How do bands make money? United Kingdom-based Right Chord Music recently released the results of a small, 200-participant survey of mostly independent musicians. According to the survey, 75% of the participants were unsigned independent musicians. Based on that fact and some of the other numbers from the survey, we can conclude that the musicians answering the survey questions are in the fairly early stages of their careers. Also, many of the participants came from the United Kingdom and Australia, which may be significant, or may mean nothing, but which is worth noting. Nevertheless, from my own experience and from what I’ve heard, I think there are some aspects of the survey that ring true for a lot of musicians.
How Do Bands Make Money?
BandCamp v. Facebook
You can draw your own conclusions from the survey, but here are a few of my own thoughts. First, 68% of the participants identified Facebook as the site they’re most likely to log into to promote their music. Soundcloud came in second at 11%, and BandCamp fourth (after Twitter) at 4%. YouTube followed that at 2%. I was a little surprised by that because Facebook is, in my opinion, not a very band friendly platform. I personally much prefer (and I know several managers and publicists who also prefer) a good BandCamp page that allows visitors to stream and even download and (gasp!) BUY music. When I’m telling a colleague about a band, I like to have a link I can send to a page that has songs, videos, bio, and tour dates all on the same page. BandCamp works great for that purpose.
Of course, on the other hand, those numbers are probably explained by the fact that all or close to all of the musician participants in this survey have personal Facebook pages and so are very much used to logging in regularly. Clicking over to the band page is no big deal. Plus, Facebook pages are, like Twitter, used for daily or even hourly updates as to what the band is doing at the moment, whereas a BandCamp page is set up and then doesn’t require weekly attention. Same with YouTube. And in fact, later in the survey it’s revealed that while Facebook is updated more frequently, BandCamp still accounts for 17% of music sales, while Facebook accounts for 10%. And yes, you can sell your music on Facebook.
Paid Live Shows v. Playing for Free
Fifty-two percent of the survey participants said that they make the most amount of money per month from paid live shows. Digital download sales accounted for 13%, CD sales at 12%, and merch sales at 4%. In the music industry as a whole, digital sales have only just recently started competing with physical sales, but they still have a long way to go to catch up, as recent studies show. Of course, remember this survey is dealing with younger musicians who are likely to have younger audiences, which suggests that in a few years, digital will overtake physical sales once and for all. On the other hand, because these are younger musicians, they might not even have any physical products, as that would entail manufacturing costs, whereas digital tracks can be downloaded or streamed directly.
Now, on Slide 17, we see that the top two concerns of the participants of this survey are getting their music heard (19%) and making enough money (14%). Again, we shouldn’t really draw many conclusions from this, and with such a small sample size, the difference between 19% and 14% is only a few different answers. But still, one thing we do know is that there are a lot of bands in the world today. There are therefore many more options in terms of music listening. Bands need to find a way to get their music heard by people, which is one reason why so many of them play for free. Mostly younger bands (i.e., the kind of bands who participating in this survey), play for free. Why? Remember your first band? Or even the band you played in in college? There was still an aspect of “it’s cool to play in bands and it’s cool to play in front of our friends and people we may want to hook up with later.” Bands play for free because their friends ask them to. Or because they sort of have to because so many other bands will play for free. Or they play for free for charity. They do it for a variety of reasons. Maybe they have nothing better to do.
Bands have the option to play live, just as they have the option to give away their music. But they don’t have to, and after awhile, it starts making more sense to not play for free in most situations, even if there’s some other band that’s perfectly willing to sign on and fill the spot. Playing for free for “exposure” is something bands can do, and, really, should do sometimes, but they should be picky about when they do it and not devalue themselves. If the venue and promoter are making money, unless it’s a truly great gig playing to a sold-out venue opening up for an act you love, proceed with caution.
The one take-away, though, is that playing for free and making more money aren’t necessarily mutually exclusive. There is a line though that bands need to be aware of, and venues and promoters also need to be sensitive to what they’re asking bands to do.
Selling Direct v. iTunes
If you want to really support a band, it’s almost always better to buy from them directly, either at their live shows or via the band’s own websites. Slide 16 in the survey indicates that the young band participants of the survey make 33% of their money by selling their CDs (and, though the survey doesn’t specify, I assume vinyl), at live shows. BandCamp, as I noted above, came in at 17%. iTunes (via a distributor) didn’t show up until number 3, at 11%. As you probably know, iTunes takes about a 30 cent bite out of a band’s profits, and the band will get even less than that if they use a digital distributor. BandCamp, though, allows flexible pricing of digital tracks, and allows the band to keep more of the money.
On Slide 18, the participants were asked how they discover new music. As I would have suspected, YouTube polled number one at 17%. I have written about YouTube before, and think bands should absolutely set up a page and monetize their videos there. As you may have noticed from the survey, 4% of the participants’ revenue came from YouTube and Spotify – not a lot of money for sure, but as I’ve said before, every penny counts and it may one day grow into a more significant source of revenue, so you might as well set it up now. But, regardless of whether you monetize your videos, you should have videos up. Curate your channel so that viewers get to hear your “best” songs or at least see your “best” videos. The first thing I do when someone recommends a band is see if they have a YouTube video so that I can both hear their songs and see them, maybe even watch a live performance. So kids, use YouTube to your advantage.
Not surprisingly, friends and family came in second at 12% (but tied with Facebook…interesting), while Spotify was a tick below that at 11%. National radio came in at 7%, which is depressing unless it’s true that many of the participants are from the United Kingdom or Australia where (hopefully) they have better national radio than we do. However, I regularly listen to college radio, which is a great music discovery tool.
Nothing, really. If you’d like more details about how musicians earn money, I highly recommend checking out the Future of Music Coalition’s Artist Revenue Streams project. Got any questions? We may have some answers. Contact us to discuss.