Peter DiCola of Northwestern University School of Law and partner in the “Artists Revenue Streams”-project of the “Future of Music Coalition” has recently published a working paper entitled “Money from Music: Survey Evidence on Musicians’ Revenue and Lessons About Copyright Incentives”, which also will be published in the Arizona Law Review. Based on data of the “Artists Revenue Streams”-project, DiCola analyzes different income streams of musicians in the U.S. He highlights that musicians differ in earning money from music relying on several revenue sources. The main finding is that the largest revenue category for musician in the U.S. on average is live performance, which accounts for 28% of the overall annual income from music. Another important income source is teaching (22%), followed by salaries from orchestras, bands and chamber ensembles (19%) and session work (10%). Revenue from songwriting/composing and sound recordings is less important, accounting for 6% of the annual music income each.
For a summary of the study, please click here
DiCola’s paper is based on the “Artists Revenue Streams” Internet survey, which was conducted from September 6, 2011 to October, 28, 2011. 5,013 respondents – of a total of 7,395 people – provided information about their income. However, the sample is not representative for the population of musicians in the U.S., since the data was not randomly collected on the Internet. Nevertheless, the large sample size allows a good insight into the revenue situation of the survey participants.
In the sample musicians aged 50-59 are the largest group of respondents (25.3%), followed by those aged 30-39 (21.4%), by 40-49 years old (18.1%) and those aged 18-29 (17.8%). The age groups of 60-69 years old (13.5%) and older than 70 (3.9%) account for the rest of the sample. From a gender perspective, the sample consists of 69.6% male and 30.2% female respondents. 0.2% defined themselve as transgender. The sample is dominated by “white” musicians (87.6%), whereas members of other ethnicities (African American, Hispanic/Latino, Asian etc.) account for the rest. Taking these demographics into consideration, the composition of the sample is anything else than representative.
There is a bias towards higher income groups too. A proportion of 18.7% declared overall annual revenues of less than US$ 20,000. A further 25.1% earned US$ 20,000-39,999 annually and 19.6% from US$ 40,000-59,999. The same proportion had an annual income of 19.5% of US$ 60,000-99,999 and the rest of 10% earned more than US$ 100,000. A small group of 99 respondents (1.8%) reported an annual income of even more than US$ 200,000. To sum up, the median annual income was US$ 50,000 and the mean was US$ 55,561.
It is striking that a high share of 42.1% earn their total income from music and music related activities. A further 10.6% assumed that 75-95% of their annual income is music related and 6.4% earned at least more than half from music. Almost a quarter (24.1%) of repsondents derived 5 to 20% of their income from music. This reflects a considerable proportion of amateurs, hobbyists and approaching musicians in the sample.
By defining a “full-time” musician as someone who derives more than 75% from music and spends more than 36 hours per week on music, 32.2% of the sample can be labeled as “full-time” professionals. 20.8% said that they even spend more than 45 hours per week on music, whereas 27.6% cannot invest more than 15 hours weekly on music related activities. 24.1% spend 31-45 hours and a further proportion of 27.3% spend 16-30 hours; most of them are multiple job-holders.
In respect of music genres, the largest group of respondents are classical musicians (34.7%), followed by jazz musicians (16.2%), rock musicians (7.2%) and pop musicians (4.5%). In the sample we can also find 229 (4.3%) self-declared songwriters/composers and 3.5% of singer-songwriters. Representatives of other music genres such as folk, country, rap/hip-hop, blues, electronic, Christian music, punk, heavy metal, soul, funk, reggae etc. do not account for more than 3% each in the sample.
These figures underline the fact that the sample is anything than representative. It comprises mainly of male, “white” classical and jazz musicians. This has to be considered by interpreting the final results.
