Here at FMC, we tend to think a lot about changing business models for musicians. Certainly, many artists are still making the majority of their money from selling CDs, merch or playing gigs. Yet we’ve come to realize that musicians’ access to potential revenue — especially in today’s digital landscape — expands far beyond that.
Recently, FMC started ponder all this in a more organized fashion: just how many different ways are there for musicians to earn money? We’ve come up with 29 so far, which we list below.
In some cases, the internet makes it easier for a musician to take advantage of new opportunities. Take, for example, artists reaching out directly to fans to finance new recordings. While the patronage concept is centuries old, the internet and new services like kickstarter.com make it much easier for artists to approach fans, advertise incentives, build a supporter base and distribute the final product.
In other instances, new technologies and new policies have resulted in brand new revenue streams. Thanks to the Digital Performance Rights in Sound Recordings Act of 1995 (DPRSRA), performers and sound recording copyright owners receive a digital performance royalty when their songs are played on webcast stations or satellite radio. That revenue stream didn’t even exist thirteen years ago (and it still doesn’t exist on terrestrial radio!). Then there are technological developments like ringtones and song placement in video games. Thanks to innovation in consumer technology, music is being used in dozens of new ways, many of them monetizeable. (Well, that’s the theory, anyway.)
As you read the list, remember that a song has two copyrights: (1) the musical composition, which includes the notes and lyrics, and (2) the sound recording, which is the performance of a musical composition. So if you hear Patsy Cline singing “Crazy” which was written by Willie Nelson, Willie created the musical composition when he wrote down the notes and lyrics. Patsy created the sound recording when she performed Willie’s song, and it was captured on tape. As you browse the list, it’s important to keep these distinctions in mind since there are many times when different parts of the creative team are paid differently. Don’t worry if it feels like too much to keep in your head at once — we get confused, too! Just take a deep breath and dive back in.
So, without further ado, here’s our list. Please let us know in the comments if you think we’re missing something.
A. If you are a composer or songwriter (again, think Willie Nelson from our example above), here are possible revenue streams from your musical compositions:
- Retail sales: Mechanical royalties from physical sales of recordings of your songs at stores, concerts or via mailorder
- Digital sales: Mechanical royalties from digital sales via online services (CD Baby, iTunes, Amazon, eMusic, Rhapsody, MySpace Music)
- Sheet music sales
- PRO royalties: Royalties for the public performance of your work (airplay on radio, TV, movies, jukeboxes, live performance and foreign royalties ? and home recording and foreign levy payments) distributed to you by ASCAP/BMI/SESAC
- Advances from publishing companies during a publishing deal
- Payments from publishers for litigation settlements
- Commissions for works
B. If you are a performer (think Patsy Cline), possible revenue from sound recordings:
- Digital performance royalties: Royalties for the digital performance of your recordings — airplay on satellite radio, webcast stations, cable TV stations — distributed to you by SoundExchange.
- Advances from record labels that are not just reimbursement of recording or touring expenses
- Label payments for tour support or recording expenses
- Payments from labels for litigation settlements
- AARC royalties: collected for digital recording of your songs, foreign private copying levies, and foreign record rental royalties, distributed to US artists by AARC
- AFM payments: Payments from the Film Musicians Secondary Markets Fund to performers on recordings used in TV and other secondary uses
- AFM payments: Sound Recording Special Payments Fund to performers for the sales of recorded music
- AFM/AFTRA payments: Payments from the AFM/AFTRA Intellectual Property Rights Distribution Fund (distributes recording and performance royalties to the non-featured artists)
C. Possible revenue from licensing your musical composition or your sound recording:
- Ringtone sales: Mechanical revenue from ringtone sales
- Synch licenses: Synchronization royalties based on master rights licensing your song to TV/movies/video games/commercials
- Sampling licenses: Licensing fees from other musicians sampling your songs
D. If you’re a performer, possible revenue from live performances:
- Touring and shows: compensation for playing live shows or performances, including busking
E. Revenue from a performer’s brand:
- Merchandise sales: t-shirts, posters, etc
- Sponsorship: or tour or of a band/artist
- Direct financial support from fans/patrons
- Ad revenue or other miscellaneous income from your website properties (click-thrus, commissions on Amazon sales, etc.)
- Acting in television, movies, commercials
- Product endorsements
- Other licensing of your persona (to video games, comic books, etc.)
F. Revenue from an artist’s knowledge of the craft:
- Work for hire/hired as a studio or live musician or composer
- Work as a music teacher
- AFM/AFTRA session payments: Session payments for recording sessions, TV appearances, and performances flowing from synch licenses
- Producer: income from producing or music direction
G. Other ways a musicians’ work can be funded:
- Government grants
- Nonprofit/foundation grants
OK, granted some of these items — like licensing your persona to a video game — are only relevant to the tiny percentage of music superstars, but we wanted to be as thorough as possible when we put together this list.
So, dear readers, what have we missed? What other sources of musician-related income are out there? What ways are you making money with your sound recordings or your musical compositions, or your “brand”? Use the comments section or email kristin [at] futureofmusic [dot] org to make our list even better.
Postscript: Visit our Artist Revenue Streams project to participate in our research about how today’s musiciand and composers are earning a living.