushed in to take advantage of the windfall. Hundreds of musicians who had never seriously considered an original music career jumped at the chance to make their creative dreams come true. A model emerged that held for nearly 30 years where the average Jimi or Janis could write a dozen good songs (still the most important part of the equation), record them inexpensively, design and press their own CDs and derive about half of their annual income from the sale of these CDs at shows, over the internet, and (if they were lucky) maybe even thru conventional record stores.
But progress giveth and progress taketh away. The same digital revolution that gave us home recording and cheap CD production has now supplanted the medium with real time music streaming. Services like Spotify, Amazon Prime, Apple Music, and Pandora now pluck thousands of songs out of the ether on demand. The record stores are mostly gone, terrestrial radio is on its last legs, and even Satellite radio seems ill equipped to do battle with the consumers ability to create their own playlists. CD player sales have diminished sharply and so has the demand for those shiny silver disks. The drop in sales revenue has been devastating for the artists who came to depend on it just a few years ago. Some have left the business, others are struggling. It’s clear that, if we hope to remain a robust community, we need to find a way to replace that lost income. Here are a few suggestions
With cheap, seemingly limitless bandwidth available, video is now the preferred medium for engaging your audience. And arguably the best delivery platform for your videos is YouTube.
1. YouTube’s internal advertising platform is called AdSense. In 2016, AdSense paid out 13.7 Billion (with a B) dollars to content creators. That’s a lot of cheese. Unfortunately, it is harder and harder to break into the most lucrative YouTube ranks. YouTube adds 300 hours of video to the service every minute. A decade ago, the median number of views per video was 10,262, last year it was 89. Your video is a needle in a hayfield full of needles, so it’s not enough to just put the videos online, but you need some way to garner attention for them. It is daunting, but not impossible. A 26 year old British gamer named DanTDM earned 16.5 Million dollars last year on YouTube. But it takes continued engagement. The top 3.5% of YouTube channels (averaging a million views or more per month) still only generate $12,000-$16,000 a year in revenue. That’s less than your average greeter at Walmart. (But it’s more than many of my friends used to make per year in CD sales. We are talking about augmenting your income here, not replacing your performing career entirely)
It used to be a lot easier to make money with AdSense and many creators who used to have 5 figure incomes based on channels where they just did stupid or shocking stuff have found themselves frozen out of a platform continually in search of higher quality content. It’s going to be extremely difficult to replace all your lost merch income strictly with YouTube ads. But I think a YouTube channel should definitely be a part of your strategy. Ads aren’t the only way to make money with YouTube
2. Brand deals, Sponsorships, and product placement can also generate income for your YouTube channel. Advertisers and other entities who strongly resonate with your message may want a firmer relationship with you than pseudorandom occasional ad placements. These agreements are negotiated directly and there is no standard contract or pay scale, but they can be very lucrative. Read more here. Here’s another article on Sponsorships. I think these have more income potential than AdSense, but if people are watching your content, there is no reason not to get the AdSense dollars too. And more tips on Sponsored content.
3. Affiliate marketing and hawking your own merchandise can also generate revenue for you. Online retailers like Amazon have affiliate programs where you earn a commission on buyers who you refer. This is a tangible benefit to the seller and it costs your buyer nothing extra. Amazon, eBay, and Rakuten have 3 of the best known affiliate programs, but there are many others. There are specialized musical gear affiliates programs thru Zzounds, Musicians Friend, Sam Ash, Guitar Center, and other companies that you can use to spotlight the products that you love and actually use. Commissions can range as high as 10%.
Your fans may no longer buy CDs, but they still wear clothing and jewelry. Sell them something they will use. You can sell custom printed or embroidered t-shirts, sweatshirts, hats, bandannas, and other clothing and jewelry items that make them a walking billboard for your music. You can sell your original paintings, woodcarvings, salves, potions, and other handmade items. You may be able to crossmarket and sell on commission the items made by your other artistic friends. Fullfillment can be done thru eBay, Etsy, or your own website.