The musicians’ revenue streams in detail
In the survey the respondents were asked to allocate their income – in percentage terms – to seven categories of musical occupations and a miscellaneous category:
(1) Money from songwriting/composing including publisher advances, mechanical royalties, collecting societies’ royalties, commissions, composing jingles and soundtracks, synch licensing, ringtone licensing, sheet music sales
(2) Salary as an employee of a symphony, band or ensemble
(3) Touring/shows/live performance fees earned as solo performer or as band/ensemble member
(4) Money from sound recordings including sales of physical or digital recordings, payments from interactive streaming services, Internet radio, SoundExchange royalties, master use licensing for synchs or ringtones
(5) Session musician earnings, including payment for work in recording studios or for live performances, freelance work
(6) Merchandise sales
On average, the largest revenue stream for musicians comes – unsurprisingly – from live performances, which account for 28% of the total annual income. Teaching is another important income source with a share of 22%. Salaries from orchestras, bands and other ensembles account for 19% and session work for further 10 percent. Less important are revenues from compositions (6%) and from sound recordings (6%). However, the smallest contribution to the annual musician’s income comes from merchandising sales (2%). Other revenue sources account for the remaining 7% of the musicians’ earnings.
However, the high percentage share for the salary category and the small shares for composition and sound recording reflect the relatively large proportion of classical and jazz musicians in the sample. We get, nevertheless, a good insight into the income sources of musicians in the U.S., but it is important to to break down the aggregate numbers by genre, income class and other variables.
The author, therefore, defined three types of musicians’ income that have a different relationship to copyright law. Whereas revenue from compositions and sound recording has a direct relationship to copyright, revenue from teaching, live performance, salaries and merchandising sales has an indirect or no relationship to copyright. Session work is considered by the author to have a mixed relationship to copyright, since the payment in studio sessions is indirectly based on copyright law.
On average, 78% of a musician’s income from music derives from revenue that has no or indirect relationship to copyright such as teaching, live performance, salaries and merchandising sales. In contrast, only 12% of the average income derives from copyright related sources such as sound recording and composing. And the remaining 10% of session work has mixed relationship to copyright.
However, a more detailed analysis of several income groups unveils remarkable differences. The top income group – earning more than US$ 330,000 from music – reported an annual revenue from compositions of 28%. Therefore, DiCola (p. 34) concludes: “[T]his simply tells us that composition revenue accompanies success.” In contrast, revenue from sound recordings does not exceed 5% for any of the income groups in the top half of the population. For the lowest income group sound recordings account at least for 9% of the total annual income from music. Nevertheless sound recording income does not play an important role for any of the income groups. For the lower-income groups session work is more important. However, the most important revenue stream for the lower half of the income groups comes from live performances (figure 2)
The survey also unveils considerable differences in revenue shares by four genre categories: classical, jazz, composers and rock/pop and other genres. Whereas classical musicians make only 10% from live performances, they earn 36% instead from salaries and 33% from teaching. Session work is less important for classical musicians with a share of 10% and revenue from composing and sound recording is more or less irrelevant. Jazz musicians mainly rely on income from live performances, which accounts for 37% of their average annual income. 15% derives from salaries and 24% from teaching. Similar to classical musicans, jazz musicians earn only a small proportion from composing (4%) and sound recording (3%). These two income sources are more important for rock/pop musicians (and all other genres) with a share of 8% from composing and 10% from sound recording respectively. However, they rely heavily on live performance revenue which accounts for 40% of total revenue. Teaching (13%) and session work (9%) are less important for rock/pop musicians (figure 3).
The survey also illustrates the differences in revenue mix by income group and genre. No income group of classical and jazz musicians relies much on composing and sound recording. Only the top income group (1st percentile) of jazz musicians have some reliance on these copyright related revenue streams with a share of more than 25%. Session work is only relevant for the highest and lowest income group of classical musicians, whereas teaching is the predominant revenue source for the middle income groups. With a share of 5-10% session work is less important for all income groups of jazz musicians. Rock and pop musicians rely more on coypright related income sources than musicians of other genres. The top two income groups earn more than a quarter from composing and sound recording annually. Nevertheless the relevance of copyright related income declines with a decreasing annual income. Similarily, session work is more important for the top two income groups of rock and pop musicians with a share of 25%. The less rock and pop musicians earn annually the less important is revenue from session work.
