The Big Question: How To Make a Living In Music?

hi everybody I'm Rick Beato on today's episode I'd like to respond to a question that I got from one of my viewers last week and it was a question without a simple answer but I'm going to try my best and the question was how do you make a living in the music business well that's become more difficult as the past 10 years have proven for most musicians people always look back to the advent of streaming and Napster that you know as the downfall of the music industry as far as a way to make a living but it actually started a little bit before that it started in 1996 with a thing called the Telecommunications Act of 1996 that was signed by Bill Clinton that essentially took what in 1983 was 50 companies owned 90% of all the media and entertainment companies in the United States and it shrank down to 6 and those six are Comcast Walt Disney 20th Century Fox Time Warner CBS and Viacom these six companies control everything that we hear see and read in the United States with less companies involved that means less people are making the decision or people have much much more power consolidated to make a decision on what is going to be played this led to more homogenized playlists that we see today I mean it's still the case it didn't really you didn't see the effects immediately in the business until 1999 when Napster came out that's when it started to the shift really started happened that happened to be the biggest year 99 and 2000 were the biggest years in the music business from a profit point of view I believe 2000 was the biggest year of all-time with about two point four five billion dollars of profit versus 2015 which is down was down to about two hundred and forty million dollars in profit this has made it more difficult for people that are not only artists but producers engineers and everything associated with that record labels publishers you name it to make a living I'll give an example around 2005 when I was producing records a typical new band would have a budget this would be a rock band but a typical new signing that didn't have a buzz around it would have about a hundred and fifty thousand dollar budget to make their record bands that would have been in wars whereas multiple labels have bid for them could be anywhere up to two million dollars or more I've had instances where bands had budgets like that where they would have in their budget they get a bidding war with five six labels are interested in signing them and they get things like one hundred and fifty thousand dollar equipment budget two hundred fifty thousand dollar tour support seven hundred fifty thousand dollars to make their first record and they get a guaranteed second record well none of that happens anymore that stopped happening in the mid-2000s nowadays people that get signed no matter what the genre is are typically people that are already successful and the labels act as an amplifier too that they can take things that are happening on if somebody has a hit on YouTube or somebody has a hit on radio or whatever it may be the labels can come in and do that now what the labels do is they signed acts to 360 deals a 360 deal essentially takes your live performance money a portion of it your publishing your record royalties your merchandise essentially everything that you make money at the record label takes a piece of that didn't used to be the case people assigned record deals before 2005 were not signed to these kind of deals but this has really become the way that record deals happen now one of the reasons being is that there's just not the amount of money that is produced from selling physical or digital recordings so as I said before the music industry hit its peak in the year 2000 you had acts that would have you know multi-platinum records you'd have bands like NSYNC and Backstreet Boys selling 10 million records each or more and that just doesn't happen this year I mean if a band or an artist sells a million records it's a miracle as of a couple months ago only drake taylor swift and adele had sold over a million records this year let me put that in perspective on what that means in the old days a producer's typical advance on a song would be about three thousand dollars depending on who the producer was this is in this is your generic production cost so the label pays you $3,000 per track and that's a recoupable amount of money meaning that it has to be paid back before you start making royalties not only that but the record has to recoup its cost before you start making royalties and sometimes records just never recoup because they spend so much money on them so it's not just the money that you make if you do ten songs you make $30,000 it's not just that money that needs to be recouped the money is recouped from the band's profit that they get from their percentage from the label back ten years ago fifteen years ago a typical new band would get 13 points meaning 13 percentage points out of which 3 points we go to the producer 1 point we go to the mixer a big-time producer that produces hits like a Max Martin people like that would have you know can get $100,000 for a track plus they're a writer on it so they're making publishing royalties now since there are so few records being sold now the amount of people that are able to make a living from that is just diminished dramatically and that this doesn't fall upon the artists or the label it's writers in Nashville for example if you were writer 20 years ago you could survive off having album tracks meaning non singles on record because you would have records it was me gold records plenty of Records or platinum records and your album tracks will be worth some real money I mean today an album track may be worth you know if you're part of a three-way split $3500 something like that and the only way to really make it is to have a hit single now people always wonder how much hit singles bring in for a writer or an artist well really it's the writer that are the ones that are making the money typically a song for example in country let's say a number-one country song will bring in from terrestrial radio like BMI and ASCAP that collect money from radio airplay will bring in about a million dollars a top 5 song will bring in a million dollars in country and in pop music it'll bring in probably one to three million dollars so that money is split between the writers if there's three writers and it's three million dollars everybody gets a million dollars uh there's also your mechanical royalties which is the physical sale of