Busting The DIY Millionaire Musician Myth & Why Labels Aren’t Going Anywhere According To The Data
If you’ve bought into the DIY marketing your own music to become a millionaire myth, here’s why you still need a label
If you’ve bought into the DIY marketing your own music to become a millionaire myth, here’s why you still need a label
With the rapidly evolving digital marketing landscape, especially in the music industry apart from other industries, in my case, financial services, sports (football) & and film which I have had the experience of working in & contributing to as a writer, critic & founder & musician/composer, over the course of my 10+ year career since 2013, the need for effective marketing has remained something that I haven’t paid enough diligent attention to & subsequently learned the hard way that it is an imperative necessity & holds prime importance in any industry or business; something I’ve understood over the course of my professional career.
While the cliche goes along the lines of, “you can have the best product in the world, but if it’s not marketed properly you’ll fail”, it is, however, rather true & glaringly apparent, especially if your product is music.
The number of start-up book summaries I read(And I’m saying summaries because of this cool app I use called Headway, which you can buy a discount subscription for if you check out my old article) also suggested that founders should primarily focus on bringing in new business, & marketing their existing products/services to drive up sales & revenue, & bringing in investment after.
So you’ve been told that you need to think like “you’re a business as a musician” in the “music business”, and all that bullsh*t you get fed by people talking about it & regurgitating it on social media in ads/posts, promoting their courses, etc etc.
When it comes to music, Justin Bieber for example, is just sh*t music being shoved down listeners’ throats, from the unending conveyor belt of sh*t music being made. He’s marketable, so even if he makes the most abhorrent song in the history of music(like most of his music); it sells!
The music industry is hugely hit & miss; it’s true. A legend like Nick Drake, a master of fingerstyle & unmatched guitar prowess & songwriting ability, committed suicide in the 1970s because of the lack of product he pushed, and his posthumous fame clearly pits him as one of British folk music’s greats. But some dimwit rapper, who hasn’t recovered from an extended bender down in Mexico & who replaced his hair with bling, busting out a sh*t hook is raking in the dough. The answer (in AI Liam Gallagher’s text to speech tone) is — “fu*king marketing.”
If you look at most popular music & its sound, including the production & its technicalities compared to the vast annals of the greatest music ever made, it’s pretty crap, but it’s effectively marketed, which is why it does well.
I had this engaging conversation with the frontman of a moderately-popular, yet mildly underground band from Europe towards the end of last year & he told me “Unfortunately few labels will take a look at you seriously until you have built a solid number of ‘followers’ online” & that “it’s a “sad shape” that the music industry is in while saying “the best advice I can give you is to use the internet as best as possible to put your music out there & build a fanbase”.
There’s a lot of truth to this, in that you do need a fan base to get that break/ bump up the ladder & make the jump to get signed by a label. But that’s perhaps the only thing you need to aim for as a musician/artist or band with your social media marketing.
If you’re planning on making millions by marketing your music on your own, here’s why that’s NOT going to happen. I know, you’ve been told that “Record Labels are dead… You can market your music on your own”, “you don’t need a label today”, “it’s 2024 & there’s no need for a label”… “The DIY musician” etc etc. But read on, I’ll explain why…..
Music Marketing Economics — Your Marketing vs a A Label’s Marketing | Crunching The Numbers
Today we do have the tools to market our own music — you know running an Instagram or Facebook or Twitter ad is affordable & anyone can do it, & you’ve probably seen a host of people posting ads on social media after watching a few YouTube videos & thinking they’ve beaten the system. But here’s the economics of what it’ll take to make $1 million from your music streams.
On the face of it, the need for the traditional label model is suggested to be apparently slowly dwindling especially because of the significantly low payouts from streaming platforms & that in today’s modern times, understanding & effectively marketing your music has become an essential tool in a musician’s toolkit.
The latter is true, but only in the sense that you need your marketing to grow your fanbase/audience NOT your streams & that it’s a prerequisite for labels these days.
In the music business, again there’s a huge trade-off & mismatch between per stream & per social media ad spent.
Spotify pays $0.0032 per stream, while the average cost per click is between $0.7-$1 per social media ad (as of 2023). To earn the US minimum wage of $15,000 you’d need over 4.6 million streams — which is just not possible without marketing, if you’re just starting out. Unless you’re really lucky with the algorithm.
So you need at least 1000 streams per $1 spent on ads to make $3 in streaming income & in turn a $2 profit. The ratio of 3:1. But get this, run the math & to get 5,000,000 streams you’d need to spend at least $5000 maintaining this ratio. So you’d need to spend $5000 to earn $15,000. That’s minimum wage!
