Contrary to popular opinion, musicians don’t make a lot of money from selling their songs. This is especially true for artists who’re still young in the industry since they don’t know the inner workings of the large industry.

It is a sad realization uncovered by a new report that found musicians only bag 5 billion of the hefty paycheck. From this report, it is right to conclude that music pays poorly. But does it? Where then does the money in the industry come from?

The truth is, music pays but many parties get a cut of the musicians’ earnings. This puts billions into other people’s’ pockets while the artists struggle. Since the industry pays artists poorly, they opt to tour to garner more income. In reality, most of their income comes from touring and not music sales.

According to the report, ‘putting the band together’ compiled by Citigroup, in the US alone, listeners spend more than $20 billion on music annually. Despite this considerable number plus revenues that add up to $43 billion, musicians only get a $5 billion part of the cake.

Despite how low the 12% cut seems, it is an actual improvement from the previous 7%. This is apparent growth but still very low. In actuality, the value has grown due to artists having concerts and festivals in the recent past.

Why do musicians receive 12% of $43 billion?

Ted Gioia posted, “you need to put this into context to grasp the full absurdity. Production costs of music are tiny (compared to movies, TV, etc.). And manufacturing and distribution costs are dropping to zero with the disappearance of physical albums. So where does all the cash go? Take a guess.”

This is one of the posts arising after the report as people seek to understand what goes on in the industry. The report details that the industry is using out of date systems to deliver music. Therefore instead of artists getting their music to the fans, their earnings are lost on the antiquated methods.

One of the authors of the report, Jason Bazinet told Rolling Stone, “there’s an unbelievable amount of leakage.” as revealed by the ‘amazingly low’ figure.

The report also attributes the increase to two significant changes in the music industry. First of all, consumers are more inclined towards renting music instead of buying. The second is the growth of concerts and festivals which have seen to the demise of physical music.

Three main areas take the biggest cut. First up are music platforms: Spotify, Sirius XM, and YouTube. Second comes record label costs and Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA). This is for recording and publishing music. The third is EBITDA for music platforms.

Once those three are filled, then comes musicians, then managers, agents, record producers and retail margins.

Another reason why musicians earnings are abysmal is the ‘one solution less intermediaries.’ In other words, middlemen are in excess, and they all get paid. Compared to other industries in the entertainment umbrella, the music industry has the most intermediaries.

The authors of the report stated, “While the artists’ share of total revenues is rising, the absolute level of value capture is quite small. In most forms of entertainment, the artist captures the lion’s share of the spoils. But, because the music industry has so many intermediaries, and because the consumption of music is so fragmented across various platforms; the artist captures very little of the aggregate revenues.”

How to change it

Support musicians by attending their concerts and festivals. Also, you can buy their merch. It is still an enigma as there isn’t a concise way of fixing all the problems plaguing the music industry, such as cutting middlemen without hindering distribution. But you can always count on live music to not only give incredible experiences, but also support artists directly. 

It is essential that artists know their value and understand how the industry works. This ensures that they’re not cheated out of their earnings. This is especially true for young artists who are struggling. The definite increase of the figure should hopefully keep rising and grant artists their real worth.


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