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Monday
Sep192011

On the Money: Examining Musicians’ Revenue Streams in the New Digital Landscape

By Kristin Thomson, consultant to Future of Music Coalition and co-director of Artist Revenue Streams project

September 9, 2011

Back in October 2009, following a presentation about New Business Models at our 9th Future of Music Coalition Policy Summit, then-FMC Executive Director Ann Chaitovitz and I sat down and tried to list all the possible revenue streams available to musicians and composers. Most musicians would say they make money selling recorded music, playing live shows, or selling merchandise. Those are certainly three important streams, but there are many more. At least two dozen more, in fact.


Building the List

According to US copyright law, each piece of recorded music embodies two copyrights: the musical composition — the underlying notes and lyrics — and the sound recording of the performance of that musical composition. 

Copyright law treats these two roles very differently. As a result, there are a half-dozen revenue streams available to songwriters and composers that are NOT available to recording artists or performers, and vice versa. This sounds silly and arcane, especially to musicians who write and perform their own work. But there are thousands of musicians in the United States for whom this distinction is very real: professional songwriters who write songs for others to record and perform; orchestra members who play classical repertoire; and session musicians and freelancers who do not compose or have any contract rights to the sales income of the sound recordings on which they have performed, to name a few.

Guided by the contours of copyright law and business practice, Ann and I came up with 29 revenue streams, which we organized into five buckets. 

1. Money earned by the musical composition’s composer/songwriter.  This can include publishing advances, mechanical royalties, public performance royalties, sheet music sales, and licensing the underlying composition for synchs, samples or ringtones. Composers can also work on commission to write pieces for particular ensembles, presenters or orchestras, or can be hired to compose original works for TV, film or other commercial entities.

2. Money earned by the sound recording, or the recording artist.  This can include record label advances or label support for the recording artist, earnings from selling the sound recording (physical or digital sales), income from interactive streaming services, digital performance royalties, AARC royalties, and licensing the master work for synchs, samples or ringtones. 

3. Money earned by live performance or session work. This is the bucket that most musicians recognize; the money they receive when they’re paid to perform their own music in a live setting. But it also includes salaried orchestra members who are playing repertoire, and session musicians’ earnings – those hired guns who are paid to perform in the recording studio or on the road. Some performers are also eligible for payments from various AFM and AFTRA funds.

4. Money earned by an artists’ brand.  This can include merchandise sales, corporate sponsorships, grants, endorsements, direct support from your fans, licensing your persona to video games, creating clothing lines, or honoraria for speaking. In essence, any income earned from musicians leveraging their brand or persona.

5. Money earned from your knowledge of the craft. This includes earnings from teaching and producing.

We posted this itemized list as 29 Streams, a blog entry that has since been re-blogged and referenced hundreds of times.  As useful as this exercise was, it was just the beginning.


Putting 29 Streams to the Test

Since our inception in 2000, Future of Music Coalition has strived to provide artists from all backgrounds and genres with valuable information about the issues that affect their ability to earn a living.

Over the past eleven years, we’ve all witnessed the drastic and profound changes in the music industry. New technologies such as digital recording studios, digital aggregators, online music stores, on-demand streaming services, webcasting stations and satellite radio have greatly reduced the cost barriers to the creation, production, distribution and sale of music. A vast array of new platforms and technologies — from social networks to blogs to Twitter feeds — now help musicians connect with fans.

Many observers have characterized these structural changes to the music business as positive improvements for musicians, particularly when compared with the music industry of yore. While it’s true that musicians’ access to the marketplace has greatly improved, there has been no systematic attempt to understand if and how artists’ ability to generate revenue based on their creative work has changed in this new environment.

There are lots of assumptions made, like “musicians make all their money from touring,” or “nobody makes money selling records any more,” or “YouTube plays don’t amount to anything.”  But we are sorely lacking on empirical evidence to verify or disprove these assumptions.

This is why, in 2010, we launched the Artist Revenue Streams (ARS) project, a multi-method research initiative to assess if and how musicians’ revenue streams are changing in this new music landscape.  


ARS Project

Artist Revenue Streams is a project that is collecting information from a diverse set of US-based musicians, performers and composers about the ways that they are currently generating income from their music or performances, and whether this has changed over the past ten years.

We seek to find out: what percentage of musicians’ income comes from each possible revenue source? What is the ratio among different sources, whether it be royalties, money from gigs, t-shirt sales, synch licensing fees or support from fans? Has the ratio changed over time and, if so, what are the factors that have influenced these changes? Finally, are the revenue stream ratios different for artists working in different genres and at different stages of their careers?

The project employs three methodologies: (1) in-depth interviews with more than 25 different musician types — from jazz performers, to classical players, TV and film composers, Nashville songwriters, rockers and hip hop artists; (2) a review of financial records to illustrate individual artists’ revenue pies in any given year; and (3) a widely distributed online survey that we hope thousands of musicians, performers and composers will take this fall.

Over the past year, we’ve conducted more than 50 in-person interviews, with more to come. We’ve also developed financial case studies that illustrate the annual revenue pie charts and time series revenue streams for a range of creators. And, starting this week, we will launch our third and most critical data-gathering tool: an enormous, wide-ranging online survey

FMC urges US-based musicians and composers of all types — from session players to songwriters, from self-released rockers to major label stars — to participate in the online survey that will be available nationwide from September 6 - October 28, 2011.  Given the crazy configuration of the music industry, this survey isn’t meant for the faint-hearted — it asks questions about specific revenue streams, and why your earnings may have increased or decreased over the past five years. But, the survey has been carefully built to make it as easy as possible for musicians of all types to take it, and all participants are anonymous. The data will be compiled and analyzed, and delivered back to musicians and music fans to help us all better understand the complex nature of being a creator in the 21st century.

Do your part and contribute to the project. Take the survey here, and urge as many musicians and composers as possible to take it as well. http://futureofmusic.org/ars.

Musicians as First Movers

Technology has greatly improved musicians’ access to the marketplace but, to this point, measurements about the effect of these seismic changes on musicians’ ability to make a living have either been anecdotal or speculative. Even the most esteemed books about copyright in the digital age are largely based on theory, and lack qualitative data. FMC believes that this multi-method, cross-genre, musician-focused research is essential to understanding how changes in technology and the music landscape have actually affected US musicians and composers. We hope it will not only educate the public about musicians as creators, but also inform the development of successful models of marketplace creativity in the future.

To learn more about FMC’s Artist Revenue Streams project, including its staffing, advisory committee, funding, hypotheses, methods, population of study or anticipated outcomes, visit http://futureofmusic.org/ars

Reader Comments (2)

This article is on point. Definitely a great roadmap for up and coming musicians who need to know about different revenue streams. A lot of artists aren't in the know and need to know, especially if they're independent. Thanks for this article. I have a lot of info for artists out there who want to know HOW to make money through different revenue streams too.

http://www.startyourmusicgrindnow.com/

September 21 | Unregistered CommenterPF

Wow, well done, Charles. I'm going to have read this several times to even grasp all of it! :)

Thanks,

Ylan Smith

September 22 | Unregistered CommenterYlan Smiths

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