Your Music Your Money by Leena Sowambur

YOUR MUSIC YOUR MONEY

30 WAYS TO A MONEY MAKING MINDSET FOR INDEPENDENT MUSICIANS Leena Sowambur

dedication

To my Mother

Sarah Sowambur â&#x20AC;&#x153;who always taught me it was better to save rather than spend.â&#x20AC;?

Leena Sowambur is an established expert in digital music business. She has two music business degrees and ten years in digital marketing and PR. Leena has held roles within Sony, digital marketing agency Outside Line and the pioneering music dotcom Peoplesound where her clients included Universal, EMI and Warner. Leena also has indie sector experience with clients such as Sanctuary, Echo/Chrysalis, Beggars Banquet and Ministry of Sound as well as boutique labels such as Tummy Touch, Warp and Wiiija and Telstar. A few of the artists that can be named in campaigns that Leena has worked on include:- Shakira, Sugababes, Longview, Mary J. Blige, Chris Brown, Destinyâ&#x20AC;&#x2122;s Child, Beyonce, Darren Hayes, Take That, Angie Stone, John

about the

author

Legend, Rod Stewart, Luther Vandross, Paul Oakenfold, Pulp, Pink, 50 Cent, Eminem and Bon Jovi. Leena has also worked on various compilation CDs such as a soundtrack compilation for Empire Magazine, The Total Music Mirror Premium CD Giveaway comprising of Pet Shop Boys, Cream, Kaci, Muse, BBMak, Zero 7, Beverley Knight, Cher, Depeche Mode, Oxide and Neutrino, the Instant Music Mirror Newspaper Premium CD Giveaway comprising of Stereophonics, Travis, Marti Pellow, Stereo MCs, Feeder, Shaggy and Gabrielle; a Red Magazine Feel Good compilation including Moloko, Lisa Stansfield and Catatonia, a Metro Life Live In London covermount CD including Suede, Basement Jaxx, Turin Brakes and Carl Cox and an Eve Magazine compilation including Groove Armada and The Orb. Leena speaks all over the country on the subject of digital music business and entrepreneurship. Events regularly include University of Chester, University of Westminster, The Manchester College, London Metropolitan University, Croydon Council, Southwark Council and Portobello Business Centre and the University of East London

Leena Sowambur now runs her own enterprise “Positively Music.” Positively Music provides entrepreneurship and digital business training to the music industry. The first programme is “Music Business Builder.” Music Business Builder is for independent musicians looking to build a genuine, self-sufficient and sustainable business in the music industry. Please view www.musicbusinessbuilder.com. The second programme is “The Fan Experience.” The Fan Experience coaches top level music industry in the creation of experienced based products and services. More about “The Fan Experience” can be found at www.thefanexperience.com. In addition to music business, Leena also has interests in food, fitness, boutique hotels and £3 million in property. In her spare time, Leena enjoys travelling, writing music, socialising with family and friends and training in fitness and martial arts. She is concerned with all aspects of conservation and wild life preservation. Leena is known for her work ethic, her trait for making an extensive study of everything that interests her and a dedication to constant and never-ending improvement. If you want to connect with Leena please follow at the social network links below:http://www.facebook.com/positivelymusic http://www.twitter.com/positivelymusic

contents

Introduction

P. 7

Instruction

P. 8

The Physical Stuff

P. 9

The Services

P. 26

The Digital Stuff

P. 63

The Partnerships

P. 79

The Learning

P. 89

The Resources

P. 105

Final Note

P. 117

â&#x20AC;&#x153;As for the music business itself, the key things have not changed that much. It operates like any business and money still keeps things moving.â&#x20AC;? Tom Jones

This tipbook on the subject of money and music started out as a blog entry. I challenged myself to come up with 30 ways that unsigned, independent, self employed artists could make money out of their music. That is making money out of doing what they love. The theory behind this 30 item brainstorm is to find the best solution to a defined problem. The first 5 items on the list were easy to brainstorm; the last 5 really pushed me to think harder around the issue. The next step was to then work through the solutions, testing and measuring each one until the problem is solved. After publishing the blog I was then asked the question of “How? How does one do these things?” This made

Introduction

me realise that the real challenge behind unsigned independent artists making money out of music is not a lack of knowledge in the sales and marketing area. It is in fact having too little an understanding of money. I’m a firm believer in studying whatever it is I want to be successful in and then acting on that knowledge. So if you want to be successful in the life area of “money” you need to understand money, change your mindset around money and act upon your decisions. This tipbook will therefore cover the basics, other career options and it will also cover some basics in money management. The aim of this tipbook is to help you change your thinking around money and music and help you to understand that a money mindset is fundamental to your success as a self-employed artist. I hope it will inspire you to do your own learning in the area of your finances. Enjoy! Leena

Instructions How to use this tip book

What this book aims to do is to stimulate your thinking around money and music. Everyone is different so what works for one person may be unsuitable for another. This tipbook is here to help you decide whether what you want in music business is really what you want and then give you direction to get there. As a self-employed artist/musician you may find yourself running a portfolio career or a growing business. It is important to understand however, that money is the lifeblood of your music business, not your music or your marketing, the money you bring in. Without money you have no music business, you’re simply not in business. Whilst money shouldn’t be the motivating factor to your music endeavours (you should have a bigger vision) it is the vehicle that will help you achieve your goals.

Money is simply a means to an end and an important part of the journey though this book is for you to decide what you want money for. As Ayn Rand said:-

“Money is only a tool. It will take you wherever you wish, but it will not replace you as the driver.”

The Physical Stuff

â&#x20AC;&#x153;Some guys record an album with songs that are filler. I recorded this album like it was my last.â&#x20AC;? Dick Dale, The King of the Surf Guitar

#1 Sell Physical Records

This is the first of the basics. It is still possible to sell the physical format as long as this is what the fan wants. So do you know if your fans want CDs? Or would they prefer vinyl? Or would they prefer a deluxe limited edition CD box set with luxury photo book of live gig shots with a meet and greet dinner enclosed? The key thing to remember here is to imagine whether the fan will have the hardware or player to play the format you believe they might buy. In addition, selling physical product doesn’t have to end with a simple CD in a jewel case. If your fans want CDs, get creative. I have seen everything from a band handmaking and printing limited edition paper CD covers for their product to glorious luxury CD sets for VIP fans. When you look at things from this perspective you can set different (and higher) price points for your product.

“People don’t buy plastic and paper, they buy emotions.” Scott Young, Wherehouse Entertainment

The days of a few artists dominating a few media channels are coming to an end, media has been democratised. This means that you as the artist can experience deeper more fulfilling relationships with your fans and can cater directly to what they want and need. Ultimately, this means a tighter more efficient business for you. So with this in mind – let’s get you started by asking some questions….

HOW? Use the decision making tree to find out your next move. Take your 20-50 fans out-ask them what they want Yes Listen to your fans online â&#x20AC;&#x201C; what are the patterns in what they are discussing?

Do you have fans?

Get more gigs (See Tip #2) No Watch video at www.musicbusinessbuilder.com

TIPS Take Your Top 20-50 Fans Out!

Here are some important things to consider:•

You must take your fans out – this doesn’t have to be an extravagant expense – an hour’s coffee will do.

•

Let them know the reason why. Be genuinely interested in what they think because you want to serve them better.

•

Ask questions and LISTEN! You must listen intently. This is not a debate or discussion and stay on point. Make plenty of notes.

•

Look out for Strengths (what you are good at) Weaknesses (what you need to improve) Threats (Dangers you need to be prepared for) and Opportunities (Options you can leverage for progress.)

•

Demonstrate gratitude. Perhaps think about publicly thanking your fans for their input via a video blog.

•

You can leverage the meetings by filming videos and posting them as video blogs as long as your fans are happy with this arrangement.

• 12

This is an extremely important tactic in terms of understanding your fans’ wants and needs.

