The Blue Collar Musician

[alert type="success"]Have you entered this month's drawing yet? ENTER HERE.[/alert] In episode 16 of TIM Talks, I give you a hypothetical scenario where we look at the numbers of the blue collar musician.

After that, we compare those numbers to the numbers of an artist who builds up his or her audience online with a big email list primarily selling exclusive digital releases on their own (not using iTunes or the other digital stores).

The Blue Collar Musician's Numbers

I have to warn you.

This episode is a numbers doozie.

Honestly?

I didn't enjoy recording this episode all that much because of some of the facts that I have to bring up.

The first 20 minutes or so I cover the blue collar musician's side of things. I got happier after that when I got into an alternative scenario, looking at an artist who uses list building and digital marketing and media to form an audience online. The numbers there are much more encouraging.

But even then, you may not be a numbers person, and I don't want your eyes to glaze over here.

So to make this easier for you I've put together this little PDF that goes over the numbers that I talk about in this episode.

I suggest you sit down with this document and read through the numbers as I go over them in the episode.

But before we break down those numbers, I want to do some high level thinking first.

The Changes Of The Music Business

blog_headerWhen was the last time you sold 25,000 copies of your album?

When was the last time you sold 15,000 copies of your album?

How about 10,000?

And when I say “sell”, that’s exactly what I mean. I'm not talking about counting your free downloads and skewing the numbers. (ahem U2?)

The truth is, the music business has changed, and everyone knows it.

To reach these numbers you would need to throw yourself into the full-time life of the modern day “Blue Collar Musician”.

It’s actually pretty cool that there are people who reach these numbers pretty easily from good ‘ole sweat equity.

That’s the reality.

These guys work hard. Really hard.

They give themselves to always learning about the tumultuous music industry....

They tour constantly, they work around the clock, and they relentlessly sell themselves, knowing very well about what it means to “pound the pavement”.

They represent a new category of artists that have been dubbed “working class musicians”. Derek Webb calls them The Blue Collar Musician. I think that's a great name for them, and I have the utmost respect for artists in this category.

But you might be shocked by my next statement:

I think most of that work is based on an old music business model.

I believe most artists are still playing according to old rules set by the music industry of the 20th century....

Here are just a few of the things I'm talking about:

  • Long play albums
  • Singles
  • EP's
  • Touring
  • Radio
  • Press releases

proBut if the music business has changed so much, why would artists continue to work in a business model that was birthed in the old way of the music business?

Let's look back at two reasons how (and why) the music business changed.

Reason 1: Music production is cheaper than ever.

You can produce high quality recordings these days, for a fraction of what it used to cost. Because of the laptop computer and a little application called GarageBand, artists all over the world discovered their ability to be self produced.

Studios have had to close their doors, and technology has only improved, faster, and faster - making it easier for indie artists and musicians to have opportunities to achieve professionally produced music.

But this wasn’t just in the DIY, indie world.

It hit everybody.

Majors, indies, and beginners alike found the cost of production going down. What happened as a result?

Prices eventually went down too.

People tend to think Napster and file sharing drove the price of music down, but that's only part of it (albeit a huge part. One that I'll get to in a second).

Remember when you could go down to the record store and you had to purchase a CD for almost $20?

The bubble burst.

But the cost of production going down wasn’t the only reason for the major changes in the music business.

Reason 2: The Internet

This is where things really got exciting.

Suddenly what was once only reserved for major label artists became possible for anyone and everyone....

Distribution.

Distribution to anywhere and everywhere.

In 1998, there was a little company that literally changed the game for artists everywhere.

Seem like Woodstock, NY has always had a knack for changing up things in music right?

Derek-Sivers-cd-babyThat’s where Derek Sivers founded CD Baby, just before growing the company and eventually selling to Disc Makers for $22M.

The company today has recent stats of having paid out an impressive $250 million to their artists.

The thing that’s crazy is that they have over 300,000 artists on their roster.

Woah wait a second. 300,000??

Now some of those artists are definitely making a good living as indie musicians. But just a quick look at the math means that, on average, their artists have each made $833.

OVER 17 YEARS.

Now don’t get me wrong. CD Baby is awesome. They are an amazing advocate and voice for today's independent musician. But these numbers aren’t encouraging for indie artists, if they want to make good money to support themselves and their families.

Don’t worry things will get extremely positive in a moment....