To earn $1,000,000 you’d need to spend $333,333 on marketing maintaining the same ratio. That’s 2.7 CR in INR to spend to make 8.3 CR. So that’s why labels aren’t dead yet because unless a musician has that kind of spending capability, i.e to spend $300,000 on marketing you can’t make $1 million dollars.
But again, this is just a modest calculation to put things into a base bracket. It’s based on the assumption that each person who clicks your ad will stream your music 1000 times. That’s another huge catch. A single person who clicked on your song stream link you spent $1 on an ad for on Instagram is NOT going to stream your song 1000 times.
The average max range someone will stream your song is probably about 100 times, at max. So you’d need to get 10 people streaming each song 100 times per $1 spent on ads or 20 people streaming it 50 times each, on each $1 ad spent to get 1000 streams per $1, which is still asking a lot!
More realistically, assuming one person streams your song 10 times, you’d need 100 people clicking on your song stream link per $1 ad spent & listening to it 10 times for over 30 seconds.
So for each $1 spent on an ad, you’d need at least 100 clicks per 1000 impressions & each person would have to stream your song 10 times each.
Technically, your cost per 1000 impressions is your CPM & your CTR is clicks/impressions * 100. You can read in detail about these 2 KPI metrics used in digital marketing anywhere online.
So for this explanation you’d need 100 clicks/1000 impressions or a CTR of 10%. That itself is double the CTR of even the biggest & most successful music marketing campaigns.
According to Bard, here are some reported CTR ranges for Instagram ads:
Average CTR for all industries: 0.5% — 1.5%
Average CTR for music industry: 0.75% — 2%
CTR for high-performing music campaigns: 3% — 5%
So while this may seem doable for all that you’ve read online, it’s pretty deceiving & one that fools you into thinking you can do it yourself. But the whole game is in volumes.
To make the holy grail of $1 million per song, you’d need to spend $333,333 on marketing; that’s if the above ratio is maintained & if you get 1000 streams per $1 ad spent.
Why You Still Need A Label
Ask yourself, as an artist, do you have $330,000 to spend on marketing on even 1 song of yours that you think could be a huge hit?
If you want to make $1 mil off a song, you’d need to market it by spending at least $300k. The biggest labels spend at least $2.54 million on marketing per artist on their roster in a year.
According to Bard: “…. Music Business Worldwide estimated in 2023 that the average major label artist marketing budget around $2.54 million (adjusted for inflation from a 2014 estimate of $2 million).”
So if that’s a 10-track album that’s $254k per song. Which then earns them $762k per song in income, maintaining the same ratio I’ve explained above. This translates to $7.62 million per album, again at the same ratio of 3:1 or earning $3 per $1 ad spent.
Now assuming the split is 50/50 between you & your label, you get $3.81 million for each album you make.
Whereas, for you to make $3.81 million by marketing your music on your own, you’d have to spend roughly $1.27 million.
Unless you come from that kind of wealth or George Soros is your dad’s golfing buddy or know some hackers who can give you that much for marketing, yea… it’s NOT happening.
Even if you get signed on to a mid-sized label & they can spend roughly $100k on your music marketing you can earn $300k a year. But can you put that much into marketing yourself? I think most definitely not.
Apart from that the obvious advantages of labels like gigs & PR, licensing, legal aspects etc etc, managed by labels definitely helps.
But labels are still critical. They are very much needed.
“It All Adds Up”…. My A*s
Some, & by some I mean mostly non-musician music enthusiasts & music “experts” & curators have posed the “it’s not only Spotify, it all adds up” across all streaming platforms argument. The truth is that, all streaming platforms are more or less similar, and irrespective of releasing your music across — yes, again it’s mainly only YouTube, Apple Music & Soundcloud for streaming— means that you’re still paying the same ad spend for each click & even if you have a customized landing page with YT Music, Apple Music & Soundcloud.
Your targeted listener will just choose the streaming service he/she prefers. So that’s still resulting in the same numbers. They’re not going to stream each song of yours 10 times on all streaming platforms right!
While I still think a landing page with stream option links makes a lot of sense, some particular case studies on Bard seem to suggest a drop-off:
“Case studies: Some music marketing case studies suggest drop-off rates for landing pages directing users to multiple streaming platforms can be around 15–20% compared to direct Spotify links. However, these studies are often conducted with specific demographics and ad formats, limiting their generalizability.”
It doesn’t add up, it just evens out. The streams you’ll end up getting will be the same, and either way, you’re paying $1 per ad spent irrespective.