a physical CD or a for a digital download that you make money on a million digital downloads is probably worth about a million dollars or so you may get that money you may not get that money there are so many elements to this that making money from mechanical royalties is next to impossible and most bands that make records never ever make any money from physical sales of the record they have this thing called cross-collateralization so if you're a band that does three records let's say you spend $300,000 on your first record but only make back 250,000 dollars well that $50,000 that you didn't recoup gets added onto your next bill and your next record cost $400,000 but you only make 250 on that so there's an extra hundred and fifty thousand plus the 50 thousand that's two hundred thousand dollars well you'll probably get dropped then but if you didn't get dropped then that debt carries on to the next record and so on so for so labels have always found a creative ways of not paying the artist in it on things like that the next thing is how do you make money off Digital streaming that's been the real trick now there is a thing called sound exchange that many people don't know about and don't sign up for but sound exchange is the way that you can make money from Digital streaming rights things like YouTube Spotify Pandora Apple music sound exchange will pay you if you're a performer or producer on a particular record I get sound exchange checks every three months because I've been a producer on certain records that have that are I mean anything that that that you sign up for that on records that you've produced or played on you can make money from sign exchange as long as the paperwork has turned in on time I had a thing where there's a record that I did years ago that's done really well on in the digital realm that was never the contract was never signed with sound to agree to the sound exchange money and I never received it until recently but I didn't receive the money when that record is actually selling a lot so sound exchange is something you need to really look into um merchandise selling t-shirts selling anything with your band name on it or your you know you as a solo artist your name on it um developing a YouTube following can be hugely successful thing for artists one of the things about YouTube and music is if you look at the top people on YouTube and I'm going to talking about in the top 10 the things that are people playing with toys or you know the gamers that that I have you know that have 50 million subscribers I'm talking about music the top music people the Taylor Swift Justin Bieber's people like that they have billions and billions of plays of their song and one of the things about music that's unique on YouTube is that people will listen to the same song over and over and over and over and because of that if you have advertising you see the ads that come up on YouTube videos like this one for example that advertising pace YouTube or Google and then YouTube gives the artist or the Creator a small amount of that now when you're talking about 13 billion plays let's say Justin Bieber's got 13 billion views on his the aggregate number of all of his videos and he's making let's say $3,000 per million because that's pretty much what what YouTube works out to be let's say roughly then that's a lot of money now the way that YouTube pays out is really difficult to understand I don't understand it I mean I've been making videos here for the last five six months and that's it and what I've gathered is there's a thing called watch time it's not how many views you have it's how long people watch your videos for and that's kind of what you're paid on the more watch time you have the more money Google pays you and it's a very small amount anyways but you can become a massively big artist by having huge hit songs as a YouTube artist or as an artist that you know somebody that starts on YouTube and then generates millions of subscribers and has millions of views of their videos and then actually sells physical or digital product meaning songs or merchandise things like that you've got things like live performance that's a huge huge moneymaker the top earners in the music business are people that are have huge live draws there's really no substitute for that and that's something that can't be taken it can't be stolen they can't steal your live performance same thing with merch I mean people can do knockoffs on your merch but really merch is a great way to sell things that and generate income for your for your as an artist or as a band to keep things moving with your career um so if you got digital sales you have vinyl sales if you're a hip indie rock band and you have a great following you can sell vinyl anybody can sell vinyl you don't have to be a hip indie rock band you can be a not hip band and sell vinyl still but vinyl sales are a are another way to make the lit make money in the music business there's this whole idea of people that go to recording schools and I see this all the time so I'm a music producer and I record rock bands country bands things like that I've done it for 20 years well the amount of studios that there were 20 years ago there were tremendous amount of studios people would go to studios all the time because people had budgets to make records now people make records in their own personal studios whether they're in their house or they're in a free-standing building whatever it may be records are made by producers or engineers without huge studios and huge tracking rooms it's just the way the music business is now because there's no budgets for it so people that go to recording schools and get degrees the ability to work in the business is shrunk so much that there's unless you're going there to make a living as a producer using the skills that you've acquired the skills of being an engineer there's just not the available work out there in studios to do it I've had the same engineer for the past 16 going on 17 years that I've been working with he went to Full Sail and I've never needed another one so anyone anyone else that has gone you know to any of these recording schools and come out and I used to see him all the time when I worked in a commercial studio I had a room in a commercial studio I would see guys that would go in turn four a year two years and they'd never get a session ever and this is back when there were actually budgets to make records they would do that and then eventually they would just give up and move on and get another kind of job so that's one