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Musicians are increasingly forgoing the major-label system. The problem is that most can't afford to.

26 November 2024 at 16:12
Rachel Chinouriri
Rachel Chinouriri.

Chirs Burnett for BI; Lauren Harris

  • Despite the democratization of music in the streaming era, it's still very expensive to record an album.
  • A veteran music lawyer said it can easily cost $250,000, while a Grammy nominee estimated $300,000.
  • Although many artists are forgoing record labels, it's nearly impossible to become a superstar without one.

It's no secret that artists yearn for creative freedom, and in recent years, musicians like Raye, Tinashe, Laufey, and Little Simz have opted to release their music independently instead of via the traditional major-label system.

But that creative freedom comes at a price β€” literally.

In Business Insider's new feature, "Want to make money as a pop star? Dream on," singers, songwriters, managers, and music lawyers explain why making money as an independent artist is especially tough, particularly for those who are early in their careers.

Thanks to streaming services and social media, it seems easier than ever to become a star. Artists no longer need distribution deals to upload their music online, or expensive marketing campaigns to get noticed on TikTok.

"You've got this democratization of the music business where there's not the same barrier for entry," said Donald Passman, a veteran music lawyer who is the author of the music-industry bible "All You Need to Know About the Music Business." "The problem is that everybody's got that access."

About 100,000 new tracks are uploaded to Spotify every day, per Passman. "So how do you break through the noise? That essentially is what the labels have become," he explained.

Labels typically offer artists advances as a signing incentive, which they expect to recoup over time. They'll also often front the cost of recording an album β€” a key benefit for any artist who wants to work with high-quality producers and sound engineers.

"If you want to be a worldwide superstar, so far, nobody's really done it without a label," Passman said. "People can get along pretty far down the path, but they don't really do it without a label."

Muni Long performs in Atlanta for a Grammys nominee celebration.
Muni Long performs in Atlanta for a Grammys nominee celebration.

Derek White/Getty Images for The Recording Academy

Muni Long, a Grammy-winning R&B singer and songwriter who's also written hits for artists such as Rihanna, Kelly Clarkson, and Fifth Harmony, recently broke down these expenses for Apple Music 1's Nadeska Alexis.

By her back-of-the-napkin estimation, which included studio costs ($1,200 per 12-hour block, plus a session engineer at $75 to $100 an hour), mixing and mastering (anywhere from $2,500 to $10,000 a song), and paying for beats (anywhere from $5,000 to $40,000), the baseline cost to record a full-length album like her 2022 breakthrough, "Public Displays of Affection: The Album" would be about $300,000.

"That eliminates 75% of the people who are aspiring," Long said. "I didn't realize how much money that it takes to actually be an artist."

Long's estimates align with Passman's; he said it can "easily" cost $250,000 to record an album, especially for pop and hip-hop artists, who tend to collaborate with larger teams.

That price tag is a key reason many artists still opt for a record contract, even if it means signing away their masters (the original sound recordings of their songs) or agreeing to a lopsided division of royalties. Getting cash up-front gives the artist freedom to make music without worrying about the often astronomical price tag β€” at least not right away.

Rachel Chinouriri, a 26-year-old singer-songwriter from London, told me that signing to Parlophone/Atlas Artists in the UK was the only way she could afford to make music her full-time job. The contract offered a supportive team and a financial safety net. Otherwise, she would've had to write songs on the side while fueling her income with another gig β€” not an uncommon practice for independent artists.

"My manager was just like, 'Here are the amount of costs you'll need,' and I'm someone who is paying rent and can't live at home with my family," she explained. They both agreed the indie route wasn't feasible.

While creating her debut album, "What a Devastating Turn of Events," Chinouriri was able to execute her vision on her label's dime, instead of fronting the money herself.

"I've never had to sit and think, 'How much has this studio session cost?' When I did my album, I don't even know how much the producers got paid β€” it just was done," Chinouriri says. Her plan is to build a following and recoup over time; she notes she's still being loaned money from her label and is not yet in the black.

