Between 1999 and 2011, the record industry shrunk by 64%. With the advent of digital music, musicians were forced to find other streams of revenue as opposed to relying on record sales and touring. Several qualities of digital music forced this change; those being the companies hosting the music downloads taking a cut, consumers newfound ability to buy only a song from an album as opposed to the entire album, music streaming, and digital piracy. Ironically, the underlying structure of these services, the Internet, both undermines and supports artists. With the help of the Internet, artists are able to reach listeners all over the world. Unfortunately, the Internet also enables all the factors listed above, to the detriment of the profits of the artists. For instance, the average iTunes user averages .25 albums a year, which equates to nowhere near enough album sales to fund an industry.
Musicians have combated the downfall of the record industry by increasing sales of merchandise, accepting movie and TV licensing, creating fashion lines and beauty products, using crowdfunding websites such as Kickstarter, and finally, selling premium content. Items such as clothing are often sold at live concerts, so musicians that do not have the fan base to tour or play in concert are left without this option of revenue. Rolling Stone estimates that bands such as One Direction net up to $225,000 per every show in merchandise sales. Musicians, provided they have a hit song, are entitled to licensing fees when that song is played in a movie or television show. Green Day licensed their song “99 Revolutions” for the movie “The Campaign” and made hundreds of thousands of dollars as a result. One copyright licensing agent commented, “There was once a time where it was completely uncool for a band to allow their music to go on a TV commercial. Now if you get your song on a TV commercial it’s high five, it’s great, everybody’s happy for you.” Artists have also taken to using their fame to promote select beauty products. One example is Justin Bieber, whose perfume “Someday” netted a three million dollar profit upon the summer of its release. Obviously, this stream of revenue requires sufficient fame, and is therefore not an option for every musician. That being said, musicians who are not yet famous enough to rely on these streams of revenue have taken to using crowdfunding websites such as Kickstarter in order to fund their projects. Rolling Stone estimates that artists average around $200,000 in crowdfunding profits, which is a substantial dent in any expenses associated with creating music.
It seems that the primary way musicians will profit in the digital age is by releasing exclusive content with their albums. One Nielsen study found that a fifth of listeners would be willing to pay for exclusive content if given the opportunity, and that in-between 560 million and 2.6 billion dollars in revenue is possible if artists begin to increase the amount of exclusive content they release. One such artist that uses this strategy is Nipsey Hussle, a rapper from Los Angeles. He has released two studio albums, and each time has released his album for free but also offered a small number of copies of the album with exclusive content. This strategy has proved profitable, as Nipsey made $60,000 the week his second studio album debuted from sales of exclusive material. While music is far from unprofitable, it is obvious that musicians can no longer rely solely on record sales as a source of revenue.