How Do Musicians Earn Money?

Traditionally musicians would work for record companies who paid them for a particular album or a song. But music is a multi-billion dollar business today. For every ten new musicians who cut albums, only one will be successful. Essentially the earnings of that one musician will cover for the losses made by the record company on nine others.

Since the stakes are so high, the kind of contracts between the singer and the record company has become increasingly complex. There is a fixed as well as variable component to most of the contracts. The singer will be paid a fixed fee but he will also get a cut from the net profits. Some of the more famous singers will demand a cut from the gross profits. The singer could keep whole or part of any revenue from merchandising. The record company on the other hand could opt out of a multi album deal if the initial audience reaction has not been favorable.

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