The 29 Streams

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.
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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.
Comments
14 comments postedSetting up a non-profit and
Submitted by Anonymous (not verified) on October 14, 2009 - 4:02pm.Setting up a non-profit and raising charitable donations.
Aren?t #s 4 & 5 just
Submitted by Anonymous (not verified) on October 14, 2009 - 4:09pm.Aren’t #s 4 & 5 just advanced or delayed forms of other revenue streams? (Not really separate opportunities.)
Thank you for this post,
Submitted by Kimberly Cain (not verified) on October 14, 2009 - 5:52pm.Thank you for this post, Kristin. Any way we, as artists, can better understand revenue streams is helpful! It is certainly challenging. I have a campaign on Kickstarter right now. I’ve been a songwriter & performing artist for years & have written my first novel, which will come with a CD that is a compilation of songs from other artists, as well as myself (adds to the “feel” of the book for readers). I decided to see what I could learn from using Kickstarter - it has been a challenging undertaking. I think it will eventually be a great way for artists to fund their projects, but the initial challenge is in understanding how to get the word out & get people to understand what it is (it’s still so new) & then to take action to “back” the project.
It seems, more & more, that we have to connect ourselves & our music (or other artform) to other things in order to make it visible. When big labels launch projects, a lot of money goes into them. Indie artists have to find ways to funnel revenue their way just to let others know it’s even available. It means we sometimes have to tie our music to things outside the traditional music loop, so to speak.
I hope this isn’t too off-topic. I just wanted to express the need I’ve found to try to create revenue streams in lots of other ways. Check out my project on Kickstarter! http://www.kickstarter.com/projects/KimberlyCain/heaven-the-novel-and-the-cd-that-goes-with-it
Great list, thanks for
Submitted by Brandon (not verified) on October 14, 2009 - 11:34pm.Great list, thanks for sharing. With a “brand” point of view, I’m currently working towards leveraging the efforts of my two bands (plus another songwriter and my old band) by bringing everything together under the umbrella of a single label that provides music in (a) mp3 format and (b) short-run, creative/collectible physical formats. The idea is to provide cool, collectible “artifacts” for people who value such things and instant gratification for those who don’t. Regarding the mp3s, the idea is to evolve over time to a subscription model where fans can purchase a single subscription through the label site and gain access to the *entire* digital catalog in one shot, for a given period of time. The ultimate goal is to cultivate relationships at the label brand level and sell from the “top down,” so to speak. Easier said than done! Lots of work to get there, but it’s a goal. Anyway, it’s still mp3/album sales, but it’s a slightly different (I think) brand-focused way of going about it. Thoughts?? -Brandon @calmstock
Hey everyone. Thanks for the
Submitted by Kristin on October 16, 2009 - 10:28am.Hey everyone. Thanks for the comments. Kimberly, your work sounds amazing, and best of luck with the Kickstarter project. And Brandon, I’ve heard of this model before, and it’s something that Ariel Hyatt often talks about — how to cultivate people from being casual fans into regular supporters. Your idea sounds really interesting, but, I agree, very labor-intensive.
To get back to the list, here are some other streams that folks have passed to me via email:
- Digital print/sheet music sales, folios
- Karaoke Licensing
- Lyric reprints in books or articles (i.e., those that are not news articles)
- direct licensing fees when music is played in a retail outlet
Given all the feedback we’ve gotten and ideas that are percolating, expect another blog post in a couple of weeks from us, maybe with some short interviews with some people who are actually experimenting with these models and streams. Thanks! — Kristin Thomson kristin [at] futureofmusic [dot] org
Hello Kristin and all, I
Submitted by Jean-Robert Bisaillon (not verified) on October 18, 2009 - 8:35am.Hello Kristin and all, I can’t see in your list of revenue streams - Recording artist royalties from direct digital sales collected by the performing artist trough Paypal or Nimbit. These are not Mechanical royalties from digital sales (the writer is not directly involved), they are not advances from a label (there could be no label) and are not Royalties for the digital performance (not a performance but an actual digital sale). Am I right?
Best regards! JR from iconoclaste music in Montreal.
Under its exclusive
Submitted by Anonymous on December 17, 2009 - 3:32pm.Under its exclusive collective bargaining agreement with over 600 labels, AFTRA also provides payments to singers based on physical and digital music sales, for music videos, and for recordings used in film, television, and other media. In addition, AFTRA performers receive health and retirement contributions based on their earnings. For more information, visit http://www.aftra.com/F69D2BA1BD9B467388C4C80F5E5D5F2A.htm.
Technical question, aren't
Submitted by Drew Stephenson (not verified) on February 6, 2011 - 6:51am.Technical question, aren't the litigation payment streams (A6 & B4) technically just a delayed form of payment for one of the other streams? Assuming that these payments from litigation around unlicensed use. I think you're actually double counting if so.
Very interesting article though, and a useful reminder (and example) of the different copyright types.
thanks
I'd also like to add bundling
Submitted by Ron Amundson (not verified) on February 14, 2011 - 12:28am.I'd also like to add bundling of the above. An artist could bundle the recording, the sheet music, karaoke for vocals, but also for instruments, and add a teaching video.
Far too many look at teaching in isolation and that its not scaleable. However it doesn't have to be, a bundling effort with video most certainly could scale, and provide non-direct revenue.
Another potential stream:
Submitted by Kelly (not verified) on February 22, 2011 - 7:13pm.Another potential stream: licensing the use of a song title for the title of another work, such as a movie.
Great breakdown of revenue
Submitted by Jarv (not verified) on March 16, 2011 - 4:59pm.Great breakdown of revenue streams
advances are loans not
Submitted by melodyvonrock (not verified) on May 9, 2011 - 11:12pm.advances are loans not revenue? I did a value chain analysis on the music sector some years ago, it can be read here http://researchbank.rmit.edu.au/eserv/rmit:4932/Daniel.pdf it gets interesting after p.151 - would be interested to see how it's aged. I have a financial model in excel - can send it to you if interested. xx twitter @melodyvonrock
Thanks so much for this list.
Submitted by Dano (not verified) on October 25, 2011 - 12:35pm.Thanks so much for this list. It is invaluable to see all of these sources in one list. Dano
You missed Live Performance
Submitted by Anonymous (not verified) on December 7, 2011 - 6:25pm.You missed Live Performance Royalties via BMI or Sesac mainly...somehow no one seems to know about this...
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