Music is a business, which means that ultimately, no matter how much you wish it wouldn't be, it all comes down to the money. Yes, it may bastardize pure art, but that hasn't stopped record companies before and it won't in the future. You've got to be proactive about what you want to do with your band if you want to avoid being taken advantage of in the future.
Record sales are the least of your concerns. This may be the category that everyone pays attention to, the one that gets you press and lands you magazine covers, but as a musician you aren't going to receive much in the way of profits on record sales. If you can land with a major album, you'll keep about 7% of the total sales of your album, which usually translates to about a dollar an album for unproven bands. Indies tend to be a little more generous, letting you keep anywhere from 15-40%, but their limited promotional reach usually translates into significantly lower album sales. So even if you manage to sell a million albums through a major label (that's quite a feat!) then you're making less than a million dollars, because any promotion the record company does for you and any advance is going to come straight from your cut of the sales. That's simply the way the music industry is set up; record companies take big risks in signing artists and take a huge cut of any successes that they have. They do the dirty work to get your album to radio stations and run ad campaigns, which set you up nicely for the real moneymakers.
Touring and live shows are going to be your bread and butter as an artist. Emerging artists tend to make around 10% of the gate charges. This number can balloon to 60% for legendary acts like the Rolling Stones on their last tour they generated $437 million in ticket sales, of which around $262 million went to the band. This doesn't even include band and tour merchandise available, a number that averages 10% of the gross ticket sales.
The other big ticket item as an artist comes from royalties and licensing. Every time a radio station or bar plays your song, you've got a three-cent royalty. Put your song on rhapsody or other streaming sites and you'll grab a one-cent royalty per song. Sell your song on iTunes and you'll earn ten to twenty cents (more if you aren't selling through a label). If a movie or television show uses any of your songs, you earn a negotiable licensing fee. Michael Jackson would charge $500,000 for the use of any Beatles song in a movie. Let an outside company put your name and/or image on their product and take a cut of sales. KISS is the industry standard with its $1 billion/year licensing business.
That's a lot of numbers. How does this pertain to survival in the business of music? Simply, this means that your album sales are far from the most important thing. Album sales generally receive the greatest amount of publicity, but generate the smallest percentage of cash flow for the artist. Album and single sales have their greatest effect as a means of promotion, not as a means of revenue.
You're primarily an artist so I doubt that that conclusion reverberated within your mind. Let's break it down like so: albums and singles are simply promotional tools. Don't be bound by traditional thoughts about albums. It may be well worth it as a band to give away albums or release a single that has nothing to do with any album that you've got in the works. In today's music industry, the album is no longer the focus. The focus needs to be on you, what you offer to the consumer as a band.
To the consumer your band isn't an album. To the consumer your band is an emotion. The consumer buys your album because they feel love, because they feel aggression, sadness, or like some badass roaring through the desert in a convertible packing a 9mm and aviators. Your job is to deliver that promise, and an album is only a part of the picture. Your job is to let them feel that emotion whenever they wear a t-shirt with your band on it, or whenever they see your picture. This is something you can do by making sure that everything non-recorded fits together. Deliver the emotion you promised on an album in a live performance, show that emotion in your merchandise. Your album is like a one-night stand in Vegas, but the other aspects are what form a lasting relationship between you and your fans when you've got to live with each other, warts and all. Don't let a rigid focus on albums hold you back from a career as a musician. Don't try to sell albums; try to sell your band.
By Ben Heere, Dotted Music