Things To Remember Listening

When you take your fans out or listen to their conversations online they will give you important feedback. They will tell you what they would like to see more of, what they would like to see less of and they may give you ideas for products and services that they would like to buy that you hadnâ&#x20AC;&#x2122;t even considered. After this you must check your notes, look out for patterns in the feedback and act on what you have found out immediately. Some examples might be that the fans would love to buy all your videos on DVD, maybe they would like a coffee table book of photos taken by a particular up and coming photographer from your gigs? Do they want an hour long workout mix of your tracks? Do they want to see you collaborate with a certain band or producer and would buy those recordings? Maybe they donâ&#x20AC;&#x2122;t want records but perhaps you customise your clothing and they would buy clothing items designed by you? In this case your music can encourage the purchase of other products. Listen intently, the information you will get will be priceless. It will give you product, service ideas and partnership ideas which will help move your music business forward.

#2 Sell Gig Tickets

This is another one of the basics when it comes to making money from your music. If you can get a cut from your ticket sales perhaps you can negotiate for a larger percentage. One other tip here is to try to work increasingly with promoters who really care about their brand name in putting on QUALITY events. When you think “Glastonbury”, you think about a quality festival with quality acts. Alternatively, you can hold your own gigs, clubs or parties, especially if you have a large fan-base. If you do choose to hold your own events these basic principles apply; get your business plan written and have a step by step plan of action. It is also important to understand the local legislation around your event such as room capacity, music licences and insurance requirements – you would need to check with your local authority or council for this information.

“I love playing live now more than ever. I enjoy it; I think it keeps you young.” Dave Davies, The Kinks

One other thing to bear in mind in business of live is once you have gotten your feet wet with gigs – your own or those run by another promoter – is to ensure that you use the live format as a campaign. Leverage the fact that you are in front of an audience to get email addresses, sell your physical product and your merchandise. You can also try to leverage your gigs by recording your gigs and creating video products from them. They can be anything from simple videos of your gigs to complete movies of your road trips.

HOW? Use the decision making tree to find out your next move.

Watch video at www.musicbusinessbuilder.com

Yes

Need Gigs?

See Partnership Section No

Need to sell tickets? Watch video at www.musicbusinessbuilder.com

TIPS Here are some important things to consider:•

Don’t forget that your family and friends can and should be your biggest supporters, make sure they’re enrolled!

•

Promote the show and the other bands – ask them to do the same for you!

•

Remember your top 20-50 fans? Talk to them ask them for help and ideas – where are their hang outs – go there meet people, show face and build those relationships. Sales come from strong relations!

•

Partner with local businesses (see Partnership Section) is there a local clothes shop that your fans love that can dress you and help sell your tickets in return for cross promotion? What about the local record or instrument store?

•

Remember to promote a string of gigs with a complete marketing and PR campaign.

#3 Sell Merchandise

This is another basic but are you actively working on it and how creative are you being? You may have created t-shirts but will your fans wear them – or would they prefer a car bumper sticker? This again comes down to listening to your fans and asking them what they like. Are you partnering with other artists and products to create bundles of merchandise? Are you partnering with someone who has a great database? Do you ALWAYS have merchandise at your shows and a pre-order sales form for extra orders or up coming products? Merchandise or product is an extremely valuable asset to your music business. Whilst it may be increasingly difficult to get revenue from records, other physical product can tell another story. Your core merchandise or product doesn’t always have to be your music. Your music can be the lead in product

“A market is never saturated with a good product, but it is very quickly saturated with a bad one.” Henry Ford

to a core product created based on the needs and wants of the fans positioned at a higher price point that actually makes you money. There are plenty of examples of bands such as the Ramones that make sizeable revenue from the copyright in their logo and images. You will also find tiered product ranges from bands such as Nine Inch Nails. Once you have your product range established the big revenue comes when you collaborate with others but first let’s get you started on that range.

HOW? Use the decision making tree to find out your next move.

Find potential partners for increased sales

See Partnership Section

Partner with other lists

Yes

Leverage fanbases

Do you have

Use Promo to increase yours

Bundle with other products

merchandise?

Endorsement from influencers

Make some!

Start with print on demand services

TIPS Here are some important things to consider:There are 4 different types of products you MUST have, •

A product that is given away freely with no condition for example a digital live album.

•

A product that is exchanged for data for example a 3 mini –film series of your live shows.

•

A low cost product that will fund your main product this would be your digital downloads, T-shirts, posters and other typical merchandise.

•

A main product that makes you REAL money for example a VIP luxury trip to your European shows complete with accommodation, food and a meet and greet dinner with you.

If you have lifestyle products you will be selling boxes of these to retailers not individual products to fans. This is how you make money. Apple makes money from Mac computers, iTunes is free, iPods and iPhones are prospective products. Think about selling bundles of products rather than selling individual products, for example pair your CD with your T-shirt and your next gig ticket at a preferential price for fans.

#4 Sell Sheet Music

This falls in merchandise somewhat but it has been given its own place because it deserves attention. Few artists think about sheet music however depending on your fan-base this can prove to be quite a lucrative earner paired with the products tactics already discussed. If you are lauded for your musical and song writing skills and you have fans who are also musicians who would welcome sheet music then you should create it. This also adds extra kudos to your artistry. Sheet music can also be used to help with collaboration and partnerships (this will be covered later in the book) because if you wish to work with classical musicians in the hope of expanding your fan-base and therefore your sales, they may need a score to work with. Whether you sell in digital or paper formats is entirely your fans’ choice. Whichever format you choose will be whichever format they favour. In terms of pricing this – think about pricing at the highest point

“The music is not in the notes, but in the silence between.” Wolfgang Amadeus Mozart

that your fans will pay for, for example if the price band for your type of sheet music is $10-$13, price your product at $13 – you may even be able to price at $13.10. This sounds like unusual pricing and it is however, you are simply doing yourself out of extra cash if your fans are willing to pay a fraction more. This pricing principle of course applies to all your products.

HOW? Use the decision making tree to find out your next move. Find a musician who can score your music

Make available via print on demand and download

Yes Use software but have a professional check the work Do you have fans?

Choose another merchandise

TIPS Here are some important things to consider:•

I strongly advise you to get a professional to check over digital transcripts. This can be a local music teacher.

•

Create a professional looking cover for the score.

•

Have your score professionally laid out on the page.

•

This will still need promotion via a campaign! Think about collaborating with a local string quartet, choir or other ensemble to creating a string of events around your new scores. You will need to have the score arranged in order to do this.

•

Think about your copyright terms make sure you research and understand the implication of your options.

•

If you cannot read sheet music think about learning these skills for yourself. This can open up a whole new world of music eras to you from the Renaissance to the Minimalists to our contemporary choral writers.

#5 Auctions

If you have items that fans would love to own then an auction may be an option for you. There are plenty of auction websites that you can use, and you can auction off anything that your fans tell you they would want to own. People typically use online tools for their auctions however try not to rule out traditional live event where you get to play live, sell tickets to other events and sell other merchandise. An “offline” auction is also a chance to meet your fans, have a drink with them and a chance to invite

“In the music business bigger is not necessarily better. In fact, I believe smaller is actually better.” Chuck Kaye, Dreamworks, SBK Publishing

relevant industry contacts from media, music and corporate for potential sponsorship. An auction is for your top fans, the fans that support your work because they want you to keep making your music because they love it so much. These are the fans that are most likely to come to an auction online or offline. To make an auction work as an independent artist you would need again to have a pretty convivial relationship with your fans. The deeper the relationship the more value you have. The value in music now comes from what you can do for each other in partnership with your fans rather than how much your fans can consume.

HOW? Use the decision making tree to find out your next move. Take your top 20-50 fans out-ask them what they want

Yes

Do you have fans that would support an auction?

Get more gigs (see Tip #2)

Watch video at www.mucisbusinessbuilder.com

Build relationships with fans online

Listen to your fans onlinewhat are the discussion trends

Plan and execute

TIPS Here are some important things to consider:•

Whether you choose to conduct an auction online or offline you will need to promote it properly. Proper promotion means a marketing and PR campaign. This is much more than a few tweets and emails. To understand this please see the video www.musicbusinessbuilder.com

•

It is wise to have as much contact with the fans as possible during this process remember the fans are buying your stuff at auction to be closer to you – the artist. You cannot post items online and expect matters to take care of themselves.

