Revenue Streams That Make the Money Flow In

I recently wrote a news blurb on HypedSound about the 25 highest paid artists from May 2011 through May 2012. Dr. Dre topped the list with $110 million in gross revenue, before accounting for taxes, fees, overhead, and related expenses. That’s a lot of money for someone who hasn’t released in album in over a decade! 

Dr. Dre’s been meaning to release his album Detox for some time, but probably got sidetracked with selling a 51% stake in his massively popular company Beats By Dre for $300 million. You know, those headphones with the letter ‘B’ on it that you can’t help see all over the subways in New York City (and probably in your suburban high schools too, I just wouldn’t know about that those).

So what does this all mean? It means hip-hop moguls like Dr. Dre and Jay-Z are more business moguls than anything else. They leveraged their music fame to create branded businesses centered around their larger-than-life personas. This might not be something the average indie musician can do, but they certainly can take a couple lessons. 

When it comes down to it, don’t sell your music—at least not at first. The reason Facebook, Instagram, and many other social networks didn’t focus on making money at the beginning was because they knew they had to get the eyeballs before they could get advertisers interested. The same is true in music. If people don’t want to listen to your music for free, at first, do you really think they’ll pay for it? It’s hard enough getting attention with the word ‘free’ let alone getting someone to open up their wallet for someone they don’t know about. 

I’m not saying artists shouldn’t sell music, but their should be a strategy behind selling. If you give music away for free and increase your fanbase to the point you sell more merch or concert tickets, then perhaps you’ll make more money than if you sold your music straight out of the gate.

EDM and dubstep phenom Skrillex released an advergame, SKRILLEX QUEST, that is promoting his single for ‘Summit’ by having players experience the song rather than merely listen to it. While creating an advergame (advertisement + game) is probably out of the budget or skillset of an up-and-coming artist, that doesn’t mean they can’t a) come up with something interactive to boost record sales, or b) come up with something interactive to boost awareness about you as an artist that will turn into revenue later. 

What we’ve seen with advergames, Kickstarter campaigns, Google Hangouts, and other promotional tools is that it’s no longer just about the music. It’s about an experience. Invest in your experience.

Getting Through the Noise on Facebook

Now more than ever is when you need to make each post count. Facebook status updates and shares, tweets, and email marketing newsletters are all important to maintain your fans, followers, and userbase. However, it’s getting harder and harder to cut through the noise. As more artists embrace social media 24/7, more companies bring their marketing online, and more “stuff” tries to get in your inbox or in your feed, which makes it harder to distinguish between the good and the fluff. 

Facebook is trying to take a proactive stance for quality. Their EdgeRank algorithm sorts what comes into your News Feed every time you login to Facebook. If you login every few minutes, you’ll see the best stuff from the last few minutes. If you login once a month, you’ll only have some of the best stuff over the last few days or the last few weeks. If you, as an artist or a brand, want to make it into that News Feed to reach all the people who already liked your page, then you have to tone down the number of posts that people don’t care about or are unlikely to get any engagement (i.e. likes and comments). You need to focus on quality. Once people stop engaging with your content, you’re almost lost from the News Feed entirely. 

Many Facebook page owners and marketers were up in arms when Facebook introduced the pay-to-promote option. If you pay a certain amount, you can reach a certain number of your followers. So instead of the EdgeRank algorithm deciding which 10-30% of your followers would see your post, you can guarantee views to your post and reach a lot more people. The conclusion was that many people paid Facebook for their likes through Facebook advertising and now Facebook was asking for money to reach those followers (double taxation, if you will). Some felt duped. 

Facebook is grappling with two different pressures: the pressure to increase revenues to perform well on the stock market for their investors and employees and to maintain the user experience for their users. Even if you think what Facebook doing is in part to increase revenues, which it is, they are also combating the increasing amount of noise on the platform.

The story? Facebook gets huge. Marketers flock to the platform for cheap advertising or for “viral” and organic ways of reaching more people. Facebook has to deal with all the noise and turns down the noise of not only the bad actors but also legitimate actors who can’t fit all their content in the News Feed. As social media gets flooded, social networks will turn to algorithms to chop down the noise or add in expert curation to pick out what’s the best content. No matter what the method is that prevents posts from being seen, you have to make sure you focus on quality to get through the clutter and actually stay visible to your audience and your potential audience.

