Recording artists’ revenues can come from a variety of sources. The main ways artists make money in the music business are through:
1. Royalty Advances
When an artists receives an advance (loan) from a record label, he/she receives money based on royalties projected for the artists’ album sales. In a nutshell, a record label loans the artist xxx amount of money that they estimate the artist will make off album sales. The label then expects to recoup that advance after the album sales come in.
2. Album Sales
Royalties from digital and physical album sales
After an artists has paid back their loan (the record label has recouped their advance) an artist can begin getting paid from digital and physical album sales as specified in his/her contract.
3. Licensing of Master Recordings
A master recording entails the final mixed and mastered lyrics and music production of a song. Master recordings can be licensed to TV and film companies as well as for compilations.
Promoters and venues will often pay premium prices to have select rappers, singers, songwriters, etc. perform or appear at events.
Exploiting the copyright of songs an artist writes can generate huge amounts of income in the music business.
Artists can earn money from the sale of t-shirts, hats, electronic products (eg. Beats Headphones) and other items.
Monies artists charge companies for product endorsement or for sponsorship of concerts can be used as a means of income.
8. Mobile Products/Services
Some artists reserve the right to use their name, image and voice which can be exploited in the form of selling mobile wallpapers, voice tones, voice ring backs, apps, etc.