•

If you choose an online auction make it an event over the course of an evening, you can play live, chat live, tell stories about the auction items and answer fan questions.

•

Work this into your business plan and ensure you complete an event management plan.

The Services

“Playing scales is like a boxer skipping rope or punching a bag. It’s not the thing in itself; it’s preparatory to the activity”

Barney Kessel Jazz Guitar

#6 Writing For Film/ TV

Writing music for broadcast film and TV is a sought after position, as writing for it is potentially very lucrative. There is demand for independent unsigned artists as there is always a budget to work to and major labels can be costly. This does however take initial legwork. Writing for film and TV is unlike writing songs and may require study on your part. It is an absolute requirement to create an online portfolio for music supervisors and a CD/DVD demo. If you are starting off in this area you will have to start from scratch and demonstrate that you can compose for this area, this means working your way up.

“A painter paints his pictures on canvas. But musicians paint their pictures on silence.” Leopold Stowoski

One way to get a leg up in this area is to start off on the web. Web video is a breakthrough area with the top film makers making up to 5 figures from YouTube advertising due to extremely high subscriber lists and therefore views.Collaboration with web film makers will extend your portfolio and get you paid. So don’t rule this out. Remember in this area you are expected to be able to compose and arrange.

HOW? Use the decision making tree to find out your next move.

Network Yes

Yes

Attend small business classes

Do you have music ready?

Create music and portfolio

Are you proficient in composition? Courses

Start working!

Reading

Listening to film, TV or music 28

TIPS Here are some important things to consider:•

You must love writing music – this should be your primary motivation for this project, the paying projects will come in as a result of your productivity.

•

This isn’t a quick fix. It will take a lot of work on your part if you are an indie artist; it counts as part of a portfolio career.

•

It is expected and assumed that you can write music in a theoretically correct manner, this means writing for ensemble for example orchestra and understanding things like range of instruments, phrasing, dynamics and harmony.

•

Work on your compositional sound or signature.

•

You must network and build relationships and don’t discount student and independent film – these guys are the next generation of superstars.

#7 Song writing

Another very sought after and lucrative position and this has been the way to a record deal for some. This pathway is known for being fraught with rejection and demands a positive attitude. Again think of this as a parallel career. Songwriting is a craft which means honing your skills, taking your songs out into the public and getting feedback to polish your creations. It is also worth joining a songwriters organisation for additional support. Much like writing for film or TV – you will need to have some competence in music theory. You will also need skills in music recording, lyric writing and an appreciation of how to write for voices other than your own.

“For me, songwriting is something I have to do ritually. I don’t just wait for inspiration; I try to write a little bit every day.” Sean Lennon

Also think about collaborating with other songwriters and producers to broaden your horizons and hone your team working skills. These types of collaborations can open up doors of opportunity. Songwriting doesn’t have to be a lonely business. Think also about studying other songwriters and getting to know songwriting theory and structure. There are plenty of books and courses on these. It will also be important for you to understand the business of songwriting meaning copyright, publishing and licensing as topics of study.

HOW? Use the decision making tree to find out your next move. Play at songwriterâ&#x20AC;&#x2122;s club

Yes

Join Associations

Learn Copyright Law Music Royalties and Music Publishing

Source a music business lawyer for advice

Self promote

Do you have a stable of songs?

Start Writing Research books and courses

No Start Learning

TIPS Here are some important things to consider:•

The golden goose in songwriter is a deal with a publisher. For this your songs must have commercial value and for that to happen you must be competent in musical form and structure.

•

You will need to network and you will still need to play live to showcase your compositions

•

You will need to be prolific with your song writing. Song writing is a craft and this means consistent and diligent work at honing your skills.

•

This is a parallel career or an exclusive career if you wish it to be. However, much like writing for film and TV you must have an inner desire or motivation to write songs and music.

#8 Studio Services

If you have studio or rehearsal space that isn’t making money it is losing money. A music studio for most artists is an investment, and investments need to show a return. If you want to recoup on your music studio costs you will need to draw up a business plan first and foremost. A business plan template is provided at the end of this book. In order to make this work as a revenue stream you must pay close attention to your financial management and work out how to best make use of the space be it recording services with or without engineer, courses, workshops or one to one sessions.

“Just writing and being in the studio was like therapy for me.”

This is a saturated and competitive area with many artists that have their own studios at home. You will

Justin Timberlake

based on your knowledge which can be another area of revenue. Think books and DVD courses.

need to work out a niche that you can occupy and can show yourself to be an expert in so that you will not suffer from undercutting in price. Once you know your area of expertise you can produce products

HOW? Use the decision making tree to find out your next move.

Business Plan

Yes Attend small business workshop

Do you have studio premises?

Pursue another route

Rearch options carefully should you wish to own a studio! Could you collaborate with a partner?

TIPS Here are some important things to consider:•

You must write a business plan! Remember a business plan is a living and breathing document so it needs regular reviewing and updating.

•

You must become competent in understanding business finance for this and all your business endeavours. There are again plenty of books and courses on this.

•

It is strongly recommended that you read small business books and seek advice from business coaches at seminars and through one to one coaching.

•

It is really important to understand how to operate your business in a saturated market.

•

You must seek out all relevant insurances and legal requirements. Do not skip these!

•

Think about how else the space can be used? Can you hire out for workshops, courses or even artist webcasts?

#9 Sessions

This is the reserve of the master musician and consummate professional, so if you have the skills to compete with the top tier session musicians then this is a pathway for you. Again you must master your instrument, understand music theory, be able to read music and have a good ear. You need to be able to play what you are required to play and must be able to follow instruction. This requires a lot of

“Even though I have often recorded alone, I still feel the best music is made by musicians playing off each other.”

networking so you must get to know people and people need to know your face. Get out, play live and

John Fogerty

Not only will honing your musical skills open up session opportunities but it will open up other types of

contact local studios, engineers and producers with a recording of your musical ability. You must also learn session musician etiquette and professionalism. If you’re not quite there yet in terms of your skills don’t be discouraged. Practice, practice, practice. opportunities to which are mentioned here.

HOW? Use the decision making tree to find out your next move.

Create web presence with audio

Build your portfolio

Yes Collaborate Network

as much as possible

Can you play to order?

Get some

music lessions

Get qualified

TIPS Here are some important things to consider:•

If you are starting out here you will have to do some of this work for free or expenses to build your references.

• •

This is a parallel career. Try to niche your skills find your unique selling points and talents, for example can you sing in whistle register?

•

You will need a thorough understanding of musical history and genre.

•

Keep your equipment in good order – this includes your voice!

•

If you cannot already do so having vocal ability in addition to an instrument helps as you can add backing vocals to tracks.

•

You must also understand recording studio and live practice.

•

You will be working as a freelancer on a per track basis.

#10 Music Therapy

Music therapists work with all kinds of clients to address social, physical and emotional challenges. This is a very social job with plenty of communication and sharing. You must be able to create a shared music experience as much of the communication is done through music making and music expression. This is freelance work on a full time or part time basis. To do this job you must genuinely care for the well being of others and sincerely want to heal them. The purpose of music therapy is to facilitate positive changes in behaviour and well being helping your clients to reach their potential. This role requires qualification. Updating yourself through continued learning is a large part of being skilled musician. There are many courses available on the subject of music therapy which are generally coupled with a music diploma or degree. The personal qualification required are a genuine interest in people and their sense of self-empowerment.

â&#x20AC;&#x153;Music is the medicine of the mindâ&#x20AC;? John Logan

You will need empathy, patience, creativity and plenty of imagination. You will also need to have a good awareness and understanding of who you are. Experience in this area can be acquired through volunteering or summer work in care homes and childrenâ&#x20AC;&#x2122;s camps for example.

