Playing the money game for musicians.
I'm posting some early drafts of chapters from Audience Supported just for supporters of spinme.com...
“You don’t need a hit to survive.”
That’s the crux of the argument Kevin Kelly made in his 2008 essay, 1,000 True Fans. Kelly’s influence in the technology sector brought into wider debate a topic that regular readers of spinme.com have watched our community debate since the late 1990s. Instead of waiting to “get signed,” to “get discovered,” or to win a reality show competition, you can just focus on building an audience just large enough to support you financially from year to year.
Musician (and occasional spinme.com guest author) Scott Andrew explored similar territory on his personal blog back in 2005. Referencing a “5,000 True Fans Theory” from Just Plain Folks founder Brian Austin Whitney, Scott challenges us to do the math:
“Here’s an exercise: take your own salary, pre-taxes, and divide it by 20. If you were to quit your job right now and start living as a full-time musician, poet or author, that’s how many fans you’d need, spending $20 each year to support your art. So, if you’re making $30K yearly, you’d need 1500 paying fans each year to replace your salary. And it gets better if you’re willing to take a pay cut.”
In this exercise, Scott used the rough salary from his then-day job. He also noted that it’s easier for an artist to get by on $30,000 in Seattle than in other parts of the United States.
We’re not content with just “getting by,” though. We want artists to thrive.
Believe it or not, there’s actually a “magic number” that American researchers call the “income plateau.” Hit that income, and no more money will make you feel any more secure or any more content about your career.
Economist Angus Deaton and psychologist Daniel Kahneman reviewed Gallup surveys of over 450,000 Americans between 2008 and 2009. The Wall Street Journal’s Robert Frank chronicled the pair’s findings in 2010:
“As people earn more money, their day-to-day happiness rises. Until you hit $75,000. After that, it is just more stuff, with no gain in happiness.”
What would it mean for you to earn $75,000 next year?
Would that be enough to replace your current “day job?” If you consider yourself a “starving artist,” would that amount get you fed? What would your daily routine look like if you reported to a community of 3,000 superfans instead of to your current boss?
Having spent most of the past twenty years talking to artists (both successful and otherwise), I can tell you that the answer’s deeper and more surprising than you’d imagine. As I learned from business coach Andrea J. Lee, who first taught me how to play this kind of “money game,” it’s easy enough to break down how much you’d have to earn from an army of fans.
It’s a different challenge to set those fans up with the system you’ll need for them to support you every year. That’s where I think Kickstarter has turned into the current decade’s equivalent of FM radio’s “local music hour.”
Seth Godin warned readers of his newsletter in early 2012:
“Kickstarter campaigns fail when the tribe of people who believe in the idea is too small… Kickstarter is the last step, not the first one. There are some outliers that are clever and lucky enough to go viral among strangers, but out of the huge number of projects posted (increasing all the time) this is as likely as writing a blog post that gets you on the front page of Hacker News.”
Under these conditions, Kickstarter becomes just one place where your fans get to show you their support. It’s the cash register, not the assembly line. It does one thing very well, though. By breaking up the idea of fan rewards into tiers, it can encourage you to think differently about the ways you open yourself up to fan support.
In the simplest version of Andrea’s money game, she asks her workshop participants to break down their money goal based on a single product or service. Using her math and Scott’s calculations, we can get to $75,000 per year just by getting $20 from 3,000 true fans. However, the traditional money game doesn’t account for the friction of paying for music recording or live touring. It also doesn’t open up the accepted option for fans to support you at varying levels.
Therefore, I want to challenge you to keep the money game simple, but to factor in some costs. Let’s budget $25,000 per year for recording and touring expenses, keeping things really simple. We’re talking couch surfing and recording your EP using GarageBand on a MacBook Pro. Using accepted price points, we can focus on five ways you can grow revenue from your music:
$5: Five-song EP download.
$10: A ticket to a live show.
$25: A shipped “artifact” that builds on your EP.
$50: A “VIP” experience that can include both a live ticket and the “artifact.”
$300: A private house concert experience for up to 30 people.
I’ve kept these numbers deliberately low, because you’re still working on convincing your future fans that you represent a better value for money than their current entertainment choices. Remember, you’re probably not going to win in a fight with an established artist that charges $50 or more per ticket. But you’re highly likely to come out on top if your excellent, intimate live show costs less than a movie pass.
This stripped down budget aims for $100,000 in revenues over a year, so you can keep $75,000 in profits. Your initial price point is low enough that you can attract “tips” from casual fans. You’ve got a high end reward for superfans. But the real opportunity lies in the sweet spot bundle, offering your download, your “artifact,” and a live ticket for just $50.
To keep the math simple, let’s assume you’re splitting gig fees 50/50 with the venue. (My other books, Grow Your Band’s Audience and More Gigs Now, explore how you can negotiate better deals that include a cut of bar revenue, but that’s for later.) Let’s also keep the budget for your “artifact” below $5. Assuming that your VIP experience costs less than $2.50 per person to pull off (not hard if you’re just doing a pre-show hangout with snacks), you’re on track to cover your $100,000 with the help of just 2,000 true fans.
If you’ve imagined your perfect day and set up a cadence for your creative output, it’s not hard to visualize recording an EP every six months. You could actually cycle through your core live venues twice a year, knocking the minimum viable audience for your project to 1,000 or fewer.
This works because we value experiences over everything in a digital economy. Even though you can hire TuneCore or CDBaby to post your single in iTunes, only an extraordinary outside intervention will cause the 166,000 downloads you’ll need to have the same impact as cycling through a few dozen venues in person. Visualizing a physical copy of your EP as an “artifact” that’s somewhat handmade allows your audience to connect with you more deeply than a product that looks like it popped from the assembly line of a major label.
Your audience values the feeling that they’re connected to you, and connecting with them in person is still the fastest, most effective way for you to win the money game.