thing that you really need to keep in mind if you're going to go out there and get a degree in recording engineering if you can't put it to use as a producer then it's not going to be much good you're not going to be able to make a living doing that now one of the things about being successful as a producer it's not just about being successful making records you have to be a writer because that is a skill that labels expect if you get hired by a label that you're able to do you can contribute on the songs you have to be able to engineer you have to be able to mix you have to be able to find talent nowadays you have to be able to understand social media because social media is not only for the artist but it's for the producers as well I don't do social media on my production work I still work full-time as a producer but when you look at my youtube channel or you look at my Facebook page there's nothing about any projects that I'm doing almost nothing I rarely post anything about what I'm working on that's just something that I've never done people wonder why and I'm not sure why I still work as a producer I get calls from bands and solo artists and if any of you out there are you know wondering if I take on projects I still do I don't take on a lot of them I take on only really good ones that I want to do but I still work as a producer full-time the things that I do in my production work is I do right I have a publishing deal and I've had one on and off since 1991 I'm with Sony publishing now I've written many songs on major label records I've had a number one song as a writer I've had platinum records as a producer I've had gold records as a producer but the ability to really make a living off things like royalties nowadays is almost impossible as a producer producers in the 90s for example you'd find people like Brendan O'Brien for example or Rick Rubin that would produce these multiple multi platinum records over the course of ten years they might have had you know Brendan probably had Oh 20 30 40 multi-platinum records and he's making money he makes his three points as a producer like everybody does but he also mixes his record so he makes an extra point for mixing it two plus guys like that get a higher feed to make a record as well but those production points don't really pay anything anymore typically a producer back then would get three points like I was saying meaning three percentage points based on net profit those three points would equal about three hundred and some odd thousand dollars per million so if something went five times platinum you'd have three hundred thousand times five so one point five million dollars so a 10 million selling record would be three million dollars if you look at Adele for example whose last record sold ten million twenty one so ten million more than ten million so the producer on that would have gotten that kind of money on that I think private sold twelve fifteen million worldwide but these instances are so rare that they're almost impossible and that's not really a sustainable way to do it since no records sell a million copies virtually no records and sell over million copies there's really no money in the back end of making records unless you're a writer so that particular skill is extremely important because labels will hire you if you can write and our producer if you can also engineer and play instruments that is HUGE I do a lot of Records where I play everything on it and because of being able to play multiple instruments it's enabled me to work for years people want to know at record labels if they're going to hire you that not only can you deliver the record but if you play it cuts down the cost tremendously it also lets them know or have an idea on what they're going to get and a lot of the big producers of the day the guys like Brendan O'Brien played on a lot of Records Daniel Lanois they plan all the records that they do they're really accomplished players their sound is tied in with the sound of the group's they work with Daniel Lanois did Peter Gabriel so record 1986 and came right back in 87 and did Joshua Tree with u2 those are incredibly different sounding records he's able to do records with really varied artists and make incredibly great records that sound that don't sound like him but he does have a sound no question about it so those avenues are very difficult but they the songwriting part of it is probably the most important part because that's still the place where you can make money if I were going to give advice to people out there most important thing would be hone your abilities as a writer if you're a pop musician or rock musician a country musician if you're into hip hop anything any style of music the writing part of it is the most valuable more important than than anything really because those are the people that generate money when you look at artists that on the country charts for example most artists don't write their own songs so they don't make any money from that if their songs become huge hits it's the writers that are making all the money it's the Max Martens out there it's the you know read Aikens and country people with Dada or Dallas Davidson your ability as a writer is directly linked to your ability to make a successful income getting your songs placed is incredibly difficult though it's next to impossible that doesn't mean it can't happen but it's very very difficult you also have licensing licensing for film and TV is another avenue to make money it's become much more viable for people nowadays it can be either in a television show in a movie it can be an original song or it can be library music that it could be instrumental orchestral music many different forms there's tons of libraries out there getting your music placed is not easy people that work for libraries that are established entities that have been around for a long time where the people that run them have connections direct connections with movie studios and with television producers have a tremendous advantage in actually getting they're placed for performance in those different mediums but that is a really great way to make money if you're good at it a lot of these things that I'm talking about are all about how good you are at doing it if you're not a great player then and you're not a great engineer then being a producer is going to be really difficult now you may be a great songwriter but getting production work is going to be next to impossible you have to really be able to do it all that's what people look for so in the production part