HOW? Use the decision making tree to find out your next move.

Yes

Get relevant internships Build your online presence

Are you qualified?

Get relevant internships No Qualification in music therapy required

Do you have a high level of musicianship?

Take No

lessons and get qualified

Qualification in music therapy required

TIPS Here are some important things to consider:•

You do need to be qualified in music therapy for this pathway.

•

You must care about the well being of others or this isn’t for you.

•

Highly experienced music therapists are paid very well.

•

Join organisations representing this field.

•

Build your online presence by blogging show your passion for the field.

•

You must have a high level of musicianship.

•

The standards of this work will be very high as you are responsible for positive change in the behaviour of your clients.

•

Work experience must be relevant as shadowing is generally disallowed due client confidentiality.

•

Read as much about this field as possible.

#11 Workshops

If you have particular musical or production skills and a number of creative fans who would like to learn these from you then this might be an option for you. The workshop can be on any topic you choose that your fans want to learn more about. If however, you have a specific range of techniques that you use to achieve a certain sound or you are proficient in arranging for string quartets and this is something your fans would like to learn then you might consider targeted topics such as these. You can also use other areas of expertise for workshop topics round your own intellectual property. As with any event, workshops do need to be supported with a full marketing and PR campaign even if

â&#x20AC;&#x153;A good drummer

you have a dedicated fan base. When fans see your events supported by a larger campaign it also helps

listens as much

the fans to feel supported and part of something that is organised. To hold workshops you will need an

as he playsâ&#x20AC;?

understanding of events management which includes the financial and legal requirements needed to

Indian Proverb

hold these events.

HOW? Use the decision making tree to find out your next move.

Ask them Yes

what they

Market

Plan and

want

Research

execute

specifically? Do your fans want to learn Take your top 20-50 fans outask them what they want

from you

Learn No

from your fans

Could you collaborate with someone they want to learn from? 43

TIPS Here are some important things to consider:•

To be successful you must run a series or several workshops where your fans live. Your fans must be able to get to your workshops with ease.

•

Don’t rule out webinar or online formats for your workshops either. You can in fact do both online and offline events!

•

You must use a business plan and understand small business finance and your legal responsibilities.

•

You can sell your products at your workshops, sign fans up to a mailing list, use pre-orders for new products and sell your core service or product.

•

You may wish to partner with others to share event costs and expand your fan base.

•

Encourage fans to being like minded friends through referral incentives.

•

Record your workshops for online leverage – have fans sign a disclaimer.

#12 Music Lessons “Music majors are the most likely group of college grads to be admitted to medical school.” The Case for Music in the Schools,” Phi Delta Kappan, February, 1994

Music lessons can be taught privately or in small groups, in your home, the client’s home or in schools. You will typically need to follow a national curriculum as students may want to obtain musical qualifications. You will need to be musically proficient. You will need a high level of musicianship, understanding all areas of music from history to aural to composition, theory, performance and interpretation. Alternatively you may want to deliver your own lessons in the form of one to one sessions and small groups in the skills you are adept in. You might also choose to create online courses or collaborate with an online “agency” or web partner that will take care of your the business aspects while you focus on teaching. Remember you can also collaborate with other instructors and coaches and combine your educational content to create larger group lessons and educational events such as the workshops mentioned previously.

HOW? Use the decision making tree to find out your next move. Network

Apply for positions Yes Create online presence Can you teach

Find private clients

music?

Get No

learning and qualified

Network

Apply for positions Create online presence

Find private clients 46

TIPS Here are some important things to consider:•

There are several different ways to teach music and its associated skills you can teach anything from voice to remixing.

•

You can choose your level of teaching – which age group (N.B. Small children will need a background check) and the hours you wish to devote to it in favour of preferred projects.

•

This can work as supplementary income stream.

•

Build your online presence to help your credibility and integrity.

•

Build your reputation within your local area.

•

Do not forget teaching requires preparation time you must factor this into your lifestyle and costs.

•

You must keep your own skills up of course!

•

It is also useful to keep performing to inspire students.

#13 Talks

Similar to workshops – talks focus on you doing the speaking whilst workshops focus on the clients doing the work. The subject of your talk is up to you and your fans. Have you just completed a national tour and do you have stories that you could share with the fans? Could you hold a playback of your latest album for the fans and tell the fans the story behind each track followed by a question and answer session? Would you be prepared to combine the talk with dinner – giving the fans the chance to “have

“Music is your own experience, your thoughts, your wisdom. If you don’t live it, it won’t come out of your horn.” Charlie Parker

dinner with you” and listen to you talk afterwards. Is there another subject that you have in common with your fans that you would like to talk to them about? Again “talks” fall under events management so you would need to plan this carefully and ensure you have enough cash flow to support the event’s creation. Your legal obligations must also be observed here. As with any event – always support with a comprehensive marketing and PR campaign. Remember to leverage your talks by recording them – these recordings can be sold as a product after the event.

HOW? Use the decision making tree to find out your next move.

Ask them Yes

what they

Market

Plan and

want

Research

execute

specifically?

Do your fans want to learn Take your top 20-50 fans outask them what they want

from you?

Learn No

from your fans

Could you collaborate with someone they want to learn from? 49

TIPS Here are some important things to consider:•

You must be comfortable with speaking in public if you are not there are courses for this.

•

Like any event you hold you must understand your finances and legal duties.

•

You can speak about any number of subjects simply ask your fans – you do not have to do this in a venue you can hold these online too.

•

You can sell your range of products at these events.

•

Partner with others to increase your fan base. Enrol other speakers!

•

It is also worth pitching for sponsorship.

•

Encourage fans to bring like minded friends through referral incentives.

•

Record your workshops for online leverage – have fans sign a disclaimer.

#14 Studio skills

If you have great studio skills to offer then this might be a pathway for you. These can range from production to engineering. If you have your own studio you might choose to mix and master tracks or you might choose to work full or part time for another studio. Regardless, as ever this is a very competitive area so you will have to find out what your speciality is in order to survive in a saturated market. This pathway also requires an ability to network, communicate and nurture relationships. You must have an

“You put the right artist on the right track in the studio and leave the door open to let God in.” Jay-Z

empathy or understanding for clients when they are trying to communicate difficult concepts to you such as the typical “I want it slower but faster” comment! Again if you have some unique IP in the area you might want to think about creating products around it. This might be anything from ebooks to DVD courses to live events such as the workshops and talks already discussed. Again do not forget to partner with others perhaps you can find a partner whose skills and IP compliment your own to create products and services that you can offer.

HOW? Use the decision making tree to find out your next move.

Network

Apply for positions Yes Create online presence Are you proficient

Find private clients

in music production?

Get

learning

qualified

TIPS Here are some important things to consider:•

This is an overly saturated market containing plenty of people in music production and people with their own home studios. To survive you will have to be stellar at your specific area of expertise as well as your niche within that area.

•

Leverage word of mouth. Reputation can be your best ally or worst enemy, make sure your reputation works for you by being the consummate professional. This will give you a competitive edge.

•

Learning communication and people management skills will help here, conflict management will also be useful in easing frayed studio tempers!

•

If you are experienced develop your own range of “creativity coaching” techniques, or methods that will help artists unleash their creativity. This can also be a product on your website.

#15 Remixes

Can you remix? This can pay pretty well and gives you some good PR. However, rather than providing your own interpretation of the song in question the job of the remixer is to introduce that song to a different audience. Remember it is the record label that holds the budget here. Again this is a saturated market due to many people having remixing skills and their own equipment so you will need to figure out your niche. It is important to understand copyright and licensing in order to make a success of this side of the business. You will also need a showreel and an online presence. If you have an audience for your remix work this is even better.

â&#x20AC;&#x153;With this CD technology, you can just remix a record right there on the spot.â&#x20AC;? Jam Master Jay

Prolific output seems to work well with this pathway and helps listeners to get to know you and your style to keep producing the work. Partner with upcoming indepedent internet artists to build your profile. Online video is generally the best way forward to showcase your work to mainstream listeners and think about collaborating with a video producer for your work. Also think about audio streaming platforms that appeal to tastemakers in your niche too.

