Know These 12 Key Concepts Successful Musicians Understand to Generate Revenue (Continued)
Text by Randy Chertkow and Jason Feehan
- Spend less to make more
No business can last if they spend more than they take in. This is true whether you run a Fortune 500 company, a taco stand, or a music business. In all our research and interviews with successful musicians who make their living solely off their art, one common theme is successful musicians are scrappy entrepreneurs. They don’t spend money when they don’t have to. They keep track of what they spend on and take business deductions to lower what their business is taxed on and they’re prudent with how they spend money on the creation of their music. In short, successful musicians spend as little money as possible — when it makes business sense to do so. As a general rule, you should ask yourself: I spend this dollar, will it at least make me $1.01 in return? In general, we’re fans for starting your music business for $0 and using the profits to buy any services that you’re going to use.
- Learn how to boost income
You don’t always need to make a new album or product to get more sales. Often, it’s about boosting sales for what you already have. With the right promotion, say from a well-made video posted on YouTube (which should be linking directly to where you sell the track), your music sales can improve. Marketing and promotion is especially helpful at generating passive sources of income. This is because as awareness of you and your music grows, it increases the likelihood of your songs being heard more, often by people who may have the need and power to license it. For each income source you have, you should always ask how you might be able to boost it so you can make more.
- Build a team and use agents
Make the most of your limited time and energy by building a team around your music business. These agents might take a cut, but offloading this to someone else should give you more time to make more music, create new merchandise, or generate a licensing deal. If you can find business partners you can trust, you can use publishers, promoters, and bookers to make you more than if you were to do it yourself. As a result, you can grow other parts your music business or create the next album or video while they bring in opportunities for you.
- Start with your gut but decide based on the metrics
When generating ideas for you and your music, you need to start somewhere. Often this starts with your gut. But any good businessperson will tell you that you need real data and metrics to let you know how successful each of your initial attempts are doing in the real world. Sales figures for your music are the most straightforward example of what to track, but you can also use tools like NextBigSound, views on YouTube, Facebook demographics, and plays on Spotify to let you know how things are going. Tracking your stats also allow you to use techniques such as A/B testing to let you try out two competing ideas and find out which is the most effective. It could also help you spot a trend about a particular song you wrote which may lead you to try out things you may never have noticed. For instance, when our band, Beatnik Turtle, noticed the song we created on a whim based on a game from an independent board game company, “Were All These Beer Cans Here Last Night?“, was being downloaded 15,000 times, we realized we had something special going on. The result was a brainstorming session that led to us creating an entire album in partnership with the company, which cross-marketed it. This was something we would never have thought to do if we weren’t actively reviewing our data — in this case our .mp3 web stats from our website. The best business people take the emotion out of it and go off of the raw numbers.
- Understand the 80/20 rule
The 80/20 rule underlies the best decisions in business and it’s stated like this: 80% of the beer is bought by only 20% of the beer drinkers. Once you’ve scaled up your business, you will often find that 80% of your income is coming from just 20% of your sources. Get to know that segment of your audience well and enhance how you approach them, as they are the best customers to put your energy into. But it’s not just about customers, it’s also true about your marketing, your PR, your videos, and more. Focus on the items that are working well and see if you can continue to grow those opportunities.
- Decide whether to focus on B-to-B or B-to-C
Musicians are in a unique position. They can focus on providing their services and music to businesses (known as business-to-business) or directly to consumers (business-to-customers). Selling directly to fans is what most musicians focus on since traditionally they made money by selling albums directly to their audience or playing shows. However, many of the successful musicians we’ve interviewed put a lot more emphasis on selling directly to other businesses. For instance, licensing music to a music supervisor for a TV show, writing and recording music for a business or advertiser, or producing and recording other bands or musicians’ music are just three examples of b-to-b sales. Building a fanbase is a very difficult task and takes longer but has a higher upside since once you build that audience up, it not only can sustain you, but other people and businesses will pay you for access to them (think sponsorships, business partnerships, advertising, and more). Building business relationships requires networking with specific decision-makers and providing them business value. You can do both at the same time most easily if you have a trusted team behind you to help, but if you don’t, you should decide which one you want to target.
You can use these 12 key concepts successful musicians use to generate revenue and make more money from your music. Mash-up, mix, apply, and regularly review these 12 concepts to get more out what you’re already doing to grow your music business as well as help you come up with future business opportunities for you and your music.
POST/ABOUT THE AUTHORS:
Billboard Magazine called Randy Chertkow and Jason Feehan “the ideal mentors for aspiring indie musicians who want to navigate an ever-changing music industry.” Together, they’re musicians who are working on their 21st album, authors of The Indie Band Survival Guide: The Complete Manual For The Do-It-Yourself Musician, 2nd Edition (Macmillan), creators of the 15-hour online course, Making Money With Music (CreativeLive), and regular contributors to Electronic Musician Magazine, including the free weekly web column, “The DIY Advisor“. They also teach, speak, and consult about music business including speaking at New York City, San Francisco, Austin, Chicago, Oklahoma City, and more.