"I don't know how I'd be able to do all of this and then have to think of the cost," Chinouriri adds. "I don't know how Raye does it, I don't know how Tinashe does it. It's such a mission."

While Raye and Tinashe are independent artists, neither began their careers that way, splitting from Polydor and RCA respectively after negative experiences.

By the time they severed ties with their major labels, both had already built loyal audiences, networks of collaborators, and teams they could rely on when the purse strings tightened. And even that doesn't necessarily mean they're bringing in a profit.

In June, Raye told me she was "breaking even," while Simonne Solitro, Tinashe's longtime manager, said they've had to figure out how to make songs and music videos on a "microbudget."

"Every single dollar that you make needs to funnel back into your project," Solitro said. "You essentially become a startup business."

Read the original article on Business Insider

Three-time Grammy nominee Raye says she's not making money in music: 'We're breaking even'

25 November 2024 at 14:18
Raye.
Raye is nominated for best new artist and songwriter of the year at the 2025 Grammys.

KAPFHAMMER; Chris Burnett for BI

  • Raye is a 27-year-old singer and songwriter who was recently nominated for three Grammy Awards.
  • While promoting her latest single "Genesis," she told Business Insider that she was "breaking even."
  • "If I was in this to make money, I wouldn't even be releasing the kind of music that I am," she said.

Raye is a multi-platinum singer and three-time Grammy nominee who has worked with BeyoncΓ© and opened for Taylor Swift on the Eras Tour. And yet, as of this summer, she said her music career still isn't making her money.

In Business Insider's new feature, "Want to make money as a pop star? Dream on," Raye opened up about balancing the books as an independent artist and sacrificing profit to serve her artistic vision.

"There's ways to make quick cash and there's ways to make a profit. And trust me when I tell you, I'm not taking those ways," Raye told me in June following a performance at the Conrad hotel in downtown Manhattan.

It was the latest stop in a series of mini-concerts across the globe, including Amsterdam, London, and Berlin, to promote her newest single, "Genesis." The price to organize and execute these shows β€” from travel expenses to lighting design and hiring a full band β€” was far from cheap, Raye said, but ultimately worth the investment.

"We're breaking even and it's beautiful," she said.

"I'm putting out a piece of music that I'm really proud of," she added, "with the roll-out plan that I wanted."

Raye, 27, was born Rachel Keen in London to a Ghanaian-Swiss mother and an English father. In 2014, she signed a four-album record deal with Polydor, who were impressed by the buzz surrounding her self-released EP, "Welcome to the Winter."

Seven years, four more EPs, and hundreds of thousands of streams later, Raye publicly accused Polydor of keeping her debut album suspended in limbo. She begged the label to take her off the shelf, saying she'd already tried everything else. "I switched genres, I worked seven days a week, ask anyone in the music game, they know," she wrote on X.

The following month, Raye announced that she'd been freed from her contract. In 2023, she released her first full-length LP as an independent artist, "My 21st Century Blues," which landed at No. 3 on BI's list of the year's best albums.

Earlier this year, Raye took home six Brit Awards, setting a record for the most wins in a single night. She's nominated for songwriter of the year, non-classical at the 2025 Grammys, and will also compete against stars like Chappell Roan and Sabrina Carpenter for best new artist. (She was also nominated for best engineered album, non-classical for her work as a producer on Lucky Daye's "Algorithm.")

Raye won six awards, including album of the year, at the 2024 Brits.
Raye won six awards, including album of the year, at the 2024 Brits.

Jeff Spicer/WireImage

In the music industry, working outside the major-label system can yield more creative control. For Raye, it has ushered in a new era of critical acclaim and commercial success.

But there are downsides, too, namely the lack of financial backing. Labels typically offer an advance as a signing incentive, though the actual dollar amount varies widely. They also tend to cover the up-front costs of recording and promoting an album β€” studio sessions, producers, sound engineers, photographers, stylists, and radio campaigns, to name a few β€” which can total $250,000 or more for pop and hip-hop artists, according to Donald Passman, a veteran music lawyer who is the author of the music-industry bible "All You Need to Know About the Music Business."

