The good news: With streaming now the largest revenue source for the record industry, in 2017 global music sales grew for the third consecutive year, rising 8.1 percent to $17.3 billion. Overall, the music industry generated $43 billion in revenue.
But only 12 percent of all that money actually trickles down to the musicians--and the bulk of that slice comes from touring.
That's why smart artists do what smart entrepreneurs do: find ways to expand their revenue streams.
Sometimes that works out well. Sometimes it doesn't. And sometimes a band will take what seems like a business disaster...and turn it into a triumph.
Case in point: Steel Panther, the glam metal band that has thrived for decades by turning the hair-band lifestyle, as Nigel Tufnel would say, up to 11.
Profane yet funny lyrics? Check. Over-the-top stage personas? Check. Hairspray by the truckload? Check. Great albums? Check. Hugely entertaining live shows? Check.
Think of Steel Panther as the Howard Stern of metal: They may say and play outrageous things, but somehow it's OK because, at heart, you know they're good guys--they're equal opportunity offenders whose greatest delight seems to be poking fun at themselves.
But don't be fooled: Scratch the surface of all that hairspray, spandex, and humor and you'll find four exceptional musicians.
Like Satchel, the band's lead guitarist. Satchel worked with guitar pedal maker TC Electronics to create a guitar effect called--well, if you want to know what it's called, since like all things Panther it's also NSFW, go here. (For the purposes of this article we'll call it "PM.")
The PM was a toneprint, software you can upload to an existing pedal. (Think of a toneprint as analogous to an app for a mobile device.) In this case, the software replicated Satchel's guitar tone.
And while it created a cool sound, the PM didn't take off.
Then Jessica Fennelly saw the PM on the TC Electronic website and, "shocked by the poor marketing decision," started a petition dubbing the pedal "offensive", "extremely vulgar," and "obviously sexist." Some thousands of signatures later, TC Electronics apologized and pulled the toneprint from its website.
What happened next? To find out, I talked with drummer Stix Zadinia (say the name slowly and: yep), a very nice and very smart guy who now ranks high on my list of Top 5 People I Would Like to Have a Beer with. (And I don't even like beer.)
After online criticism, TC Electronics pulled Satchel's toneprint. What happened next?
First, keep in mind TC Electronics is a global audio equipment company. They didn't want the heat. They had a conversation with Satchel and said--and this is their right--that they are not in the politics game and don't want to take edgy stances.
I get that. There's absolutely nothing wrong with that. Again, that's completely their right.
Just like it's our right to turn the toneprint into an actual pedal and develop and sell it ourselves.
I'm really proud of how quickly we were able to pull everything together. We commissioned a custom pedal maker to develop the hardware. Our friend Brent Skaff did the graphics; it's beautiful.
Then we took pre-orders, the response was great (one fan wrote, "I'm not even a guitar player and I've ordered one"), and now we're going into production.
In the meantime, we sent a prototype to the Fear the Riff Expo in New York and the response was awesome. Respected guitar players love it. Angel Vivaldi loves it. Lots of people are digging it. It couldn't be cooler.
Sometimes the worst way to try to make something you don't like disappear is to call attention to it. Like those black-and-white Parental Advisory stickers on albums in the '90s.
We would never have thought about getting into the guitar pedal business had the controversy never happened. Now we have a second pedal in the works.
The goal, as with the first pedal, is to make it a top-quality pedal, to make it something guitar players love...we're not in this as a gimmick. We may have a little fun with the branding, and with the overall package [laughs], but ultimately, we want to make awesome pedals that guitarists will love to use.
And to your larger point, you're right: When you bring attention to something, you better be prepared for people to take a different stance.
The last thing Steel Panther will do is back down from something we totally believe in. We may sing about sex, drugs, and rock and roll and wear awesome spandex and have super bitchin' hair [laughs], but we are also not afraid to take a stance.
You know who you are and you stay true to your values. That's Branding & Business Building 101.
Within the first weeks, the [PM] has already become a significant source of revenue.