Creating Your Own Visual Tapestry

Most musicians approach their craft from an auditory level. How does this production sound? What melody is appropriate for this song? Or on an even more granular level, what kind of filter should I add to give this intro a contrasting sound from the rest of the track? Oftentimes, artists who think of music first are so enveloped in the songwriting and production process that there is no consideration for the visual aspect, at least at first.

As much as humans love a nice catchy melody, we are visual creatures. While we’re not going to be thinking about how something looks when we listen to music with our earbuds tucked neatly in our ears and our eyes on the road (or on the treadmill, or in our bedrooms), it can be a great exercise in creativity to think about the visual aspect of your work first. 

As the cliché saying goes, a picture is worth a thousand words. I’m not sure how many words a musical note is worth, but I can venture to say visuals are pretty important in expressing creativity as much as sound. If you think of what kind of visual and emotions you want your imagination to convey, as you would with the music you create, you can get a good sense of what atmosphere you’d like to evoke.

For fun, start writing a song by drawing a picture or recording a video. Maybe take a couple pictures. Find the visual first and then craft a song as if that visual was the summary of your song. This can be a powerful tool to cure writer’s block or it can just be an interesting project. On the plus side, if you like the music you create after creating your visual, you’ve already got your album artwork, music video, t-shirt design, or a concert stage prop ready to go along with your composition.

The Outdated Story of the Drugged Out Rocker

Duff McKagan tells you how to say no to drugs. At one point in time, drug use in the rock n’ roll scene was not only expected, it was a given. McKagan, of Guns N’ Roses fame, writes for Seattle Weekly: 

“Rock and roll definitely has the stereotype of being connected to drug use. I get it. The cliché has been earned. But in our modern era, it seems like drugs have finally lost the status of being a mystical and romantic part of the rock persona. Maybe we've seen too many people implode, with public meltdowns, and worst of all, death.”

This mentality goes back to the days of wild nights in L.A. and NYC. McKagan notes:

“Places like The Viper Room--and the old CBGBs, come to think of it--only have one set of bathrooms. Everyone shares. Your columnist went into the men's room at the Viper Room in L.A. Your columnist simply has to urinate. Your columnist is nervous for the show, as he patiently waits his turn for the urinal. Your columnist gets offered a bump of cocaine right there--dick in hand and everything!”

It’s funny to come across this article at around the same time I watched a documentary on the old days of New York city in a VH1 documentary called “NY77: The Coolest Year in Hell.” The infamous Summer of Sam was also a time when NYC hit rock bottom, going through bouts of crime, unemployment problems, a city-wide blackout, and the beginnings of the disco craze, hip-hop birth, and punk rock underbelly. 

It’s easy to look back on an era in a favorable light, despite its problems, romanticizing the excesses and the newness that is now nostalgia. Rockstars from records labels and punk bands like The Ramones and Blondie reminisce about the early days of CBGBs and how 42nd street was crawling with drugs and hookers. As one put it, the days when it wasn’t safe in Times Square for women and children, those were actually the best days for the arts.

In the same way that modern day New York City might be bland for a punk band from the late 1970s, drugs are often seen as the alluring and commonplace part of the artist’s lifestyle. Clearly McKagan doesn’t think it’s necessary even though many of his fans offer him joints at shows as if its second nature, thinking that it’s a given that a rockstar would partake in drugs handed to him (or her). Steve Jobs, co-founder of Apple, was open about his experimentation with LSD, so even in other fields than rock n’ roll a drug can be described as providing a spiritual or creative awakening. However, all the coke, heroin, or pot in the world won’t help you write the next “Sweet Child o’ Mine” or “Welcome to the Jungle.” 

This is How Much You Can Make on Merch

As musicians scramble to find new ways to make money in the digital era, Jakprints released data on the profit margins for a variety of popular merchandise options for artists (see photos). Digital Music News broke down several merch selling strategies, including everything from partnering with distributors who organize drop-shipping, sales, and merchandise printing to organizing touring inventory and merch giveaways.

