Pop Music Revenue Streams

Goals

To determine revenue streams of pop music singers and average sales earnings, in order to create a business plan for an artist pursuing a music career.

Early Findings

  • There are over 45 possible revenue streams for an artist. These include a publisher advance, various royalties, a record label advance, sales at shows, label settlements, persona licensing, sponsorship and grants.

Making, Selling and Performing Music

  • Selling music, whether physical copies or digital ones from iTunes or Google Play, is one revenue stream. Money from that sale is paid out to both the composition and sound recording copyrights, as well as middle parties involved.
  • The average retail price for a music album, both physical and digital, in the UK was £8.38. An artist typically makes between 10% to 20% from each sale, so would make somewhere between £0.83 and £1.68 for each album sale.
  • Streaming music is also a revenue stream. The percentage payout depends on the specific type of service and negotiating power of all entities involved. An average pay out per stream to labels is between $0.006 and $0.0084, but a signed artist makes $0.001128 from this.
  • Synchronization, or allowing music to be played in film, TV and commercials, will result in an upfront fee and later royalties. Sync licenses can be lucrative and a chance for less popular music to make it big.
  • Live events, such as tours, concerts and music festivals, are a huge way for artists to make money. Live shows are also experiencing highest ticket prices ever. Live events account for 28% of an average musician's income, the largest single share.

Other Revenue Streams

  • YouTube monetization is one way that artists make side money. In the US, payout rate can be as high as $3 per 1000 streams. Psy's "Gangnam Style" made $2 million from its 2 billion views.
  • Brand partnerships give artists the opportunity to endorse a brand they may endorse in return for additional revenue streams.
  • Pop music singers can also make money through direct sales of fashion and merchandising. Many artists sell posters, clothing, perfume and other paraphernalia.
  • Crowdfunding is also a viable way to get support from fans and generate a revenue stream. For example, Angie Johnson from The Voice raised around $36,000 on Kickstarter to record her upcoming album.

Proposed next steps:

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We propose taking ten of the revenue streams that we found regarding songwriter, composer, performer and recording artist revenue and investigating them further. These streams can be: publisher advance, mechanical royalties, commissions, synch licenses, record label advance, digital sales, record label support, AARC royalties, songwriter awards programs and interactive service payments. We recommend creating a list with a short description of each revenue stream and the average earnings from this revenue stream for a pop music singer.
We could also look at a further ten revenue streams identified earlier, that fall under performer session musician revenue, brand-related revenue and fan, corporate and foundation funding. For example, show/performance fees, session fees for studio work, session fees for live work, YouTube partner program, merchandise sales, ad revenue, product endorsements, fan funding, sponsorships and grants. For each revenue stream, we recommend including a short description of how a pop music singer can make money through this revenue stream and average earnings from it.