But that's because our hearts were in the right place. Satchel designed the tone with a great manufacturer. It was done with care. Really, it was done with love. He only wanted to do it if it sounded great.
So while some might claim we simply took advantage of the opportunity the attention brought, the whole thing stems from the fact that we, as Steel Panther, will not be told what to say or do...as long what we say or do is within our rights.
If you don't like our pedal, that's cool. Don't buy it. But don't try to police the world because you don't like something. Not to sound all high and mighty, but this is about a great guitar pedal... and also about freedom of expression.
We would never try to tell anyone what to say or do, as long as it's within your rights to say or do it.
You also have pretty strong feelings about certain aspects of the music business.
I feel fortunate to play rock and roll for a living, but you do have to look at it as a business. Too many bands don't. They don't pay attention to the business side until it's too late.
I've been super-preachy with a lot of bandst because I want them to keep what they make. I don't want to see them, 10 years down the road, having to scratch out a living because they weren't paying attention to their business.
Give me an example.
Take management. Managers are fantastic for some bands, especially if the band is just starting out. And maybe some top bands need managers, since the overall enterprise is so huge.
But many mid-level artists can do just fine without a manager, especially if they are willing to take on some of the things you really should, as a working musician, already know how to manage.
One of the things that really sparked the self-management concept for us was when I thought about the basic math of a tour.
Just for the sake of argument, let's pretend you book tour in Australia for a guarantee of $500,000. If you have a 15 percent gross deal with your management, they take $75,000. Then you have to factor in withholding taxes. Let's say 20 percent. Already you're out $175,000.
Then you pay for travel for your crew. You pay per diems, pay daily wages, food, lodging, tour buses...when it all shakes out, that $500,000 has turned into $130,000. The average band has five people, so split that $130,000 five ways.
You each come home with $25,000. For comparison sake, an A-list sound guy makes $3,500 a week, so he comes home with $14,000. And your manager made $75,000.
Yet you're one of the five guys that people came out to see...and you only made $25,000.
I'm not into that. No artist should be. I'm so supportive of the artist because I am one. I know what it feels like to get the crumbs and think, "Wait a minute. We put all this blood and sweat into what we do, we're the ones people are coming out to see...why are so many people making more than we do?"
In that example, the artist makes $25,000, the manager makes $75,000...not to downplay the importance of the manager, but he or she gets to stay home.
Exactly. Again, I'm not saying some managers aren't great, or that some bands don't need managers. Many do. We decided we did not.
But that doesn't mean you don't need help. We definitely realize that we don't know everything, and what we don't know, we find someone who does. There's no way any one person can know everything. Even a guy like Jeff Bezos can't know every single aspect of his business.
But when you hire the right people, when you work with the right people...you can solve almost any problem. For example, Jason Lekberg is invaluable to us. He handles a lot of things: Record deals, he's our liaison on the guitar pedals...when you're an active band, you don't have time for everything. Jason really digs into the minutiae that then helps us make the bigger decisions.
You also pay close attention to every line item on your P&L statements.
When you're a band that knows what you are--and what you are not--you have a really good shot at managing yourself and being able to cut costs where it makes sense.
For a long time, we found that the net profit from touring would be somewhere in the range of 20 to 28 percent of gross guarantees. If we kept 28 cents out of every dollar, that was an amazing result.
Now, by paying attention to where the money is going and by taking on more work, we keep more money. Our nets are now in the 54 to 76 percent range. And in May, when we toured, we kept 77 percent. Then you factor in merchandise sales....
What about VIP tickets? Lots of bands generate significant revenue streams from meet-and-greets.
VIP sales can be a double-edged sword.
For an artist, selling your time that way can feel a little awkward. For a fan, I get it. If a fan wants to spend money to meet their favorite artist, that's really cool...but there's still something rushed and hurried about the experience. It can be a little impersonal, especially if the fan gets hustled through what feels like an autograph and photo assembly line.
There's also something to be said for the energy it takes away from the artists for the show they're about to do. Does the show suffer from a 1.5-hour meet and greet? It certainly might.
