Music Business

The Times Are Changing For Artist Investors

Artist Growth.jpgBy Matt Urmy, CEO of Artist Growth.

When a young person announces that they have decided to pursue a career as an artist or entertainer, probably the most common response they get is something along the lines of, "Good luck with that."

Despite this belief that trying to make a living as an artist is a nearly impossible waste of time, every person I have ever met admits that they canʼt imagine what their life would be like without music. In fact, listening to music plays a central role in most peopleʼs lives.

Why then is there no established career path for an artist? We all need doctors in our lives…and they have a clearly defined career path. Why donʼt we establish a way for artists to work through a system that leads to a career? I think we would all agree that itʼs not for a lack of demand…music is a multi-billion dollar industry, itʼs something almost all of us consume everyday.

One of the reasons there isnʼt a clear career path for artists might be that there has never been a good way to quantify the potential market value of an artistʼs work — itʼs always been a crap shoot.

Investors (traditionally labels) have used a couple ways of hedging risk: throwing lots of money into an artist they believe in, or more recently, waiting until the artist builds enough revenue on their own before forming a partnership and investing in them (or buying them) to scale the business (in exchange for complete ownership).

The problem with this model is that it leaves artists out in the cold, with very little knowledge of how to create a realistic business plan. This leads to artists spinning their wheels for years, wasting energy, time, and talent, susceptible to trolls that can take advantage of them, essentially robbing them of their creative and intellectual property.

So here comes the good news: As a result of all the money invested in digital music entrepreneurs over the last several years, we now have the tools we need to be able to track the growth of an artistʼs business development in almost real time, and build the reports necessary for a potential investor and aspiring artists to negotiate a quantified valuation of the fledgling artistʼs business.

Like a startup, artists can acquire ʻseed moneyʼ from services like Pledge Music (fan funding), or family & friends, and armed with that initial funding, enter the marketplace. The key to this phase is making sure that no data falls through the cracks. Every show booked, every download sold, every post that gets clicked, shared, liked, retweeted, and all the other minute digital engagements that occur while an artist is sleeping, at work, or on tour must be captured in an artist management tool so it can be summarized and reported.

Then over time, armed with the data that shows their business is growing, artists can get some ʻAngel Investmentʼ (hopefully at an improved valuation) from managers, agents, publicists, promoters…anyone who is in the business of music and believes in the artistʼs potential. This capital can help them achieve an even greater level of traction in the market. And finally, when itʼs time…the institutional round of funding (like a VC) is injected when the artist is ready to ʻscale upʼ.

At the end of the day, it becomes about execution on the part of the entrepreneurial artist and their team, and those who are in the business of investing in music tuning in to the new tools that are available to them to evaluate and quantify the market opportunity of their potential investments.

So, hopefully in a few years, when a high school senior decides that they want to be in a rock band when they grow up, they can contact a digital strategist who instead of blowing them off will say, "Ok then, letʼs start putting together the plan."


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1 Comment

  1. Yeah, I totally agree with the need for some type of strategist to help young artists put together a plan…if they can start thinking ‘business’ from the word go (without, of course,killing their creativity), then all the pieces should fall into place as they proceed, particularly in terms of attracting serious investors.


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