How independent record labels make money in 2022

Independent music is growing in the music industry. More artists are leaving major labels to become independent.

A recent global industry report reveals the increasing share of the revenue from the independent sector in the music industry. Independent labels now account for more than 40% of the music industry’s revenue. This is a great time to start an independent label and get involved in independent music.

Label owners need to know where their cash flow is coming from to be able to support their business. They also need to identify the major revenue streams available to artists and independent record labels.

Record Label Revenue Streams and Sources of Income

Sales & Streaming

It is not surprising that artists and labels earn streaming royalties and sales, but it isn’t common to know how much they can expect from major online music stores.

You will generally keep 60-70% of the iTunes download price and get about PS0.003/$0.005 per Spotify stream.

Although payouts from other stores may vary, these numbers offer a good guideline that you can use to estimate your potential revenue from the stores – once you have calculated your target sales and anticipated streams.

Label owners can use the financial planning spreadsheet from this record label business plan template to calculate their sales earnings and other revenue streams. Make a copy and add your projections.

Publishing and Licensing

Independent labels and artists increasingly rely on music licensing and publishing to make a living. Publishing is the right to own songs or compositions. Licensing allows you to make your music available for sync agreements with visual media such as TV, movies, and games.

To collect the mechanical royalties due to you, you will need to register your tracks at a Performing Rights Organisation. Your PRO will be dependent on where you live: PRS and PPL in the UK, BMI and ASCAP in the USA, or APRA//or AMCOS Australia.

A music publishing company is worth the investment unless you are willing to do all administrative work and legwork yourself. Music publishers can help you identify potential sync opportunities and ensure that you and your artist receive royalties when your music is commercially used.

Publishers offer a more straightforward way to get synchronization agreements and your music into high-profile media outlets. However, they also take a cut from any royalties earned. This article will give you a better understanding of what music publishers do and whether or not you should sign up.

Performance royalties

Registering your music with Performing Right Organisations allows you to make sync deals and allows for public performances and radio broadcast royalties.

Performance royalties can be a lucrative source of income, so make sure you have your songs properly registered with PROs. You will need to record all gigs with your Performing Rights Organisation to get the royalties due.

Whether heading out on an arena tour or performing at a small open mic night at a local pub, you can make royalties.

Independent artists and record labels often don’t realize the potential income from performance royalties. Register your tracks with a PRO to ensure you get access to the money that’s yours.

Merchandising

Music merch can be sold at live events or online to help artists and labels make extra money. It’s not just about how great the music is. But how creative your branding looks. Quality and design are the most important things.

 

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