Unless it’s Bandcamp, but there’s a catch there too…..
The Idealistic Bandcamp Comeback?
So it’s not rocket science to understand that you stand to earn much much more & get paid fairly on Bandcamp, especially for lower volume sales.
According to Bard’s data referencing an article it says:
“Case Studies: Some established artists like Amanda Palmer reported that Bandcamp is their primary source of income, generating over 70% of their revenue. However, this likely varies greatly depending on genre, popularity, and fan dedication.”
Bard further suggests: “Research from the Digital Music News suggests that Bandcamp buyers are significantly older than the average streaming user, indicating a potentially different market segment.”
So these are your oldies, ranging from the classic rock & beat generation old timers to probably everyone born before 2000. If
I’ve toyed with the idea of an only Bandcamp release. But as per my estimations & notions, I think that would only work once you’ve established yourself upto a certain level. Neil Young pulled his music from Spotify in 2023 for that misinformation thing, but imagine if someone like Neil Young or Taylor Swift decided to only release on Bandcamp!
I’m sure streaming platforms like Spotify would probably pay Taylor a token to stay on Spotify, your classic “under-the-table” greasing as it’s termed in Mumbai. But unless you’ve reached a certain degree of popularity an only Bandcamp strategy isn’t going to work.
Maybe you could earn more per ad spent. So if your release is $10. You’re still better off than a 3:1 at 10:1 but the volumes won’t be the same considering buying music & owning it (digital or physical) is dying. That’s just technology. Old is replaced by new.
Also the metrics turn to “conversion” then and conversion for a $10 album/product per click is much harder than a person who can stream for free or at their minimum monthly subscription.
But on the other hand, research shows: “Musicians have reported that their Bandcamp followers tend to be more active and supportive, often leaving comments, engaging with social media content, and attending live shows. This suggests a potentially more valuable fanbase compared to purely streaming listeners.”
Either way, building your fanbase & audience is key. Which is what your main aim of marketing on social media should be.
Also, it’s worth noting that most of the time vinyl, tapes & CDs are offered at the best rate by labels, as opposed to trying to make them yourself. Who even has CD drives to do that! (Insert nostalgic note for burning CDs on Nero back in the day).
But if Bandcamp could keep the same model for listeners to buy albums(digital & physical) & download them & maybe also incorporate free & premium unlimited streaming, and keep the same level of payouts or even tweak their margins by 7–10% 20% tops, but basically offer payouts for artists that are much more than Spotify, I’m sure there’d gradually see a global shift of artists using Bandcamp more since they get paid fairly & in turn, listeners coming back to Bandcamp, if they start using some innovative marketing.
They could change/make the UI of the Bandcamp app really sleek &cool, & go manual instead of an algorithm making recommendations or manual+algo, and launch free(ad based) & premium (subscription based) streaming.
It’s your typical “if you can’t beat them join them” kinda thing, however, Bandcamp’s USPs of fair artist payout & availability of buying physical & digital will definitely the edge over Spotify.
But that’s just a suggestion.
Those “start a revolution from my bed” like the Oasis song aside, if you’ve tried a Bandcamp only strategy, do let me know if it’s worked!)
The Streaming Game Is Still Very Much Designed To Suit Labels & Distributors
Why would a company want to pi*s off its biggest clients? To in turn, empower the bottom feeders? And why would Spotify’s execs not want to make millions and in Daniel Ek’s case billions?
So Spotify pays out the most amount only to its biggest clients i.e. the biggest labels & in turn the biggest artists. That’s the 1%. The music industry’s 1% to be specific.
Distributors charge their fees, and their bilateral agreements with streaming platforms are a separate story.
But the streaming services, they’ve built this system thoughtfully, so there’s no way you can game the system & get into the 1% on your own using your own resources for marketing, unless you have the financial backing. That’s just the way it is.
(The highest income received by an artist in 2023 was Taylor Swift with $100m)
The Playlist Placements Cartel— No Barometers, No Tangible Evidence (Grey Market)
The elephant in the room surely. Playlist placements. Ahh a sales pitch where a freely created playlist has been said to give you millions of streams.
Let’s say it happens, you get a million streams on a song from a playlist placement. That’s $3000 roughly. But that’ll cost you probably $10,000 or more, (it could be way more than that to be frank) and this is just a lower (probably quite low) estimation of the placement cost (It’s very subjective) but is that a profit or loss?
They sell it to you because the “1 million streams” number sounds huge! But if you do the math it seems flawed.
And they make these playlists for free or maybe through a network.