of it that's that's kind of a key thing on the writing part doing licensing you can take your time you can work on pieces do library music like I said and join get placed you can put things up on YouTube you can make videos with a static image and sell them to iTunes you can also write me music for film or television you can do this it's more difficult to do if you don't live in a city that has a lot of post-production work I know plenty of people that make their living writing for commercials I know people that make their living writing scores for films but it's difficult it's very difficult you have to have connections and you need to start usually start small with doing independent films that's the best way to do it or you might meet somebody that you know here's something that that you did that they liked the sound of and they hire you because there's people that are rock musicians have become film scoring people you know Danny Elfman uh so that's a possibility as well a Hollywood film score I'm not sure with what people make a million dollars first score or something like that depending on if it's a big blockbuster but that is definitely another viable way to make money you can get known by doing things like putting up like I was saying a static image and writing your own cues and putting them out there for people to see if somebody might come across and say wow I like the sound of this I like this guy's style you could do videos like I'm doing and somebody hears something and says I want you to do a film score for me film scoring is another avenue to make a living though it's very difficult there are also ways to make money through distributors if you have if you're an artist and you have a you could be a classical artist you can be a jazz artist you could be a rock artist or a pop artist hip hop artists using companies like toon core or CD Baby there are distributors for people that are not signed to record labels they take a cut to put your record out they get it into all the different media streams whether it's Rhapsody Spotify Apple music Pandora in exchange for that you pay a yearly fee I believe that tune Corps for example is about $50 G or per project per record now they send you a royalty statement every month online and if you are selling things you get a check so that is one of the ways so you've got essentially here licensing publishing if you're writer SoundExchange if you get music that's played on YouTube on Spotify things like that that's for digital performances then you have for terrestrial radio and things like that you have ASCAP BMI and SESAC that collect royalties for that they collect royalties for things that I'm on broadcast TV as well you have money as a songwriter from your publishing company if you own your own publishing the way publishing works real fast is that for every dollar that comes in 50 cents goes to the writer and 50 cents goes to the publisher now if there are multiple writers let's say there's two writers those two writers split that fifty cents of the writers share and they get 50 cents apiece the publishers share those two writers have their own publishing company but maybe they both have a publishing deal with a different publishing company so that 50 Cent's would get split down to 25 and usually most publishing deals will be 5050 so each of those 25 cents then would be 12 and a half cents twelve twelve and a half cents to each publishing company and then twelve and a half cents to each writer so they get their twenty-five cents of the publishers share plus twelve and a half cents apiece okay I know it's really confusing that would be thirty seven and a half cents apiece and then twelve and half cents to the publishing company this is what really gets people confused about how publishing works now money comes in I'm going to make it even simpler for people you write a song and it gets on the radio and money comes in for it and you're the writer and you have a publishing deal so let's say two dollars comes in for the song one dollar goes to the writer you okay that's just your own money the other dollar goes to the publisher now the publisher if you have a 50/50 deal meaning that you split the money with the publisher 50/50 out of that other dollar fifty cents goes to you 50 Cent's goes to your publishing company okay it's that simple if you have multiple writers some might have publishing deals some might not so that publishing money always gets splits between the publisher which might be yourself and the publishing company depending on what you do maybe you only have a 10% administration deal so out of that dollar that's their 90 cents goes to you in 10 cents goes to your publishing company for administration purposes so that's that's a thing that most people have trouble wrapping their head around it's very complicated but that's the general essence of it is that for that there's a writer share and a publisher share for every song the writer share is yours no matter what so it's split right down the middle for every $2 that comes in 1 dollar goes to the writers if there's 3 writers you split it 3 ways if there's two writers split two ways that for the five writers split it five ways and the other goes to the publishers side and that gets divvied up depending on what people have publishing deals or whatever it is but half of that money as long as you own your publishing at least at you know you have a 50/50 deal some of that money will be coming back to in the publishers side as well now if you have an advance for your publishing and you haven't recouped the advance let's say you get signed and they give you $100,000 um until you've earned $100,000 back you don't get any of the money of the publisher share you still get your writer share but you did not get the publisher share typically if it's a deal in Nashville many people work on a year-to-year basis with a deal where they'll get in advance let's say it's a hundred thousand dollars a year that they will pay you and you have to deliver X amount of songs that are demoed and that they're you know accepted they don't have to all get placed but you get a sale or you get a draw each month so it might be ten thousand dollars a month um a typical new publishing deal nowadays if it's twenty thousand dollars that's that's amazing that would kind of be the going rate with a publishing deal twenty years ago anybody that got a record deal would get a three hundred two hundred two hundred three hundred thousand dollars publishing deal without selling a record period no matter what genre you're in that