Self defined songwriter and composers have a different mix of income streams. 40% of their annual income derives from composing and a quarter comes from teaching. At least 10% of the revenue is live performance income and 5% derives from sound recording and session work each. The top two income groups of composers more heavily rely on their main occupation – composing – than lower income groups. Nearly ¾ of their income derives from that source. With a decreasing overall income from music, composing revenue becomes less important as income souce and accounts for less than 50% of the annual income from music. Vice versa teaching becomes more important with a decreasing annual income.
Trends in revenue streams and conclusion
The survey data show a high diversity in revenue streams of musicians in the U.S. especially in terms of genres and income groups. Whereas the decrease in recorded music sales does not significantly affect the average annual income of jazz and classical musicians, it would have a limited but negative impact on rock and pop musicians. A recession in the live music market on the other hand would have tremendous negative consequences for the income of rock/pop and jazz musicians, whereas classical musicians would be less affected, since they mainly rely on salaries. And it makes a difference if a musician belongs to the top, middle or low income groups. Those on the top suffer more from decreasing copyright-related revenues (composing, sound recording, session work) than the lower income groups, who rely more on teaching and performing. Thus, DiCola (p. 43) concludes: “Musicians play multiple roles in their music-related work. (…) Each musician is like his or her own small business; musicians have to be ready to adjust to different opportunities and changing consumer demand”. And “[p]olicymakers should expect musicians to adjust their allocation of time among roles in response to such changes.” This means, if the entire music business shifts away from recorded music sales towards live performance and teaching legislators should adjust to such a new situation by supporting the live music business and strenghening the financial basis of orchestras and music ensembles as well as music education institutions to improve the economic status of musicians.
This conclusion is supported by DiCola’s analysis of the responses to questions asking for the respondents’ assessment of the change of income from composing and sound recording. A majority (58%) of 1,054 repondents assumed a significant increase in royalties from online retail sales. Another 51% reported an increase in royalties from music streaming. Further 46% said that they get higher webcasting royalties from SoundExchange. In contrast, 50% of the recording artists reported a decrease in mechanical royalties. Another 41% said that financial support from record labels is also in decline. A majority blamed the decline on label-wide cutbacks. Another important explanation for the cutbacks was the decline in traditional retail. A little more than a one-third of those reported a decline in label support since they left their label to release their own music. 15% of the recording artists who reported a decrease in mechanical royalties blamed the decline to the shift from an album to a single driven music market.
Finally, the survey also asked for the attitudes toward technological change among the U.S. musicians. Rock and pop musicians, therefore, employ the widest variety of web tools to produce, promote and distribute their music. Composers, jazz musicians and classical musicians are less online affine. Moreover, lower-income musicians tend to use online tools more in rock and pop, whereas middle-income musicians in jazz and classical do so (p. 41).
In fact, a majority of respondents do not see less control over their musical work in the age of digitization, but more control and more options. The respondents also have a diverse opinion on the impact of music file sharing on their income. Slightly more than half of the respondents argued that file sharing has made it more difficult to earn an income, but the other half did not see any negative impact. Similarily the statement “My music has been devalued” received slightly more strong agreement than disagreement (p. 42). However, the lowest-income groups reported more positive attitudes about digitization, whereas high-income group are more sceptical. Rock and pop musicians were also more positive about digitization than classical and jazz musicians as well as composers in the top half of the income distribution. “These results confirm the diversity of opinions about the Internet among musicians, and show how that income bracket and genre explain some of the variation” (p. 43).
At the end of this summary the limitations of the survey should also be considered. Since the survey was Internet-based the data collected is not representative for the population of U.S. musicians. Thus, the results and conclusions may not be generalized. The author also points at the missing cost side of the analysis. The respondents were only asked for their revenues but not for the cost of revenue. However, live performances and tours can be very expensive and therefore could create a loss. Recording expenses and promotional costs could also cancel out any revenue earned. Thus, the survey does not allow any direct conclusions on the economic and social status of musicians in the U.S. The survey’s results are nevertheless very important to understand how musicians earn their living in the age of digitization and I highly recommend to read the entire study “Money from Music: Survey Evidence on Musicians’ Revenue and Lessons About Copyright Incentives” by Peter DiCola.