The broke musician is right up there alongside the starving artist stereotype because, unfortunately, it’s true for the most part.
You might see artists with millions and millions of streams and equate that with millions in the bank, but sadly that is not always the case. The truth is, many artists you consider successful are actually broke.
In this article, you’ll find out why many musicians are successful but broke, and how you can avoid heading down the same route.
The difference between a top musician and a broke musician
As with most industries, the music industry has varying levels of success. We have the top multi-millionaire artists in the top 1%.
However, even this top 1% is shrinking and in all honesty, your favorite musician probably isn’t earning as much as you might think. An awful lot of top musicians get mere pennies of the value they are actually worth.
To put this in perspective, only around 7,500 artists on Spotify bring in an annual streaming income of $100,000 – out of 8 million.
Let’s look at the reasons why.
Reason 1: Deals that break musicians
This is probably one of the main reasons your favourite artist does not earn as much as you think.
They find success quickly and jump in to signing a deal with a record label or manager who ends up taking a hefty cut of all the artist’s income: streaming revenue, merchandise and live tickets. This is how deals are made, as they invest in you as an artist.
However, some incredibly bad deals have been signed because the manager or label will offer a very appealing advance, for example, a couple of hundred thousand. Would you be able to turn down that kind of offer? Especially early on in your career.
Likelihood is, these artists haven’t seen that amount of money before, and they sign the deal without reading the small print or putting much thought into the future – they just grab the big pot of cash.
You would have thought that after selling 10 million records, TLC would be automatic millionaires, but in actual fact, at the highest point in their career, they were earning less than $35,000 a year each. For 10 million album sales, it just doesn’t sound right, does it?
Here’s what happened: TLC had signed deals with both a manager and a record label, resulting in their earnings being greatly diminished by each party. This happens to artists worldwide, and it’s still something to watch out for today.
In 2018, Lil Pump voided his contract with Warner Music. He was given an advance of $350,000 and the opportunity to earn $500,000.
He caught success early on and as this contract was signed when he was a lot younger, he was able to leave the deal and take up opportunities offering up to $12 million after the chart success of Gucci Gang.
If he had got stuck in that contract, or did not know or realise there was a way of leaving it, Lil Pump would be earning a fraction of what he is now.
Reason 2: Relying on streaming revenue alone
Artists tend to rely too much on streams, and as a result, in today’s digital era, they are not earning a lot of money.
Don’t get us wrong, here at Burstimo we love streaming platforms as they allow musicians to reach a wider audience at every level. They are fantastic exposure tools.
However, many artists look at streams the same way as they do album sales. Some of us might remember buying physical album copies from record stores, usually around the £10 mark – this just doesn’t equate to streaming platforms unfortunately.
If you look at the Official Charts in the UK, 1000 album streams equal one sale. That shows how different they are!
Let’s break it down…
One stream is $0.00429. 1 million streams are approximately $5000.
That might sound a lot of money, but if you factor in who might share that cut with you – the label, manager, producer, songwriter, and potentially other artists featured on the track – the profits can dwindle very quickly. To top it off, one million streams is not an easy feat to achieve either!
Focussing and relying on streams is not the route to a stable artist income.
Even artists like Charli XCX, who adapt their music for streaming platforms (by creating hooks or playing the chorus first), do not entirely rely on streams. The artists that do are are the ones who complain and consequently, become broke.
Reason 3: Artists are broke because they don’t release enough music
A lot of your favourite artists simply don’t release enough music to make significant money. The fact is, the music industry is oversaturated.
40,000 tracks are uploaded to Spotify every day. There are millions of songs on the platform that haven’t even clocked 1 stream. So, if an artist chooses to release just once a year, or not even that, they simply can’t expect to be making any serious money.
The reason for this isn’t just the fact they won’t get enough streams, but because they won’t keep their fans engaged enough for them to continue their support.
The music industry has changed. Because of the digital era, there is almost infinitely more competition, and so much music to choose from means superfans are harder to secure. When artists had to pay to create and distribute physical music, there were a limited number of bands with superfans being able to buy every release, album, merchandise, and go to every gig.
How to NOT become a broke musician
Before this gets all too depressing, let’s summarise how you can avoid this sort of situation.
#1 Concentrate on getting superfans
Keep people interested for as long as possible with consistency, new releases, new content, playing live – basically giving your audience as much as you can. Only then will they give back to you.
#2 Always read the small print of any deals you sign
Whether it’s a deal with a record label or a manager – get a lawyer, a friend or another pair of eyes to read it with you. Ensure it is a fair deal and you know exactly what it means, or indeed if it is the best contract you could get.
Remember, even if the advance is incredible, tread with caution as it could trap you further down the line.
#3 Don’t be the artist that signs too early
When you concentrate on creating a solid fan base who cares about you, listens to your music and comes to your shows, by the time a good label deal comes to you, they might want you more than you want them. This is when the best deals are made.
It becomes more of a win-win situation as they know they are getting a good deal with you and by investing in you, are prepared to take less of a cut because you aren’t so much of a risk.
#4 Avoid going broke by multiplying your income streams
Don’t just rely on streaming platforms, even if you are getting millions of streams! Some of the world’s most prominent artists do, but it’s still not enough to secure that stable income.
Look at the other ways you can earn money in the music industry, like selling merchandise, playing live, securing a sponsorship deal (especially clothing brands), or even product placement.
Product placement is becoming increasingly more popular, especially on music videos. It was pretty commonplace in movies where brands paid to have actors use their products on set.
It actually can earn artists big money. The Chemical Brothers did a whole video with F1, while in a Little Mix video, they casually put down some Beats headphones in one small scene and there’s no doubt they would have been paid to do this.
Don’t be a broke Musician! Be a successful one
The music industry has plenty of opportunities, especially when you have a decent-sized audience, so remember – don’t get stuck on pursuing streams and don’t rush in to signing any deals without very careful consideration.