One of our lead investors planted a seed: How many ways do musical acts make money? I sat down and was able to distill it into 5 specific categories. Each revenue stream can be subdivided in hundreds or thousands of ways but at the end of the day the 5 ways musicians make money are:
1) Recorded Music - Hard to believe right? But even in the age of file sharing, recorded music is still a fundamental part of an artist's income. There are 2 types of fans: those who will pay for your music and those who won't. Make it as easy as possible for the fans who want to pay to buy your music.
Don't ever, ever alienate your fans who don't want to pay for music.Because they might want to pay for something else, like a ticket or merchandise.
2) Performing - Guarantees, a piece of the door, pass the hat for tips. You get paid to play. Some times a little, some times a lot but this is A) What you love doing. B)A great way to find and retain fans and C) money.
3)Merchandise - This includes tour merch, online sales of merch and retail distribution of our stuff. Think hard about what fans will actually want and be sure to include a range of items from inexpensive to premium.
4) Licensing - Placement in TV, Film or commercials is a payday. And a great way to get new listeners, especially now that FM radio is essentially a wasteland. The massive proliferation of programming on cable television as well as the web has created a need for licensed music that has never been seen before.
5) Sponsorships - "Sell Out" - Get over it again, but don't be stupid with your brand. Sponsor money from small affiliate links on your web widgets to full blown tour support is a godsend. The thing to avoid is being associated with a sponsor that doesn't make sense for your fans.
Those are the five critical channels for artists to make revenue. Depending on the current state of your career one or more of these may hold more weight than the others but they all contribute to your ability to generate revenue.