Expert Music Career Advice For DIY Musicians

The Essentials of Managing Your Band Fund

earningsImage via projectlifemastery.com

Money in the music industry is a messy subject. There never seems to be enough – or at least, never enough that's granted to the ones actually making the music. A key aspect of making and keeping money is the ability to manage it well. As a band, there are lots of expenses you'll incur, as well as a lot of investments that will need to be made and fundraising that needs to be done. But with all this money going out and so little coming in, how is the band supposed to support itself?

I've played in a lot of bands, and each managed its money a little differently. Here are some of the methods I've learned over the years.

Income sources

First of all, let's talk about where exactly your income is going to be coming from when playing in an original, collaborative band.

Live shows

When you're first getting started, playing live will likely being the only source of income you have, and it will likely be quite small. As your band becomes more established, gigging will become one of, if not the largest, primary income sources your band has. Money from gigs generally comes in either the form of ticket sales (the most likely in the beginning), splits of the bar/food sales, and eventually, venue guarantees. Some gigs will involve one of these three deals, others will involve some combination of them.

Merchandise

Once your bandmates have decided they're serious about performing regularly, creating merch that you can sell at your shows should be one of your top priorities. If it's well-designed, quality stuff that people want to buy, you can likely make at least the same amount of money from merch as you will from ticket sales when you’re starting out. On a good night, you could turn a $75 gig into a $200 gig once you start selling merch.

[9 Secrets From Indie Artists for Selling a Ton of Merch After Their Shows]

Album sales

One of the hardest income sources to leverage in the beginning is album sales. It's important to have music to sell for promotional purposes, but that will be your hard copies' main function until you have enough fans to actually make a decent income from your albums.

[14 Ways to Make Money From One Song]

Miscellaneous income

You can earn various income streams through licensing, YouTube ads, sponsorships/investments, crowdfunding, etc. Sources like these can bring a lot of money to bands that learn how to really utilize them, and generally take some specialized research and work.

Where the money goes

So, once you start making money, you've got to figure out what to do with it. The first option is to, of course, split the earnings among the band. This is fair and compensates everybody for their time. However, it's not a very realistic option if you're splitting $75 between your six-piece funk band.

The other option is to pool the funds into a "band fund." This is a general purpose pool of money used to cover band expenses, such as advertising, merch, and fundraising for things such as making recordings or touring.

Unless everybody in the band is willing and able to contribute for band expenses out of pocket, you'll need a band fund of some kind. However, to pool every cent into the band fund means that nobody makes any money, which is a pretty essential part of "making a living" through music. So, how do you decide what goes where?

Tracking the cash flow

Once you've got paying gigs coming in and are selling merch and music at said gigs or online, it's time to get on the Excel train. Start with a spreadsheet that keeps track of what the band makes, where that money comes from, and what expenses the band incurs. After a little time, you'll start to see what's costing you the most money and what's making you the most money. From here, you can get a better idea of how to go about splitting up the income stream.

Dividing the cash flow

There are lots of different strategies to figure out where to send the money you make and decide whether it goes to the band members or the band fund.

First of all, there are expenses that have to be covered. The largest will probably be any crew or team members that you bring on on a for-hire basis, including side musicians, engineers, producers, managers, and publicists. Only once those expenses have been paid off can you talk about where to put your net profit.

Some bands decide to split it between their income categories. For example, they put all of their gig money into the band fund and split all merch sales among the band. This is generally a fair way to do things, but may not be the most efficient. If you're a casual band, something like this works just fine, but if you're really serious about making your band a career, you may want to consider other options.

Start by setting a clear budget. Generally, how much money are you spending a month on merch and other investments? If you can pin a solid number on that, you can put all money into the band fund until that quota is reached and split whatever you make above that among the band. If the number you initially set isn't working out (as in, you aren't putting enough into the band fund to cover merch or you're putting too much in that's getting spent on stuff the band doesn't really need), you can make adjustments as time goes on and as changes occur within the band dynamic.

Another solution is to use a percentage model. For example, depending on your expenses, you may opt to put 60 percent of band income into the band fund, and split 40 percent among the group. Again, this is a number that you can adjust as time goes on and the success level of the group shifts.

Now, things are a little different when you're on the road. When you're touring, you're faced with a whole slew of new expenses like gas, food, and lodging for the full band. These will need to be covered unless you're in a band of wealthy guys that are totally cool with covering themselves out of pocket. Pre-tour fundraising is essential, but rarely enough to cover all of the expenses that you incur while on the road. A good model I've used and seen used by others is to put all earnings into a tour fund and use them to cover gas and food. Once the tour is completed, you can see if you've made a profit, and if so, split that however you desire. This will make it much more likely to not lose money on the road.

Once your band starts blowing up and making a decent amount of money (which hopefully happens!), you start getting into a whole other ballpark of money management. You may even be able to start paying the rest of the band in monthly/daily increments. But that’s an article for another day.

 

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Dylan Welsh is a freelance musician and music journalist, based in Seattle, WA. He currently plays in multiple Seattle bands, interns at Mirror Sound Studio, and writes for the Sonicbids blog. Visit his website for more information.

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