Making money in the music industry isn't always as simple as negotiating a salary and waiting for your paycheck to come in. The pay structure of many music industry jobs is based on percentages for one-off deals and freelance-style work, but different music industry careers are paid in different ways.
For this reason, the music career you choose will have a big impact on how you make money in the music business. Here, you'll find a look at how several common music industry jobs are paid—but remember, as always, that this information is general, and the deal you agree to will dictate your circumstances
Managers: Managers receive an agreed-upon percentage of the income from the artists they work with. Sometimes, musicians may pay managers a salary as well; this often works like a retainer, ensuring that the manager doesn't work with any other bands. However, this latter scenario really only comes into play when the artists are making a sufficient enough income to support themselves comfortably and legitimately have a need to make sure their manager focuses only on them.
Music Promoters: Promoters make money on ticket sales for the gigs they promote. There are two ways this can happen: The promoter takes a percentage of the proceeds from the show after recouping their costs, giving the remaining money to the artists. This is known as a door split deal. The promoter may agree on a fixed payment with the musicians for their performance, and then any money left after costs is theirs to keep.
Music Agents: Agents take an agreed-upon percentage of the fees for the shows they arrange for musicians. In other words, an agent who negotiates a fee for a band to be paid $500 for a show takes a cut of that $500.
Record Labels: At a very basic level, record labels make money by selling records. Your job at the record label and what type of label you work for will determine what this means for you. If you have your own record label, then you make money by selling enough records to cover your costs and make a profit. If you work for someone else's record label, you will likely get a salary or hourly wage. The size of the label and your role there determines how big that salary/wage will be.
Music PR: Whether radio plugging or conducting press campaigns, music PR companies are paid on a campaign basis. They negotiate a flat fee for working a release or tour, and that fee usually covers a set amount of time for the company to promote the product/tour. Music PR companies may also get bonuses for successful campaigns and reaching certain thresholds—for instance, a bonus if the album sells a certain number of copies. These agreements are made before the campaign begins.
Music Journalists: Music journalists who work freelance are paid on a per project or contract basis. If they work for a specific publication, they likely receive a salary or hourly wage.
Music Producers: Record producers may receive a salary if they are tied to a specific studio or be paid on a per-project basis if they freelance. Another important part of music producer pay can be points, which allow producers to share in the royalties from the music they produce. Not all producers get points on every project.
Sound Engineers: Sound engineers who work independently get paid on a per-project basis—which can be a one-night deal or they may go on the road and do sound for a whole tour, in which case they will be paid for the tour and may also receive per diems (P.D.s). Engineers who work with a particular venue exclusively are likely to receive an hourly wage.
Musicians: What about the musicians themselves? Musicians make money from royalties, advances, playing live, selling merchandise, and licensing fees for their music. Sounds like a lot of revenue streams, but don't forget they often have to share the money with the people listed above: mechanical royalties and performance rights royalties. If you don't mind playing other people's music, you may also consider being a session musician to earn some extra income.
There are lots of different ways to make money in the music business, and many of them come down to percentages and contracts. For this reason, everyone needs to be on the same page about how payments will take place. Also, you should always get it in writing.
Credit: The Balance Careers