REINVESTMENT

Many moons ago, artists would seek out a record label in hopes of getting a record deal and hopefully some money too. What it seems that many artists and musicians don’t realize is that this money and recording time and all the other resources that are poured into bands and acts is an investment. Not only that, it’s a reinvestment even if it’s the first time a group is being signed. For the record label, this investment most likely came from the profits from a previous investment in another venture. Record labels usually focus on profits, which is why record labels often do better financially than the people they sign because most people getting signed or looking to be, don’t realize the business aspect of, well, the business.

So much music has been made because so many people are working behind the scenes, from DJs and promoters to mastering engineers to drum techs to accountants to lighting experts to roadies and tour bus drivers. There are people who are able to get all these people working together in a big machine so that artists can turn a profit and make a living doing what they love instead of worrying about how to do the math to separate the frequencies properly on a wireless mic setup when there’s also gonna be a cell phone is everyone’s hand taking up bandwidth. Then, at the end of the day, the record label executives who took the chance signing the person, making a loan/investment, reap some reward or lose out. If the investment returns a profit, a good record label will reinvest that money into more acts and help keep the music industry moving along, but what about for independent artists?

Well, as independent artists should learn, music can be an expensive hobby. If there isn’t a profit coming along, then making music may cost you money. If that’s cool with you, that’s cool with me, but if it’s not, then hopefully you can get to a point where you are profiting and when you, then you’ll have another decision to make. Should you take your money and cut out? Many musicians do choose to do this and there’s nothing wrong with it, but if you may want to consider reinvesting in yourself which is what many other musicians choose to do.

For example, a band may get a record deal for a million dollars (read: a loan/investment from the record label). Then the album does well and the deal was solid so the band makes five million (four after paying back their loan. Then the band could ask for more money or they could use the money they just earned to finance their next record on their own. There’s pros and cons either way because, playing devil’s advocate, the band may choose to shop for a new record deal that’s better than their current one and get bought out and get a new advance that’s bigger than the band could’ve afforded to invest on their own, but maybe they’ll some control, just depends. What I hope you catch here is what happens when one reinvests in one’s self and that it’s a very real possibility whether you’re at the very start of your career or a few decades in.

Shoot me a message if you’d like some help on figuring out how your investments are going in your music career and I’ll be happy to offer some guidance.