How to manage your finances as an artist
By Grégoire Michelin28 September, 2022
You’ve taken the big leap, time to make music creation your full time job. You’ve been warned by family, friends and perceive your profession as being financially unstable. While this holds some truth, it is not entirely correct.
How can you manage your finances as an artist in the digital era in order to make your income as stable as possible?
The secret lies in optimizing, automating and diversifying your income streams. If you are smart with your investments and make sure that bad months don’t affect you as much as they usually would, you’ll be on the road to being financially stable while working a job that you love !
Optimize your revenue
While master royalties linked to streaming platforms will generate revenue for your music, there are an array of other royalties that you may be entitled to as a music creator ! These include publishing royalties and neighboring royalties.
Master rights are linked to the recording or audio files of a song. This includes your final master but also any stems or samples in your track. If you own master rights on a song, you are entitled to master royalties but also to neighboring royalties, which will complement your income.
Publishing royalties include performance, mechanical and synchronization royalties. As a songwriter or owner of a composition, you are entitled to these royalties which will complement your revenue each time your music is performed, played, streamed or bought.
We’ve published an article detailing the different rights you can own, which also explains how you can collect the revenue generated by these assets. Don’t forget to check it out here (LINK TO ROYALTY ARTICLE) in order to optimize your income !
Automate your royalty collection
Royalty collection and redistribution can get complicated if you work with collaborators, a number of distributors, or are paid at different moments by different labels depending on your contracts.
Automating your earnings through a platform like Releese will centralize your earnings in one place, including all types of royalties (master and publishing). This collection will result in a monthly payment while keeping count of ownership percentages for collaborators which will greatly facilitate your royalty accounting.
A great part of managing your finances efficiently includes easily knowing how much income you are generating in order to keep track of your progress. Monthly payments will also help you achieve financial stability as it will facilitate your personal accounting as opposed to being paid quarterly or bi-annually.
Be smart with your investments
Now that your income is optimized and automated, you need to make sure that your investments in your project are well thought through. As a rule of thumb, anything that you can learn to do yourself for free such as artworks or mastering will help you in the long run. For example, mastering for 10 releases a year would cost you around 1500$USD, by eliminating such costs from your budget it will be much easier to make a profit with your music.
In the case in which you cannot provide a service yourself or do not have the time to learn, calculate your overhead costs and how well your music would need to perform in order to make this investment back. For example, on the basis of 0.0015$USD per stream, a 100$USD will require master royalties on roughly 70.000 streams in order to break even. These calculations will help you adjust your spending and optimize your earnings in order to build a sustainable project and catalog.
When signing to a record label, make sure that the deal is worth it ! Why would you give away 50% of your income to a label who will produce mediocre artwork and barely push your music to their audience? Financially, it would make more sense to release your track independently. Planning ahead, calculating and working towards sensible financial decisions for your project are all key to achieving financial stability as a music creator.
Diversify your revenue streams
Now that you’ve optimized your revenue, automated your royalty payouts and are planning ahead and working out financial decisions for your project, you’ve started generating profit, great ! What can you do with this extra cash?
Paychecks will not be the same from month to month which can lead to unstable finances, so while evident expenses include your rent, food and more, it is key to set money aside as a creator. This will allow you to keep working through potentially tough months without worrying about your livelihood.
Another key aspect of managing your finances as a music creator is diversifying your revenue streams. Living solely off of royalties is risky as in the event that your streams and sales dip, you wouldn’t have any other income to compensate your losses. As an example, a DJ & producer could accumulate royalties, mix & master services, productions classes and performances, which would lead to a steadier flow of income.
With these tips and tricks in hand, you should have a basis of finance management to help you through your journey. It is tough to make a stable living with your music but far from impossible; all that remains is to stay perseverant and motivated, it will take time but you can do it !