The relationship between time & money in the music industry

Reading Time: 3 minutes

Written by:

Throughout the age of EDM, music producers have constantly been investing time and money into their careers. Whether it’s producers with a long-lasting legacy such as Eric Prydz or Tiësto, or upcoming artists making a dent in the industry, a commitment of time is essential to becoming successful. Our fascination with a producer making his way up through the music industry to stardom is well stated by Drake’s lyric “started from the bottom… now we’re here”. Yet amongst all of this money and time that a producer finds themselves with, the truth is that the music industry is regularly a monopoly of the major record labels using artists as a vehicle to supply a product to consumers.

The way in which artists are able to generate revenue in the music industry seems to be pretty complex. But to simplify things, it often happens when a track of theirs is either sold or played. This includes (but is not limited to) streaming, publishing, live performances and brand deals. In this article, we’re going to discuss how artists invest time into their careers, and what the financial return on investment is within these cases.

Many producers typically invest dozens of hours into the creation of a track. But in terms of revenue from a major record label, they often only receive 15-20% of total revenue. In contrast, independent labels typically offer 40% or more within the contract terms. But despite any revenue that a producer may generate from a sale/stream of their music, they often have to pay income tax and many more deductibles (such as artist management fees) on whatever they earn. In a scenario in which an artist receives a total of $10,000 in royalties from a track, they may only be able to keep $5500 from it (depending on the terms of the management deal and tax rates within their own country). In a time in which artists often tend to release only a few times per year, it doesn’t take a genius to figure out that even people signed to major record labels are potentially living on minimum wage.

RED ROCKS. ROWDYTOWN 9/29. Supporting @biggigantic See you soon?

A post shared by (@3lau) on

With a lot of music being consumed on streaming sites such as Spotify, Apple Music & Deezer, recorded music is often a great way to spread exposure of an artist or track. With the ability to get featured by high-profile playlists/channels that have millions of followers, the opportunity of distribution amongst a large consumer audience is absolutely unprecedented. However once more, the artist is often the subject of heavy fees and commissions related to promotion and other departments for their track. In a scenario in which a PR company charges $1,500 for a campaign and an independent label taking 50%, a track would have to generate approximately 750,000 streams just to break even. Due to the large amount of time artists already invest into their careers, many are learning how to promote their own music in order to avoid having to give 50% to a record label.

Although some artists may argue that music streaming has diminished their profits within the music industry, the opportunity for distribution of a music brand is pretty incredible. Whether it’s social media influencers using a song, or culture/meme pages featuring merchandise from a producer, the availability of access to a successful career is certainly now widespread throughout the music industry.

In order to sustain the return on investment on their time producing a track, producers often find themselves regularly playing shows simply to make ends meet. With record label payouts only happening once every 3-6 months, living off royalties is certainly not a viable pay to live on. Therefore, artists such as Tiësto and Calvin Harris often charge upwards of $100,000 per show in order to generate revenue from their music. Essentially, the social media content and music provides the branding necessary to warrant high performance fees and thus live from their music career.

But for those artists unable to play shows or regularly release music in order to generate significant income, the music industry is a tough place to be. After spending countless hours perfecting their craft of music production, they often see little to no results. Although the consumer is able to have access to an almost unlimited library of music for as little as $5 a month, the artist is often the party who loses out on the financial results of their music. As a result, creativity and motivation suffer greatly and the will to continue producing becomes harder and harder. Without a strong network of contacts to provide large streaming numbers, or large capacity shows, the artist might as well be on a sinking ship struggling to stay afloat. Although the music industry can yield some amazing financial returns on time, it is a shame to learn that many artists are unable to financially sustain themselves from their passion.

Emotional night @edc_lasvegas ❤️❤️

A post shared by Tiësto (@tiesto) on