The Requirements and Costs of Success in the Music Business
One of the first places an investor, potential funder, or the owners of a label will look at in a music business plan is the expenses and costs section. Having the best-planned and most-detailed expense budget is where most music business plans fail.
|Copyright fees||Publishing fees||Trademark fees||Attorney fees|
|Bookkeeping setup||Accounting costs||Music consultant||Music producer|
|Recording studio||Recording engineer||Mixing engineer||Mastering|
|Session players||Graphic designer||web designer||SEO expert|
|Apparel||Insurance (gear)||Healthcare||Grant writer|
|Web hosting||Miscellaneous Products||Press kits||Banners|
|Business cards||Postcards||Merchandise displays||Printing fees|
|Computer||Phone||Online backups||Website support|
|Music conferences||Gas/tolls||Vehicle maintenance||Radio promotion|
|Magazine ads||Postering||CDs/Vinyl||Download cards|
|T-Shirts||Cups and glasses||Merchant setup||Taxes|
|Towels||Stickers||Facebook ads||Twitter ads|
|YouTube ads||Promoted posts||Internet radio ads||Press releases|
|Website ads||Print ads||Laundry||Instrument repair|
|Local promoters||Personal insurance||Hair||Make Up|
Although you might be able to save money on certain requirements, you always need to have a great deal budgeted for the cost of marketing. In turn, you will see the returns of success. Marketing is one area where you don’t want to skimp on spending.
Investing other people’s money
People invest in your idea, dream, and plan. Paying back those loans should be your first priority when you start seeing a profit from your business.
Whether you find a private investor, a venture capitalist, a record label, angel investor, or take out a loan, understand that they aren’t just giving you money. In most cases, you have to deal not only with the principal amount, but also with interest at possibly a high rate.
Your investors are taking a very big risk on you, so if all goes well, they deserve part of the reward. Whether your agreement with your investors reflects high interest, or a long-term percentage of the profits — or both — go into any meeting with an investor, label, or interested lending party knowing that they need to be paid back with interest.
Set up regular meetings to keep them in the loop about their investment as well as updates to instill additional confidence in their investment in you.
Investing your own money
In most cases, you probably don’t have the type of money that many of these larger-scale investors have at their disposal. Investing your own money in your plan will not only help the plan move forward but also show others down the line that you have equity in the game.
You can waste great deal of money on radio promotion and other public relations campaigns that are meaningless if there’s no conversion to sales or real exposure.
Doing these type of promotional pushes before your branding, marketing, and basic promotional structure is in place doesn’t help and wastes money.
Major labels can spend upwards of $75,000 a week to promote a single. So that $1,000 campaign you have budgeted for a month is not going to bring you to the ears of others. There are smarter ways to promote for real results and conversions than taking the radio approach.
Other bad choices
Hiring a producer who is way out of your budget is not going to guarantee a hit either. Also spending on number builders to add 100,000 followers on Twitter doesn’t grow your fan base. These services charge you to build up views, adds, likes, and only showcase to potential labels, investors, and the industry. You waste money on ego-type things that look good on the surface but don’t create results.
Put your money in preproduction sessions, the graphic designers who help you build your brand, and the music business consultants who can get you organized and build out that music business plan to get funded. Put your money and personal investment into buying domain names, web hosting, and fundamentals you need, such as your branding, your graphics, getting contracts in order, and publishing set up correctly.
Lastly, track every dollar you spend or invest. All of it! Be able to show what you personally have invested and where it’s gone. Keep every receipt.
Investing time and resources
There are connections you can make that that don’t offer financial assistance, but can provide numerous resources, services, and other needs that are part of your plan.
Some of these can include donations from friends who know how to do graphics or web work. When you look through the expense list of your music business plan, think of the potential resources, people, and companies that you could contact for services, time, or assistance without asking directly for money.
The more resources you can tap from friends, family, contacts, and companies, the easier it is to check off certain items in your expense budget.
Time and resources should be treated the same as cash investments, and should be paid back with interest. This respect could lead to sponsorships, endorsements, or physical equipment down the line.
Fashion consultant: Some artists need help with their look and image. From working individually with the artists or working through a manager or a record label, this job helps create the overall appearance and branded image of an artist or band.
Hair and makeup: This job option includes photo shoots and specific gigs, but many larger-scale artists travel with hair and makeup personnel.
Sound, light, and stage designer: Designing the lights or the stages for tours and artists with large budgets.
Choreographer: Many artists need dancers, and dancers need a choreographer.
Instrument builder: Building the instruments for the musicians.
A&R (artist and repertoire): Finding musicians and artists is less of a job due to the Internet, but if you have a good ear, an eye for development, and an understanding of what it would cost to develop an artist, you could be in A&R.