As artists, we prioritize creativity and artistry above all else. The beauty of making music and the fulfillment we get from it is what we’re in it for, but it doesn’t seem to be enough to survive in today’s music business. Artists now have to wear all the hats necessary to keep their career running themselves, including all things financial.
The money side of music is unfortunately rather complicated, but that is partly due to how many different streams of income there are in the business, which is a great thing. No matter your niche or skillset, there is a way to make money off of your work.
Signing with a label is a great way to ensure that someone is overseeing your finances and can be trusted to bring you new income opportunities. If you’re looking to get signed, Groover is partnered with a number of labels you can pitch your music to directly. You’ll get a response within 7 days or your credits back – it’s worth a shot!
How Do Artists Make Money?
Artists are paid similarly to freelancers. Earnings are project-based and are either lump sum payments or percentages of future profits. This mostly depends on the type of income stream being pursued. Here are the main ways to make money in music and how payment works
- Streaming and radio (royalties)
- Physical sales of CDs, vinyls (payment per sale)
- Live shows (payment per ticket sale)
- Studio sessions (one-time payment)
- Features (one-time fee and/or royalties)
- Label advance (one-time payment)
- Sync placements (one-time payment)
- Merchandise (payment per sale)
- Selling beats or samples (payment per sale)
- Teaching (payment per gig or salary)
- Social media (pay rate based on following and views)
- Brand partnerships (payment per post or shoot)
Regardless of the income stream, you are providing a service in your field of expertise, which means you should be compensated for it. Almost all forms of payment can be negotiated as well – just make sure you understand what is and is not a realistic amount to ask for.
Survey from 2022 by TwoStoryMelody
Royalty-Based Payments
For royalty-based earnings like streaming/radio and features, you’ll need to arrange an agreement with your producer and co-writers for every song you release if you’re independent. Whether you’re the main artist or a feature, everyone who contributed to the creation of the song must agree on each person’s percentage of publishing and master splits (who gets what share of each type of royalties). If you’re signed to a label, the royalty percentage you’re entitled to is stated in your contract.
One-Time Payments
For one-time payments like studio sessions and features (and teaching, if you’re freelance), you can set your own rate. This is the alternative to getting royalties after you’ve helped create a song; if you prefer a one-time fee, you can set your rate for a guest verse on a song or a couple hours of studio time to play an instrument or sing vocals someone needs on their track. You get paid in full for your work, but do not see a penny from the song afterwards. The other lump sum type of income, sync placements (when a TV show, movie, video game, or commercial buys the license to your song), is usually proposed by the network that wants to use your music. The amount can be negotiated, but largely depends on how big your buyer is and how much they’re willing to pay.
Label advances are an exception here – they are a lump sum payment given to an artist for signing with a record label that they can live off of and spend as they please, but the label decides the amount and expects it to be paid back in full before an artist sees any royalties from their music.
Per-Sale Payments
Live shows, merchandise, physical CDs and vinyls, and selling beats all generate income per sale. These prices are also set by you and your team, but must be at minimum a little more than what it costed to put together if you want to break even. If hiring a sound engineer, band members, and renting equipment for a live gig costed X amount of money, you’ll need to charge audience members X + 10 to turn a profit. Beats and samples are easier to price because they’re entirely up to you and don’t require other people’s time and resources but your own.
| Check out: How to find a booker
Pricing Yourself Correctly
There are many factors to take into consideration when you monetize your work. Here are the 5 most important:
- Experience – When charging for a service, take into consideration how much time you’ve been in the business for. Usually, more experienced artist charge higher rates than those just starting out.
- Expenses – How much is it going to cost you to do the job? Do you have to travel, buy materials, hire people, book rooms or studios, buy a meal? All of these things cost money and you shouldn’t be paying for them out of your own pocket on the job. Calculate those expenses and add them to your quote.
- Availability – How busy are you? Is it touring season? Availability is an underrated factor to consider. If a job comes at an inconvenient time/date, you can charge a higher rate to at least cover what you would have made if you’d taken another opportunity.
- Average pricing – What are other people charging for the same job? Understand the market you’re working in. Have you reached a career accolade that often hikes up someone’s rate – say, getting a big collaboration or being nominated for an award? Look to people in a similar spot in their career and compare your prices.
- Necessity – Do you have bills to pay at the end of the month? This is the reason why a lot of musicians blindly say yes to all job opportunities: they need the money. However, instead of just taking what you can get, calculate how much money you need to be making per week/month and figure out fair prices for your rates from there.
Once you take these factors into consideration, write your rates down and make them official. This way it is fair game for everyone you work with, and no one will feel blindsided.
A common misconception, especially in the music industry, is that a low rate = more work, and this is NOT TRUE. The price you set reflects what you believe the value of your work is, so underselling yourself will ultimately send the wrong message. REMEMBER: when you monetize your work, you can always go lower, but if you start low you will have to fight twice as hard to increase your rates. The people around you will get used to what you currently charge and may be put off by a sudden hike in pricing. To monetize your work effectively, find a healthy balance between showing your worth and staying relatively affordable.
Be Straightforward from the Get-Go
When it comes to payment, do not just assume what another person is thinking. Right at the gate, ask a potential collaborator their rate, or let them know yours. Conversations about money can be uncomfortable, so make sure everyone is on the same page before you begin working together. Royalty-based earnings are dependent on how much each person contributed to a work, so that can wait, but make sure you know who’s a flat fee kind of worker vs. who’s down to see what happens.
Whatever all parties decide on, put it in writing. Some sort of written agreement can come incredibly handy in the future and can dissolve any dispute you may have. If you are worried about coming off a certain way to others by wanting a written agreement, DON’T BE. Anyone in music knows how messy it can get if no one stays on top of things – you’ll be doing everyone a favor by taking care of it right away.
| Check out: Music Rights and how they work
You Can Say No
Remember that you can say no to jobs! Though you may be eager to work, if you don’t think you’d getting paid fairly, don’t do it. Most people are willing to negotiate, but if you’re working with a company, venue, or group that has leverage and isn’t budging, it’s ok to turn down the gig. Trust your gut and stick to your values when accepting work.
The Bartering System
Despite so many available income streams in music, the most popular and common form of compensation in the music industry is none other than favors. When first starting out, musicians and artists often don’t have the funds to afford a top of the line collaborator (producer, songwriter, manager, etc) so much of the industry is based on a mutually understood “you help me out and I’ll help you out” system. This is one of the best parts of music – everyone starts out by collaborating for the purpose of learning, networking, and giving each other a hand. The foundation of the music industry is personal relationships, so build your circle by working for free.
The only potential downside to this is that someone will expect your services to stay free, even as you climb the ranks in your career. If this is something you want to avoid, mentioning that you’ve begun to charge others but can make an exception for them the next few times can be a good thing to do. It will create an understanding that the value of your work as increased, but that you care about your relationship with them.
In other cases, another collaborator’s work value has also increased and you both continue to enjoy making music together and love the output – no need to charge if it is a mutual understanding. Trust your instincts when you feel as though you’re not getting enough out of a collaboration on your end and need to begin charging for your time.
How Groover Can Help You Monetize Your Work
Groover can be a great tool for you to navigate through the music business and ease some hardships along the way. Find industry professionals that can serve as mentors and are more than happy to help you with any query you may have on our platform, and send them a message. They’re waiting to hear from you!
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