How Musicians Make Money - 2021

Performing Music Live

Advertising 

Fashion, Merchandising, and Other Direct Sells

Selling Music On Digital Stores

Performing Music Live

Live events are quickly shaping up to be the most lucrative space for musicians in the digital-music era, and for good reason: As listeners become inundated with cheap access to music provided by streaming services, dedicated music fans crave more intimate experiences with their favorite artists. That’s why tours are getting grander and music festivals are drawing ridiculous crowds even if their lineups are all the same. It’s also why concert and ticket companies like Live Nation are growing like crazy.

While album sales dwindle and streams may only pay out fractions of a cent at a time, live shows — be it tours, festivals or one-off concerts — are commanding some of the highest ticket prices ever.

Advertising

In the heyday of pop and rock, musicians rarely wanted to be associated with corporate brands, but that’s changing with the rise of rap as America’s most popular genre. Brand partnerships offer artists the ability to sponsor or endorse a brand they might genuinely like, and get access to an additional revenue stream while they’re at it. Another way musicians find side money is from YouTube monetization, wherein YouTube videos share in the profit from the ads that come tagged onto them. Psy’s “Gangnam Style” reportedly made $2 million from 2 billion YouTube views. YouTube’s head of music Lyor Cohen wrote in a blog post last year that YouTube’s payout rate in the U.S. is as high as $3 per 1000 streams.

Fashion, Merchandising, and Other Direct Sells

Selling non-music products like perfumes, paraphernalia and clothing lines is an easy money-making strategy that artists have been taking advantage of for decades — but in the digital era, musicians can also get creative with their methods, expanding well beyond traditional merch tents at concerts and posters on a website.

Artists are also starting to ask for money from audiences directly — via crowdfunding or creating custom channels of communication with their fans — outside of social media platforms like Instagram and Twitter. The Voice star Angie Johnson raised roughly $36,000 on Kickstarter to record an upcoming album, for instance. More groups are releasing dedicated apps or subscription packages for their music or selling bespoke products like artist-curated festivals, email subscriptions and limited music releases. Pitbull has his own cruise.

So Then — Where’s All the Money?

All of the above is by no means a comprehensive list of ways that modern artists make money; keep in mind that it’s also now easier than ever to switch lanes and become a producer or writer for someone else’s music, as is the case with Bebe Rexha’s journey from songwriting to recording or American R&B hitmakers’ move to South Korea’s K-pop industry (which complicates the royalties splits a bit by involving copyright law from overseas, but nonetheless brings back significant money). The sheer number of different revenue streams available to musicians is higher than it’s ever been in the past.

And yet, the average modern artist is still strapped for cash.

By recent research estimates, U.S. musicians only take home one-tenth of national industry revenues. One reason for such a meager percentage is that streaming services — while reinvigorating the music industry at large — aren’t lucrative for artists unless they’re chart-topping names like Drake or Cardi B. According to one Spotify company filing, average per-stream payouts from the company are between $0.006 and $0.0084; numbers from Apple Music, YouTube Music, Deezer and other streaming services are comparable. That creates a winner-takes-all situation in which big artists nab millions and small ones can’t earn a living wage. It’s nothing new — one could argue that such were the dynamics in almost every era of music past — but the numbers are more dramatic than before.

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