Money in Music

In the music business there are varies ways in which an artist actually makes their money. Income can be from record sales, songwriting, royalties there are also other sources.
 
Very often people think the more records an artist sells the more money they make. This is not strictly true; it’s not all about the record sales. When a bands is starting out it’s better to think of record sales as promotion.
 
Once a band has signed a big record deal, they very often take advances which are paid back to the record company before they see any share of the profits. There is also the risk that the record company does not recoup enough money to cover the advance. It could take a band years before they pay back an advance and start seeing any income from record sales.
 
Even once a record has been released it takes a long time for the money to filter through from the record shop to the label company. There are acts who have had careers spanning a few albums and have never recouped at all. It is also a possibility that the band is dropped from their label due to poor record sales.
 
Another source of income from records is licensing, this falls into two categories: sales of songs as part of a compilation or mix CD, and the use of music in TV, films or adverts.
 
Publishing is really where the money is in the music business. Whereas record labels deal with recordings, music publishers deal with the songs. Whenever a song is used commercially the songwriter is due money. This includes CD’s, MP3’s, ringtones etc. This also covers the public performance of songs from musicians playing live to songs on a jukebox. However, publishing income can only be paid to people who are credited as the writers of songs.
 
One source of publishing income is mechanical royalties which are paid when copies of your songs are made for reproduction on different formats such as CD’s, MP3’s, ringtones etc. Songwriters are entitled to a fixed percentage of the income generated. Another source of publishing income is through public performance. Live music venues must report the music that's played in them as well as the records that DJ’s play in pubs and clubs. You don’t have to be signed or have a publishing deal to collect these royalties. Demo’s that may be played on a radio station generate performance royalties for the writer.
 
PPL also collect royalties from public performances but these are due to the people who own the rights in the recording as well as anyone who contributed to the performance. PPL collect a royalty on behalf of record labels for the use of their recordings in public.

Another source of income is from merchandising. The sales of t-shirts, hoodies, wrist-bands and posters can be a healthy source of income for an act.