How Musicians Make and Manage Their Money: The Financial Melody Behind the Music Industry
In the world of music, where creativity and passion reign supreme, financial literacy often takes a backseat. However, as the music landscape evolves, so does the necessity for artists to become savvy with their finances. As Matt Thomson, the frontman of the UK rock band The Amazons, candidly states, "In 2025, it’s everything." This shift from ignoring tax affairs to embracing the complexities of income management is a crucial theme that resonates throughout the industry.
Understanding the Changing Landscape of Music Revenue
From Record Sales to Streaming: The New Financial Reality
Once upon a time, bands thrived on record sales, with top 10 acts reaping substantial rewards. Fast forward to today, and streaming services have transformed the revenue landscape. In 2024, Spotify announced a staggering £7.7 billion in global royalty payments, yet cries of "low streaming rates" echo through the halls of the music community. The pandemic and its aftermath have further squeezed touring revenues, leaving many musicians scrambling to make ends meet.
As Thomson points out, “Every pound and penny counts.” For many artists, the struggle is real, particularly in the face of soaring costs and diminished profit margins. With the right financial strategies, however, even the smallest amounts can significantly impact an artist's long-term success.
Building a Business Mindset in Music
The Evolution from Band to Business
Historically, bands transitioned into businesses only after achieving success. For instance, The Beatles founded The Beatles Ltd in the early '60s to manage their finances efficiently. Today, rising stars are encouraged to incorporate themselves early in their careers, ensuring they understand the financial implications right from the start.
Moe Bah from 5K Records, a management company affiliated with Sony Music, notes, “If you want to run it as an actual business, then you’re going to have to expense it and cost it.” As new musicians navigate diverse revenue streams and tax laws, a proactive approach to financial management can set them on a path to success.
Financial Education for Emerging Artists
Tackling the Financial Literacy Gap
Despite the rapid changes in the music industry, many emerging artists lack essential financial knowledge. Bah and his partner, Kilo Jalloh, recognize this gap and aim to create educational resources to guide artists through the intricacies of their finances. As Jalloh wisely advises, “Get an accountant on board.” Financial counseling is especially vital for artists not from privileged backgrounds, who may experience significant earnings for the first time, often without understanding the costs associated with their newfound wealth.
The Role of Financial Advisors in Music
In the annals of music history, few financial advisors have made as significant an impact as Prince Rupert Loewenstein, who managed The Rolling Stones' finances until 2007. Through savvy investments and financial planning, he transformed their earnings into long-term wealth. For many artists, having a proficient accountant, lawyer, and banker becomes crucial when securing their first advance, ensuring they are financially prepared for the journey ahead.
Paul Morris of Hardwick and Morris, an entertainment accountancy firm, emphasizes this point: “When an artist gets their first advance, that’s really when they need to go to the holy trinity of accountant, lawyer, and banker.” This trio forms the backbone of financial stability for musicians—equipping them to navigate the complexities of earning, spending, and managing their money.
The Journey of The Amazons: A Case Study
Pooling Resources for Survival
The Amazons serve as an intriguing case study in contemporary music finance. With the guidance of a capable accountant, they learned the importance of being tax efficient and managing their finances as a collective. “It’s all about putting it all in the pot and paying ourselves a steady wage,” Thomson recalls, reflecting on the necessity of financial solidarity within the band.
By pooling their earnings and establishing a steady monthly wage, they found resilience during the challenging times of the pandemic. Even with a Top 10 record, the band confronts harsh economic realities—like the housing market—that make financial planning essential for long-term sustainability.
Rythmic Financial Awareness: The Role of Rappers
Leading the Charge for Financial Literacy
Across the genre spectrum, rap artists have emerged as prominent advocates for financial literacy. From Kendrick Lamar’s campaigns with billionaire investor Ray Dalio to Stormzy's initiatives in schools, the hip-hop community is raising awareness about the importance of financial education.
Rakim, alongside former artist-turned-entrepreneur DIVINE, is working on an innovative app named Notes, designed to assist musicians in understanding their finances and accessing funding. Lombard asserts that this app aims to empower socioeconomically disadvantaged artists who often face exploitation due to a lack of understanding of the industry's financial intricacies.
Conclusion: Money Matters in the Music Industry
As musicians navigate an evolving landscape of income streams, touring challenges, and financial management, financial literacy will be the key to their survival and success. Understanding money is not just an afterthought; it’s a crucial skill that ensures artists can focus on what they do best: creating music.
Ultimately, the story of music and money is one of resilience, creativity, and the necessity of strategic thinking. By embracing financial literacy, the artists of today can compose a score of success that resonates for years to come.
