Business, Finance and Music

Cover of How Music Works by David ByrneThe first time that I’ve ever seen any artist share a  financial statement was October 1st at a talk at the Smithsonian Baird Auditorium in Washington DC . David Lowery, a singer, songwriter, and guitarist projected a copy of a recent song royalites statement. David Byrne had just shared a Powerpoint of the cost distribution for creating an album as well as a chart that showed changes in music distributions over the years.

The artists had come together to talk about Byrne’s new book, “How Music Works” but also the impact of changing distribution models. The speakers’ big concern was the “freemium” business model that is the a “norm” in social media seems to have trickled into the world of creative content and stuck into the mind of the audience. I can’t speak for the rest of the audience but I was riveted.

Here are some  highlights of the discussion

Utopia or Dystopia

Is the internet the utopia that many artists initially envisioned or is there a dystopian quality to it that we’re struggling to define? David Byrne reflected on the possibility that the anonymity of the internet adds to the dsytopian dimension. Sure, there is a social quality to exchanges online but the “virtual exchange” can’t replace that unique personal communal experience of a powerful “in-person” musical performance.

Why are Artists Poor?

What David Lowery may not have known it but he shared the 80/20 rule with his royalty statement. A minority fraction of his songs were bringing in the majority of royalty income. This 80/20 rule is something that I continue to hear about from small business trainers. You’re going to work like crazy but it’s 20% of your effort that will yield 80% of the results.

What he seemed to be more upset about was the devaluing of content that has continued to occur under the new distribution models. The shift over to the internet has not increased the revenue that creative artists can generate. The percentages seem to be the about the same as with the older models.

Even very well known artists struggle financially because their creative output earns less than is assumed.


Lowery brought up Spotify frequently as an example of the problem. I see his point. The tag for the website is “Listen to millions of songs for free”.

What does “free” say about how we value the creative work product?

How can artists become more successfully financially?