Despite seismic shifts in the production, distribution, and consumption of music — shifts that have rocked the industry to its core over the last two decades — musicians are still able to make money by leveraging their brands. And entrepreneurs can learn a few things from them in this regard.
So let’s get down to it: Musicians make money on music, right? Wrong. Album sales and radio play used to make up the bulk of a musician’s take-home cash. In 2015, music sales in the U.S. totaled $7.02 billion, but that figure has been more or less stagnant since 2010.
This is why so many artists have embraced the fact that a “band” is also a “brand.” Running their own business empires allows them to create new revenue streams beyond the music, such as touring, licensing, brand partnerships, re-issuing songs in new formats, and even allowing fans to leverage stems and riffs to create new versions themselves.
Most artists truly are entrepreneurs at heart. Look at celebrities like Rihanna, Lady Gaga, and Katy Perry. They all make music, but they also sell themselves and their brands.
The Business Moxie of Artists
After deciding Apple’s earbuds weren’t the best for listening to music, rapper Dr. Dre partnered with Jimmy Iovine, co-founder of Interscope Records, to consult with top artists about how they could provide consumers with more optimal sound quality.
The duo went on to launch Beats headphones, but they didn’t stop there. In 2014, they sold the Beats brand to Apple for $3 billion. That year, Dr. Dre earned $620 million — more than any other musician in history.
How does this apply to your business? Here are three ways successful musicians focus on monetizing their brands — not their products — and how you can do the same.
1. Be a master of reinvention.
The art of reinvention is an important skill for any entrepreneur, and it’s one that musicians excel at. Consumers’ tastes change often, and even popular artists may see declining sales at some point. Those who best adapt to market fluctuations — and develop additional revenue streams — are more likely to succeed.
Pursue your passions, and test them as business ventures. If you succeed, great! Build on that success to create other ventures. If ventures fail, learn from them: Adjust your approach until you figure out what works.
Some of the biggest companies didn’t see large-scale success until they pivoted and reinvented how they were being perceived. Netflix, for example, was once considered just a mail-order Blockbuster. It wasn’t until the company introduced streaming video in 2007 that the brand became a household name.
2. Sell a lifestyle, not just a product.
Image is everything to a musician because she knows she’s selling more than tunes. Everything artists put out into the world is calculated and purposeful: Each photo op, charity event, and side-venture reinforces and builds their brands.
In the business world, Apple does this brilliantly. In fact, the Apple “fanboy” is a stereotype at this point. That’s because Steve Jobs wouldn’t allow even a single prototype to be viewed by those outside the development team until it met his standards of streamlined functionality and wowed his own aesthetic sensibilities.
To get customers to buy into your brand like Jobs did, make sure everything that comes from you — websites to storefronts to social media — showcases the lifestyle and “promise” you want for your customers. Your brand can become synonymous with luxury, utilitarianism, and sustainability (or whatever type of lifestyle you’re selling) — as long as you’re committed to it.
3. Connect to larger causes.
Consumers today care so much about causes that they are often willing to switch to other brands that show commitment to those causes. Musicians are masters at using the power of their brands to make a positive social impact and boost their influence at the same time.
By lending their voices and faces in support of causes they believe in, they know they can turn fans into advocates, both for the cause and for their brands. Just look at Bono of U2, whose (RED) initiative has raised $465 million to fight HIV/AIDS and raise awareness. And with Apple’s recent release of the red (Product)RED iPhone 7, that star power is shining even brighter.
Like musicians, entrepreneurs can embrace the power they have to connect with a wider world. In doing this, they become influencers who leave a positive legacy. Connecting with causes that your target audience cares about will also motivate them to care more about your brand.
While the business of music today is almost unrecognizable compared to what it was 20 years ago, it is still one of the most powerful industries, especially in terms of influence and innovation. That’s good news for entrepreneurs facing constantly changing markets and aggressive competitors. To keep up with a fickle market, keep an eye on your favorite musicians, and follow their lead when it comes to developing your brand and engaging your fan base.
The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.