Making Money in Today’s World of Music

In today's world, there are a variety of ways songwriters and artists make money in the music business. These include, but are not limited to: video games, on-line streaming, traditional radio play, downloads, songs in films, TV shows and commercials, webisodes, ringtones, e-greeting cards, lyrics on t-shirts and jeans, merch bundling and more

Some of these channels generate a lot of money, others very little and some are good for promotional benefit only.

Each subset of the music business has its own set of rules, contracts, licenses, considerations and royalties and differ depending on whether you are a songwriter, an artist, or both.

Here are basics of what you need to know about how to make money as a songwriter and artist in today's world of music.


Record Sales

Every time a song is downloaded or sold in a physical form (CD, vinyl, etc.), the songwriter and music publisher are paid a combined 9.1¢ from the record company. For example, if the song has 100,000 individual track downloads from iTunes and is on a 500,000 unit selling album, the total “mechanical” royalties would be $54,600 ($9,100 + $45,500). In addition to these “song” royalties, the artist would also receive recording artist royalties for each sale based upon the royalty provisions of his or her recording contract.

Radio

If the song becomes a major radio hit, the total songwriter and music publisher “performance” royalties could easily exceed $700,000. These royalties come from the fees that are negotiated by the performing right organizations (ASCAP, BMI and SESAC) with the many users of music (radio and television stations being the largest) and which are split 50/50 between the songwriter and music publishers involved with the song. Writers and publishers have to join one of these organizations to receive these royalties.

The royalties in this area can vary greatly depending on which organization you join as well as how many times the song is performed and the type of station it is performed on (a performance on a large station will be worth more money than a small station, etc.). Also, ASCAP, BMI and SESAC give extra bonus monies to songs which generate a great many radio performances in a 3 month period; sometimes tripling the amount of money for a hit song (e.g. $200,000 in royalties becomes $600,000).

Streams

The song also receives many thousands of streams on the Internet (web radio) resulting in additional song royalties to the writer and music publisher. The recording artist, on the other hand, receives even more money for these very same streams of the record from SoundExchange (the entity that collects for artists, labels and background musicians and vocalists). An artist has to join SoundExchange to receive these record “performance” royalties. There is also no fee to join SoundExchange.

Movies

The song is put into a major motion picture resulting in a $40,000 songwriter and music publisher “synchronization” fee. If the film were an independent feature film, a documentary, a student film or a film being shown only in film festivals, the fees could be as low as $500 or “gratis” depending on the budget of the film. In many cases, the writer and publisher will negotiate “step deals” where they receive additional “synch” monies if the film achieves certain box office numbers. In addition, every time the movie is shown on broadcast television or cable, the writer and publisher will earn monies from ASCAP, BMI or SESAC. Once again, this shows the importance of registering with a performance rights organization.  If you are not associated with ASCAP, BMI or SESAC, you will not get your song royalties for performances of the movie.

If the original master recording is used in the film, the fee will normally be the same as negotiated for the song and is shared 50/50 by the record label and the artist.

Video Games

Based on the song's success, a video game developer wants to use it in a Guitar Hero / Rock Band type game. As opposed to most video games that pay only a one time “synchronization buyout” songwriter / music publisher fee to put the song into a game, many music intensive games pay a song either on a per unit sold basis (e.g. 1¢ per game sold) or on the game reaching certain sales plateau numbers (e.g. $ 4,000 to put the song into a game with an additional $4,000 for each 250,000 units sold). Additional monies are also earned when a song is downloaded into a game. As many of these types of games sell millions of units, the monies can be substantial for the songwriter and music publisher. If the original master recording is also used, the record label and recording artist will receive the same amount since they usually license on the same basis.

With Rock Band, you can make your song available for gamers to buy and play. Each time your song is bought, you are paid a fee that you must split with the publisher (after all, the song was “reproduced” when it was bought and downloaded).

Television

Anytime a song is placed into a television program, the television producer will negotiate a fee with the music publisher of the song who then shares the monies with the songwriter. The amount of the fee will depend on many factors including the show's music budget, the stature of the song, the length of the license, the distribution media (over-the-air television, cable, the Internet, downloads to mobile phones, etc.) and how the song is used in the program (sung by an actor, played in the background, used as the theme, etc.), how long it is used for (10 seconds, 2 minutes, full use), among other factors.

Some television series ask for an “all television” license which will allow them to broadcast the program on all types of television media including Internet distribution. Virtually all television licenses have an option for the TV show producer to distribute the program to home video. Some include home video in the original license without making it an option and pay more upfront. Other series license for all media which gives them the right to distribute the series over all distribution platforms. And there are many variations in between. For example, CSI will ask for one type of license and American Idol a totally different type of license.

Fees range from $9,000 to $30,000 for the use of a known song in an episode of a successful series depending on the type of license and the media requested. The fees for lesser known or new songs are less than the above.

If a TV show wants to use your song as a theme, the producers will also many times license the master recording of the song.  For example, The Sopranos TV series not only used A3’s song “Woke Up This Morning” (through a license with their publisher) but also licensed the original master record from the group’s record company under a separate negotiation. If the song is specifically written for the TV show, however, the production company will virtually always own the publishing rights and master recordings. 
 

Broadway Show

The song is placed in a “catalogue musical” similar to the Journey songs used in the show “Rock of Ages” and the Green Day songs in the Broadway show “American Idiot”. The deal that the music publisher agrees to is one that pays all of the songs in the show a percentage of the gross weekly box office receipts. The show becomes a big hit grossing 1 million dollars a week in New York with the writer and publisher earning $200,000 in theatre royalties for the 1st year of performances.

