Shifting Sources of Artist Income: 1999-2012

If artists make more than three times the percentage from concerts as they do from recordings, does it matter if people are stealing their recordings?  Or, is that just a label problem?

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So, how do artists make money? The latest breakdown comes from the Consumer Federation of America, which just released an exhaustive report that deeply questions the entire premise behind anti-piracy campaigns, legislation, and litigation (more on that ahead).  And part of that doubt is whether any of this anti-piracy stuff is actually about artist welfare.

“If the demand for, say, live performances is enhanced by the ‘popularity’ of the artists generated from the number of distributed recordings (legal and illegal copies combined), then we obtain the conditions under which publishers of recorded media may  lose for piracy, whereas artists may gain from piracy.”

(Sources: RIAA, Year-end shipments. Concert revenues from Geoffrey P. Hull, Thomas Hutchison and Richard Strasser, Source: Hull, The Music Business and Recording Industry (Routledge, 2011) 3rd Ed., pp. 144. Pollstar, Year End Issues, Economist. Unsigned artists estimated based on Exhibit xx. Unsigned share grows from 0 to 45%. U.S. equals half of total (equal to U.S. share of label digital sales). Net cost savings equals – (.5 * reduced Album Revenues) +(.33 * Digital revenues) + (.35 * Increase in Concert Revenues). Album and digital cost savings based on Hull (2011). Concert cost based on Passman and Vogel)


22 Responses

  1. GGG

    As most people on here probably know by now, I’ll be the first to say artists can gain a lot from piracy (I am of the opinion the explosive growth of the indie music is largely due to piracy since it is such a hype-based, stay-in-the-know scene). Doesn’t mean you should ignore it or not try to fight it, but you should knowledgeably weigh the pros and cons of your specific case.

    And to the greater point, this is exactly why a giant push for streaming is so crucial. (And continue to fight for higher payouts for sure, just also push the idea on people). So many aspects of life, not just music, are moving and have been moving to digital/mobile/tablets. Sure, vinyl will probably grow for a few more years, but it will most likely never become the go-to way to consume music again. DLs might waver back and forth for a couple years, so we certainly shouldn’t write them off, but the best bet is to beat people at their own game, since we have tried and failed so hard to beat them at our game.

    And last, again, it’s not about throwing your hands up and forgetting about sales, it’s about understanding that it’s not the biggest piece of the pie anymore. Plan your career, long-term and short-term accordingly. Try new things. Be imaginative. Going through your career the same way people did in 1971 or even 2001 is just a silly way to approach things. Will everyone be able to succeed Of course not. But even when everyone did buy records tons of bands failed.

  2. Chris H

    More Propaganda from those who know nothing of the business. “AND PART OF THAT DOUBT IS WHETHER ANY OF THIS ANTI-PIRACY STUFF IS ACTUALLY ABOUT ARTIST WELFARE”…

    Mmmkayyy. Because viral video stars are filling up stadiums right? Examples? Artists need the MEANS to create a body of work that an audience can get behind, thereby justifying their long term live performance money. Take away sales (major or independent), you can take away promo money, which loses impressions at radio and video networks (if you are so lucky).

    There is no and has never been an example of an artist who came out of the social media/p2p universe who has had a superstar level career on the level of pre-1990 acts. Because exposing is fleeting, not consistent. That has and always will take money, paid for by fans. Arguing about the mechanisms is a separate argument altoghether.

    • GGG

      I’m not disagreeing with your larger point, but Justin Bieber gained traction on YouTube. Macklemore gained traction via the internet. Pretty Lights gives their music away for free and has a healthy, active career. The whole indie scene is based on knowing every new slightly hyped up band that gets on the tour circuit. Think everyone buys 10 Pitchfork reviewed albums a week? It’s just a different industry.

      To the point of nobody playing stadiums, that really has nothing to do with piracy and more to do with what you said, the fleeting nature of exposure/hype in our current culture. If Band X as 100K fans, wouldn’t matter if you sold 90K records or 10K records, you still only have 100K fans. Arcade Fire has almost 2M fans on Facebook, their first week sales were 150K. They are doing an arena tour again. Kanye has 10M Facebook fans, last I checked Yeezus was just around 500K. He’s doing an arena tour, too. Sales and fans are not remotely synonymous, and I would argue, while closer, were still never close.

    • Ron Swanson

      “There is no and has never been an example of an artist who came out of the social media/p2p universe who has had a superstar level career on the level of pre-1990 acts.”