just the way the way it used to be but that money doesn't exist anymore because once again the ability to sell it is has been greatly greatly diminished you gotta investigate things like sound exchange and you have to sign up for it you're going to make sure that your music that you have out there is on there if your producer or performer or a writer and trying to take an advantage of that because royalties through ASCAP and BMI you'll see people I know people that have had hit songs they've sold millions and millions of copies they'll get digital performances let's say 40 million plays in a quarter that would be spotify youtube Apple music Rhapsody whatever it might be and they'll make fifteen hundred dollars that's a it's hard to make direct comparisons between terrestrial radio because you get a figure a number one song at terrestrial radio may hit a hundred million people have the reach up in country music a number one song hits about 60 million people that means that that's the audience that it's heard that or that has heard that particular song over the course of a week and you're talking about getting X amount of plays like a number one song might have twenty five thousand plays on the twenty five hundred country stations in the in the United States you know particular week a number one song can bring in in a quarter can get maybe six hundred thousand plays on terrestrial radio and it's a terrestrial I mean actual radio stations physical radio stations that broadcast so there's big money in that that's probably where the biggest money is but sound exchange can really really help you dramatically if you have a solo new-age piano record that you want to put out sign up for sound exchange you may be getting get into some compilation CDs or your record might sell really well or get played digitally people are streaming it and then that that's how you get paid on performing rights organizations like ASCAP and BMI and CSEC don't collect much money for these things this is why you need to be signed up to sound exchange your ability to navigate through social media I can't stress hard enough though you have to keep learning new forms of social media as they come out but you pick only a you that you master Facebook YouTube Instagram those are the big ones if you have things like snapchat you have whatever news coming out by the time you know a year from now these will all be maybe there will be completely difference I'm sure there will be but when I say master them I mean you have to understand how each of them work what drives viewership what drives there's algorithms associated with each of these things and for for artists it's really difficult to understand the stuff because you have to study or you hire people that do this professionally and there's not a lot of people that really do it well professionally people ask me how is it possible that Dylan has added these viral videos one after another and they're not just we've put out five videos but they've been in multiple uploads so there's probably 15 different maybe more videos and they've gone viral everywhere they go well there is either a novelty factor with a viral video or you're doing the impossible that's kind of my take on the way to make a living in the music business um I'm not talking about teaching I'm not talking about because that's a very viable way and I've been a teacher and essentially that's what I'm doing here um many teachers have live students and they have Skype students and by the way if I'm taking on one day's worth of students I've been approached by many many people about Skype lessons and I I've done a couple but I'm going to set aside one day a week now to do some if you're interested in taking any skype lessons with me whether it's composition lessons ear training any type of improvisational conceptual lessons I'm taking on a few students so just write to me at my Rick Beato number one at gmail.com so teaching and live performance merchandise things like that they're the kind of standard ways that you make a living in the music business and that really hasn't changed it's just the amount of money that you make and it shifted over to different things if you become a YouTube star and get a million subscribers you're making a lot of money if you're getting a million views a day it's easier for artists to do that because people will listen to songs over and over they're not going to necessarily watch my videos on an esoteric scale uh they might watch some of my videos over and over but some of my videos they're going to watch you know one or two times songs people will play over and over they'll consume it if they consume it on youtube for example they will listen to it billion times they can so that's a real viable way and a lot of bands don't make videos for their songs and they need to I tell every group I work with make a video for every song in your record whether it's a lyric video is a must you do just that for every video and then take your songs that are going to be your your singles that that you think and that you talk to your friends and they think are your best songs try and get as many opinions as you can but make actual full-length videos for those and you need to post content all the time just keep uploading is kind of the mantra that that that you hear in social media so that's my view on how to make a living in the music business so that's my view on how to make a living as a musician if you guys have any questions once again you're always welcome to write in the comments section below here you can post it on my Instagram page or you can write me personally a trick be out on number one at gmail.com I get back to people when they write me and I get back to the comments whenever I can so I will try and respond to every comment I can that's all for now please subscribe here and tell your friends about my channel if you haven't already you're interested in the Beato book in the material that is the precursor to what my videos typically are about there's the whole stuff that leads up to the that's in the viado book which is why I do these more advanced videos that you can always look that up and find out the kind of genesis of these concepts that's all for now I'm rapido thank you for watching

Channel: Rick Beato

Views: 351,400

Rating: 4.9498801 out of 5

Keywords: Rick Beato, Everything Music, How to Make money in Music, music publishing, songwriting royaltys, Sound Exchange, BMI, ASACP, Film Scoring, Music production

Id: r0aeGQZhbn0

Length: 37min 55sec (2275 seconds)

Published: Mon Dec 26 2016