Business models of the music business

LESSON 4. Business Models

Money can be made in a lot of ways from music. This revenue is generated from royalties from the use of copyright for rights-holders (owners and royalty bearers) as well as fees for services delivered by industry practitioners like artists, audio engineers and music producers. There are also many products that are sold to the industry at large, such as merchandise like musical instruments and audio equipment.

Many revenue streams, which are unlocked by business models, are at work in the industries. Royalties are negotiable and always at least ask for a high rate, so take care to understand the reasons for the “going rates”. Usually, a percentage of net receipts is used, meaning the amount of money received by third party service and after deducting any costs to the copyright owner.

If you are a songwriter or performer (royalty bearers), seek no lower than 50% of net receipts with a music publisher or record label (copyright owners). Revenue streams consist of licences for usage of works, such as music streaming, synchronisation to film/video, adaptations, CD/vinyl sales, or theatre performances. Broadcasting and live performances are a major source of revenue, and are administered by groups of rights-holders called collective management organisations (CMOs), see the next lesson.

As a performer looking for shows, start with a salary you’d like to earn in a month. Divide that by the number of working days in a month, then the number of working hours. Add your costs to this rate and this may be your hourly rate for shows. Same for any other practitioner offering services.

Gabi Le Roux speaks about royalties for musicians (2018)

Blaque Nubon and Lilly Million (aka “The Nubons”) discuss the reasons musicians should get paid.

Dumisani Motsamai, Master KG’s entertainment lawyer, speaks to Newzroom Afrika about synchronisation royalties (2021)

South African Revenue Service (SARS) tax education session for arts, entertainment, and sports sector (2022)

Lesson 4. Questions

4.1 With a salary of R€$910, and you had 26 working days in a month, 7 working hours a day with a costs of R€$5 per hour, what is your service hourly fee?
4.2 What is the minimum royalty rate for royalty bearers negotiating with copyright owners?
4.3 List the various revenue streams that are available to copyright owners.

Back to lesson 3?

One thought on “Certification: Lesson 4

  1. 4.1. 910/26 = 35 / 7 = 5
    my cost 5
    total = 10
    4.2. 50% net
    4.3. music streaming, synchronization to film/video, adaptations, CD/vinyl sales, or theatre performances. Broadcasting and live performances are a major source of revenue as well


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