Let’s face it, the music industry is going through an uncertain period right now. Venues have had to close their doors indefinitely, and artists have been forced into busking online for money. The music industry is resilient though. This isn’t the first time it has been forced to adapt to tremendous change and adversity. No one is immune to the threats of disruption, volatility, and hyper competition that exist in this industry.
Despite the fickle nature of the music industry, there are things artists can do to set themselves up for success in the long run. Here are some thoughts on how to weather the storms and come out on top.
Diversification
One of the best ways to protect against the risk and uncertainty of making it in the music industry is by diversifying revenue streams. Many musicians do this already without even realizing because it is almost a requirement for most artists that want to make a living off of their music. Artists that only rely on a single source of revenue are threatened by many forces outside of their control.
Over the years there have been plenty of examples of artists and companies being rattled by industry disruption, physical limitations, or other unforeseen occurrences. The rise of music streaming has caused major disruption for the record industry and sharply cut into recorded music sales. If you were an artist that relied heavily on album sales, you would have lost a significant source of income.
Live music on the other hand has been a consistent revenue source for many artists. It has seen a lot of growth in recent years, but it too has its weaknesses. Artists that bring in a large portion of revenue from live performances face threats of lost income due to illness or injury. Although artists are extremely resilient individuals (just ask Dave Grohl of the Foo Fighters or Rick Allen of Def Leppard), we all have physical limitations that could cause a temporary or permanent end to a performance career. Other unexpected occurrences can be anything from inclement weather, to acts of terrorism like the Las Vegas shooting tragedy, to unprecedented global events like the current COVID-19 pandemic that has shut down the entire live music industry.
Maximizing earnings through multiple different revenue streams offers the best protection against some of these unanticipated risks. Both independent artists and businesses alike can benefit from this strategy. Take a company like Live Nation for example. They bring in revenue from many sources including concert promotion, ticketing, venue ownership, artist management, sponsorship and advertising. This focus on diversification creates stability and enables future growth.
There are lots of ways artists can also diversify revenue streams by monetizing their music and brand. Without going into detail on each of these, here are some common sources of revenue for musicians:
- Live Performances
- Streaming
- Physical or Digital Music Sales
- Publishing Royalties
- Merchandise Sales
- Session Musician Gigs
- Songwriting for Hire
- Teaching Music Lessons
- Advertising
- Sponsorship
This is certainly not an exhaustive list, and artists should explore all of the options available to them. It may even make sense to consider generating income from other industries or skills outside of just music. With a commitment to diversification, there will always be another source of income to fall back on.
Content Ownership
Artists should do everything in their power to maintain ownership of their creative content. After all, your greatest asset is the content and music you produce. Protect it at all costs.
There may be reasons to give up control over your music, but these decisions should not be taken lightly. Any deal that takes away ownership should add significant value to your overall business. Think like an entrepreneur. Business owners looking to raise money for their venture may take out loans or give up ownership for funding. Artists might be tempted to enter into similar arrangements in the form of record or publishing deals. If it will benefit you to have the added resources and expertise then it may be well worth it. Tread carefully though. Besides, there are many creative ways to raise money these days such as crowdfunding, royalty exchanges, and even celebrity bonds (see Bowie Bonds).
Artists should be in control of their other creative content as well whenever possible. There’s a concept in marketing of owned versus shared media. Owned media is that which you have complete control over like a website, newsletter, or podcast. Shared media on the other hand is created on a shared platform like Facebook, YouTube, or Twitter. You have full possession and creative control of your owned media, whereas on shared media the platform makes the rules. The potential risk with shared media is that it susceptible to forces outside your control like the health of the business, government regulation, and cultural trends.
To illustrate this point take a look at Myspace. It was the dominant social media platform several years ago, especially among musicians, and has been all but forgotten today. Many new social media competitors emerged since then. It would not be a good strategy to rely on Myspace today as your primary outlet for sharing content. Trends change, technology advances and musicians need to keep up.
The more you can be in control of your creative assets the better. Owning your music and content is the simplest way to control your own destiny.
Get Creative
Many artists excel at looking at things from a different perspective and solving problems in novel ways. Innovation is a great way to stay ahead of the curve. Don’t just sit around waiting to fall victim from circumstances around you. Be bold and create something brand new!
These are certainly unprecedented times, but many artists are rolling with the punches and coming up with unique ways to adapt and keep fans engaged. Live streaming and online offerings have taken off for obvious reasons. Many artists have come up with creative ways to put their own spin on things and engage audiences in new ways like creating a live stream tour or delivering albums with drones.
When faced with uncertainty or disruption in any industry, businesses and people must adapt or fall behind. By pushing the boundaries of creativity, the sky is the limit. Go build your own streaming platform, invent a new genre of music, or a way to telepathically broadcast songs into people’s heads. Innovation and creativity can open doors to a brighter future.
