MIDEM: Bands, Brands and Revenue
On Monday, January 30, 2012, FMC’s Kristin Thomson participated in Visionary Monday at the annual MIDEM conference in Cannes, France. Drawing upon data from both Money from Music survey findings and artist interviews, we explained the changing relationship between artists, brands and earnings.
Below is a webcast of the presentation.
What do we mean by “brand”?
For this study, income from “brand” could include any of these:
YouTube partnership program: revenue-sharing program that allows creators and producers of original content to earn money from your videos on YouTube
Ad revenue: or other miscellaneous income from your website properties (Google AdSense, commissions on Amazon sales, etc.)
Fan funding: Money directly from fans to support an upcoming recording project or tour (Kickstarter, Pledge Music)
Fan club: Money directly from fans who are subscribing to a musician’s fan club
Persona licensing: payments from a brand that is licensing a musician’s name or likeness (video games, comic books, etc)
Product endorsements: payments from a brand for a musician endorsing or using their product
Acting: in television, movies, commercials
Sponsorship: corporate support for a tour, or for band/ensemble
Grants: from foundations, state or federal agencies
Essentially, it’s income tied to a musicians’ creative self, but ancillary to what they earn based on their sound recordings, compositions or performances.
Five key points
1. Income from merchandise and branding is only relevant for a small number of musicians.
One of the core questions on the survey asked musicians to allocate their music-related revenue amongst 7 different buckets such as income sound recordings, licensing compositions, and live performance.
In aggregate, revenue from merchandise – that’s non-musical items like t shirts, hats and posters – accounted for about 2% of our survey respondents’ revenue last year. Now there are certainly differences by genre, with jazz and classical earning less than 1 percent of revenue, and rock and hip hop earning up near 7 percent from merchandise, but it’s still a small portion.
We also asked them about changes in revenue from merchandise sales. For about 73% of our survey respondents, the question was “Not applicable”.
Remember, our survey respondents included not only recording artists, but also (1) composers and songwriters, (2) salaried orchestra players, (3) session musicians and (4) teachers – all of these being sectors in which merchandising and branding are not typically part of their revenue picture.
2. Artists have many other ways to make money off their brand, but widespread participation is difficult.
While merchandise sales is the most common source of income related to an artists’ brand, we asked about other revenue streams on the survey.
For our survey respondents, about 7 percent of their income in the past 12 months fell into this “other” category. So we asked a couple of follow up questions to figure out what these ancillary sources of income might be.
About 10% had earned some income from grants. This can be money from a state or local arts council, or a private foundation.
Five percent of our survey respondents have received some income from fan funding in the past 12 months. This can be direct appeals to an existing fan base a la Amanda Palmer, Jill Sobule or Jonathan Coulton, or they can be managed through a site like Kickstarter or Pledge Music.
Lower on this chart are the parts of the music industry where leveraging your brand takes a certain amount of pre-existing fame. The fact that only a small percentage of survey takers have earned money in this way shouldn’t be a surprise given the high hurdle it takes to get there. And, in some instances –like, corporate sponsorships and product endorsements — it might be that the individual musicians don’t see that money in their pockets, but that it pays for tour expenses or provides them with free goods in exchange for their support.
3. Artists are increasingly strategic about their brand.
The data above suggests that merchandise and branding is, on average, a small piece of musicians’ revenue pie. But the US musician community is large and diverse, and there are a number of genres for which merchandise and branding is an important or growing part of their business.
During our interviews with a variety of full time musicians – from jazz composers to metal bands – many demonstrated an impressive understanding of the value of their personal or band-based brand, and they told us how they were using a variety of tools and business strategies to maximize it.
We talked with a very active touring rock band who saw increases in merchandise revenue when they brought on a dedicated merch staffer.
We interviewed a hard rock band that was seeing the value in limited edition merchandise, only sold at specific shows or via their own website. Not only was it making them more money, but they were increasing their connection with fans.
that only 200 people have, they love feeling like they’re a
part of something special.”
And some managers and attorneys talked about the differences in opportunity by genre, especially about unique ability of rap and hip hop artists to forge these relationships.
4. For jazz and classical artists, brand engagement is evolving.
While we found some classical and jazz artists venturing into the worlds of merchandise and branding, there are other factors in play.
The first one being priorities. In classical music,many “artist managers” are primarily booking agents. Classical music managers we talked to said they needed to dedicate their limited time and resources on building a “brand” for the artist’s primary audience: influential curators and performance hall agents.
And, one group manager put the branding and marketing conversation in perspective, saying that they needed to be realistic and strategic in what they focus on.
5.Corporate sponsorship and fan funding is filling in where labels have dropped off.
It’s no secret that label budgets have been going down. As a result, musicians are seeking other sources of money to support their work.
Some artists told us how they’re turning to corporations to support tours, or projects.
And, finally, some told us about how they’re engaging their fans in the process and how important it is to embrace it.
1. Not all musicians are able to leverage their brand. The common assumption that today’s musicians can or should just rely on playing shows and selling t-shirts in lieu of other forms of compensation ignores the fact that there’s an army of musicians – from composers, to salaried orchestra players, to session musicians – that have career structures that doesn’t make it possible to build a monetizable brand. This should in no way diminish their value or importance; we simply need to remember that the community of creators is large, diverse, and specialized, and does not lend itself to “one size fits all” solutions.
2. For musicians and bands who are in a position to leverage their brand, the key is for them to be flexible and open minded but, above all, strategic. Our interviewees not only knew that their brand is valuable, they also recognized that decisions about everything from merchandising deals to corporate support have an impact on their artistic reputation.
Good music and top notch performances are what makes these artists desirable in the first place so artistic integrity must always take precedence, but faced with diminishing label support and less money from recorded music sales, the smart artists are figuring out ways to leverage their brands, broaden their fan bases, and earn money.
FMC will be publishing a 40-page white paper, through an exclusive arrangement with MIDEM, in spring 2012.