These days, touring is especially expensive, as costs for everything from bus rentals to hotel rooms to hiring a lighting technician or manning a merchandise table have ballooned.

"You're getting paid X to do Coachella, and then you spend double the amount that you got paid to do the show on the show itself, because you want to do a great show," Raye explained. "And you have to pay musicians, and the singers, and everyone what they deserve."

To find any level of success in the industry, Raye said she needs to be as much a businesswoman as she is a creative force.

Still, even when faced with the cold, hard numbers, she said that losing money is preferable to cutting corners.

"It upsets me to do a half-assed gig or to do a half-hearted thing," Raye said. "If I was in this to make money, I wouldn't even be releasing the kind of music that I am."

Read the original article on Business Insider

That famous artist you love probably isn't as rich as you think

21 November 2024 at 11:17
Rachel Chinouriri; Raye; Tinashe; Two Door Cinema Club

Lauren Harris; KAPFHAMMER; Matt Jelonek/Getty Images; Katy Cummings; Chris Burnett for BI

On a hot summer night in downtown Manhattan, Raye was exhausted and excited. The British pop singer had just finished a series of performances of her new single "Genesis" as small groups of devoted fans cycled in and out of the Conrad hotel. She'd barely stepped off the stage before a member of her team handed her a plaque to commemorate the sale of 2 million US copies of her 2022 single "Escapism."

By nearly any metric, the 27-year-old singer and songwriter is a star on the rise: 2 million Instagram followers, 27 million monthly Spotify listeners, three Grammy nominations, a single-year-record six Brit Awards, a writing credit on BeyoncΓ©'s most recent album, and coveted performance slots at Coachella, "Saturday Night Live," and Taylor Swift's Eras Tour.

But in 2024, artists who want a sustainable career can't survive on talent or even fame alone. They now have to strategically post on social media, design cost-efficient tours, and navigate the complex web of legal and financial bureaucracy necessary for their work. And oftentimes, even that's not enough to turn a profit.

"We're breaking even and it's beautiful," Raye says in one of the Conrad's many boardrooms, one hand resting casually on her plaque.

Music has always been a business, but streaming, TikTok, inflation, and the ballooning costs of touring have dramatically altered a musician's traditional routes to making money.

Even the world-famous billionaire musician Taylor Swift has acknowledged she can't focus on songwriting alone to build her career. "I'm sick and tired of having to pretend like I don't mastermind my own business," she told Rolling Stone in 2019.

"You've got this democratization of the music business where there's not the same barrier for entry. The problem is that everybody's got that access," says Donald Passman, a veteran music lawyer who is the author of the music-industry bible "All You Need to Know About the Music Business."

"The real challenge for artists now is to get yourself an audience before you go to a label, if you decide to go to a label at all," Passman adds. "You've got to do it yourself."

Or as Kevin Baird, the bassist of the Northern Irish indie rock band Two Door Cinema Club, tells me: "You have to be the CEO of your company. You have to understand what is going on in every single facet of the business."

Raye.
Raye is nominated for best new artist and songwriter of the year at the 2025 Grammys.

KAPFHAMMER; Chris Burnett for BI

A chart-topping hit β€” or 2, or 3 β€” isn't always a golden ticket

The formula for success in the music industry appears simple: Release a hit song, climb the charts, rake in the cash.

The reality, of course, was never that straightforward. Predatory record deals existed way back in the 1950s, when, for example, Chuck Berry was forced to split the songwriting checks from his first hit, "Maybellene," with people he'd never met. But a lot has changed since streaming usurped radio play as the kingmaker of a rising musician's career.

Streaming numbers can help a song top the charts or act as a bellwether for internet virality, boosting the artist's profile in the process. But while it's still possible to live lavishly off the back of one song, like a classic sitcom theme or a holiday staple, that's the exception, not the rule: Whether the artist actually makes money on a song depends on a myriad of factors, including complex copyright rules.