Conclusion

These are just some of the ways that music makes money in today's world. Granted, you have to have the right song or record as well as be knowledgeable enough to take advantage of opportunities when they are presented to you. That said, opportunities to make money from your music are greater than ever before. Recognize them, take advantage of them, and enjoy your career in music.

© 2010 Jeff Brabec, Todd Brabec
Information contained in this article is from the Jeff and Todd Brabec book "Music, Money, And Success: The Insider's Guide To Making Money In The Music Business" (Schirmer Trade Books/Music Sales/505 pages/6th Edition). See also the Brabecs' website: www.MusicAndMoney.com

Please Visit ArtistHouseMusic.org for more related articles.

  • http://www.jonathalaurince.net Jonathan Laurince

    Great information… Thanks

  • Japreme Eloheem

    The Old-Man appreciates the knowledge.

  • http://blkdragonent.com Javas

    where do we get listings to submit music for these organization you speak of. is the only way to sign up for taxi are broad jam. their pretty expensive , so before i go that route is their any other methods to submit music for video games, movies ,commercials, back drops etc.

  • Horace Moning

    Hi i have a record label call Moning,Records, and i wrote two demo is there any information to help me get started.

  • JOE K.E..LLAM

    HAVEN’T CAN’T GET STARTED

  • http://WWW.KEITHARENZ.COM keith arenz

    For anyone serious about their songwriting go to Barnes and Noble and purchase a book called SONGWRITERS GUIDE 2010 which is published by writers digest. The good news is
    the days of a big break or knowing someone on
    a inside track is helpful but not the main ingredient. every music related company from publishers to agents have a how to contact section which is the format they ask you to have your submissions prepared.If you follow these to the letter you will have your material listened to.If you don’t they trash it feeling you did not do your homework or cannot follow direction

  • http://radiusarts.com Michael Bishop

    I have been fortunate enough to have music used in all of the formats
    you mention in the article.Things are quite different now and working with a company like Tunecore is a great place to start. Still, magic
    can happen. While I was dropping in music to a feature film in the editing bay at Cannon Films, The editor went into the hall to talk
    to a very tall, well-dressed man. He returned with the man and he asked to sing for him, accapella, right there. The editor nodded and
    The man said “the Blues” I sang “Born under a Bad Sign”. Well,” he
    turned out to be Andrei Konchalovsky, the Russiam film director
    of “Run Away Train” starring John Voight. He hired me to sing the
    title song and 2 other scenes. I also produced the sessions and
    Tangerine Dream who was scoring the film.the film was “Shy People” starring Jill Clayburgh and Barbara Hershey.This was agreat leap in my career.So use whatever tools you can and be ready for
    opportunity when it comes knocking.
    Michael Bishop

  • bobby tramble

    im lovein the info….

  • http://ItsMyUrls.com/PurpleChrome PurpleChrome

    This is wonderful information. Soak it up ppl…
    *NY Underground Ghost Producer/Singer/Songwriter/Pro Tools Engineer

  • http://ItsMyUrls.com/PurpleChrome PurpleChrome

    This is Wonderful Information. Soak it up ppl…

  • pkk

    Thas WassUp

  • http://www.myspace.com/gezro J.RO – Jennifer Roberts

    Tunecore, your company is great and great at supplying useful information. Thank you.
    TUNECORE, you should also consider writing books related to music and advertise more as many Artist are lost in this business. It is beyond complex and everday, there is more to learn. The key is seeking, persisting and acquiring useful and relevant knowledge in the industry.

  • Eddie donahoo

    Hello Im back IM known by Eddie Donahoo.
    Some people refer to me as Ka Horus ben pathera Harakalti the genius.(Ha Ha Ha)
    My recent activities alot of the massed public is not aware of.
    Ive only disclosed my recent book contents to my wife.
    Im really delighted with the technology and theorectical propects proposed by myself.
    Mulitasking is not easy, Far as my music goes im working on a great album.
    Ill be releasing the album that im making infrence to in a couple days.
    Ofcouse my album will be stupendous ive completed new material merged with material that Echoes my ceedings of a diffrent order of life and a achievement of goal etc.
    Im looking forward to working with Ms Daniella Kohovy from tunecore.
    Ive found myself in sorts appalled by the condition of music thats considered current.
    All the talk about the club and sex and personal body parts and the likes is corrosive to true art and artiste.
    The executives who are generating monetary gain from this need to modify their thoughts of a money making machine And consider what these messages have done to the psyche of the impressionable children and masses abroad.
    Despicting what is sexy can be said in a more decent context such description sultry but not vulgur every drop and grimemy.
    If Love is just penetration and vistual flesh and curves mixed with money and diamonds The Children will find morale and marriage kinda vain including a misunderstanding of the family nucleaus and their Feminine and masculate roles.
    Lets broaden the art and lift the bar with language education buiness and true desire.
    Incaceration is a reality for gangsters and death let this be known as fact premature.
    As rappers have experienced great hardships and being incarcerated and maimed for trying to make a violent life a reality.
    The outlaw nature is not a reality without the penality and all who try will be in magizines etc saying in vibe the source etc I messed up.
    We cannot go around having perverted sex everyday as decent human beings and find ourselves being fullfilled we will only find unquenched desire and weak support.
    Lets improve are buiness mind nationally and are spirits lets try for a better tommorrw im cleaning my act up Holla.

  • Jon Goble

    got a few good songs for sale

  • J-Fresh

    Eddie Donahoo, you are crazy man. There is much more out there than just rap right now, maybe thats all you hear on the radio but that is a very small portion of what exists. Also, modesty is a virtue 😉

  • Horacemoning

    Where can i sell my songs.