In an age where the top DJs don’t sell many records, the modern day musician needs to professionalize the rest of their trade (i.e. stuff other than recording music) and concentrate on diversifying with alternative revenue streams. When people think merch, most  think of t-shirts first because fans proudly sport the latest in their favorite artists’ fashion. Artists know people need to wear clothes, so fans might as well support artists at the same time as they pick their wardrobe.

T-shirts provide a good profit margin, as Jakprints’ data shows, but there’s no reason to ignore little knick-knacks that are fun for fans and easy to produce cheaply. This means everything from stickers to magnets to patches. These are all items that fans can easily stick on clothes, laptops, and their local indie club’s stall doors (disclaimer: I’m not condoning graffiti, but some clubs dig the grungy vibe provided by a sticker-covered bathroom). This all means getting free marketing as you would with a fan wearing a t-shirt, except that fans can’t wear the same shirt every day, assuming they have some sense of proper hygiene.

Not only should you look at other options other than clothes, but you should think about what fans can wear year-round. A t-shirt is good in the summer, but hoodies, hats, and maybe even a wool scarf is something your fans could be into. If you’re pinching pennies, ask your fans what they want via an online survey before making an investment in merchandise—use a site like SurveyMonkey if you have an email list of your fans all ready to go. Alternatively, run a presale for items on your website or an online store widget and only commit to charging your fans for an item once you’ve sold enough of a specific item and can commit to ordering the item from a manufacturer.

Merch is just one of a varied number of ways to make money as an artist, but even within that one category of sales, dig deeper and find new ways to take advantage of product offerings. 

Check out the profit margin of each product type below:

Songkick To Help Artists Crowdfund Concerts

Songkick, a music concert discovery service, is going into the business of helping artists crowdfund their concert experiences. CEO Ian Hogarth wrote a blog post about how Songkick helped electronic artist Tycho organize a gig for 500 people in London.

Ian wrote about the process of spreading the word for Tycho’s crowdfunded concert: 

“We chatted to Tycho and his team and it seemed like they’d need to sell a few hundred tickets to make it feasible to come to London, so we created a simple website, Detour to allow Tycho fans to pledge. What happened next was pretty insane! We emailed the fans on Songkick who were tracking Tycho, and over 100 of them pledged money for a ticket. Gideon was pretty thrilled to see how many other people shared his passion for Tycho. But 100 or so wasn’t enough to get the show confirmed so the Songkickers took it into their own hands & started to contact friends and music fans who were either into Tycho or should be! Within a short while we hit our target and the gig was on! Wow.”

This isn’t the first foray into crowdfunding events, but Songkick might have the technology to take it up a notch. Kickstarter, the most well-known of crowdfunding sites, helps artists raise money for album releases and tours, helps film-makers shoot documentaries, helps product designers release their newest project, and enables many others to realize their dreams. However, crowdfunding a concert is only one very small chunk of the Kickstarter platform for creative projects. Songkick, which ties into Facebook and other social media sites to help get the word out about concerts in your area, is perhaps the ideal location for bands to raise money for  tours they don’t know they can afford.

As Hogarth notes, social media sites are filled with comments from fans asking artists to come to their city. Sometimes it’s very hard to know whether there is enough demand for an artist in a particular city if the artist only sees a few comments. Artists can use data and analytics sites like Next Big Sound to see what cities are most interested in them or can look at song and album sales to gauge some idea of where to travel next. For independent artists or bands on a budget, this might not be enough to commit to an expensive gig in a faraway city. 

If Songkick can not only provide the platform to help artists raise money to play in different cities, but also help spread the word about a concert, there might be a whole new market for concerts all over the world. Kickstarter already proved the power of ecommerce, patronage, and donations all wrapped into one platform. If Songkick has the formula to reach more people who like to attend concerts and helps fans put their money where their mouth is, we might start to see a much more efficient market for artists who don’t find themselves on the Ticketmasters of the world.


Social Media Is Not a Number

The most damage you can do to yourself is to treat all numbers alike. Social media is not a number. The race to some elusive goal (3K Twitter followers, 10K Facebook likes, or 500K YouTube views) is just a goal. But not all numbers are created equal.

