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This is How Artists Make Money from Music in the Age of Streaming.

2/2/2020

 
The classic image of the newly-minted rock star, blowing their first million-dollar contract on champagne and fines for trashed hotel rooms, is fast becoming the stuff of legend. As industry watchers have repeatedly announced, the age of the overnight millionaire musician is practically dead. While global music industry revenue has skyrocketed to new heights, reaching a staggering $55 billion in 2019, less and less of that money is actually making its way into the pockets of artists.
​The average artist streaming their work on Spotify now receives around $0.007 per stream, according to the music magazine Rolling Stone. Despite the vast majority of music consumption now taking place via streaming services, most artists can rely on them to make a decent living.

That's why they typically explore lots of different, more creative avenues to make money from their creations. Here's how artists actually make their money in the age of low-revenue streaming.
While the dedicated fans streaming an album in their apartment may not be making much dollar for a musician, playing that music elsewhere will. One of the most lucrative assets an artist can have is known as "synchronization copyright", which guarantees high-percentage royalties if their content is played on, say, a TV show, movie, or live event.

Many artists make a substantial amount of their income via this route, especially older, more established ones such as Pink Floyd or Bruce Springsteen. For smaller artists, it can also be their ticket to the big time, especially if their music is played on a prime-time piece of television. In addition, artists will receive those royalties every single time the TV episode or film re-airs, ensuring a healthy revenue stream that far outstrips income from streaming in many cases.
​
Although many might struggle to believe that radio is still relevant, huge numbers of artists rely on radio airtime to boost their income. This is because artists receive much larger cuts than they do if their song is streaming on Spotify. Within the streaming business, the huge number of middlemen involved means that there is too much "leakage" as industry insider call it - a term used when too many people take a cut before the artist receives their paycheque. Radio is one way to reduce this leakage.

Merchandising & Licensing
Revenue from merchandise and licensed products can often mean a seven or eight-figure payday for an artist. One illustrative example of this is in the world of gaming. The hugely popular Guitar Hero franchise relies heavily on the creations of rock legends such as Van Halen and Black Sabbath. These artists made a per-song average of $10,000 per hit, rising to $25,000 for each original recording used in the game.

Other examples in the world of gaming include titles such as Brutal Legend, a cult-classic video game that heavily features rock and metal music throughout, going as far as to feature Ozzy Osbourne as a character. Ozzy himself is no stranger to finding royalties in other mediums, having recently branched out into the world of iGaming to feature in an online slot game made by developer NetEnt. It's clear to see that iGaming presents a great opportunity for a variety of entertainment mediums to capitalise on their IPs, with TV shows and films such as Game of Thrones and Bridesmaids joining the roster of themed slot games. Again, any music that appears on these slots generates royalties for the artists behind them.

Merchandising is also a big moneymaker for artists of all stripes. The BBC reports that merch only makes up 3.1% of music industry revenues, artists get a massive cut ranging from 25-50% for sales. That means a t-shirt that sells for $30 could put $15 into the pocket of the artist. If a musician sells 1000 t-shirts at a concert, that adds up fast.

Live Performances
Finally, one of the most lucrative revenue streams for artists in the modern world is live shows. Ticket prices for A-list artists are higher than ever, whilst ticketing platforms such as Live Nation are recording record profits. Despite high prices, shows are selling out like never before, which is motivating retired artists such as a-ha to come back and embark on world tours.

Tickets for Ed Sheeran's latest tour sold out in about 2 minutes, despite a standard ticket costing around $90. Since artists typically see much more of the money from ticket sales than from streaming, shows have once again become the main way that they actually generate income in many cases.
The rise of festival culture in recent years, from smaller events like the Ramblin' Man Fair to mega-events like Glastonbury and Coachella that charge more and more each year for a ticket, has also helped to line the pockets of both A-list and up-and-coming performers.

Despite the impact of streaming, it's clear that artists have adapted and are able to continue making money. The key difference is that, rather than making millions overnight from album sales, the money is made over a longer period of time.

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