      Yes, but none of the current superstar acts survive without social media. Poptarts satisfy the instant gratification the music consumers demand, and I see no reason why the traditional model will survive in the long run.

    • chxxlie

      “Because viral video stars are filling up stadiums right? Examples?”

      Justin Bieber for one, and OK Go might not fill stadiums but their success has been built largely upon their clever music videos going viral. 2 examples and I barely had to think.

      “There is no and has never been an example of an artist who came out of the social media/p2p universe who has had a superstar level career on the level of pre-1990 acts.”

      More people are able to gain exposure and make money from music now than ever. Your argument only supports the superstars/labels who previously monopolised the industry. Something like 98% of artists SIGNED TO MAJORS would fail prior to the internet, let alone those that remained unsigned. Now these bands and others are able to make a living from their talents, if not then at least more than they would’ve done. But no, it’s the billionaire, stadium-filling acts that we need to be concerned about, right? It’s also the huge difference in income between these acts and the vast majority (the 99% if you will) of smaller ones that throw average earning statistics like these so far off what’s realistic that they’re pretty much meaningless. This graph would undoubtedly look very different if you removed the average earnings of the top percentile from the equation.

      The music industry is being forced to adapt to a huge paradigm shift that rewards talent and work ethic more than ever, as well as providing consumers with more choice and greater accessibility to music they love, not just the small amount that’s made available. This is only a good thing.

  3. David

    Where do you get the idea that artists get 40% of live concert revenue? Net income is gross minus costs. It is relatively easy to estimate gross revenue, but costs are generally more opaque. I have seen someone in Billboard quoting a range of 25%-40% for artists’ share of the gross, but that was only for major stars, and even there 40% is the top of the range, not the average. Other knowledgeable people quote lower figures, like this one, who suggests that even for major stars, after all expenses, ‘maybe 10% finally flows to the talent’:

    For artists below that level of popularity, anecdotal evidence, like that collected by Chris Ruen, suggests that most of them don’t do much better than break even.

    • Boneman

      What if you’re a songwriter? Piracy really sucks then doesn’t it?

  4. Faza (TCM)

    Gee, I hope that there’s data in the rest of the study which supports the quoted speculation, ‘coz the graph above sure doesn’t.

    For a start, it’s pretty clear that artists these days are earning around 3/4 of what they were in 1999. Secondly, live income in 2012 wass only about 2/3 of what recording income was back in 1999, while combined 2012 contract royalties and freelance sales don’t quite add up to what live income used to be at the turn of the century. No matter how you spin these numbers, they won’t add up to musicians being better off now than they were in the Nineties.

    And that’s even before we get into how these aggregate amounts are split. It’s no big secret that the lion’s share of live revenue goes to a small number of legacy artists. This suggests that with time live incomes will begin to contract considerably and we can even see the beginnings of that when looking at what’s been happening between 2007 and 2012.

    Lastly, whatever is a “label problem” soon becomes the artists’ problem, either because the labels start to shift the burden onto their artists (through artifices like the 360 deal) or drop artists altogether, meaning that the artists become the labels (more than enough of that already).

    You’d think people would stop trying to push piracy being good for artists by now given since the idea has been proven rubbish time and time again.

  5. Peter

    Anyone who supports Piracy doesn’t participate in the music business industry and is only hurting it.
    The Idea of free music is wrong. All lot of you praise Piracy as a way forward to gain more fans and exposure.
    If that was the case then every single market out there would be giving this away for free.. however that is not so.. Being a musician or a recording artists is a Job. and for thousands of years artists and Musicians have been respected for their work way before the Monetary system was placed upon us.. The only reason why you are all supporting Piracy is because you feel like there is no way in combating the issue.. But you don’t realise that a few simple very simple moves from sites like google can Kill piracy over night. If you all focus on pressuring google to exclude illegal downloads from the search engines is a way forward. Pulling your content from streaming services like deezer and Spotify and sending you fans to legit services that are actually respecting and supporting artists is a way forward. Until Musicians ,labels dont realize this and until the Industry is taken back by creative minds and not corporate interest things will continue down hill..
    so you can al cry about not making money from your hard work … but really what have you done to make changes , we all whine and cry like little babies we live in a world where humans are exploited everyday .it seems like every industry out there is always fighting for their rights and respect.. Unfortunetely the Music Industry is a shallow place to be we need energy and strength and strong business leaders that respect art and not the wealth fame associated with it. Its a shame that musicians and labels are so blind to the fact that we are actually being ripped off here … Wake UP! especially the indie community that make up more then have of the worlds music catalog. tell your fans to support and purchase the music tell yoru labels to fight piracy and tell your distributors to exclude yoru music from services that are meaningless and disrespect art. most importantly go after google!