Royalty distribution β€” how artists and others who own copyrights get paid β€” is a many-headed beast, but reliable industry estimates have put Spotify's payout rate at less than half a cent per stream, while Apple Music in 2021 was said to have told artists it paid about one penny per stream.

Even the hitmakers who dominate your "For You" page are getting paid "almost nothing" from TikTok, as one music exec told Billboard. (Apple Music and TikTok didn't respond to requests for comment. A Spotify spokesperson directed me to a Q+A section on their website, which notes, "In the streaming era, fans do not pay per song, so we don't believe a 'per stream' rate is a meaningful number to analyze.")

Ariana Grande, Tayla Parx
Tayla Parx cowrote multiple hits with Ariana Grande, including "Thank U, Next" and "7 Rings".

YouTube; JC Olivera/Getty Images for BMI; Justin Ayers; Chris Burnett for BI

There are perks unique to the streaming era β€” Two Door Cinema Club's Baird notes that it provides a level of granularity to data about listener interests and tastes that can help artists decide how to market and create music β€” but mostly, it's a lot of work for not a lot of payoff.

The veteran songwriter and performer Tayla Parx knows this problem acutely. In addition to her solo career, she's cowritten plenty of earworms, including two of Ariana Grande's biggest hits on the Billboard Hot 100 β€” "Thank U, Next" and "7 Rings" β€” and Panic! At the Disco's top-five hit "High Hopes."

But songwriters typically only take a small slice of the small streaming payout: Billboard reported in 2022 that, on average, songwriters could expect to earn 9.4 cents for every dollar a streaming service paid in royalties. If more than one writer is credited β€” "Thank U, Next" has eight β€” they all split it.

It's also not standard practice for songwriters to charge a base fee for their work. That means if Parx spends eight hours writing a song with a pop star, but that song ends up on the cutting-room floor, she's earned nothing for that full workday.

Parx tells me her biggest slice of income doesn't come from her work as a performer or as a Grammy-nominated lyricist. Instead, her bank account is buoyed by a shrewd investment outside the music industry.

"What I can make off of one of my rental properties from a one-month or two-month rental could pay for a whole tour," says Parx, who self-released her third studio album, "Many Moons, Many Suns," in July through her umbrella company, TaylaMade Inc. "That's very different than showing up in the music industry for work every single day for free."

Parx's experience is not uncommon. For many musicians, especially independent artists, diversifying one's income is necessary to make ends meet, whether that's getting a gig editing videos, teaching art, or stocking milk at a coffee shop.

Record labels can offer cash up front β€” but artists still need a solid business plan

For musicians to actually profit from their work, revenue β€” which includes royalties β€” must outweigh expenses. The problem? Recording an album can be eye-poppingly expensive.

Muni Long, a Grammy-winning R&B singer and songwriter who's also written hits for artists such as Rihanna, Kelly Clarkson, and Fifth Harmony, recently gave an interview to Apple Music 1's Nadeska Alexis in which she broke down how expensive it could be to write and record an album.

By her back-of-the-napkin estimation, which included studio costs ($1,200 per 12-hour block, plus a session engineer at $75 to $100 an hour), mixing and mastering (anywhere from $2,500 to $10,000 a song), and paying for beats (anywhere from $5,000 to $40,000), the baseline cost to record a full-length album like her 2022 breakthrough, "Public Displays of Affection: The Album" would be about $300,000.

"That eliminates 75% of the people who are aspiring," Long said. "I didn't realize how much money that it takes to actually be an artist."

Of course, these are estimates of the cost to record an album within the mainstream music industry, something artists are increasingly forgoing. But these numbers illuminate what still makes a major-label record contract so appealing: Getting cash up front gives the artist freedom to make music without worrying about the often astronomical price tag β€” at least not right away.

I don't know how I'd be able to do all of this and then have to think of the cost. Rachel Chinouriri

For the London-based singer-songwriter Rachel Chinouriri, signing to Parlophone/Atlas Artists in the UK was the only way she could afford to make music her full-time job.