HOW? Use the decision making tree to find out your next move.

Produce showreel Produce own tracks Yes

Remix for popular unsigned artists

Can you create professional broadcast quality remixes?

Network

Create online presence Understand music business law

Follow a course

Get learning

Practice!

Collaborate with others to build skills 55

TIPS Here are some important things to consider:•

This is a reputation business so your first chance to create a great impression is also your last. Make sure you feel 100% about your work and it’s presentation before submission.

•

Building up your own online audience will give you extra leverage, especially if clients can see you have positive fan comments.

•

Do not use famous tracks to build your portfolio. This is copyright infringement for commercial use. You will not curry any favour with clients.

•

To build your portfolio create your own tracks, collaborate with friends, indie artists, popular unsigned YouTube artists and public domain works.

•

You must understand entertainment law and contract law.

#16 Jingles

Advertisers still need jingles and if you have a talent for producing catchy hooks this might be for you. The best place to start is with your local small business market and local media, for which you will have to network at local business groups. Remember you are not writing for yourself but youâ&#x20AC;&#x2122;re a specific audience and for this you will need to be able to empathise with different people. Whilst jingle writing has many components of song writing it also has its own components so you will have to master these to be successful in this area. This will need partnering with other musicians sometimes dependent on the arrangement you have decided on. If you do not already own one you will of course need access to recording studio facilities,

â&#x20AC;&#x153;I want it to sound like an orangeâ&#x20AC;? John Lennon

you can gain this in partnership or you will have to factor in the costs into your business plan. As usual to get started to will need sample jingles as part of a portfolio, you can do this by perhaps designing jingles for local businesses known to you in exchange for the experience.

HOW? Use the decision making tree to find out your next move.

Study jingle form

Learn some sales technique

Network Yes Create showreel

Create online presence

Can you write jingles?

Study famous jingles No

Take a course

Practice and get feedback 58

Understand contract law

TIPS Here are some important things to consider:•

Make sure you feel 100% about your work and it’s presentation before submission, this is a word of mouth business.

•

You must understand entertainment law and contract law

•

Learn jingle form such as business name repetition, use of upbeat tempos and major keys; use of assonance, alliteration and strong words.

•

You will need to understand contract law and small business planning in order to succeed in this area.

•

You need to have a strong empathy for lots of different types of clients and their customers

•

You will need to have great communication and listening skills.

•

Create a strong online presence and don’t forget to blog!

#17 Video Games

This requires a competency in music, you must be able to score for different instruments, in addition to this a familiarity with gaming is needed. This is not the same as creating commercial radio tracks or writing film music, rather you are creating music for cut scenes and/or music that facilitates the players’ perception that he or she is in the game but also watching the action at the same time. Like jingles you will need a showreel, you will need to network and get your face around. However as in all these cases rather than chasing the people who hold the purse strings you want to be sought after and to do that

“If Pac-Man had affected us as kids, we’d all be running around in dark rooms, munching pills and listening to repetitive electronic music.” Marcus Brigstocke

you need to work from the ground up. You will need focus on your niche once again and work to your style. The trick to getting projects in this area is to find the games that are in their right time of development when the producers are thinking of looking for a composer. This is generally circa the second year in development. To determine this you will need to check games release date calendars online. After this initial phase of research you will need to find the main contact responsible for hiring sometimes known as the “Audio Director.” When you have your contacts, networking is your friend and this is where you should pitch your showreel.

HOW? Use the decision making tree to find out your next move. Study the gaming business Create showreel Yes Network Can you Create online presence

write music for games?

Get learning

Follow courses No Play games

Study the gaming business

TIPS Here are some important things to consider:•

This is a word of mouth business. You must feel 100% about your showreel submission.

•

If you are new to this area start working with student

game

developers

and

upcoming

developers. •

Know your strengths when starting out and aim for a project that needs the music genre that you can write for best. This will help towards you creating better work.

•

Understand game development and target projects when they are just about to look for a composer.

•

Get in front of the decision maker, know who they are and network with them at industry gatherings.

•

Make sure you know what you bring to the table, you might have a visionary example of music for their game to hand.

The Digital Stuff

â&#x20AC;&#x153;Music in the digital age is just ones and zeros. A lot of zerosâ&#x20AC;?

Terry McBride, Nettwerk

#18 Sell Downloads

Let’s cover the basics off first. Your first port of call is selling your music and this might be in download format. However, if your fans do not buy and download music from iTunes or some other online digital media store then you need to find out what they will purchase from you. If your fans do buy downloads there are numerous questions that need to be asked such as which is the best website to sell from and what kind of downloads would they prefer to buy? One thing to note is that the days of mass

“My idea is that there is music in the air, music all around us, the world is full of it and you simply take as much as you require.” Edward Elgar

mainstream sales in records have gone with the democratisation of media so in order to leverage this revenue stream you will need to have a deep relationship with your fans. You can also choose to get creative with the digital download format for example you don’t need to stick to the 3.5 minute duration. This was brought in due to radio broadcast. With the internet the length of your music can be the length it needs to be. There is no need to limit yourself when you have the opportunity to create a larger complete work. Remember also that downloads do not need to be limited to music – you can include any kind of rich media in your digital download bundle.

HOW? Use the decision making tree to find out your next move.

Take your top 20-50 fans outask them what they want. Yes

Do you have fans?

Listen to your fans onlinewhat are the patterns in what they are discussing? Get more gigs (See Tip #2)

No Watch video at www.musicbusinessbuilder.com

TIPS Here are some important things to consider:•

It is worth observing how best your fans will buy, will they respond to emails, social networks or are they more likely to buy download cards at live shows.

•

If you are playing live try to record and sell each live show recording – personalise each show to each town you play and sell regionally.

•

Work on creating deep relationships with the fans. Fans are more likely to buy from you if they feel an affinity with you.

•

Find out who you most influential fans are and ask them what they think.

•

If free downloading is a trend offer an official free download of the track/album that directs fans back to you websites.

•

Tier your digital product offering with download bundles at different prices.

#19 Sell Ringtones

This is extension from selling downloads and ringtones could well be part of your digital download bundle. This revenue stream is dependent on your fans and dependent on whether your music makes a good ringtone. If your fans spend credits on ringtone downloads then this is potentially for you. You will need to understand how to create ringtones from your music and how to make them available; it is best to source a good independent supplier that is weighted fairly in the interests of the artists. Each ringtone service supplier has its own technical specifications and payment structure. However,

â&#x20AC;&#x153;Who hears music, feels his solitude Peopled at once.â&#x20AC;? Robert Browning

there is no reason not to sign up to more than one. Ringtones will of course need promotion as any product does so it is advised that a marketing campaign is devised to support ringtone sales at launch. It is very important that you understand copyright law should you be using third party samples in your music.

HOW? Use the decision making tree to find out your next move. Source ringtone supplier

Yes Factor into business plan Do you fas want your Take your top

ringtones?

20-50 fans outask them what they want. No Listen to your fans online-what are the patterns in what they are discussing

Create marketing plan

TIPS Here are some important things to consider:•

Like any revenue stream, ringtone sales should be factored into your business plan paying special attention to cost benefit analysis, sales forecasting, profit and loss forecasting and operations.

•

It is worth looking at the components of what makes a good ringtone

•

Talk to your fans to get their opinion on which parts of your tracks work best.

•

Ringtones as any download (albums, singles, remixes) or any product (merchandise) or service require promotion to launch over and above emails, benefit from a deliberate and co-ordinated marketing and PR campaign.

•

Be sure to price your ringtones at a price that is appealing to the fans.

•

You may want to think about constructing a mobile version of your website to further sales and appeal.

