We’ve written a lot over the last year about how musicians make money, and whether downloads, streaming services, YouTube, and physical sales can provide independent and signed artists with enough income. We recently spotted an infographic by The Music Business Association (Music Biz), offering “songwriters and performing musicians a simple way to understand the complex framework they must navigate to receive proper payment for their work.”
While this infographic is specifically aimed at musicians living and working in the USA, we thought it would be useful to share the main points with you, as they are still useful for musicians in Europe and worldwide.
The main categories of payment listed are:
- Physical products and downloads. These are the most classic forms of income for artists. Money for the composition and the recording of a song is paid to you, your label, distributor or publisher whenever physical and digital copies of your music are sold. A certain percentage of this will go to iTunes, for example, but you are entitled to earn something each time someone buys a copy of your music.
- Radio & TV. In spite of the recent surge in streaming services and internet radio, people do still use the classic terrestrial AM/FM format to consume music and discover new bands. However, US copyright law means that performance royalties aren’t paid to musicians for this airplay. Royalties are only paid to the owner of the publishing rights, i.e. the melody and lyrics, not the musicians on a specific recording. A famous example of this is Dolly Parton’s song “I will always love you”, which continued to earn her royalties thanks to Witney Houston’s legendary cover! As an artist, you can apply for publishing rights for cover songs that you release, but make sure you receive permission from the master copyright owner first. On the plus side, it’s good to know that there are services in place to protect your music and royalties against the unauthorised use of your work.
- Satellite & cable radio.
- Non-interactive streaming radio (i.e. the listener cannot choose which songs they hear, create their own playlists, or use existing and visible playlists provided by the streaming service.)
- Synchronisation (sync) deals. Your music can be used in TV adverts and programmes, video games, films, etc. There is big money to be made in this field if you have the correct metadata and licensing agreements sorted!
- On-demand streaming services. This category includes services like Spotify, which have agreements with labels that then pay their artists on a per stream basis. As we reported recently, streaming sales are up by 91% in Germany, meaning that this is not a source of revenue to ignore! There is much discussion about the future of streaming and whether it will replace physical sales and downloads, but nobody can know for sure what will happen in the long term.
You need to sign up with your country’s collection society (Performance Rights Organisation, otherwise known as PRO) in order to receive royalties for your work as a songwriter, musician, or author. In many cases, an artist might be all three of these things at the same time! It is, however, still important to recognise that copyrights are divided into two main categories: master rights, for the recording itself, and publishing rights, for the lyrics and melody. After signing up to your PRO (like GEMA, PRS, etc.) you might need help administrating and understanding the system. That’s where digital distributors like iMusician or record labels can come in handy. They will usually take a small percentage of your earnings, but will also help you to ensure that you’re receiving the maximum possible financial benefit for your work. Many artists choose to work with digital distributors today, as they can offer invaluable assistance to those who are new to the music industry and not with a label, or artists who are independent but not able to take on all the administration tasks necessary to receive all their income!Tours and merchandise are of course other sources of income available to musicians that aren’t mentioned here. Services like Gigstarter have recently been set up to help musicians embark on tours with less financial risk, as the internet can be used to find out where your fans are, and where they want to see you play.
There are, however, always some risks involved in being a musician. Creating great music that you believe in is of course the first step towards success. As your career develops, you may want (or need) to involve more industry figures like labels, managers, bookers, etc. These people can help you with the practical business of being a professional, but it’s extremely encouraging to know that you can also embark on a comprehensive career using your own initiative. As long as you are aware of all the different sources of revenue available, you can receive the support and the payment you deserve, whilst remaining independent if you want to.
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