Economics of Being a Musician

You and a buddy, or maybe you and your lover, want to be professional musicians. You're not being unreasonable...you're not looking to become Lady Gaga. You just want to be able to make a decent living by performing and recording music.

Ok. So your goal is to net $100k a year, each. Which is an above average income, but not crazy high. What does it take to get there? It will be a mix between live performance, streaming, and merchandise sales.

Something like...

• Spotify pays around $0.004 per stream, so 1M plays of anything you record will net you about $4000. This is net to you as an artist. If you have a management company managing that relationship for you, Spotify will pay ~50% more, but that will go to your manager. So...how much streaming can you get?
• Picking an example from my currently playlist...Japanese Breakfast
• Over their four year career, to date, they're generated about 70M streaming plays at Spotify
• Spotify is about one third the global streaming market, so let's say the total streams are 200M over four years, or about 50M a year
• That's $200,000/year in streaming revenue
• Japanese Breakfast has become a relatively well known act, and can fill 1000 seat venues. So we need to scale this number back by about two-thirds...let's call it $70k/year in streaming, "net" to the band members


• Let's say you achieve sufficient notoriety to consistently fill 300-seat venues. To simplify, let's just commit you to taking a fixed fee for playing the venue, instead of working through the mathematics of revenue splitting with the club owner. For a venue of that size, a typical fee is $1500. 
• That $1500 is for the band and the traveling entourage. 
• Let's say you're on a regional tour where you play every second day, for one month. That's 15 shows, and 30 days of keeping the band and crew alive.
• $45,000 in monthly income
• Pay your roadie/road manager: $4500
• Pay your hotel bills: 3 rooms @ $100/night: $9000
• Pay your driving expenses: $100/day @ 20 days: $2000
• Feed everyone for a month: 30 days @ $100/day (you're not Lady Gaga, remember?): $3,000
• What's left is $26,500. Or $13,500 each half of the duo
• If you tour at 25%, or three months a year, that's $80,000 "net" for the band members themselves


• Merch sales are trickier to estimate. The typical guideline is that you can expect to sell enough tshirts and whatnots to generate about 25% of your income. Based on this model we're looking at...
• $70k/year in streaming revenue
• $80k/year in touring revenue
• Having merch at 25% of revenue puts the target at around $50k/year

That's most of it. Adding up, we've hit $200k/year for the band. As a duo, you're each hitting the $100k income mark. If you happen to be a quartet...you're not. You do, however, have a framework to plan from. If you want a six figure income as a quartet, you need to be a band that can fill a 1000+ seat venue, fifty nights a year. It's not quite that simple, because touring as a foursome makes some costs go up non-linearly (more gear, more crew, longer stage setups, higher audience expectations for the live spectacle, etc).

Notice that something left out of here is the costs of making recordings. That is intentional. Recording costs are now close to zero. Extremely capable "bedroom studios" are everywhere, and the entry barrier to making professional quality recordings has essentially disappeared.

The other bit unaccounted for is self promotion. As a musician, you are essentially in the brand-making business. As with every business, this costs money to do right. Estimate 25% of your "net" income will go to marketing - or plan on touring four months of the year, instead of three, to net the same income.