#20 Sell Apps

Have your fans been asking for an app? If so then this is the time to create one. Apps can be very lucrative for independent artists provided they are treated correctly as a medium. They should be more than mini versions of your websites in order to merit purchasing. However, in order to make the most of this you must have a loyal fan base, be tech savvy and have a solid plan. You need to know what you want to achieve in the short term and be prepared to test out various technologies and measure the

â&#x20AC;&#x153;Musical innovation is full of danger to the State, for when modes of music change, the laws of the State always change with them.â&#x20AC;? Plato

results. Using apps as part of your revenue strategy needs to be combined with a solid understanding for mobile marketing and fan base marketing. This is where you can get creative. Perhaps your fans wonâ&#x20AC;&#x2122;t buy an album but they might purchase an app that acts like an album. This means that the app would be your new format. Again you can add as much rich media to this as you like and even have a tiered pricing structure appealing to different groups of fans who might want different things from you.

HOW? Use the decision making tree to find out your next move.

Review existing mobile

Create plan

marketing plan Yes Research app suppliers

Do you use mobile marketing?

Source No

Start learning

courses, articles, books

TIPS Here are some important things to consider:•

Be familiar with mobile marketing before attempting to sell apps.

•

Test the loyalty and purchasing habits of your fan base. What are they already purchasing?

•

Test the mobile habits of your fan base – do you have your fan’s mobile numbers as well as email addresses?

•

thorough

with

your

research

all

technologies. •

Ensure that you work all expected costs of operations into your business plan.

•

Ensure you launch your app with a marketing campaign.

•

Ensure you complete a risk assessment.

#21 Sell Ebooks

A further extension on your digital downloads bundle. Have you thought about creating a book? There are plenty of different books you can create such as, lyric books, gig photo books, tour photo books, books to accompany albums that explain the album concept and tell the story behind each song, a band biography, fictionalised stories using the band members as characters, graphic novels using artists as characters, books that give advice to younger fans and any challenges they face – a common one for kids is bullying and cyber bullying for example or perhaps more creative books such as song writing advice, a book of your sheet music, or perhaps even books on other topics that interest you and your fans.

“Where words

You can sell your ebook as a separate entity as well as selling it as part of your app download package

leave off, music begins.”

or digital album package. Once you have a solid range of digital products you can start to partner with

Heinrich Heine

others who can speak for your work and/or who have distribution in order to widen your fanbase.

HOW? Use the decision making tree to find out your next move.

Ask your fans Yes

what type of

Start book

Set up pre-

book they

creation

order to fund

would like

Would

Take your top

your fans

20-50 fans out-

purchase a

ask them what

book?

they want

Listen to your fans online-what are the patterns in what they are discussing?

TIPS Here are some important things to consider:•

Do your market research – talk to the fans.

•

Make your book available in print on demand at extra cost.

•

Make your book available in all ebook formats on online stores such as Amazon.

•

Price at the highest end of the most appropriate price band, for example if the typical fan would pay between $11 to $15 for item then test the price at $15 or if you can $15.10

•

Consider having a book launch which you can play at.

•

You must back your book with a comprehensive marketing campaign.

•

Use a pre-order initiative to fund book production.

•

Get your book cover professionally designed.

•

Consider using a book writing coach.

#22 Advertising Revenue

There are many ways of leveraging your assets for advertising. One way is YouTube advertising revenue via the YouTube partnership programme. Other ways include Google Adsense on blogs, online advertising on websites.You can also investigate advertising on your printed media â&#x20AC;&#x201C; such as a partnership with a local food business on targeted gig flyers. When it comes to deciding on having adverts it is important to consider the advertiser type, the payoff, whether your fans will be responsive and whether it will detract from your content. However, it is worth remembering that advertising can be extraordinarily lucrative if you have a large

â&#x20AC;&#x153;Music stimulates within us direct experience of expanded reality.â&#x20AC;?

enough fanbase for example enough subscribers to your YouTube channel. Advertising can be treated

Barbara Marx

are appropriate and what you choose is dependent on you and what you think is suitable if advertising

Hubbard

in different ways for example your free app in a tiered priced range may be ad funded or you may be running a series of online gigs via webcast that an advertiser might be able to leverage. Not all methods is suitable at all so it is important to sound out your fans here

HOW? Use the decision making tree to find out your next move. Learn and sign up for YouTube Partner programme.

Yes

Research and sign up to online advertising partners

Try to think creatively about your assets and advertising

Think about adding ads to print advertising

Do you generate high traffic?

Get more gigs (See Tip #2) No Watch video at www. musicbusinessbuilder.com

TIPS Here are some important things to consider:•

Advertising isn’t suitable for every musician. Decide which options work best for you. It might be that YouTube advertising in the only option for you.

•

Try to think creatively around this area. Adsense might not be great for your music blog but do you live a certain kind of lifestyle that you could run a different blog for that Adsense would work better with? You’d be surprised how much you have in common with your fans.

•

If you regularly run events or clubs would you consider giving your attendees advertiser “goodie bags” from businesses that they like such as clothing, food, drink and electronics?

•

Remember sponsors will want to use adverts on your assets.

The Partnerships

“First, make yourself a reputation for being a creative genius. Second, surround yourself with partners who are better than you are. Third, leave them to go get on with it.”

David Ogilvy, “The Father of Advertising

#23 Sponsorship

Band sponsorship is pretty common these days usually in the form of instruments or clothes. However, what bands really need is financial sponsorship and to do this you really need a solid sponsorship plan. Sponsorship is a partnership however you do need to show that you have the sponsor’s best interests at heart and need to make the deal worth their while. Make sure you fully understand your fan base and approach sponsors that your fans have an affinity with or you may alienate your fans. Is there a brand that has become fashionable amongst your fans? Are there brands that you shouldn’t approach? Make sure you bring something to the table of value to be seriously considered.

“Where words leave off, music begins.” Michael Lippman

You also need to show a potential sponsor that you can competently manage budget you can competently manage the budget you are pitching for, be creative with your proposed marketing strategy for their brand and work with their team.

HOW? Use the decision making tree to find out your next move.

Yes

Research suitable sponsors

Create plan based on sponsor guidelines

Do you have a solid fan base? Get more gigs (See Tip #2) No Watch video at www. musicbusinessbuilder.com

TIPS Here are some important things to consider:•

Sponsorship isn’t suitable for every musician though it is an increasingly popular option.

•

Work your sponsorship plan to the needs of the sponsor not your own.

•

Start small – are there local or regional businesses that you can work with?

•

You must deliver on your proposal in order to increase your chances of getting larger sponsors and better deals.

•

very

important

that

you

have

understanding of small business finance if you are pitching for financial sponsorship •

Be creative with your proposal and research sponsorship campaigns. A little imagination helps in securing a deal.

#24 Licensing

This is a sought after position, as licensing for broadcast film, TV, video and advertising is potentially very lucrative. There is always a budget to work to and major labels can be costly hence the search for great indie artists. This does however take initial legwork. Your best foot forward is to have a licensing representative. To do this you must build your own portfolio of film and video. If you are new to this area perhaps you might try working with local and regional independent producers and online partners. As always this pathway requires networking within music for publishers and in film and TV for music supervisors.

â&#x20AC;&#x153;Iâ&#x20AC;&#x2122;m a survivor in a business that constantly rejects you.â&#x20AC;? Dick Clark

Another point to note is that you should think about having a good library of music in your range. A good range of music can encourage music supervisors to come back to you should they need to license music from you further and help with recommendations. It is also worth getting a good reputation for being easy to work with here.

HOW? Use the decision making tree to find out your next move.

Get more gigs (See Tip #2) Yes

Start work with indie TV/ film producers Get more gigs (See Tip #2)

Do you have a large repertoire?

Get writing, hone your craft

Submit widely for online feedback

TIPS Here are some important things to consider:•

This pathway requires groundwork you must have a large selection of music – write with placements in mind.

•

Try to understand the role of the music supervisor and the procedure they must go through to secure music.

•

Use links to your music in emails not attachments!

•

Connect with professionals on “business” social networks such as Linkedin where contacts might be more receptive and use groups.

