Whether you are a band, artist manager, recording producer, record label, or music store, if you can learn how to take the best advantage of both live and recorded revenue streams, you may be able to beat competitors at the music game. Your music business plan should describe your strategy of utilizing these two sides of the music industry.
Live Music
Live concert tickets can be sold for hundreds of dollars for popular groups, while up-and-comers may need to play for just tips at bars and small venues. However, there is a place for every type of musician on this spectrum, and almost all musicians maintain a live performance schedule even as they become successful recording artists. Live concerts offer an opportunity for the group or artist’s music to be exposed to new audiences in a visceral way, sometimes driving direct sales of CDs at the concert itself, and leading to word-of-mouth inspired sales down the road.
Live concerts can be a significant revenue stream for a successful music artist, but they must play at venues large enough to cover the fixed costs of music production (marketing, ticket sales, equipment rental, and set-up, travel, wages, and venue rental) leaving a net profit. If venues are too small and cost too high, concerts may have to be considered just a promotion method for other revenue streams, like recording sales.
Recorded Music
The sales of CDs or mp3s of the group or artist’s music, on the other hand, leave much more potential for huge returns. The profitability of selling recorded music increases significantly as the number of CDs or mp3s increases, as the cost of producing and selling each additional CD (and especially mp3s) approaches zero. Recordings can also help promote concert sales to a certain extent, through the release of singles and promo CDs. This can be through giveaways and through radio promotion of those songs.
If each revenue stream is significant on its own and also reinforces the other, you can build an extremely profitable business over time.