If you buy a ticket to our show I will try to put on the best show I possibly can. But when you spread yourself too thin with meet-and-greets, with everything that goes into that...something has to give.
So as a band, we have mixed feelings. We love that our fans want to meet us, but we also want to give 1,000 percent onstage. So we try to maintain a healthy balance instead of trying to wring every last dollar out of the VIP experience.
Talk to me more about finding ways to cut costs. That's something every business does. What does that look like for, say, going on tour?
The average artist out on the road pays almost no attention to where their money gets spent: As long as they're comfortable, they assume everything is OK.
But everything is not always OK.
How much does the bus cost? How much does fuel cost? How much is cartage, is equipment rental...is it smarter to rent equipment in different cities or to buy and transport your own gear? Or take my Australian tour example: Should you take a seven-person crew along, or take two key people and hire local talent? There are stellar people all over the world; you can easily save $10,000 or more just on crew travel costs for a short overseas tour.
Most bands are conditioned by the industry to believe they need certain things. They need this crew. They need more this. They need more that.
I'm all for awesome production values...as long as they're reasonable. Paying for things that don't move the fan experience needle is just wasteful.
Basically, you're willing to spend money where it touches the customer...and a lot less willing where it doesn't.
There are certain things you need to do to put on a great show, but there are also many ways to save money.
Compared to this time last year, we're light years ahead financially.
But that doesn't mean you have to make unreasonable sacrifices. And if you're doing really well and decide to spend more money to be more comfortable...go for it. Just make sure you're making an informed decision about what that costs and what that means for you long-term.
That's also true with record deals. I remember back when the band Kix had a record deal and even had a popular record...yet their guitarist was still painting billboards to make ends meet.
I wouldn't be surprised if Kix didn't go $500,000 in the hole right out of the gate.
If you're an artist, all you want is a record deal. Signing with a label sounds so romantic. It sounds so cool.
But everything--everything--is recoupable. Say the record company wants to take you to dinner to show how much they appreciate you. You think that's great...but in the end, you pay for it. The dinner is recoupable. They charge you back for it. Or if you're recording an album and you're not in the studio but your engineer is...and he wants to order in dinner...you pay for that.
Those are just small examples. If money gets spent, trust me: You're the one paying for it.
Plus, doing a record deal is not always advantageous to the artist. Do you want to own your own masters? Do you want to stay in control of your art, your packaging, your marketing? Sign the wrong deal and you may lose some or much of that control.
Again, I'm not saying signing with a record label is always a bad thing. You just have to know what you're getting into and feel confident that the deal you make is right for you...not just right for the record label.
Steel Panther has been together since 1996. You have five records, two DVDs, great merchandise sales, a 14-year run of sold-out shows...now you're in the guitar pedal business.... How have you managed to stay together for so long and continue to be successful when very few bands do?
Communication is crucial to being a highly functional and high-performance band.
We have a meeting before and after every show. It's just the four of us. We get a chance to tell each other how our days went, what's going on with us, and talk about the show we're about to play.
Then, when we get offstage, we have another meeting to review the show and talk about what went well or didn't go well.
After all, it's like being married to four middle-aged men. [Laughs.] We respect each other and each other's space.
In the Eagles' documentary, Timothy B. Schmit says, "In my experience, every band is 10 seconds away from breaking up at all times."
Maybe so, but the band is our source of income. We respect it. We protect it. Each of us realizes that people are coming to see the band--not one guy. They come for the event, for the feeling...they come for the whole thing.
We're a band. We're equal partners. Why wouldn't we treat each other with respect and kindness?
Plus, it just doesn't take much effort to be nice. [Laughs.]
And if you're upset with someone in your band, that's when communication is really important: To be able to tell someone, "Hey, you're bumming me out..." and just as importantly, to be able to take it when that gets said to you. To say, "I see your point, I'm sorry...." If you don't, little resentments linger and eventually blow up.
And then you have to go get a job at Ikea selling home furniture. [Laughs.]
Don't get me wrong, I love IKEA, but that doesn't mean I would rather work there instead of playing kick-ass rock and roll for a living.