There are many ways for a music producer to can earn a good income in 2020 and beyond. In a nutshell, a music producer can earn money by utilizing the following six ways:
- Become a staff writer
- Use Tv & film
- Use Youtube
- Go custom
- Create sample packs
- Offer services
- Earn royalties
- Start DJing
By utilizing more than one income streams, a music producer can earn about $4000 per month.
The 1st Way a Music Producer Can Make Money: Becoming A Staff Writer
As a staff writer, you are under a contract with a music publishing company. The company owns everything you create (music and lyrics), and you own no publishing rights. Also, depending on your contract, you will have to create X amount of songs per year.
Often, by the end of the year, the publishing company will take all the unpublished songs and promote them to a variety of artists. In that way the songwriter can receive extra payment plus possible royalties.
What Is an Advance In Music?
We have to note that staff writers are not getting paid by the hour. Instead, they get paid for results. In other words, they will receive an advance when signing a contract with the publishing company, and that advance translates to “money to survive on until I get paid from royalties.”
But there is a catch. (Read further to find out).
The upside is that you can determine your own working hours and the amount of working time spend per week.
What Are Music Royalties?
Royalties are a payment received when a song is being published, performed, or licensed.
What Are Demo Fees & Advance Fees and Why Should I Care?
Do you remember the catch I mentioned before? Here it is.
No matter how many royalties you’re entitled to, you won’t immediately get paid. When the royalty payment comes in, the publishing company retrieves the amount they spent on the songwriter’s advance. Plus, any possible extra expenses such as recording studios, or other expenditures made that were necessary for the completion of the song.
The fees collected are called demo and advance fees. Only when those fees are deducted from the royalty payment, the songwriter gets paid the remaining amount in cash.
How to Connect with People You Want to Work within the Music Biz?
Networking is a crucial step to master for musicians. When you’re out networking, try to connect with publishers songwriters and musicians that are connected with other publishers songwriters & musicians.
You can meet these people by attending industry events and writer’s nights. The goal here is to build a foundation and establish a strong relationship without being needy or too pushy.
You want them to think of you when they need a song, and for that to happen, they must first enjoy your work and personality.
The 2nd Way a Music Producer Can Make Money: Licencing for TV
When you Licence a song to someone, it means that they are buying the rights to use that song for a determined length of time. Of course, you can control the number of rights the buyer will have, based upon what is stated in the contract.
Connect with the Right People in the Music Industry
If you believe you have several songs that could be an excellent fit for TV or film, then you have to connect with other songwriters, producers, film producers, directors, and (especially) music supervisors. You want to do that because you want to position yourself strategically while waiting for the right moment to arise.
An alternative way is to pay a music licensing company that already has established strong industry connections with music supervisors.
Furthermore, stock libraries are widely used for TV and commercials. You could join one of these companies and upload your own tracks. Here is a list with the most popular websites for that use:
The 3rd Way a Music Producer Can Make Money: YouTube
The third way on our list is YouTube. There are five necessary steps you need to follow to achieve success at this popular platform.
- Create your own songs
- Create a video-clip for your songs
- Upload your songs on your YouTube channel
- Monetize your songs and
- Make money from the ad revenue
Keep in mind that you need a certain number of subscribers and views to be able to monetize your videos. A social media fan base can help to boost your YT subscriptions dramatically.
The 4th Way a Music Producer Can Make Money: Go Custom
A fourth way on how you could possibly create an income is by writing and selling songs/beats for other artists. Again if you have a lot of connections, this will help you find clients easily. Otherwise, they are online platforms where clients can reach out to you and place a custom order.
Be aware that some of the online services require a monthly fee. Others will keep a percentage of your earnings. If you’re not keen on that an alternative way is to build a custom website. You can sell your songs from there using PayPal or Stripe.
Do I Need Testimonials?
If you decide to go custom and build your own website, I suggest creating a review/testimonial system where customers can leave their comments and star ratings.
It’s even possible in the beginning to create a few songs for free in exchange for a review of the customer; in that way, you can boost your sales. Also, try giving away freebies on social. Then transfer your followers to your website or online platform!
The 5th Way a Music Producer Can Make Money: Sample Packs
Almost all music producers use sample packs, and these days demand is continually increasing.
If you consider creating sample packs, try to follow the flow. Create what is popular, but at the same time, try to be unique. Aim to provide something that popular but refreshing.
When it comes to samples, my favorite company is Splice. I believe Splice is going to be the industry standard in a couple of years.
