Successful indie artists and record labels may not have the name recognition that some of the bigger artists and major record labels have, but they do have longevity and make millions because of how well they nurture their fan base. Great examples include Chance the Rapper, Rostrum Records, Dom Kennedy, Top Dawg Entertainment, Foster the People, FKA Twigs, Tech N9ne, Macklemore, Joey Bada$$, Ryan Leslie, and Domino Recording Company.
Here are some ways these indie artists and record labels are attaining success through direct-to-consumer marketing tactics:
Email marketing and text blasts to get fans to shows
In the pantheon of success in the music industry, people talk in terms of going gold (500,000 album sales) and platinum (1 Million Album Sales). 100,000 album sales x $10 (the average price of an album on a DSP like iTunes), that’s $1,000,000 in gross revenue (before cuts). Concert tickets cost anywhere from 2x to 400x more than the cost of an album. And no one really goes to concerts alone! Do the math, and you’ll come to find that you don’t need to sell 100,000 albums or need 100,000 people to buy your album to make that type of money by going directly to your fan base or core audience with direct b2c marketing like text blasts, targeted advertising or emails (contact us today!) 🤷‍♂️ Nurture your audience and reap the benefits. Ryan Leslie does a great job of explaining this in his Breakfast Club interview from December 2019. Check out the video snippet below.
Selling merch
Selling merchandise online and promoting it at events can yield large profits for indie artists and record labels. Some examples of indie record labels that do a great job at selling merchandise include Dirtybird Records (former client). Dirtybird Records is an independent electronic music record label based in San Francisco, California.Â
Royalties
According to Billboard, both the sound recording and its underlying musical work receive royalties paid from the DSP — the commonly used abbreviation for digital service provider, such as iTunes or Spotify. Unless you’re an indie artist, the four major record labels (EMI, Sony Music Entertainment, Universal Music Group, and Warner Music Group) collect and pay the recording artist from their share of royalties from the DSP. For audio streams that’s about 80% of a total stream value for rights holders, and slightly less for video streams). Songwriters are also paid what’s called a mechanical royalty (about 10% of a total royalty). And performance rights organizations (PROs) are paid performance royalties as well, just as they receive royalties when a song is played on the radio, in a retail store or at a concert(an additional 10% of a total royalty).
Now after the major record label receives that 80% of the total royalty, an average of 16% – 20% royalty is then shared with the artist with an average of 60 – 64% going to the label. That money won’t, however, necessarily end up in the artist’s pocket unless the artist has recouped their advance and their share of expenses. Otherwise, royalties earned will go towards reducing the artist’s negative balance for an advance and expenses such as marketing, promotion and touring support.
On the other hand, an independent artist who owns the sound recording will receive the entire label share (80%).
Overall, for every $1 a streaming service pays in royalties, rights holders collectively earn about 73 cents, creators take a little over 25 cents and the PRO gets a little over 1 cent. Breaking that down for recorded music revenue, an artist signed to a major label receives about 16 cents and an indie artist gets about 64 cents. With a lot of listeners, these payments can add up to millions over time.