But let me explain,
Here’s the data via our AI friends:
“Max Streams:
There have been reports of individual songs gaining millions of streams from placements on major curated playlists. However, these instances are often attributed to already-popular artists or songs benefiting from significant algorithmic push.
For smaller or up-and-coming artists, max streams from a playlist placement could range from tens of thousands to hundreds of thousands, depending on the playlist size, genre, and target audience.
Different studies and reports offer varying estimates for average playlist stream gains. Some suggest an average of around 5,000–10,000 streams, while others mention ranges between 1,000–20,000 streams. These variations depend on playlist size, genre, and engagement.
Costs:
Wide Range: Playlist placement costs can vary drastically based on the playlist’s size, genre, targeting, and the service or platform used. Costs can range from a few hundred dollars to several thousand dollars for a single placement.”
Let’s take a slightly mid range for example, you pay $500 for a playlist placement. You’d need 150,000 streams to just break even or make your $500 back. And you’d need 300,000 streams to make $1000 dollars or a $500 profit.
So per $1 spent you get 300 streams. Considering it’s $0.0032 of income per stream so that’s $0.96 you earn per $1 spent on a placement. You’re not even breaking even.
Yes, it seems better than social media on the face of things & the huge “1 million streams” hook, but it’s actually worse.
Also the top 20% to 30% of listings on the playlist of course get the most plays. And these placement companies will charge you more for that as well.
It’s also at zero cost to those placement dudes/dames or companies creating these playlists for free or through a vast network working together etc etc. And they’re using Instagram ads too (Let’s not get into their ad spent to revenue ratio, haha)
Maybe it could work if they put you on a 100 playlists that get 1million streams each, that’s a 100 million streams which makes $320,000. But does it exist? And how much do they charge you for it?
But considering the average is 10,000 to 20,000 streams per placement that’s 2 million streams on a 100 playlists that’s earning you $6400. If it costs you less to achieve this then, maybe this thing could work.
But, it’s a huge grey area according to me.
Or maybe it’s a place that placement dudes could exploit if their network & agreements are wide enough — The playlist placement cartel.
But I’m sure there could be some kind of crackdown or the algorithm being readjusted to ensure this doesn’t happen, unless they know insiders at Spotify. Corruption exists everywhere.
Let’s just leave it for now.
Advice To Upcoming Artists/Musicians Bands
So this conclusion has come after doing the research & doing the math. I even finished a couple of online courses on digital marketing to get a bit of accreditation/credibility going forward, especially to apply it to marketing my music & other endevours.
But my advice is, ditch trying to make enough streaming income from your social media marketing/ads and focus on growing your fan base & followers. Grow it as much as you can to get say 3–5k or over 10k followers on each platform. A newsletter is a great idea too. So spend your campaigns on “Awareness” & “Engagement” then once you’ve hit enough, make that leap to a mid-sized label. And a huge label could follow shortly after or if you’re lucky enough.
Ideally you’ll need a label that is a powerhouse when it comes to marketing & has big marketing budgets for your music, if you want to rake in the mils.
Again of course huge artists like Thom Yorke of Radiohead can afford to release music on their own, but that’s because they’ve already been there & done that & can put money into marketing or simply not give a f*ck about labels to make sure all the money comes to them. But they’re established. They’re already known worldwide. They’re not an upcoming band/artist.
So don’t buy into that myth that you can do it yourself, it’s BS.
Sure organic growth on socials & organic streams is a plus but organic streams are far from sustainable. Of course the music you put out needs to be of the highest quality: It has to speak to you & move you & be your way of expressing your inner self through your art, putting it philosophically; why you do it & your end product depends on you but the monetary success can’t be reached without your Sonys, EMIs & Universals of the world.
Focus on gigs, & building your artist pages for “followers” NOT for “streams” — you can’t win the streaming game with your own marketing methods & your own marketing budgets & DIY methods, despite whatever the f*ck people try to sell you online. Playlist placement is also a huge myth, just don’t get caught in that misleading web of lies.
If you have the goal of wanting to make millions from your music, & have some left over cash from your gigs & whatever else you’re doing to make sufficient money, make sure your social media ads are mainly aimed to gain a bigger audience & follower count & build an audience that cares about your music. Then apply to labels.
Of course, if you’re happy with the $15,000 from 5 million streams or even if you have 10 million+ streams and make $30,000 per year & really don’t give a sh*t, then that’s a separate story. But if you’re not getting over 10 million streams & if you want to make millions or even over $200,000 off your music, each year you’ll need the help of labels or a big enough marketing budget.
This is just the math & the market economics.
I hope this article clears things up & helps you if you’re making music!
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