While many involved in the music industry may feel that they have one skill to bring to the table that they hope to make a living off of, a true entrepreneur must diversify their income streams, bringing in more revenue and allowing them to survive even through tough times.
If you plan on making a living from your music, then you plan on being an entrepreneur. While many DIY musicians envision themselves more like a freelancer, focused on bringing in income from one main skill set, an entrepreneur creates multiple streams of income in order to ensure that there’s always money coming in, even when one stream goes through a dry spell.
In order to succeed as a music-preneur, you must diversify your income. I know what you’re thinking:
“It takes all I’ve got to bring in one stream of income. How the heck am I supposed to create multiple streams without completely losing my mind?”
It’s important to know that with a little organization and planning, you can create multiple streams of income from one skill set or offer. Before we dive into what these possible streams can be, let’s first understand two types of income: passive and active.
Passive income refers to recurring income you receive for something you did once and no longer have to actively work to earn. Many people call it “money you make in your sleep.” I don’t like to call it that, because it should be noted that earning passive income still takes effort on your part. It’s not a total “set it and forget it” deal, but it can lighten your load without lightening your wallet.
Think of passive income like dropping the kids off at school. You still worry about them, you’re still ready to attend to them if they or the school needs you, but you know they’re being taken care of and earning an education while you go off and run errands or attend to clients.
The most common example of passive income for a musician would be albums, songs, and merchandise available for sale online. You create the product, you promote it, and people are free to buy it whenever they want — you don’t have to be available for them to make a purchase. You continue to go about your day, and Bandcamp or CD Babycollects that money for you.
Active income is exactly as it sounds: income you actively earn. Playing a show and getting money from the door, delivering content to your patrons via Patreon in order to earn the money, or teaching a music lesson are all examples of active income.
You may realize that you already have multiple streams of income, but you just never gave it much thought. Not realizing this fact is a good indication you haven’t leveraged these income streams to their full potential. Ready to do that now?
1. Keep It Simple
Decide on three income streams to focus on building. You can choose three offers or three tiers of one offer.
For example, you can focus on selling merchandise and music from your online shop, teaching private lessons, and playing corporate gigs or weddings. Those are three different offers to paying customers. Or, you could decide to only focus on income from playing live via virtual shows with virtual tip jars, private house concerts, and playing corporate events. These would be one single offer with three different pricing tiers.
If you’re not sure how to go about choosing these three areas of focus, list out the skill sets and resources you already have available, and decide where putting your energy would have the greatest effect.
2. Make Sure There’s a Demand for Your Offers
Poll your audience, and ask them what they want.
Be sure to control this process, otherwise you’ll get endless amounts of varied answers and zero clarity on your next steps. If you want to sell more merch from your online store, pick three items to focus on selling and ask your fans to choose what those three items are before you move forward on designing them. Do they want thermoses or mugs? Buttons or hats? Tanks or long sleeves?
If you’re thinking about making house concerts a regular source of income, see how many people would be interested in hosting them so you have an idea of how many you can start booking.
3. Create a Process
After doing the research and mapping out which offers you’ll focus on building up, determine the systems involved for pulling these services off effectively.
For passive income, figure out ways to automate the process. Is your PayPal account connected to your online store? Is your MailChimp account connected to your online store so that subscription confirmation emails go out without a hitch? When doing private house concerts, what is your system for confirming details with the host? Is there a contract to send them? What’s your tip policy? Have you created a survey to send them after the concert for feedback and testimonials? Is there a referral fee available to them if they bring you other hosts for future concerts?
Curl up on a comfy couch, press play on your favorite playlist, get out a pad and pen(cil), and start brainstorming. When in doubt, work backwards and break steps down into manageable tasks.
Before you know it, you’ll have a plan to carry out various streams of income with a clear focus on who you will market to, as well as the process involved once they choose to purchase your product or service. With a little bit of reflection, structure, and planning ahead, you’ll soon be creating offers that your fans want and, more importantly, you want to supply.
So what are you waiting for? Give it shot, and tell us in the comments below the three offers you will focus on growing!
Want to learn more about how streaming and sales royalties really work and how to get the money you deserve? Check out our free course with Ari Herstand, How to Get All the Royalties You Never Knew Existed, and read up on the differences between getting paid as an “artist” versus a “songwriter” here.
Suzanne Paulinski is is a mindset coach for music-preneurs, helping them reach their goals with custom time management solutions that enable them to gain clarity on their next steps while maintaining a healthy work/life balance. She published her first book, The Rock/Star Life Planner, now in its third edition on Amazon, as a tool for creatives to find focus in their daily lives. Follow her @RockStarAdvo.