It used to be you had to spend $20 on just one CD. People would spend thousands on CD collections.
These days you can access so much for free, and what isn’t free you can get for $10/month or less. Music piracy was rampant in the late 90s and 2000s with MP3s, these days no one even bothers with that because it’s all free anyway.
How do they still make money?
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It’s all in the “almost for free”. That money pays everybody in the music industry. That was the solution, make music cheap enough that people choose to pay for it. With enough people, that’s plenty of money.
$10/month is far from free. People still spend thousands on music if they just subscribe to a streaming service for a few years. You can even get premium streaming services with higher quality audio, for a price of course. “Free” music is a lot harder to listen to. It is usually lower quality, interrupted by advertisement and may only be available as a few single songs instead of the entire album. That was also true in the late 90s, people tend to forget how horrible quality those mp3s were. But in addition to the streaming services there is also a lot of income from concerts and merchandise, which is often the primary source of income for artists.
This is a question that’s been asked and answered here before but I’ll give you the gist of it.
Back in the pre MP3 days the supply of music was low and the cost of music (as in, to the end consumer) was high, 1 album = $20+ where as now the supply of music is, astronomical (particularly in comparison to pre MP3 days) while the cost of music (again, to the end consumer) is either quite low or free.
This is paid for via subscriptions, Spotify has about 180million paid subscribers and 406million MAU (Monthly Active Users) So that means that for around 226million users (this is just Spotify alone) they will be, fed an add every “X” amount of songs or ever “X” amount of minutes.
Using Spotify as the example here, their deals with the 3 record companies (who are/were also all minority owners of Spotify early on) basically sees Spotify give 70% of all revenue they generate, to the record companies.
the library gives away books for free, yet people still buy books
– not everyone pirates music
– streaming does produce revenue – $5.9B in the first half of 2021
– so does licensing for movies, tv, commercials
– record companies are notorious for contracts that pay the artists nothing, that hasn’t changed
Everyone gave a lot of answers as to why recording artists still make money from Spotify and YouTube.
But another piece of it is that >90% of musicians don’t make a living from selling singles / albums. They never have. Only the top artists make enough money to live on, the rest it’s just one portion of their income.
In general musicians make a lot more money from tours / concerts. It’s more work but far more profitable.
A lot of musicians also make money in other ways: writing commercial jingles, teaching private music lessons, and singing/playing in the background for other more famous musicians, just to name a few.
Some people still buy physical copies. I would buy a lot more vinyl if I had more money and space to buy something just for the sake of having it. But the majority of money in the music industry these days is through merchandising and live performance. Merchandise can mean a lot of stuff. Clothes, physical copies of albums, live DVDs, song books, picks, lighters, straps, and so much more since some bands also license out their logos for other companies to make merchandise for them. The Ramones do this, The Rolling Stones also do this. Fuck man, you can get The Rolling Stones lips as a cushion.
Then there are live performances, this works two ways. One they are paid by the promoter (either a cut of ticket sales or a flat fee, the bigger the band the more likely it is to be a flat fee regardless of how well the tickets sell) and two they get an opportunity to sell a lot of merchandise. They sell special tour shirts, hats, wristbands, whatever the fuck they want, and they also sell special editions of their albums. Sometimes a band or artist will book their own venue and do their own promotion leading to a much higher cut of the profits after paying the staff, venue, and insurance fees.
On top of that, streaming services _do_ provide income, I have had a Spotify cheque myself. It was about 40p for a whole year of streaming, but it was for a band that didn’t get very far. Bands that get millions of streams certainly see money, but record labels and the like get their share too and that definitely cuts into what they should be earning. There is also stuff like PRS (not sure what the US equivalent is), I make money from them by playing my own music I have registered with them at venues that have to pay them a fee for live music. I get paid by the venue or the promoter on top of that. The bands I cover also make money from my performances too. Licensing deals such as for advertising or TV/film soundtracks if you’re known enough is another ancillary means of making money off your music. Radio play pays too.
A modern musician needs their fingers in many pies. But it’s still possible to make more than a healthy living through music, even if you’re not famous. I am a professional musician myself. I make my living by teaching, performing, helping other local bands out with recording, and I even do a bit of promoting too. So even for someone like me who is far from famous, its still possible to make a living from music.
They now have very few distribution overheads (operating Spotify etc is incredibly cheap compared to having to make cds, distribute them, have stores etc).
And heaps of people have a subscription to a music streaming service.
On a personal note, I basically never bought a music cd ever (grew up in the 90s), but I have had some sort of music streaming subscription for quite a while and will continue to do so, as the mild annoyance of the freemium model is worth the small expense.
In streaming services, you pay for a subscription, and there are sometimes still ads. Those fees from you and the advertisers are used to help pay for the songs. You’re massively undervaluing the cost of an advertisement. While a companies aren’t paying millions for short spot like at the Super Bowl, they are paying a lot. And when it’s a dozen companies or more it makes up for the lack of the subscription or physical device.
Musicians often make a lot of their money from tours and merchandise.
If they can get their song in a movie, TV show, or even a commercial they can get a decent amount for it and/or royalties especially if it’s a very popular show/movie and was big budget to begin with. While they hate being called, “those Shrek guys,” I’m sure that they haven’t returned a check from it.
And radio still hasn’t died. People still listen to it while stuck in rush hour traffic. So they are still paying for it, and funding it from ads.
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