A Millionaire in the Music Business – Part 2

When pursuing your passion as your profession it can be easy to lose sight of business principles that will help you become financially successful. Below are a few thoughts I collected in a 30 year career in the music industry. 

Rates & Maximum Value

This was always a hot-button topic as I was working in music – what and how to adequately charge. The big debate was always an hourly rate versus a per-song or per-project rate. An hourly rate seemed to always win the debate as conventional thinking led folks toward the idea it protects their time. Those advocating for charging by the hour sought to prevent a “pay cut” should they quote something per song or per project that ends up taking much longer than expected. I disagree with this thinking.

I always charged on a “per song” or “per project” basis when mixing. Charging by the hour limits your long term profit potential. Let me explain… If I charged $500 to mix a song versus $100/hour, I knew I could easily average 3 hours per mix across a 10 song record. On average, that’s an extra profit of $200/song or $2,000 on the project versus an hourly quote on the time I knew it would take. 

Quoting per song also allowed me to quote a hard number when bidding a project. I could easily say “your 10 song project will cost $5,000” and the artist would know the exact cost in advance. They can then agree to the price or counter-offer. 

The alternative is to say “10 songs will cost you $100/hour”. If you quote by the hour, however, the next question will almost always be, “well how many hours do you think it will take you?” Boom – you’re now handcuffed and the onus is back on you to negotiate your position. Once you answer that question you’re pretty much locked in.

Sure I got stuck in mixes from time to time that took me longer than I wanted or planned, but I’d rather lose the battle to win the war. Over the long haul (remember, your career will last several decades) I easily increased my revenue by quoting per song or per project as opposed to a straight hourly rate. It’s a way to leverage your output versus a linear line of income.

One other note on this topic – my quote was to mix the song; therefore, I provided a mix – ONE mix. If you wanted a bunch of extra mixes or alternate versions, then yes, I will bill you hourly for that extra work. Otherwise I was paid to mix the song and I delivered that mix. I never had a single issue with this rate structure and I rarely had to endure a lot of time sitting around doing a bunch of different versions of a mix when the artist couldn’t make up his/her mind. More on this below.

The Patero Principle & Maximum Value

To continue this topic, printing mix after mix, version after version, stem after stem is mind-numbingly boring work. Sure, you may be getting your hourly rate or maybe you factored this time into a per song quote, but is this really something you enjoy? It’s certainly not “maximum value” work, that’s for sure. This is work an entry level student in the industry can do.

Consider offloading this work. If it is truly required by your clients, it can be done by a trained assistant with built-in profit for yourself. Schedule this work in your “gaps” – in the early mornings, during lunch breaks, in the late evenings, or weekends.

Don’t be the guy working all day and night and wearing “busy” as a badge of honor for all the work on your plate when this type of work is taking up a lot of your time. Be the guy who figures out how to make the most amount of money in the least amount of time while truly enjoying 100% of what you are doing.

For more thoughts on this topic, read up on the Patero Principle as it relates to running a business. In the simplest of explanations, the principle states that 80% of your results will come from 20% of your efforts. This is how you can maximize your money making potential while at the same time excelling in your line of work.

Points & Profit Sharing

I never took “back end deals”. Many times I would be offered “points” or a percentage of sales on a project if I agreed to work for free or a lowered rate. I never took the deal. I always bargained that I could take my immediate profits and invest with more long term gain than I would see from a percentage of a music project. Capital I deployed in the stock market years ago is still working while points based on the sale of physical products are now basically worthless. Songwriters suffered the same fate when streaming platforms took the place of cd sales and radio spins. 

Be very wary of accepting back-end deals these days especially – just keep an eye on social media for a continuous stream of folks taking pictures of their paltry checks. Also, remember future money is not as valuable as money in your pocket today, so future earnings must be discounted relative to today’s dollar.

Studio Maintenance

I always saw two camps regarding studio maintenance. One camp lobbied for turning your gear off every night and then powering it back up the next morning. This camp always seemed to win out over the neanderthals who preferred leaving their studio running 24/7. Put me in with the latter. I NEVER turned off my gear. It all ran 24/7/365 on filtered and isolated power.

When does an incandescent light build usually blow up? Rarely when you are sitting in the room with the light on. More often than not it happens when you walk into a dark room and flip on the light switch. Boom! I saw gear failures in the same way. A piece of equipment would rarely just die. The problems always seemed to happen when things were powered up. I had several racks of outboard gear, power amps, meters, converters, a printer, a nice vintage stereo, etc. all running 24/7/365 and suffered zero failures in 15 years of installed studio use.

Furthermore, your gear does not draw as much power as you might think. I’m sure someone will go all scientific with current draw and electricity rates here, but I’ll gladly pay a few extra bucks on the power bill versus downtime and expensive repairs on my equipment. When I moved my studio into my home and got all my gear up and running, our electricity bill increased by about $35/month – about a buck a day. Of course, Greta Thornberg hates me for it, but that’s for another blog post. 

Maximum Efficiency 

When in business, your aim is to maximize profit at every turn. I left no stone unturned in an effort to make my time as efficient as possible, knowing that would lead to maximum earnings. Leaving my gear on meant I could walk into the room in the morning, hit play, and immediately start working. I automated tasks like backups, uploads, and downloads to happen at night while I was sleeping rather during the day when I would have to wait for them. When I would output my mix files they would go straight to the Dropbox folder I set up for my client – no copying required. That Dropbox folder was than shared with the mastering house – no copying required. My entire home was set up on a network so I could access any file from any computer in the house at any time, rather than having to walk to a specific room, computer, or hard drive.

I like to think of everyday tasks in terms of additive time. If it takes 5 minutes to get the studio powered up and 5 minutes to get the studio powered down plus 10 minutes to run a backup and then another 10 minutes to wait for files to copy, that doesn’t seem like much time at face value. Factored across a 5 day work week, however, that’s 2.5 hours – enough time to mix a song and get paid for it! Across a year, these mundane snippets of time could easily rob you of 100 hours you could bill for – or, better yet, 100 hours to pursue hobbies, leisure, family, or even other money-making pursuits.

What can you eliminate, offload, or automate to maximize your efficiency? Consider learning about scripts, researching automation apps, hiring a local assistant, or using the services of a virtual assistant.

Conclusion

There will be more to come regarding the music business. More stories, experiences, lessons, and learns. In the meantime, this 2-part series is meant to be a cursory look at some very simple and basic principles to help you succeed in the business part of the music business. If you have any questions, thoughts, or even ideas for future blogs please get in touch here.

Next up – a look at setting up your IRA, 401k, savings, and investing accounts for maximum value. Tips and tricks to help you earn more and spend less doing it. Subscribe below so you don’t miss it!

Cheers! And thanks for reading!


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