The music business is now one of the most tricky businesses in the world, albeit its tricky nature, it has served as an empowerment tool for millions of people, including singers, producers, managers, marketers, A&Rs, journalists, creative directors, cinematographers, and photographers, to mention a few.
In 2020, the global music industry recorded a total revenue of 23.1 billion U.S. dollars. Streaming made up 56 per cent of this figure, bringing in 11.9 billion U.S. dollars globally. That’s close to Nigeria’s national budget for 2021, for a clue on how impressive the market size is. However, as impressive as it sounds, the music industry is strenuous to navigate, it is a finicky business and it requires major efforts to pull through.
Artists like Jay Z, Kanye West, and Rihanna are included among the 2668 people on the list of world Billionaires in 2022, although they’ve engaged in different investments outside the music industry, one cannot downplay the influence of their music industry foundations on their wealth, thanks to the music still.
In Nigeria today, the music industry is one of the most engaged sectors. Is it because of the high unemployment rate in the country or the love for creativity? I think it is a fair mixture of both. The music industry, Nigerian music industry, in particular, has been fertile ground for many people, especially artists. Successful artists have been able to pull through and are now enjoying the returns from the business. Now, that leads us straight to our major topic, how is the money made?
Compact Disc (CD) Sales
Before the introduction of streaming technology, the sales of compact discs were the order of the day. It was the most reliable means of music distribution prior to the streaming era, but there were some loopholes which inspired new methods, one of which is piracy.
With the advent of new technology, compact disk sales are now on a decline. It is now being replaced by digital sales through music streaming services like Spotify, Youtube, Apple Music, Audiomack, and Boomplay. Although the demand for CDs is low, it is still a good means of generating money for music artists.
The advent of new technology has opened new ways for artists to market and earn money for their music. Artists get to upload their music on digital streaming services like Spotify, Youtube, Apple Music/Itunes, and Boomplay, and earn money when fans download, listen to or stream their music.
The use of digital streaming services for music consumption is at an all-time high and it is rapidly replacing other methods (e.g CDs). It is quite a reliable and stress-free means of generating revenue for music artists.
A license is a right, granted by the copyright holder or his/her agent, for the broadcast, recreation, or performance of a copyrighted work. Royalties are paid to artists (songwriters) and their publishers for the right to broadcast a copyrighted musical composition on their platforms. This includes performance, radio airplay, film soundtracks, advertisements, TV broadcasts, podcasts, webcasts etc.
Shows, Concerts and Tours
Music artists generate a high percentage of their revenues through concert tours, it is a series of concerts by an artist or group of artists in different cities, countries or locations. Often concert tours are named to differentiate different tours by the same artist and to associate a specific tour with a particular album or product. Such tours can become large-scale enterprises that last for several months or even years, are seen by hundreds of thousands or millions of people, and bring in millions of dollars in ticket revenues.
They are also paid to perform at different kinds of events, including shows, concerts, festivals, weddings, political events etc.
Brands collaborate with music artists by offering them endorsement deals so as to utilize the artist’s name, likeness, reputation, and authority for the promotion of their products and services. In exchange for this, the artist gets paid a certain fee, depending on the negotiation.
Merchandise has proven to be another good source of generating money for music artists. It includes the sales of culturally relevant products like T-shirts, hoodies, face masks, vinyl, bracelets etc.
NFTs (Non-Fungible Tokens)
NFT art is taking over the world at the moment, and its future will give more power to artists. NFT art is rapidly changing the way artists are paid and revolutionising how NFT artists can work, create new projects, and take ownership of their art.
Artists can now make money through the sales of NFTs. In fact, it can become a game-changer in the coming years, considering its promising nature.
In Nigeria, artists are being paid certain amounts just to grace occasions, in order to give these occasions a demeanour of class.