If for whatever reason you don’t enjoy Splice try one of the following alternatives:
Yes, selling your own sample packs DIY style is a viable option, but bear in mind that it requires much more branding and marketing efforts to promote your website. I find Splice or Vandalism Sounds to be much easier to start with.
However, if you want to go down that route, you should definitely check out Sellfy. They are a great company that can help you sell your packs.
The 6th Way a Music Producer Can Make Money: Mixing & Mastering
Everyone can mix their songs, but the real question is, “how good are you in doing that?”
Mixing is an art on its own, let alone mastering—that’s why I don’t recommend providing mastering services unless you know what you’re doing.
That said, there are plugins that can help you. Take, for example, Izotope Ozone, which has made the producer’s life much more comfortable.
Ozone offers a complete mastering suite in the box. If that was not enough, their new release includes a virtual mastering assistant. If you haven’t already, you should really check them out.
The 7th Way a Music Producer Can Make Money: DJ-ing
I know people who get 2.000$ per night just to DJ! The catch is you have to be well connected in your city, not necessarily famous but surely well known. You can always get started for $50-$100 per hour and build your fame from there. It’s easier than you think.
The 8th Way a Music Producer Can Make Money: Royalties
Music royalties are payments that go to recording artists, songwriters, composers, publishers, and other copyright holders for the right to use their intellectual property. If you are interested in finding out more about royalties, please continue reading.
A Quick Guide to Royalties
As we mentioned before, music royalties are payments that go to recording artists, songwriters, composers, publishers, and other copyright holders for the right to use their intellectual property.
These are the royalty types:
- Mechanical royalties
- Digital royalties
- Public performance royalties
- Synchronization royalties
- Print music royalties
Mechanical royalties are paid to the copyright owners whenever a copy of one of their songs is made.
The current state of the mechanical royalty rate for physical recordings (such as CDs and vinyl) and permanent digital downloads is 9.1¢ for recordings of a song 5 minutes or less, and 1.75¢ per minute for songs that are longer than five minutes.
There are also mechanical royalties for streaming services like Spotify. These are called digital royalties.
Digital Royalties Include:
1) Mechanical royalties from streaming sites (Spotify, Napster etc.). These are generated from every single stream.
2) International mechanical royalties: from downloads from stores like iTunes. These are generated from every single download.
3) Performance royalties: from streaming services (like Tidal), TV, radio, live concert performances.
4) Global YouTube Sync Publishing royalties: for any video on YouTube that contains your song.
Public Performance Royalties:
As the title suggests, public performance royalties are created for copyrighted works performed, recorded, played, or streamed in public areas. Public areas include but are not limited to:
- Live concerts
- Music streaming services
Synchronization Royalties (Sync)
Sync royalties come from TV films and commercials. Sync rights are tied to the reproduction of a song when coordinated with advertisements, television, film, or another system of that sort.
How Much Mechanical Royalties Do I Need to Make a Living in 2020?
The amount of mechanical royalties paid by each streaming service varies per company and per year. Let’s look at the 2019-2020 streaming rates. We will also look at how many streams are needed to receive the minimum wage in the US.
- AMAZON: $0.00402 per play.
Amazon is currently is the lowest payer. You will need a total of 366,169 streams in order to earn $1,472
- SPOTIFY: $0.00437 per play.
That means you will need approximately 336,842 total plays for you to earn $1,472.
- YOUTUBE MUSIC (GPM): $0.00676 per play.
At google play music if you get about 217,752 streams, you will get $1,472
- APPLE MUSIC: $0.00783 per play.
That equals to 200,272 plays to earn $1,472.
- TIDAL: $0.0125 per play.
Jay-Z’s service used to pay $0.01284 per stream, but they have fallen to $0.0125 per play. Thus 117,760 total plays will amount to $1,472.
- NAPSTER: $0.019 per play.
This is the most rewarding streaming service at this moment. With Napster, you will need a total of 77,474 plays to receive $1,472.
The Best Case Scenario for the Music maker is Napster
Here is why:
- Let’s assume for a moment that you have a contract at a music publishing company.
- The contract states that you must create X amount of songs per month for a total of 12 months.
- Because the company wants to help you, they have given you an advance that equals a year’s minimum wage that would be $17,664$ for one year.
Let’s round that up to 18.000$.
- And because you’re an awesome music producer, one of your songs takes off and gains a lot of traction.
- The question is: How many streams do you need to cover the advance and still make a profit?
I’m, glad you asked 🙂 let’s do some quick math!
