Posted by: Luke
The music industry is notoriously difficult to become established in. Not only do you have to stand out from the huge market of talented, unsigned artists, but you also have to be able to deliver the goods should be lucky enough to get a deal with a record label.
If you want to see just how hard it can be to make money in music, let's consider a real-life scenario:
We've just got signed to one of the big three record labels - Sony Music - and we're about to release our very first single; Super(fi)human.
We think the song has been a massive success. We sold 25,000 CDs, it got downloaded 38,000 times on iTunes and had 500,000 plays on Spotify. Wow. We'd never have imagined that our poorly-named, Chris Brown-inspired song about HiFi systems could be so popular.
With such success, you'd imagine we could just bow out early from the music industry and retire away in a country mansion, right? Erm...not quite.
Based on those sales/streaming figures, our song will have generated a tasty revenue of $138,315 (based on a $3.99 CD, $0.99 iTunes download and Spotify's standard pricing).
That's actually quite a lot of money! Not enough to retire off, but it would certainly make life a whole lot easier.
Not so fast. Of the $99750 we earned from CD sales, we actually only get to keep $12,967.50, with the majority of the money going to our label and distribution costs.
Of our $37620 iTunes revenue, we actually only get to keep $3429, with our label again taking the bulk of the money, and the rest going to Apple.
Of the meagre $945 we generated for half a million plays on Spotify, we only get our hands on $145.
So, after the money has been split up between all interested parties, we're left with $16,541.50. There are 5 of us in this band, so split equally between us I get paid just $3308.30 for my exceptional skills on the bass guitar.
For all the years of practising, rehearsing, gigging unpaid, purchasing new instruments and equipment, paying for studio time for our early EPs, the list goes on...our pretty successful, almost chart-topping song has earned me less than a newly qualified teacher's monthly wage in the UK (£2141.21 vs. £2295.25 - London-based).
It seems we're going to need a few more smash hits yet before we can consider our early retirement.
Alternatively, we could look to go on tour.
Once we've got a solid set list behind us, we can go on to earn a much more comfortable income through the medium of touring. Whilst touring, artists will typically earn around 60% of a concert ticket's value, with none going to the record label.
That means if we could sell out 10 small venues - just a 2,000 maximum attendance for each - we'd earn ourself £180,000 after costs if tickets were £15-a-pop. Now we're getting somewhere!
However, it's going to take us a long time to compete with some of the industry greats. One Direction earned a staggering $290m in 2014 from touring alone. Factor in record and merchandise sales - and believe me they have merchandise for everything - and they have a whole load more. It's estimated that in 2013 alone they earned over a billion dollars, or £640m.
Who's worth the most in music though? That's a surprising one. The genius behind The Sound of Music and a heap of other musicals, Andrew Lloyd-Webber, is worth an astonishing $1.2bn on his own.