4. Live Music Streaming is an ideal way to reach out to audiences old and new. The low opportunity cost of streaming makes it ideal for even the most cash strapped musicians. The 4 biggest enemies of the traveling musician are gas, food, lodging, and time. They are the negatives in every calculation of whether or not to take a gig. Some live-streaming sites charge admission. Many have built in tipping capabilities. Even the totally free streaming platforms like Facebook, YouTube, and Instagram can direct listeners to your other revenue generators. If you have a smartphone and an internet connection, the cost of live streaming is almost zero. All it takes is time. You can amortize that time by streaming your live gigs, rehearsal sessions or other musical chores. You can reach people who might never be willing or able to attend your gigs and turn them into fans. It’s a great way to publicize your website, YouTube channel, merchandise, and crowdfunding campaigns. Learn more about live streaming here. Now is the time. Just like with YouTube, the early bird catches the worm. If you wait until everyone is live streaming, that marketplace is eventually going to be just as crowded as YouTube. Stake out your claim now in the electronic frontier.
5. Kickstarter, Indiegogo, and GoFundMe are popular crowdfunding sites. They help you leverage your fan base and others to finance projects you might not otherwise have the resources to even begin. Beyond giving your fans a way to participate in your next project, they also hold great potential for building public awareness for your work and your brand. Mounting a crowdfunding campaign can be tricky, here are some tips. Here are more. And more.
6. Premium Content appeals to your SuperFans. There are various ways to accomplish this. People like access to exclusive content. This can be anything from rough song demos and informal videos, Private members-only live streams on Periscope, Access to hidden videos on YouTube. Personal photos. Even members only email newsletters or exclusive merchandise. Don’t lock away the Crown Jewels, but cater to the completist with a trove of materials that let them feel like the superfans that they are.
7. Patronage may be the ultimate way to recoup that lost income. America’s income inequality continues to grow. The rich get richer and the poor get poorer. Some people have a LOT more disposable income than others. The simplest way to accomplish this may be with an honest discussion of the financial impediments standing in the way of the furtherance of your musical career and a simple PayPal.me link on your website or monthly newsletter. This could happen once in a blue moon or could be a perpetual link on your website. I have one on BigOrangeTarp.org that I never promote, but every once in a while, somebody sends me a little cash. It is never expected, but always appreciated.
Patreon is the industry leader in openended patronage sites. You can structure a Patreon account in many different ways. Your patrons might send you a certain amount each month, or each time you release a song or an album or a painting. If your fans are willing to commit to an ongoing relationship, it’s much less embarrassing than going back to the well time after time after time with discreet crowdfunding campaigns. If they can afford it, and they want to help, why not let them. Here are some Patreon tips. More recently a few other players have entered that space. You may want to check out drip, Flattr, memberful, and Podia
Bonus: On Demand audio streaming thru subscription services like Spotify, Apple Music, and Pandora is one of the primary ways mainstream artists are monetizing their music. In a perfect world, the lost CD revenues would have just magically reappeared in this column as the CD sales dwindled. But the music industry’s long tradition of fleecing artists was hard at work when these services came into being. There are executives with 6 figure incomes running these services who have never written a song in their lives, while prolific songwriters reap minuscule rewards. Like YouTube, a few creators make 5 figure incomes, the vast majority get paid very little. a hit on Spotify may pay the writer $3-5000, but few writers can support themselves with streaming income.
But there may be hope on the horizon. There is a bill before Congress right now that aims to bring streaming revenues up to a reasonable rate and end the excessive exploitation of the industry. It is called the Music Modernization Act. This is very good news. I don’t know how soon it will take effect or exactly how dramatic a difference it will make, but consensus is that this should help a lot. All it needs now is the Presidents signature. He doesn’t like to read, but it is assumed the bill will be signed into law without delay.
In the meantime, if your music is on Spotify, you will generate a lot more income if it is picked up by a popular playlist. Here is their wisdom on that. And here is some 3rd party advice. And one more… and here’s this advice on what to do after you score a Playlist.
I hope this information is useful to you.
I will also be showing some of the new streaming hardware solutions