But not before I share some more depressing numbers for us DIY musicians.

.70

Do you know what that number is?

iTunes-10-logo$.70 on a $.99 download is what iTunes takes every time your song is downloaded from their store. This is why many artists sell their songs for $1.29 because they get back that 30 cents lost.

What's even more sad about this is that there is no way of knowing who downloads your music from iTunes. You don't get an email address (let alone a name or location).

You don't really know who you customer is.

Here's another (very sad) number:

.00029

It might as well be $0.00

This is the amount you make every time your song is streamed on Spotify.

In a recent study that was done, a fan would have to stream your songs on Spotify over 4,000,000 times per month, just to make a minimum wage!

That’s the equivalent of selling 143 CDs at $10 each month on your own.

So let me get back to my original question a moment ago....

When was the last time you sold 10,000 copies of your album?

Let's dive deep into some numbers that you could actually achieve this day and age.

The Blue Collar Musician

10,000 Copies Sold By The Blue Collar Musician

So let's really get into it now....

The blue collar musician, in this scenario, sells 10,000 albums. We'll say 5,000 digital and 5,000 physical.

[alert type="success"]Download the PDF of these numbers here.[/alert]

This is a hypothetical scenario, but it is one that many artists these days are achieving. And many are doing even more than 10,000.

The Blue Collar Musician:

Albums Sold: 10,000

Physical: 5,000 ($49,950)

These are sold at 100 shows (250 people at each show) throughout the year (see touring expenses below), averaging 50 units sold per show at the merchandise table

Digital Downloads: 5,000 ($35,000 - $7 net revenue per album after .30 per digital download goes to iTunes)

These are sold to "peripheral" fans online who visit your website later after hearing you play live and signing up for your email newsletter perhaps.

Total net sales: $84,950

Touring Numbers:

  • Net music sales: $40,950 (after $9,000 for production expenses)
  • ?

  • Net merch sales: $10,500 ($1,000 shirts sold at $15 each)?
  • ?Venue guarantees: $2,340 (after $7,660 for travel expenses)

Expenses:

Recording production: $9,000

  • Disc Makers physical units printed: $4,000 (includes shipping)
  • Tracked at a local studio and self produced and mixed: $5,000

Touring Expenses (100 Shows A Year): $7,660

  • Lodging: $50 a night for 100 nights - $5,000
  • Food: $20 a day on food - $2,000
  • Mileage: 10,000 miles over 100 days at ($2.00 per gal, 30 miles a gal) - $660

****You wrap your expenses in a bill for each venue you play $100 guarantee per show, which you make 2,340 in profit after expenses are paid.

T-Shirt Costs: $4,500 (3 per shirt sold) Artist Management: $12,000

Taxes and totals:

Total adjusted gross revenue: $76,790 After taxes: $53,753 (30% in SE taxes… I’m not a CPA by the way! There are other taxes that will need to be paid. This is a very rough estimate - $23,037)

The Online Audience Builder:

With an audience of the same size (25,000 people) and offering higher priced products to your super fans, you can do 3 times better.

In this scenario, as an artist who knows internet marketing, you do not go through the regular channels of selling your music (iTunes, Amazon, Spotify, etc.)

Instead, you use email marketing to sell a higher premium release before it hits the public digital outlets for a limited time to your “super fans”.

With an email list of 25,000 people and a 20% conversion rate you sell 5,000 units (in this case units are not traditional releases for $10, but a premium offer that could include the album + merchandise, access to a private members area for a year, and a private CD release show through StageIt, for $50)

Gross sales: $250,000

Expenses:

  • Production: $24,000 (includes 5,000 t-shirts, plus recording production)
  • Transaction fees: $7,500 (3% for credit card processing)
  • Web hosting / email marketing costs: $3,000
  • Artist Management/Assistant: $12,000
  • Taxes and totals:

    Total adjusted gross revenue: $203,500 After taxes: $142,450 (30% in SE taxes... Remember, I’m not a CPA! There are other taxes that will need to be paid. This is a very rough estimate - $61,050)

    Takeaways

    Conclusion and comparison:

    Traditional touring model: $53,753 New online audience builder model: $142,450 (3X the income of the old model)

    [alert type="success"]Download the PDF of these numbers here.[/alert]

    I also mentioned this blog post in this episode:

    Count It All: The Actual Hard Costs Of Touring