•

Find and collaborate with popular independent online film makers.

•

Whilst competitive, this is a great time for indie artists to licence music because of the economics.

#25 Crowdfunding

Crowdfunding is an increasingly popular way of raising much needed funds for recording projects. Crowdfunding is considered to be much more valuable than the finance alone with benefits such as third party endorsement, contacts and extra resources. This way of raising finance requires fan engagement and campaigns in marketing and PR to support it. It is also best combined with on offline initiative such as meet ups with the fans to allow the fans to get to know you better. The more trust the fans have in you the more likely they are to spread the word and donate. Crowdfunding is also a wonderful way to get close to the fans and find out exactly what they want

“I have the responsibility to give the fans a good time!” Thom Yorke

and what they don’t want. When planning your campaign always choose a target you can confidently exceed. Transparency is very important here. You must be honest about your costs and to help with these online video updates are very effective. Keep up the communication and even try to see your fans face to face as much as possible during this campaign.

HOW? Use the decision making tree to find out your next move.

Yes

Take your top 2050 fans out-ask them what they want.

Find your platform-create plan and execute

Do you have a solid fanbase? Get more gigs (See Tip #2) No Watch video at www. musicbusinessbuilder.com

TIPS Here are some important things to consider:•

Choose a target that is realistic which you can comfortably exceed.

•

Be realistic about your fans and how much they can donate in total and per head.

•

Create a good video pitch and get feedback on it before posting – tell a story.

•

Have a plan for how you will spend the budget.

•

Break up large projects into smaller ones.

•

Create really compelling rewards

•

Give plenty of thanks and acknowledgement

•

Be transparent.

The Learning

â&#x20AC;&#x153;Learning never exhausts the mind.â&#x20AC;? Leonardo da Vinci

#26 Save Then Spend

The amount of knowledge you have in an area that you act upon is tantamount to how well you do in that area. I have left financial education until last. If you do not understand money and you do not understand yourself and your financial habits it is unlikely you will be successful with these tips. The first good personal financial habit is to save first and spend later. Unfortunately many people exceed their monthly salary and then wonder why they have no cash. Whilst some think they should minimise spending then

â&#x20AC;&#x153;Never spend your money before you have earned it.â&#x20AC;? Thomas Jefferson

save the reality is your savings need to leave your account before you have the chance to touch them! The best way to do this of course is to set up a standing order to a savings account so this is done for you automatically. If you know your personal budget amount you can look at saving the rest. Alternatively the typical savings amount is at least 10% of what you bring in revenue.

HOW? Use the decision making tree to find out your next move.

Use a tax free account Yes Review your personal budget

Do you save then spend?

Change your mindset

Track spending for 3 months

TIPS Here are some important things to consider:•

Track your spending for 3 months and check your habits to see how much you can save

•

Your savings must leave your bank account before you have a chance to handle them. The only way to do this is to direct debit the money as soon as it comes in.

•

If you have money left after spending – save this too.

•

Attempt to save for any musical expenditure.

•

Once you have saved – prioritise your spending e.g. debts, rent, food, bills.

•

“Tax” yourself every time you buy a non-essential item by paying into your savings account.

•

Apply this principle to your band finances also.

#27 Survival Budget

A survival budget is a document that shows how much money you can live on as a bare minimum. You should do this for yourself and your musical endeavours. There are plenty of templates that you can find online for this and the first place to start would be to track your weekly or monthly spending. Do this by keeping your receipts and recording your expenses every morning; use the information from your bank statement also. Over 3 months you should build up a picture of your spending habits and will be able to see patterns and trends that you can adjust if needed.

â&#x20AC;&#x153;If you would know the

Analysing your spending is a very useful exercise as you will find out where you can cut back and what

value of money, go

areas you might need to spend more on. As an example could cutting back on breakfast at the local

and try to borrow some.â&#x20AC;?

coffee house help fund your next round of music business networking meetings. You will also find out

Benjamin Franklin

what you are currently prioritizing at this point in your life.

HOW? Use the decision making tree to find out your next move.

Regularly review

What adjustments can you make?

Yes Complete for both business and personal

Do you have a survival budget?

Track spending for 3 months

TIPS Here are some important things to consider:•

Very few businesses make money in their first year – so you need to know how much you can live off over 12 months.

•

This budget helps you understand how much money you need to live on and how much money your music business needs to make initially.

•

This is a survival budget so think about what you could shave off in a worst case scenario for example cancelling cable in favour of reading or internet TV.

• •

Find other ways of cutting back on expenses. If your estimated income exceeds your expenditure you can decide how much to invest in your music business.

#28 Sales Forecast

A sales forecast is a monthly prediction of the sales you expect to achieve. The prediction is based on past sales however if you are yet to make sales the prediction is based on market research and conservative estimation based on your understanding of your fans. Over time your sales forecast will help you understand fan purchasing patterns such as when you have high sales periods and when you have low sales periods. If you know a high sales period is coming up you can ensure that you have enough stock and that operations and manpower are in place to serve the fans.

â&#x20AC;&#x153;Money wonâ&#x20AC;&#x2122;t create success, the freedom to make it will.â&#x20AC;? Nelson Mandela

Sales forecasting is also important should you want to gain any kind of investment or other joint venture. It also gives you milestones to aim for to help you grow your music business enterprise as well as the advantage of seeing patterns and trends in purchasing behaviour such as low and high selling periods which can help you better manage inventory.

HOW? Use the decision making tree to find out your next move.

Yes

Create

sales

forecast

plan

Are you making Yes

sales?

Do you No

Take your top 20-50 fans outask them what they want. Listen to your fans onine-what are the patterns in what they as discussing?

have fans?

Get more gigs (See Tip #2) No Watch video at www.musicbusinessbuilder.com

TIPS Here are some important things to consider:•

There are many sales forecasting and sales plans templates on the web. Find one that works for you and spend some time on this area if you are new to it. Allow extra time for having to learn something new in this case.

•

This doesn’t need to be perfect – it is a forecast so it will be imperfect – focus on being reasonable.

•

Use the recent past to help with the forecast.

•

Remember to compare your forecast to your actual sales information – look for trends.

•

Sales forecast need regular monthly review. You must look at what worked and what didn’t work in order to improve month by month.

#29 Profit And Loss

A profit and loss is a record of income and expenditure over 12 months. After your total expenditure has been deducted from your total income you have your “bottom line” also known as profit or loss. You would also need this record for investment or a loan. You will need profit and loss to understand how your music business is performing and for your tax calculations. If you cannot see where you

“Rule No.1: Never lose money. Rule No.2: Never forget rule No.1.”

business is making a profit or loss you cannot see what to adjust in order to make money from your music business. Profit and loss is a critical part of the financial management of your enterprise and it will also help with the future planning of your business.

Warren Buffett

HOW? Use the decision making tree to find out your next move.

Use a Yes

template to calculate bookkeeping

Do you have a record of your income and expenses?

Create record, No

use bank statements

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Use template to calculate profit and loss

TIPS Here are some important things to consider:•

If you are new to profit and loss – remember it is just adding and taking away don’t let the numbers put you off.

•

Keep it simple to start with “Money In,” “Money Out” and “Balance”

•

Keep receipts of everything you buy and file them as you get them to avoid having to organise lots of receipts before a tax deadline! Create a file per month with different sections for different expenditure types, for example petrol, food, music equipment sundries, stationary, online services, educational materials.

•

It is worth attending small business workshops in finance to broaden your knowledge here.

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# 30 Cashflow “It’s not that people who make money become successful, but that successful people attract money. They bring success to what they do.” Wayne Dyer

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Cashflow is a measurement of how cash moves in, out and through your business. Managing how cash moves in, out and through your business is important because you will be able to prevent a shortage in cash which can hinder your progress should you suddenly need cash for marketing, recording or touring as an example. The difference between profit and loss and cashflow is that profit and loss sets out total revenue and expenses for 12 months and takes into account your stock and assets whereas cashflow details cash receipts and payments.

