Music and Finances (Part 5)

Read Part 1 here
Read Part 2 here
Read Part 3 here
Read Part 4 here

It is pretty inevitable that if you want to be a professional Christian musician, you will end up doing some recording. Now that we are done with some introductory stuff, we are at a point in this series where I want to talk about the financial side of recording and some of the pitfalls.

Recording is undergoing some drastic changes that you need to consider. For example, I touched on some of the technology issues in Part 4. Even if you don’t plan to use that kind of technology, the fact that it exists impacts you in that it levels the playing field and makes it much more crowded.

Another thing you need to carefully consider is whether the traditional CD project of 10 songs is the way to go anymore. Everybody is thinking in terms of singles these days, and that same advanced technology I just mentioned has made the process of recording one song at a time economically feasible. Granted, if you record in a traditional studio, the economics will probably not work if you record only one song at a time. However, that does not mean you have to release all the songs together on a CD.

Speaking for myself, I am definitely starting to change my mindset from CDs to single songs that are eventually compiled onto CDs once I get 10-12 songs finished. Releasing single songs as downloads just works in the world we live in. But on the other hand, I want to keep doing live orchestration and it is economically unfeasible to record a live orchestra one song at a time.

Regardless of how you lean on those issues, I want to give you a list of financial pitfalls to watch out for as you start recording.

1) Borrowing money or obligating yourself in other ways to record.
If you don’t have the money yourself, don’t record. Don’t borrow from your home equity, don’t borrow from a friend, and for heaven’s sake, don’t put it on a credit card. Well over 90% of recording projects will not even break even. You simply cannot put that financial pressure on yourself when there is so much risk.

2) Planning to pay the recording bills with CD sales.
Musicians do this all the time and the industry people hate it. If you can’t afford to pay off the people that work for you on the day you use them, don’t hire them. And in fact, do pay them the day you use them or as soon as they send you an invoice. They will have to pick themselves off the floor from shock (nobody pays them fast) but you will endear yourself to them.

As a little aside, I have a very simple rule. I pay everyone as fast as possible, usually before even leaving the studio. Let’s face it: I am not a perfect client; I can be a little demanding and I am not the best musician these guys will ever work with. The way I look at it is that paying fast is a simple and harmless thing that will make them enjoy working with me a little better.

3) Overestimating how much you can sell.
This is probably the biggest mistake that musicians make. Maybe 10-20 people tell them that they should record a CD and they begin to think they can sell 1,000 just to their church, friends and family.

Here is a dose of reality. Most of your church is not going to buy a CD from you. You will be lucky if one third of the families in your church do. If you go to a church of 1,000, there are likely about 300-400 families and you will likely sell no more than 100 CDs there.

Regardless of the size of your Facebook friend list, don’t expect to strike gold there either. Have 1,000 friends? You might sell 20 CDs to them.

When you add up your church, your friends, and your family, you likely will not sell more than a few hundred CDs. When you consider that 1,000 CDs is often close to the break even point, it is no wonder that the vast majority of CDs lose money.

With very few exceptions, the only way to break even or earn money on a CD project is by selling to people you don’t know.

4) Overestimating your ability.
You are likely a big fish in the small pond of your church. But consider carefully whether you are really good enough to create a project that will sell to people you don’t know. Think long and hard about whether someone that randomly arrives at your site can be persuaded to buy your music.

5) Underestimating the competition.
I shudder to think about all the Christian hymn piano CDs on the market. You can’t imagine how many of them there are. So the question I have to ask myself is why the market will want mine. Do we need another recording of someone playing “Great is thy Faithfulness”? The answer is simple: it depends.

If you expect there to be demand for your project from those you don’t know, you are going to have to bring something to the table that is unique. Maybe that something will be technical excellence. Maybe it will be creativity or emotional content. Maybe it will be your personal story. But you need something.

If you can’t figure out what it is that makes you unique, you are likely to have a big problem.

Notice how I kept bolding and italicizing the phrase “people you don’t know”? If there is one important thing I
know about the finances of recording, it is that the people you don’t know will determine the success of your project. It is not about the people you know; your mother will buy your CDs if you record them on a Casio in the basement. But the key is whether you can sell to the people you don’t know.

Selling to people you don’t know requires marketing and we will be addressing that topic pretty soon in this series.