Updated: Jun 21
When it comes to the fundamental ways to make money with music, the music industry has changed completely
Traditionally, music was sold as a physical products and therefore was highly profitable. We can call that the golden days of the music industry when artists, managers, and record labels were bathing in pools of money.
It's a bit different today right?
It definitely is. However, there are still many ways to make money with music because we can leverage the invention of the Internet. The ability to sell products and quickly build a fan base online has never been easier in the history of the world. So although the revenue channels in the music industry are very different they can still be very profitable if you know which ones to go after.
So which revenue channels should you focus on?
It's a great question and we recommend that you focus on multiple revenue channels in order to diversify your revenue. It's not good to have all your eggs in one basket. We recommend this because each one revenue channel will likely not sustain you on it's own. However, multiple revenue channels can provide you with a decent living.
So, it is very important to focus on building multiple revenue channels to support yourself as a musician and to make money with music.
In the rest of this post we will talk about the five most popular monetization channels for your music and how you can sustain yourself as a career musician.
You are no stranger to this one I'm sure. It's hard to talk about how minimal the stream payout is but it is a channel worth mentioning. It can be long-term passive revenue if you are continuing to build a fan base for your music.
Let's face it, if you don't have an audience or you don't have a fanbase then this channel is not great. You might even say useless. You might be lucky if you could even buy some fish and chips at the pub. Don't they look delicious though? Anyway, back to making money.
So, it is ESSENTIAL to have an audience to make this revenue channel work. If you're reading this and just starting to build your audience then this video might be worth your while in order to help you kick start your audience.
In January of 2019, according to SongTrust, Spotify reports that it pays out between $0.00331 and $0.00437 per stream to rights holders.
Let's say for simplicity purposes, we call it an even $0.0038
But like we said, good luck trying to afford your next meal if you only have a handful of Spotify listeners per month.
Where we can turn this whole thing around is in your ability to leverage your audience and turn them into monthly listeners.
Let's say you managed to get 250,000 monthly listeners.
So that's 250,000 x 0.0038 which equals $960.00
Were you expecting more?
I bet. But, is it that bad? Let's look at it from a different perspective.
Keep in mind, this streaming revenue channel will not be our only monetization channel to make money with our music. It will be one of many.
If you had four other channels making $960 a month, then that would be:
$960.00 x 5 = $4,800
With $4800 of cash flow per month, that is more than enough to sustain a decent living. Go ahead and buy three orders of fish and chips at the pub. Hehe.
But the key thing to remember is that as we diversify our revenue channels, each channel does not need to sustain itself on their own. Yes, of course, this Spotify streaming revenue would not be able to support you if it was your only revenue channel.
You might be thinking, but 250,000 monthly listeners! That's a lot of listeners!
Yes, it is. Especially if you're starting at zero. But it's not impossible or dare I say very difficult to achieve.
The ingredients to do this are to get on as many Spotify playlists as possible, finding reach through paid advertisements like Facebook and Instagram and then creating content that supports your brand.
This is the recipe to convert fans into listeners. It'a all about working with the marketing funnel to convert visitors into listeners. There are people out there who like your music, we guarantee it, you just need to reach a lot of people.
Sadly, just getting on Spotify playlists won't cut it. Even though, it's still great to get on Spotify playlists, especially Spotify editorial playlists, it's only one piece to the puzzle. For instance, someone listening to your music on a Spotify playlist is likely doing it passively. Not actively. They're cooking, cleaning, or working out.
However, think of a true fan that's listening to your music, they might actively listen to all your songs multiple times in a day. Save your songs and share your songs with their network.
It's important to always be converting listeners into fans. If not, then your monthly listeners number will drop immediately once you're taking off a playlist.
So to recap, streaming is an important revenue source for you to build throughout your music career. However, the only way to make this revenue source valuable is to convert your monthly listeners into active followers of your brand and active listeners. Did we say it would be easy? No. Unfortunately not. If it was, then everyone would be making millions.
Merchandise is the second revenue source that we suggest you start to passively build into your revenue portfolio. Merchandise can be anything from t-shirts or tote bags all the way from custom made key chains to temporary tattoos. Literally anything, and we'll explain how to do it easily.
We do not recommend that you purchase inventory and keep it in storage. This could potentially be a very bad investment for you if you don't sell the products. Then you're sitting on boxes upon boxes of t-shirts stored away in your closet.
A few decades ago if you wanted to sell a product you had to purchase that product at a wholesale cost and then hold it in your inventory storage until someone buys it.
Once someone purchases that product you would package it and ship it to them in return for a cost.
This type of business model has completely changed thanks to drop shipping.
What is drop shipping?
According to this drop shipping Wikipedia article drop shipping is:
a supply chain management method in which the retailer does not keep goods in stock but instead transfers its customers' orders and shipment details to either the manufacturer, another retailer, or a wholesaler, who then ships the goods directly to the customer.
So, in other words, you don't have to worry about purchasing any inventory so there's no cost or big investment on your end.
Not only that, this means you could literally have thousands of products available or listed to sell to your fans. Without having any of these products made yet.