With the onslaught of internet downloading, iPods, and the ever-decreasing price of home recording technology, artists these days are facing new challenges and are being forced to adapt the way they make money for themselves. One of the ways in which they must adapt, and a common theme within many of my recent posts, is that artists and musicians of the near future must learn to sell things, (live concerts, merchandise, publishing), rather than solely their recorded music. In the past the roles were reversed: traditionally musicians have used their concerts and merchandise as tools to enhance the sale of their audio art (as the image to the left suggests). Yet the internet and other digital music technologies have specifically caused popular music to lose its once inherent monetary value. The remedy to this problem is to sell the artist, rather than the art. With this in mind, it is important to examine some of the ways in which artists and their affiliates can create alternative revenue streams.An excellent, time-tested method of generating profit is through live concert appearances. The one thing that the internet cannot make more cheap or convenient for consumers is the magical connection that arises from seeing an artist one admires up close and personal. By playing concerts and interacting with fans, artists can generate serious profit from ticket sales alone. According to Jeri Goldstein, a long time artist agent and manager and author of the award-winning book How To Be Your Own Booking Agent: A Performing Artist's Guide To A Successful Touring Career, "typical percentage splits are 65-70 percent to the artist" of net ticket sales. That is a lot of money! Even in small venues (say 100 seats with an average price of $30 per ticket) the artist will take home $2250! Split between four members that is around $560 per person. If one factors in the number of hours (setup and performance) it takes for an artist to put on a production, (from personal experience it is around five hours for a small venue), that is over $100 an hour for each member of the band. According to Rolling Stone magazine's Money Makers column, which lists the top fifty money-making artists each year, Alicia Keys, (who ranked in last at number 50), made a minuscule (I joke) $10 million. Looking at these trends, if an artist can tour and play enough shows, the profit can and will be immense.
An additional method of generating revenue is through the sale of merchandise. The most direct method is when artists enlist someone close to them to setup an area at the venue and sell everything they can-tee shirts, stickers, posters, etcetera. Donald Passman, a music lawyer, states in his book All You Need to Know About the Music Business, that tour merchandise is quite profitable because “people are all pumped up by the show, they want a souvenir” (page 349). Selling merchandise at a concert adds to the total amount of money an artist can make at a performance, but there are additional methods of selling merchandise as well. The internet provides the greatest amount of exposure to consumers and can therefore be a profitable merchandise selling medium as well. Additionally, artists, their managers, and their other representatives should do all that is in their power to get artist merchandise into mall outlet, shopping center, and online retailers. Websites such as BandMerch and Rockabilia.com are great online retailers of merchandise. Passman states that an artist can get "25% to 35% of the wholesale price" when dealing with retail stores, and that "internet sales [...] are treated just like retail sales" (page 361). By allowing the retailer to withhold a portion of the total profits in exchange for their part in selling the merchandise, a profitable business deal can be achieved rather effortlessly.
In terms of ease and efficiency, the absolute best way to generate revenue is through the retention of song and sound copyrights and licensing an artist's music to third parties. In the music industry these actions are collectively known as music publishing. Through effective marketing, an artist can generate huge profit by licensing its music to television, film, and radio producers; cell phone companies (ring tones), and literally anyone else who is willing to pay for the use of the song in a public environment. The beauty of this method is that the cash flow from the artist's standpoint is entirely positive – it costs the artist nothing, (other than what it cost to create the song), and usually yields great profit. For example, synchronization of a song to a major film can generate, according to ASCAP's Music, Money, Success and the Movies article, "usually between $15,000 and $60,000." Normally, however, that amount is paid to the publisher, (who would normally split the money 50/50 with the artist), but if the artist publishes his or her own songs, then he or she retains all 100 percent of the profit. Ringtones as well are extremely profitable in today's world of MP3 playing cell phones. The Register, a computer technology review website, states that, "[A]ccording to Jupiter Research, ringtones generated $6.6 [billion] dollars in global revenue in 2006." As one can see, the licensing of music to others can be immensely lucrative.
In order to survive the changes in the music industry, adaptability and perseverance are needed. Today's artists, managers, record labels, and publishers need to subject themselves to a drastic overhaul of their traditional ways of doing business. By implementing new sales tactics, the profits one can reap will be colossal. Yet, at the same time, these alternative methods of generating revenue are dependent on one crucial factor-the quality of the music. Without great music that enriches people's lives (as the image to the right suggests), these people will never pay to see a concert, buy merchandise, or to use the song within some other creative medium. Therefore, while changes should occur in terms of what the music industry sells to consumers, the art of creating great, timeless music should never change.