Not having to worry about the cost of making her debut album gave Chinouriri the space to focus on the music while getting her career off the ground. She says her debut album, "What a Devastating Turn of Events," wouldn't exist in its current form, with its high-quality production and its glossy cover art, without her label's investment.

"I've never had to sit and think, 'How much has this studio session cost?' When I did my album, I don't even know how much the producers got paid β€” it just was done," Chinouriri says. "I don't know how I'd be able to do all of this and then have to think of the cost."

Labels typically offer an advance as a signing incentive, which they expect to recoup over time. The actual dollar amount depends on many factors β€” the artist's social-media following, how well their music is projected to perform, and the length of the agreement, to name a few. Some contracts offer an additional sum to record an album, which can easily total $250,000 or more for pop and hip-hop artists, per Passman.

Though Chinouriri did not share specific details of her record deal, she did say that despite tens of millions of streams on Spotify and critical acclaim, she still is being loaned money from her label and is not yet in the black. "The plan is to recoup and hope that this thing or brand that we have will eventually start bringing in profit," she explains.

Two Door Cinema Club
Sam Halliday, Alex Trimble, and Kevin Baird formed Two Door Cinema Club in 2007.

Katy Cummings; Chris Burnett for BI

But is Chinouriri's situation typical? The better question may be what a "typical" record deal even means these days.

Derek Crownover, who specializes in IP rights and other music-related assets at the law firm Loeb & Loeb, says that out of thousands of label contracts he's helped negotiate, advances have ranged from $0 (if the artist wants to keep their masters, which are the original sound recordings of their songs) to $5 million (if executives believe the artist is destined for superstardom).

"It's really all over the map," Crownover says. "A record deal right now is, 'We're going to write out a business and marketing plan for this artist, and we need funding for it.'"

Without a good business plan, Crownover adds, good luck getting noticed: "You might be able to break through because you're sheerly talented, but that chance is getting smaller and smaller."

The alternative β€” working outside the major-label system β€” can yield more creative control, but it requires artists to compete with Goliaths.

Even being the No. 1 song on TikTok doesn't mean anything in the grand scheme of things. Simonne Solitro, Tinashe's manager

Ten years after making her first appearance on the Billboard Hot 100 with "2 On," from her major-label debut, "Aquarius," the alternative R&B singer Tinashe reemerged this summer with "Nasty," her first bona fide hit as an independent artist.

The song's hypnotic chorus first took off as a TikTok meme, which helped it climb the charts. It also gave Tinashe's team the confidence to invest more than usual in a radio campaign and more leverage to land high-profile media placements and lucrative brand deals.

That was only the beginning.

"Even being the No. 1 song on TikTok doesn't mean anything in the grand scheme of things," Tinashe's longtime manager, Simonne Solitro, explains. It needs to translate to dedicated fans who will spend hard-earned cash. For Tinashe, that meant doubling down on "Nasty" with a remix EP, releasing her new album "Quantum Baby" on the heels of her hit song, and taking advantage of the buzz by embarking on a world tour.

"It's a lot of pressure, especially for her," Solitro says. "Her peers are Doja, Normani β€” all the big, amazing, pop-R&B girls β€” and they all have 70 million times larger budgets for these things and she still has that expectation for herself."

"She doesn't want the product she puts out to be like, 'Oh, yeah, that's my version of a budgeted video,'" says Solitro, who declined to estimate budget numbers. "She still wants it to be that caliber of a project."

Live shows are key to building a dedicated fan base, but many artists break even or finish tours in the red

Going on tour is a way to build a connection with fans, but it's hardly a guaranteed money-maker. Nearly all artists who aren't Taylor Swift are getting hit by the rising costs of touring.

In a market flooded with demand in the wake of the pandemic, costs for everything from bus rentals to hotel rooms to hiring a lighting technician or manning a merchandise table have ballooned. (Not to mention that venues take a cut of merchandise profits these days, too β€” sometimes as much as 40%).