On the one hand, a high social media count for one page can certainly give you a perception of importance. If my Facebook page has a million likes, people will come to it and view the page more seriously than a page with just a few likes. Big numbers do matter, but context is everything. Having a large presence online can act as a snowball effect, so as your numbers get bigger they continue to get bigger faster and faster. This is the viral effect, whether it be an increase in credibility that leads to more sharing by people or it’s a boost in a website’s algorithm that floats you to the top of the stack and gets you many more views. This can be a great form of free marketing. 

At the end of the day, the goal of obtaining a high number of social media followers should be more than just for ego-stroking. Ask yourself why these followers are important. How did you obtain them? Did you spend thousands of dollars on a marketing campaign that got you thousands of “fans” in a day or did you shake a thousand people’s hands at gigs across the country that led them to following you online and telling all their friends about your music? Or did you pay someone $5 to give you 1,000 Twitter followers that turn out to be mostly fake? Each kind of follower is different and increasing your following only matters insofar that the followers are there to stay and engage with you or your community.

Many music and business folks talk about 1000 fans. All you need is 1000 true fans to have a solid career doing what you love in the arts. Having 1000 true fans doesn’t mean having 1000 Facebook likes. The 1000 is for the truly devout fans that do more than press a button (be it to follow or to like). Even if someone is not that invested in you as an artist, you shouldn’t turn them away if they happen to follow you on a social media site. No one is saying that. However, think of where you are putting your energy to reach your goals. Are you being authentic in obtaining fans? Time spent on the business side of things is time spent away from the creative production of your art (be it music or otherwise).

If you’re just rigidly optimizing for a certain number instead of trying to create genuine relationships with your fans, growing revenue for your career, and making lasting connections, perhaps it’s time to consider that not all numbers are created equal.

Branding: So Is It Quality or Is It Just a Name?

iPhone 5 and headphones


Apple has become synonymous with simplicity of design and ease of use with their iPod and iPhone products. The way we experience music and related applications will never be the same after Steve Jobs helped make it possible to “fit your whole music library in your pocket.” While it’s hard to argue with the quality of Apple’s product, there is no question that the marketing and hype machine surrounding Apple’s product launches is nothing short of genius. The Apple fanboys and fangirls of the world will buy anything Apple, and even if competing companies build a worthy product, many won’t turn their heads. 

Digital Music News wrote a piece on the new iPhone 5 and how it is an evolution of the iPhone 4S but is not revolutionizing the way people use smartphones—most of that work is already done. Other than making the device much faster and lighter, there aren’t that many new bells and whistles unless you consider a new headphone name (EarPods) to be exciting. While the kind of headphones that comes with the iPhone is not a big selling point, the audiophiles of the world will see their audio experience very differently based on different types of headphones. 

With smartphone choice, other than noticeable differences in speed, app selection, and other core parts of the iPhone experience, the Apple branding has a strong psychological influence on one’s perception of the product. Whether it’s the marketing or the fact you expect quality when you buy an Apple product, there is still a subliminal desire to think highly of an Apple product regardless of all the factors at play. Then there is the case of headphones, where one would think that quality trumps branding (since we trust our ears to tell us what sounds goods, how can branding have an effect on what we perceive to be good sound quality?).

Enter Beats, the company that makes the headphones that command 51% of the premium headphone market that’s worth about a $1 billion in the U.S. alone (according to Digital Music News). In the professional audio community, Beats sometimes gets a bad rep for being overpriced—that is to say the quality is not so great, and you’re paying double a normal sticker price just for the association with Dr. Dre and the Beats name. It seems that Beats is not just a headphone choice but also a fashion choice, with the trendy headphones easily spotted in New York City subways and on college campuses across America. This might be one of those times that branding gets ahead of product, unlike with Apple products that seemed to impress a smaller core group of Apple fanatics early on before hitting the masses. The NPD says:

“Thirty-eight percent of premium headphone owners say their device is part of their personal style and one-in-four say it is important that their headphones are fashionable.”

For audio geeks such a statement seems egregious and that sound quality should be the first thing people think about when deciding how to listen to music, but our devices are more than how fast or how well they get us from Point A to Point B. Products that we wear every day are also a reflection of our personalities and how we want to be perceived by other people. That’s where branding just beat out product, even if the product itself is in fact of sound quality.

