How Music Makes Money Now
The music industry has fundamentally changed. Gone are the days of relying on CD sales; today, it’s a world dominated by streams. This report unpacks the modern music business, revealing how revenue is generated, how artists get paid, and what it takes to get discovered in the digital age.
The New Music Economy
In 2024, the global recorded music market reached a new peak, but the sources of that revenue look vastly different than a decade ago. Streaming is not just a piece of the pie; it is the pie. This section visualizes the market’s composition and highlights the scale of this transformation.
Global Recorded Music Revenue Breakdown (2024)
Following the Money
A single stream generates a fraction of a cent, but where does that tiny amount of money actually go? It’s a complex journey involving multiple parties, each taking a cut. This section breaks down the path of revenue from a fan’s subscription fee to an artist’s pocket, featuring an interactive calculator to explore different deal scenarios.
Interactive Deal Calculator: Major vs. Indie
The Modern Artist’s Journey
How do record labels find new talent in an ocean of digital content? The role of the A&R (Artists & Repertoire) scout has transformed from digging through demo tapes to digging through data. Success now requires building a brand and a fanbase online *before* a label gets involved. This section outlines the new path to getting noticed.
Data-Driven Scouting
A&R teams now rely on analytics to spot talent. They track streaming velocity, playlist adds, social media engagement, and follower growth to identify artists with proven audience traction before offering a deal.
Build a Digital Footprint
A strong online presence is non-negotiable. Consistent content on platforms like TikTok, YouTube, and Instagram is crucial for building a fan community and demonstrating marketability to potential label partners.
The Power of Live (Still)
While data is key, traditional scouting isn’t dead. A compelling live performance and a dedicated local following can still be the deciding factor that proves an artist’s long-term potential beyond viral moments.
Understanding the Deal
Signing a record deal is a major career milestone, but the contract details determine an artist’s financial future. From ownership of the original recordings to the length of the commitment, these key terms are crucial to understand. Explore the most important clauses in a typical recording contract below.
This is often the most critical point. In most traditional deals, the record label owns the master recordings of the music in perpetuity. This means they control how the recordings are used and receive the majority of the revenue generated from them. Artists are paid a royalty from this revenue. Some modern deals are shifting towards licenses, where the artist retains ownership.
An advance is an upfront payment from the label to the artist, essentially a loan against future earnings. The artist will not receive any further royalty payments until the label has recouped the entire advance from the artist’s share of royalties. This includes not just the initial payment, but often recording costs, tour support, and marketing expenses.
The royalty rate is the percentage of income the artist receives from sales and streams of their music after the label’s various deductions. For a new artist on a major label, this can be as low as 13-16%. This percentage is applied to the artist’s royalty base, which may not be the full retail price. Indie labels often offer a more favorable 50/50 profit split.
The “term” dictates how long the artist is exclusively signed to the label. This is often not measured in years, but in the number of albums or “option periods.” An artist might be required to deliver a certain number of albums, and the label has the option to fund and release each one, extending the contract term with each new project.