The 3 Most Profitable DIY Revenue Streams, And Why Many Artists Succeed at Only One of Them

This is an essay by Jay Frank (DigSin) from Divergent Streams, a collection of essays edited by Kyle Bylin (@sidewinderfm) and written by influential executives, startup founders, and thinkers in the music industry. Download a free copy of the e-book here.

Independent artists can make more money than ever before. The walls of major label distribution have crumbled, and have been down for a decade. Social networks make promotion to fans easier and cheaper. Add in home recording, crowd-sourced artwork, and other cost cutting maneuvers and DIY musicians can be financially successful.

Or so goes the myth.

Reality is far murkier. Yes, it is possible to make money as a DIY artist and many are doing it. However, they are not making it from selling recorded music. That can certainly bring in money, but even modestly successful DIY artists generally gross $20,000 to $50,000 from sound recordings annually. These are artists who have many songs in their catalog with some momentum. After you take into account recording costs and splitting revenue amongst band members and the producer, there’s not a lot left. Even those with a big enough fan base to do deluxe packages get a decent gross, but profits can be elusive.

Yet, DIY artists living below stardom are consistently finding profitable careers. How are they achieving this if iTunes and Spotify revenues aren’t paying the bills? The ones who are making a profit mostly fall into one of these three buckets:

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Chaos We Can Stand: Attitudes Toward Technology and Their Impact on the New Digital Ecology

I. Where Salvation Lies

Upon discovering that I had relatively poor vision in the seventh grade—difficulties seeing the whiteboard and anything from afar—it was understood that I would need to get glasses. Not just any glasses though, the specific style that I wanted were those worn by the front man of the rock group Linkin Park, Chester Bennington; they were thick-framed, black glasses, and in my mind, they looked amazing—on him. As it would turn out, the glasses looked less than stellar on me and I got a completely different pair.

Back then, I was an adamant fan of Linkin Park. In desiring to align characteristics of their identity with my own, the thought of looking like Bennington and wearing his glasses seemed like a logical expression of self.

I knew all the lyrics, saw every music video, and owned all of the albums.

Members of Linkin Park were not aware of my existence—camped out on a farm in the backwoods of North Dakota—but I felt a compelling bond towards them and their music. Social scientists characterize this kind of one-sided relationship as “parasocial” in nature. I knew everything about Linkin Park, but they were not privy in the slightest way to the particulars of my life. Much of my relationship with the group slanted more towards the illusion of interaction than of actual social interaction. Mass media outlets served as intermediaries between us.

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The Hidden Challenges of Subscription Music

Nearly a decade ago, Rhapsody debuted its subscription music service.

Giving fans access to unlimited music for a monthly fee appeared to be the answer to the social epidemic of file-sharing that occurred, and yet they still seem indifferent towards it.

Rhapsody failed to break into the mainstream market, leaving critics to question if it ever will. Many companies including MOG, Rdio, Slacker, and Spotify have since entered the sector too, none of which have had better luck. While Apple’s iPhone gave services a second life, experts argue that they have failed to reach critical mass due to issues of consumer awareness, user retention, smartphone penetration, and software design.

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How Does Effort Impact Music Value?

One digital decade has ended and another has begun. Throughout these chaotic times, cloud-based music services have remained at the front of music industry discussions.

Are fans willing to pay a monthly fee to access unlimited music or will ownership carry on?

It has been argued that the era of à la carte music downloads is over – that the iTunes business model has been exhausted. Fans no longer desire to pay for each song or own them. Instead, they want to have access to everything for nothing – or, at least, a small fee.

Tech-companies like Spotify are betting that if they allow enough users to build music collections – for free – eventually, they will take ownership of their libraries and pay to access them through mobile devices. Meanwhile, rival services like Thumbplay Music, Rdio, and MOG offer limited to free trial periods. This raises a few important questions.

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Ask The Readers: Do Music Fans Today Have Too Much Control?

The other day, Click Track, a blog at The Washington Post, posed this rather interesting question, “Does the 21st century music fan have too much control?”

In the advent of a world where fans can make global superstars out of rubbish on American Idol, fund artist’s careers using platforms like PledgeMusic and Kickstarter, and band together in an attempt to get Weezer to stop making records, the editors feared that fans today have too much control. They didn’t seem to have the audience needed to get answers to that question. So I thought I would put it open for discussion here.

Do fans today have too much control and what are the implications of this?

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On File-Sharing: Are You Smarter Than A 12th Grader?

Back in February, I stumbled across an essay written by a twelfth grader named Kamal Dhillon.  In it, he argues that file sharing may be illegal, but it is not ethically wrong.  The essay had been entered into the Glassen Ethics Competition and Dhillon won.  Out of eighty entrants in the contest, the essay that won the one thousand dollar prize and got republished in The Winnipeg Free Press, argued that yes, copyright infringement can be morally justified.  Though the views that Dhillon expresses in the essay and the sheer intellectual resilience that he displays in it are not characteristic of his entire age group’s attitude towards file sharing, nor does his understanding of the issues seem to reflect that of most twelfth graders, it got me thinking.  What happens when fans are not stupid anymore?  What happens when there are high school students who happen to have a firmer grasp on the file sharing debate than some of the executives and artists who get quoted in the headlines?

I mean, they are smarter than a twelfth grader—right?  Most likely not, I am afraid.  Readers of blogs like Music Think Tank and TechDirt, who live to learn about and make sense of the impact of technology on the recording industry and have observed how file sharing has reshaped our cultural lives—i.e. you—are in fact, smarter than a twelfth grader.  But, what about these out-of-touch executives, commonly relegated to “struggling dinosaurs,” whose only exit from this industry entails mass extinction of their kind and the destruction of the music empires they created?  What about all those artists in recent years who have made off-the-cuff comments about file sharing, only to be criticized for their complete disconnect from the arguments?  Better, how do Dhillon’s arguments stack up against some of the viewpoints that have been gaining traction in recent weeks?

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Paradox or Paradise: Music Choice in the Digital Age

At first glance, it appears as though the benefits of a culture abundant with music outweigh the drawbacks tenfold—a rich culture has the potential to whet a fan’s appetite for even more, and may further encourage them to become, themselves, creators of culture. More choice is always a good thing, even if in the end, it adds to the frustration and confusion faced by individual fans.  But is that true?  So far, we have only investigated choice overload in culture through the narrow lens of a record store and have yet to explore the digital sphere.  While there are many reasons to believe that the web has created a “paradise of music” for fans, as we’ll soon see, that may not necessarily be the case. It is worth noting that many of the paradoxes of choice overload that I elaborated on in my previous essay were found to be most prevalent in the material domain.  And, while psychologist Barry Schwartz suspected that the paradoxes we experience in culture are quite different, he asserted that the end result might be the same.  That, much like in the material domain, a culture plentiful with music has the potential to lessen the amount of satisfaction that fans get from their choices and increasingly causes them to opt out of the process all together.  In a paper titled Can There Ever Be Too Many Flowers Blooming, Swartz outlines three of the paradoxical effects of choice overload in the cultural domain.

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