How Many Streams Do I Need on Napster to Make $18.000?
- The equation is: Money divided by the payment per stream equals the number of plays.
- So, in math language that is: $18.000 / 0.019= 947,368 streams
- Thus in our example, the royalty counter will start scoring money only after the advance of $18.000 is recouped.
Thus, 947,368 on Napster generates about 18.000$.
Now let’s take the most popular streaming service at the moment, Spotify.
How Many Streams Do I Need on Spotify to Make $18.000?
- With Spotify paying just $0.00437 per play, things are a bit different.
- Again let’s assume our advance equals $18.000.
- Following the same formula as above: Money divided by the payment per stream equals the number of plays.
$18.000 / 0.00437= 4,118,993 streams
Yup. To make $18.000 on Spotify ( I even double checked) you need more than 4 million streams just to cover your advance.
On Spotify 947,368 streams generate about $4,370.
That is 1/5 of what Napster pays. A huge difference!
About one million streams on Napster generates about $18.000, and one million streams on Spotify makes $4,370. In both situations, you’ll only receive that amount if you own 100% of the publishing rights.
If (like most songwriters) you own just 20% of the royalty share, the $18.000 we saw from Napster drops at $3600, and the $4,370 we saw from Spotify drops at just $874.
Let’s take Ariana Grande’s song “7 Rings” as an example. Only that song generated 85 million US streams. Wow!
But on Spotify, 85 million streams would pay us approximately $74.290 at a 20% royalty rate.
Thus on Spotify 85.000.000 streams = $74.290 (at a 20% royalty rate).
A Few Examples from Sam Barsh:
“For my songwriting on Kendrick Lamar’s ‘Institutionalized’ from the album ‘To Pimp A Butterfly,’ I have earned less than $20,000. I have a 12% share of the song. The album went Platinum, won a Grammy, and was a worldwide phenomenon.”
“For my songwriting on Anderson. Paak’s ‘Heart Don’t Stand a Chance’ and ‘Your Prime’ from the album’ Malibu,’ I have earned less than $5,000 total. I have a 16.66% share of each song. The album was certified Gold in Europe, nominated for a
Grammy, and launched Paak into stardom.”
“For my songwriting on Aloe Blacc’s ‘The Man,’ I have earned a little less than $200,000 over the course of the song’s 5-year existence. I have an 8.5% share of the song”…
Because the song became a hit on the radio, Barsh earned more for his work with Aloe Blacc. The song was also licensed for use on TV, films, and advertisements, leading to higher royalties. ‘The Man’ sold 4.000.000 copies reached #1 on the pop charts in the UK and ranked among the top 5 worldwide.
Why Do Streaming Services Pay so Little?
The problem is not located at the publishing companies or the streaming services offering low streaming rates. Instead, the problem is located at the concept of “value” and what we perceive as valuable. And what most artists view as valuable is a record deal.
“Sure, a record deal sounds sweet, but today that is just an option out of the many we have as artists.”
Who’s Got the Power? The Music Artist Or…?
Imagine you are a hot artist. Everyone wants to book you. You are in high demand, plus you make money from selling merchandise, live gigs, interviews & appearances at radio and TV shows. You, (the artist) have the power.
So, it’s true that for the people, the artist is the most valuable asset. But is that true also for the songwriter and the music producer? Not necessarily.
Because if a songwriter refuses to license his tracks to a label (given he is not Max Martin), the label can find equally (or better) songs from other producers.
- Don’t get discouraged just because, underneath all that, music makers hold a significant amount of potential.
We, as music producers, we can carve our own faith, and achieve a bright future. The only thing we have to keep in mind is that the music business has evolved alongside the rest of the world.
New opportunities are present, and the “dying dinosaurs” of the music industry can’t understand that. Sure, a record deal sounds sweet, but today that is just an option out of the many we have as music makers and artists.
Today we don’t need publishers, labels, distributors, or managers anymore. We can DIY our way to success, create our own teams, and keep 100% of the profits. That is huge!
Too Much Competition in the Music Scene? Here Is How to Get in the Top 10%
“But there is a rise in competition”. I hear you say?
Well, just consider this: there are thousands of second-grade movies out there. But how willing are you to watch a second-grade movie? I bet you don’t!
I guarantee that the soonest a bad movie is spotted by the viewer, the stop button is pressed.
And the reason?… Quality matters, and that’s precisely the case with music today.
Therefore differentiate yourself from other artists by offering high value music that my friend will put you in the top 10%. And at the top is where the money is. 🙂