How does a writer, artist or band make money from music? Easy - from sales, performances and merchandise. (Performances include both live and broadcast.)
But the way things have worked out over the last hundred years or so since recorded music became popular is that most of the money is earned by a very small proportion of musicians (lumping writers, artists and bands together for convenience).
So the top 1%, or actually probably more like 0.1%, make masses of money. The rest earn next to nothing. The class of musician - the middle class - that makes a decent living is extremely small. Think about it - who do you know who makes their entire living from music? I don't know anyone among my personal friends who does.
The reason for this is that big industry has a economic stranglehold on sales and performances, (and if you're not making money from those two sources, then any merchandise you make just won't sell.) Yes you can sell your own music on iTunes, or manufacture your own CDs, but getting your work into the mass market is well-nigh impossible unless you have big-industry backing. There's no middle ground for a middle class of musicians to occupy.
Until perhaps now...
I read an interesting article recently about the Internet radio service Pandora. Since I live in the UK I'm not officially allowed to listen to it, so I console myself with Spotify where the issues, I'm sure, are similar.
The article wasn't about Pandora as such, it was about the kind of money artists can earn from it. The article lists Donnie McClurken, French Montana and Grupo Bryndis as significant earners from the service. Have you heard of any of them? No, me neither.
But Grupo Bryndis, the least well known of the three at 183,187 on Amazon, is apparently on track to earn $114,192 from Pandora over the next year. OK, I presume that Grupo is a group and it will have to be split. But for a solo artist or even a duo, this is a decent income! A properly decent income.
Of course the big artists will earn massively more, and many small artists will earn peanuts. But apparently more than 2000 acts will earn over $10,000 each over the coming year. This represents a very welcoming widening of the musical middle class.
Or, put it another way, practise your art a little more diligently and there is a reasonable chance of being quite well-rewarded for your efforts.
It is worth noting the purpose of the article however. There is a problem in Internet radio in the USA and that is the high licensing fee required by the RIAA. The RIAA is entirely justified in seeking to maximize revenues for its member companies. However, it is easily possible to imagine that they seek to do this by strangling the infant Internet radio industry at birth, leaving traditional radio stations free to prosper without this - to them - irritating competition.
Now before you start booing and hissing the RIAA, it is a proportion of the licensing fee that they have imposed that is being divvied up among the artists. So if it is a high fee, then there is a lot of money to be shared.
But, argues the article, this makes it extremely difficult to run an Internet radio service at a profit. So in fact if the RIAA licensing fees were lower, there would be more Internet radio, and more revenue to be shared by artists.
This is a bit like a government that charges income tax at 0% - they get no revenue because there is no tax. Or a government that charges income tax at 100% - they also get no revenue because there is no incentive for anyone to do any work. Somewhere in the middle ground is a rate of taxation where the government will receive the maximum revenue. (Why a government should seek to maximize tax revenues is a very good question for another day!).
So quite possibly the RIAA Internet radio licensing fees are too high, and a lower rate would lead to more money being generated to share among writers, artists and bands.
I see this as a wonderfully promising scenario where a middle-class musician can work hard, make great music and get it played. The fees generated could be enough to make music a proper paying job, rather than just a fun hobby. The people in charge just need to get the numbers to work.
Before getting too excited about this, please take a look at an update here...
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