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How do musicians make money?

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Many people assume that musicians and artists make their money by creating a hit track that breaks into the music charts top ten. This may have been true, at least to an extent in the 1990s, but the reality today is very different.

Music sales and streams tend not to be major earners for musicians today, with artists only earning a few pence per download on iTunes and Spotify and Apple Music paying minimal fractions of pennies per stream. Spotify and Apple Music do not disclose how much they pay per stream, and it varies between record labels, but analysts have calculated that it is around $0.00318, which means a band or artist would receive around $3.18 (£2.74) per 1,000 streams. Nobody is getting rich from streaming.

Where top 40 charts are still useful, however, is in getting attention and social proof, which can lead to other earning opportunities. Zach Bellas, founder of SMB Records told Business Insider: “If an artist’s song gets some attention in its beginning, the algorithms will suggest it to others, and as the view and play counts rise, it will gain more authority and social proof in people’s minds, creating a cycle that pushes the song further into the top searches and suggested tracks.”

Music is a saturated market, so the more people that are exposed to a song, the more likely those people will become fans and come and see the band play live or buy merchandise, which is where musicians make a large proportion of their income today. Small gigs for up-and-coming bands may only pay £50 for a performance, but as musicians establish a fanbase they can start to command increasing fees. And if they make it to playing large gigs of thousands of people or for the lucky few even better stadium tours, then there can be a lot of money to be made.

As an example, U2 earned an estimated $54.4 million in 2017 according to Billboard’s annual Money Makers report, and a whopping 95%, or $52 million, came from touring, with just 4% coming from streaming and album sales. If a band has a strong following then touring is their route to financial success, but it can be a wild ride of major ups and downs like playing online casinos for real money.

However, even relatively unknown musicians can still make good money from music today if they are lucky enough to get a song licensed for use in an advert or a in a television show or film – something known as “sync”. These rights deals can be the difference between younger bands being able to continue on their musical journey or changing track back into the rat race. A lot of music is needed for TV and film, and adverts often rely heavily on music to promote their lifestyle brand, from Apple to casinosonlinecanada or Guinness.

Music remains big business, with a Citigroup report estimating that the industry generated an impressive $43 billion last year, but creators only see a fraction of that money – around 12%, with the rest absorbed by record labels, publishers, executives, lawyers, PR, and every other aligned industry.

Photograph by Photo Mix Company

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