Apple to Compete With Pandora

As reported by New York Times and many other news sources, Apple will be launching a Pandora competitor within the next few months. While Pandora already has many streaming Internet radio competitors, with the likes of Slacker and iHeartRadio, and other music listening platform competitors like Spotify and rdio, Apple is the behemoth that could put Pandora in a shaky situation. 

Pandora’s stock dropped nearly 17% at the news, Hypebot mentions. This comes at a time when Pandora is still having trouble reaching profitability, as its spending is tied heavily to current regulation that requires a payment for radio streams to record labels and other sources that seems to prevent it from being in the black.

While Pandora expects to turn a profit sometime in the coming year or two, the allure of switching to an Apple product might be too great for some and could stifle Pandora’s growth. With the upcoming iPhone 5 release, and the design-focused company that is Apple, consumers will soon have a choice between what service they want to use and how tied it will be to the device in their pocket. 

Is this time for Pandora to panic? Perhaps not, considering so many consumers’ daily office experience is related to the customized radio stations Pandora offers them, catered directly to their tastes. Many companies know that the switching costs of leaving a service that knows so much about you to a competing service is high. What that new service has to offer must be 10 times better than the old service, otherwise most are too lazy to switch. Who cares if Bing is better or worse than Google—we’re used to Google and we’re going to keep going to that homepage or using that Google search toolbar until some cathartic experience with a new search engine causes us to switch.

However, if Apple provides a service that seamlessly ties into your devices, whether it be through the all-too-familiar iTunes, iPod, or iPhone, it’s going to turn a few eyebrows. Apple will easily bring the fanboys and fangirls on board, but will they have the music discovery ability to snatch away a growing Pandora userbase? We’ll have to grab some popcorn (and our nicest earbuds) and wait to see.

On Musicians and Politics

What is it about musicians and politics that gets the mainstream so intrigued? If you oppose the artist’s political philosophy, then you’re probably saying to your friends, “Why do musicians have to talk about politics? No one cares about their opinion, they should just play music and shut up.” If you agree with the artist, you’ll probably tolerate the mixing of politics and music. Perhaps, you’ll be drawn to the music even more. Is it that we hate politics in our music or that we just hate politics that we don’t agree with?

Take Dave Mustaine for instance—he’s been taking a lot of flack for his recent accusation on Obama for staging the recent massacres at Aurora and the Sikh temple. Mustaine is free to speak his mind, even if metalheads across the world don’t agree with him. Much of his music and lyrics is politically-charged, so does it make sense for Mustaine to share political opinions in the middle of a concert? If you don’t agree with a musician, is it possible to separate their opinions from their music? I’m sure there are many Mustaine and Megadeth fans who despite enjoying the music have a hard time embracing the artist behind the music—maybe they give up on the music altogether. While his lyrics might be political in nature on occasion, Dave Mustaine’s music is appreciated for the guitar riffs, hooks, and overall metal sound. When one thinks Megadeth, one doesn’t think politics. If there is no definitive connection between the medium and the message, it isn’t in your best interests to alienate fans with your politics.

On the other hand, there are artists like Tom Morello, who recently spoke out against Vice Presidential candidate Paul Ryan and his affinity for Rage Against the Machine’s music. Music and politics are at the heart of Rage Against the Machine’s music, so it’s hard to believe their fans resent the band for bringing in politics outside of their own song lyrics. Political activism and Rage Against the Machine’s music go hand-in-hand, from the distorted riffs of “Bulls on Parade” to the public statements of protest. When you listen to the music you know what you signed up for, and that’s vital to the social contract between the artist and the fans.

So if your politics isn’t core to the music and one of the most identifiable bonds between you as an artist and your fans, it probably is wise to drop any politics you have from the public consciousness. Making a difference is important, but if you forget why your fans made you successful in the first place, you could start a divide in your fanbase that can’t be fixed. Next time you want to mix music with politics, think about why your fans listen to your music and whether mixing in your own political viewpoints will add value to the discourse or just ruin the excitement of the music.