HOW? Use the decision making tree to find out your next move.

Yes Have you Yes

Use cashflow template

completed profit and loss? No

Have you completed your book keeping?

Tally receipts

Complete

and use

profit and

template

loss

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TIPS Here are some important things to consider:•

The key to your success financially is cashflow. With enough cashflow you can expand on your own without the need for outside investment such as a record label. Understanding cashflow gives you control.

•

Your main trouble with cashflow will be suppliers demanding payment more quickly and fans holding back their money. If you can see this you need alter your business model and boost your bottom line.

•

Make sure payments come in on time. Use letters of agreement or contracts and use techniques such as 50% payment upfront and 50% on delivery, milestone payments and interest and late free charges for any delays.

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The Resources

â&#x20AC;&#x153; To be successful, you have to have your heart in your business and your business in your heart.â&#x20AC;? Thomas John Watson Sr.

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The

Here are 3 forms to get your started with your financial planning. The first form is the “Personal Survival

Resources

second form is your “Sales Forecast” which helps you plan how many sales you need to make and

Budget” which lets you know how much money you need to live on in your first year of start-up. The how much money you will earn from these sales. The third form is the “Profit and Loss Statement” which lets you know whether you have made a gain or loss for the year. Work these forms in as part

“The greatest achievement of the human spirit is to live up to one’s opportunities and make the most of one’s resources.” Vauvenargues, Marquis

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of your business plan. Your business plan overall is a living and breathing document and you should check in with it regularly to ensure you are on track with your plans or refine your plans should they need improvement or amending if something is no longer applicable. Do not leave financial planning to the last minute. Financial planning should be the centre of your business planning. It is from financial planning that all other business strategy stems from particularly marketing!

Personal Survival Budget

This is where you start with your financial awareness. The purpose of the “Personal Survival Budget” is self – explanatory. We use it to work out how much money you need to survive on per year. This way you know what the minimum amount of money is for you to live on for the next 12 months as very few businesses make money in their first year. If your estimated income for the year (from sources other than your new business) exceeds your estimated expenditure for the year, you should decide how much

“Don’t tell me what you value, show me your budget, and I’ll tell you what you value.”

you can invest in the new business. Fill in the expenditure and income boxes as necessary. The “Total Survival Income Required” is the shortfall you would need to make up in earnings from your business in order to survive the year.

Joe Biden

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ESTIMATED EXPENDITURE PER YEAR Mortgage/rent Council tax, water rates Gas, electricity, oil All personal and property insurance Food, general housekeeping expenses Clothing Telephone and/or mobile Internet Entertainment (meals, drink etc) and holiday Subscriptions to associations, journals etc Car Tax and insurance Car running expenses (incl. fuel) Car service and maintenance Childrenâ&#x20AC;&#x2122;s expenditure and presents Savings plans Loan repayments Other (please state) 108

ÂŁ

EXPENDITURE in the year

Sub total (a)

ESTIMATED NON BUSINESSES INCOME Income earned by spouse or partner Other income (please state) eg part-time job TOTAL NON BUSINESS ANNUAL INCOME

Sub total (b)

TOTAL SURVIVAL INCOME REQUIRED IN THE YEAR from your business i.e. sub total (a) less sub total (b)

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Sales Forecast

The Sales Forecast is a simple prediction of the future sales of products or services that you offer. It shows how much money the business could make over the course of a year. It is based on past sales. If you have not sold anything yet this will require conservative educated guess work on what you think you can achieve with your resources. The purpose of the Sales Forecast is to give you financial targets

â&#x20AC;&#x153;Every sale has five basic obstacles: no need, no money, no hurry, no desire, no trust.â&#x20AC;? Zig Ziglar

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to work towards so that you can create a profitable business.

Product Item and Unit Cost

APR-JUN

JUL-SEP

OCT-DEC

JAN-MAR

Units Revenue Subtotal

Item and Unit Cost

Units Revenue Subtotal

Item and Unit Cost

Units Revenue Subtotal

Item and Unit Cost

Units Revenue Subtotal

Item and Unit Cost

Units Revenue Subtotal

Item and Unit Cost

Units Revenue Subtotal

Item and Unit Cost

Units Revenue Subtotal GRANDTOTAL

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Profit and Loss Template

The purpose of the profit and loss statement is to show whether a business has made a PROFIT or LOSS over a financial year. It also illustrates how the profit or loss arose. Fill in the fields in the form as described then:1.

The revenue is the total sales you have made

The cost of sales is the production costs of your goods

Subtract cost of sales from revenue to give you your first figure which is called “Gross Profit.”

Now, total up your business expenses and subtract this total from your Gross Profit.

Factor in any other income and expenses by adding other income and subtracting expenses accordingly

“Profit tells the entrepreneur that the consumers approve of his ventures; loss, that they disapprove.” Ludwig von Mises

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The final figure will be your “Net Profit or Loss.” Net Loss will be a minus number.

This form can also be used a profit and loss projection as a guide to predict whether you are on course for profit or loss over the next 3 years in which case you would complete the form twice more based on your first lot of figures and an estimation of your upcoming 2 years’ income and expenses based on your business plan.

Operating Revenue Product sales Service sales Total Operating Revenue Operating Expenses Cost of goods sold Gross Profit Overhead Rent Insurance Office supplies Utilities Total Overhead Operating Income Other Income (Expenses) Loan interest Earnings Before Income Taxes Income Taxes Net Earnings

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Weekly Cash Flow Projection “Cash is King!” Unknown

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Cash flow statements report your business’ inflow and outflow of cash. This is important because you need to have enough cash on hand to pay your expenses and purchase assets. Use this template to get you started with this exercise and track your weekly cash flow for one month. In the first column enter the date of the first Monday you will be starting with. Then add in the dates of the successive Mondays.

CASH RECEIVED

Weekly Date

Beginning Cash Balance Cash Sales Receivables Collected Other Cash Received Total Cash Available

CASH DISBURSED Salaries and Wages Lease/Mortgage Insurance Office Supplies Utilities Repairs and Maintenance Operating Supplies Professional Fees Commissions Travel and Entertainment Purchases Advertising Transportation Purchase of Capital Assets Loan Payment with Interest Dividends Other Cash Disbursed Total Disbursements

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Balance Before Financing Loan (Repayment) Securities Sale (Purchase) Stock Issue (Repurchase) Other Received (Disbursed) End of the moNth balance

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Final Notes

I hope you have enjoyed this book and that you have found it useful. It is very much geared around the idea of making a living from your music endeavours more accessible and to give you ideas and options that you can pursue. Remember if you have any questions please tweet or Facebook at the links below! http://www.twitter.com/positivelymusic http://www.facebook.com/positivelymusic “Your Music, Your Money” is part of the “Music Business Builder” programme. “Music Business Builder” is a programme devised specifically for artists who want to sharpen their business skills. Through a massive range of 90 minute online courses we will teach you everything you need to know about the business of music. This isn’t a programme that will help you use social networks and get more fans. This programme will teach you how to understand real business, such as business finance from cash flow to break even analysis, copyright law, creative commons licensing, sales forecasting and yes we will cover everything you need to know about marketing and PR as well. It is a programme designed to give independent musicians a solid minimum 5 year plan upon completion so that they can create their own jobs via their own enterprise, jobs for other people and attract investment. The music industry is in decline and as such depends on entrepreneurship to grow. I truly believe that it is a new generation of music business entrepreneurs that can support growth within the music industry and that independent musicians share the passion and appetite for such growth. This programme will leave you feeling inspired, confident and chomping at the bit for action! Check it out here http://www.musicbusinessbuilder.com 117

Notes

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This book contains over 100 pages of advice, guidance, tips and decision trees. It will walk you through 30 options to help you decide what kind of music business enterprise you want to run. You could be a musician with a portfolio career or be growing your own music business. Whichever you choose, this book will give you plenty of ideas and action steps to help you move in the right direction and get you making progress!

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