How to earn six figures in music

I just listened to a seminar on how to earn six figures in the music industry. I am not going to name the guru but it was the typical strategy of getting people onto a free webinar and then trying to sell an expensive system to them. I like to listen to those things because I might learn something and often do, either from the pitch itself or how the pitch is made.

The reason I am not going to name the guru is because I certainly would not recommend her but I don’t feel strongly enough to publicly bash her either. So without naming her, I will sort of give you a few thoughts on what she said.

I have a bias against business people that either don’t know the difference between revenue and profit or intentionally confuse the two. Revenue is how much you sell. Profit is how much is left from what you sell after you pay all the expenses. In other words, if you sell $100,000 a year in music but you spend $30K making a CD and you spend $20,000 on advertising and $10,000 on duplication of the CDs, your profit is no better than $40K. (I say “no better” because there are other business expenses too.) As you would guess, profit is a far more important number than revenue. Revenue is good for bragging but you can’t feed your family on revenue. You feed your family on profit.

This guru consistently talked about “making” six figures which implies profit but it was clear that what she really meant was revenue. With that in mind, I have no idea what she really makes. For all I know, she makes $10K/year. She might even lose $10K a year. Based on some of her ideas, I would not be too surprised if she loses a ton every year on music. That might be why she has to sell her consulting services.

That being said, I found some of her general advice to be fairly sound and close to what I have experienced. For example, she talked about music revenue these days being in these five general areas from least important to most important.

Physical sales of CDs, t-shirts, etc. (OK, I think t-shirts is a stretch. Please don’t go print t-shirts.)
Digital products/distribution (including downloads, sheet music, etc.)
Royalties from publishing (CDBaby, Tunecore, streaming, YouTube)
Selling your expertise (education)
Fan clubs (including Kickstarter, Patreon, etc.)

Notice she did not mention concerts and labels. She is anti-label and anti-touring or perhaps more accurately, she says they are not necessary. I completely agree. You do not need either in today’s music economy.

She is right on target for the most part (in my opinion) with her categories and also the order. It is no secret that physical CDs and other merchandise are way down, especially for those that are not actively touring. That revenue has been replaced by the next two categories on the list.

For me, the fourth category (education) has always been a huge part of this site’s revenue. I am going to be a little coy about the exact percentage just because I see little value in publishing that kind of information and also I am not completely sure what it is. It is a fairly high percentage though. Since I announced a new expansion into education last week, it is sort of obvious I believe in it.

As far as #5 goes (fan clubs), I am on the fence. My only club is my Monthly Arrangement Club. I just started it this year and it has done far better than I expected. However, there are less than 1,000 people enrolled at $20/year, so it is not a significant contributor to the site’s revenue yet. Certainly, it is not the top contributor as she suggests these clubs should be.

I am watching the Patreon concept and I find it interesting but I am not ready to weigh in yet. I have weighed in on Kickstarter in the past and I am mildly negative on that crowd-sourcing tool but I know it does work for some people.

Here is the big problem though. All of these things but especially #5 are the cart before the horse if you don’t already have a following. Crowd sourcing will not work if you don’t have a crowd. She knows that too so she then went into how to build a crowd.

Until then, I was on board with her but at that point, things got strange. She started off on a tangent about how to build a fan base and it came down to one thing in particular: Facebook advertising. She basically runs ads offering free music and she showed her stats. She was paying $0.41 to Facebook to get someone to come to her site and presumably download free music. And she thought that was good…

Now, here is something you need to understand. In many cases, it may make perfect sense to pay $0.41 to get someone to your site. It depends on what the average visitor to your site eventually buys. There is a lot of math behind it that I will not go into that has to do with metrics like cost per conversion, lifetime value of customer, etc.

It does not however make sense under hardly any circumstance to pay $0.41 for someone to download your music for free. I am not going to say never but pretty close to never. If you are going to give away music for free (which is not a horrible idea), it had better not cost you very much to do it. As you guys may remember, I gave away Solace for free for a few days when it came out a few months ago and close to 100,000 people downloaded the album. My cost to do that was $0. I think that is pretty close to the right cost for that kind of promotion.

You have to be careful when you listen to gurus. Gurus are very often not gurus at all. Be careful out there.