When artists as big as Jennifer Lopez, Bad Bunny, and The Black Keys are canceling tour dates or entire tours amid reports of weak ticket sales, what hope is there for everybody else?

Kevin Baird of Two Door Cinema Club; Tinashe
Tinashe's longtime manager says many indie artists finish tour "very much in the red."

Shirlaine Forrest/WireImage; Matt Jelonek/Getty Images; Chris Burnett for BI

Tessa Violet, a Los Angeles-based singer, songwriter, and former vlogger who's been performing live for a decade, estimates she hasn't made a profit on a tour in roughly six years. "That's not just me," Violet tells me, "that's literally every single artist I know."

While fan complaints about rising ticket costs abound, Violet says very little of that sum is going to the artists. They have no input on those notorious service fees, which are split between venues and behemoth sellers like Ticketmaster and StubHub. Meanwhile, the base ticket price goes toward things like production, marketing, and booking costs. Promoters also take a cut of sales, and that's all before the crew gets paid.

Even for a signed artist like Chinouriri, the stacked costs have proved insurmountable. One month after we spoke, she canceled her planned US tour dates, citing the "financial risk it would entail."

If touring is a logistical and financial nightmare, why bother?

It goes back to Tinashe's manager Solitro's risk-reward assessment. A well-executed concert is an investment that promises to yield something every business owner wants: consumer loyalty. It can deepen the connection between performer and listener and, the performer hopes, invite new fans into the fray.

"Establishing a direct connect like that β€” an actual 'in real life' connection with fans β€” that's what gets people dedicated champions of you for the long haul," Solitro says. "They're the ones that will continually stream your music."

Violet puts it more simply: "It's the best high in the world."

Musicians must be social-media influencers, not just performers

On one hand, finding an audience for your art via social media has never been easier. On the other, it reassigns a draining and unpredictable task, promotion, to the artists.

For independent artists like Violet, building a following for your music online is a new reality that comes with the territory. "Somebody can't be a fan of something they don't know exists," Violet says.

Tessa Violet
Tessa Violet's new single, "My Body's My Buddy," recently went viral on TikTok.

Sarah Pardini; Chris Burnett for BI

Social media has changed the game for musicians at all levels, signed or not. The chart-topping pop star Halsey made headlines in 2022 for accusing her label, Capitol Music, of holding her new song hostage until she could manufacture a "viral moment" for its release. (Capitol later apologized and released the single in a show of support; a year later, Halsey was dropped from the label. She's since signed a new contract with Columbia.)

For Chinouriri, being on a label meant having to build and maintain an online following to show her value to label execs. "I had to put in the legwork of three to five TikToks a day for over a year just to prove that I'm worthy enough of keeping on the label," she says. Atlas Artists declined to comment.

A high-profile cosign can be a godsend in the pursuit of growing a following. Chinouriri, who's earned shout-outs from stars like Adele, Sophie Turner, and Florence Pugh, noticed a spike in her online engagement after Pugh starred in the music video for her single, "Never Need Me." The music video's announcement in January racked up more than 600,000 likes on Instagram, nearly five times Chinouriri's follower count at the time. By the end of that month, Chinouriri's monthly listener count on Spotify had grown by more than 300,000, according to data provided to BI by Chartmetric.

Chinouriri said that Pugh had freely offered her time and acting chops and that the two had become friends β€” a friendship that she said started when they followed each other on social media. All those posts and DMs became worth it.

Still, social-media savvy can do only so much to help you stand out amid erratic algorithms, the perpetual demands of content-hungry fans, and the crowds of other talented musicians jostling for attention.

"There are three things you need to be a successful artist," Violet says. "One, you need great art. Your art needs to be better than your influencing, so it needs to be really exceptional. Second, you have to be a salesman. And for people who are artists entering the influencer world, that's a really hard pill to swallow."

"The third thing," she adds, "is you have to be lucky."

Read the original article on Business Insider

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