How do singers and bands who record other people's music make money? In the past, we have explored how songwriters and publishers earn an income from their musical activities. This time around, the focus is on singers and bands who don’t write their own music, but may be signed to a deal with a music label.
Often referred to as artists, singers and music bands are often the face of the music business. They are the ones who get up on stage (or host live streamed concerts these days) to perform in front of adoring fans. In addition, they spend a lot of time recording songs created by songwriters and other musicians and going on tours, sometimes all around the world.
Like other players in the music industry, singers and music bands can earn money in several different ways. But how it all works can get murky if you don't have a working idea about the various revenue streams and how they apply. So, how do bands and singers get paid? Again, it's important to start with the basics.
Generally speaking, every song has two parts that can be monetized.
i. The Composition
ii. The Master Recording
Singers and bands usually make money with the master recording. If you are a talented singer and manage to get discovered by an agent or label, who goes on to "sign you," the usual deal is that the label will bind you to a contract for a certain period. That period is often measured in a set number of albums and tours, rather than time.
After recording an album under a music deal, the label’s primary job is to exploit the music. Usually, you assign the master rights of your songs to your label and they are responsible for duplicating, distributing and marketing these recordings. In the past, this primarily happened through CDs and downloads. This has shifted to music streams for the most part since the emergence of Spotify, Apple Music, Tidal and others. Since CD sales and downloads are negligible nowadays, it makes more sense to focus on streams for this article.
Let’s assume that your album streams 1,000,000 times across the major streaming platforms. Based on current estimates, your label would earn between $4,000 - $10,000, depending on the contract they negotiated with the streaming service. After your label collects the monies from the streaming platforms, the label retains a portion of the income and forwards the remainder to the singer/band. How much of the total revenue that goes to the singer depends on the contract the singer signed with the label.
This can vary from 0% (rare, but possible) all the way up to more than half of the revenue. Often, if a singer doesn’t get paid any money from streaming, CD sales or downloads, it is usually due to the fact that the label paid the singer an upfront fee to buy out the master rights and likeness of the artist for the specific release. The singer or band essentially is an employee of the record label and earns a set amount of salary regardless of sales. These deals are more common in Asian countries, rather than in North America or Europe.
Due to the much lower pay rate for streamed music, compared to CD sales or downloads, performances have now become the main income stream for performing artists. Of course, this has been temporarily curtailed in recent times due to the stay at home orders brought on by the COVID-19 pandemic. Before streaming, artists usually considered tours as a means to promote their album sales. Nowadays, the roles have been reversed, with artists viewing album releases as promotional material for their tours.
When you sign a major label deal (or a larger indie label deal), a tour per album is often part of the contract. The label helps organize and promote the tour and earns revenue from ticket sales. Similar to the concept explained above for CD sales, downloads and streams, the performing artist will likely earn a percentage of the ticket sales, or a set amount regardless of ticket sales.
Each new recording of a song is a new master of the same song. For example, let’s say John writes a song called “Best Song Ever” and records a demo of that song. That demo is a master recording of “Best Song Ever.”
Someone on Kane Brown’s team hears “Best Song Ever” and thinks that this song is perfect for Kane’s new album. Kane records “Best Song Ever” with his own vocals and band. This recording becomes a new, separate master recording of that same song. Since Kane Brown has a label contract with RCA Nashville, he assigns the master rights of the song to his label and they release it as part of his new album.
To take it further, a rep on Coca Cola’s advertising team hears “Best Song Ever” and thinks it’s the perfect song for their new national TV ad, and they want to use the song as recorded by Kane Brown. RCA Nashville can issue them a license for a fee, which allows them to use the master recording for the TV ad. The label will collect the fee from Coca Cola, retain their portion, and forward the remaining percentage to Kane. It's pretty much the same for other singers and bands. The amount of the percentage going toward the artist depends on the contract that has been negotiated between the two parties.
These are the three main ways singers and bands, who are signed to a label, make money. To summarize, they make money from recorded music through the following three income streams.
In addition to the above sources from recorded music, singers and bands can also make money from a number of other activities. These include selling merchandise at concerts, product endorsements, TV or event appearances, session work, and many other opportunities.