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  7. question

    1) That concert $ figure — I wonder how much of that revenue goes to the mega acts like Bieber, Drake, etc? If 90 percent goes to only a few acts, what does that say about piracy being good for business? Whose business?

    2) What if you don’t tour at all? Royalties/sales income is about 25% of what it was 10 years ago…

  8. Wurd

    All these “piracy is good for artists” posts ignore the fact that somebody other than the artist is ACTUALLY MAKING MONEY from the traffic in pirated material. If 100% of revenue from sites like isohunt, pirate bay, groove shark and mega upload went to the content creators, then this would be a legitimate conversation. Instead it’s pointing to the irrelevant data to prove an agenda that artists somehow benefit from not making money for their work.
    Who does benefit? In the short term, Consumers and the middlemen who serve them.
    Long term remains to be seen.
    Justin Bieber may have been discovered on YouTube but it sure as hell wasn’t what bought him his Bugatti.

    • GGG

      Since I think my posts are the only ones remotely defending the article (sort of, halfway) I’ll assume this is largely directed at me. In which case, I agree 100% about the money. Labels should have sued these sites, and still should, for a large cut of income. Instead they moved from Napster to random single mother and random college kid. Go after the source.

      My point is, as it relates to benefits, and admittedly it’s a very hard thing to prove one way or another, but if you look at the nature of some music scenes, it’s pretty obvious there are SOME benefits to piracy in terms of growing your fan base. Does it cancel out the losses and/or make a band more than marginally profitable? That’s a case by case basis.

      Also, JB has billions of youtube views. Could probably buy in a couple Bugattis.

  9. Radio and Records Vet

    I asked a question once: “Since when did you have to be a songwriter to have credibility as a musician?”

    At the local level, payment rates have been static for many years. Equally, so has average room attendance. I base this on a full 13 years of booking rooms, festivals, etc, and another 30 yrs as a working musician who has played in the US, Canada, and GB. Conversely, I’ve seen “asks” 3x higher for festival slots than I saw even five years ago. Bands we could buy for $500 for a local slot now ask for $1500, with little negotiating room.

    There is a way, as a performing musician (I don’t know about songwriting per se), to make a decent living. I know because I see it done daily. Too many of my friends are full time working players – and in most cases songwriters for themselves, eschewing the time honored tradition of hiring songwriters to create the works we produce.

    Bottom line = you can do it. You can make a living doing music. You may not make 100k a year (some do, some don’t, so what, next), but you can make more doing music locally/regionally than you might make working a retail/service job someplace.

    As a buyer, I most often use YouTube as my “demo” portal.
    As a consumer I use Amazon, iTunes, and Bandcamp.
    As a fan who wants to hear something new one time (or two), I use Spotify.
    I spend about $2000 a year on recorded music. I spend an additional $2000 a year at festivals and other local shows (mostly summer/outdoor type stuff)

    • Dave

      What about the independent record store? This debate has left them out of it altogether, and sadly, based on everybody’s discussions, their future seems to be the bleakest of all…

  10. chosenlovemusic

    J. Cole isn’t the only raw talent coming out of North Craolina. Check out unsigned, solo artist Chosen Love (formally known as Young D).

  11. Anarcissie

    I am curious as to the distribution of artist income as well as its total. My theory is that as distribution costs approach zero, one will see more artists succeeding on a small or modest scale and fewer ‘filling stadiums’, which means the economic model is moving back to a pre-industrial configuration — the reason being that it will take much less capital to assemble the material infrastructure for publishing. In the older precybernetic industrial model, profits are maximized by having a few standardized products and distributing them very widely, and since Capital dominates the business model, profits dominate the business. This is not necessarily good from an ‘art’ point of view, as profits dictate a search for the lowest common denominator. As to whether a very long shot at getting very rich or a good chance of making a living is better, that’s a matter of personal taste, just as the artistic results are, but it should be recognized that there is value on both sides of the divide.

  12. sub

    People so desperately want things to go back to “the way they were.”. Newsflash – they won’t. That doesn’t make piracy a good thing, and it isn’t “good” because of a smattering of unintended consequences. But it doesn’t even matter. It’s here, to stay. Figure out how to live with it, or get out of the business….

  13. Anonymous

    Few musical artists make any money. They are surrounded by people who demand money of them.