Multiple Revenue Streams

for Record Labels

How Record Labels Make Money
A 2023 Guide

Let’s talk about multiple revenue streams…

…and why they’re so essential for the financial stability of independent record labels.

I don’t mean to be patronizing, but let’s think of small streams flowing into a bigger body of water… a lake or an ocean that gets its mass from various, smaller bodies of water (rivers, streams, etc), all flowing to a central location.

When record labels, or any businesses, look at their total revenue for an entire month or year, it generally comes from multiple sources.

For example, my label’s annual revenue is derived from at least twenty different sources! These include things like Bandcamp, streaming platforms, publishing, licensing, shipping revenue, wholesale sales, Patreon, merchandise, YouTube Adsense, and many others.

Multiple revenue streams are essential for any business because of how hard it is to achieve your revenue goals from simply one singular source of income. Instead, various income sources make it easier for you to reach your financial goals by diversifying your revenue generating opportunities.

Let’s use an easy example of a label whose goal is to make $1000 each month ($12,000/year). It would be an enormously arduous task to earn $12,000 in a year using only one, singular source of income.

However, if we spread out the income-generating responsibilities into multiple revenue streams, it becomes much easier and more achievable. We do this by simply breaking down our overall goal into much smaller, manageable goals.

For example, instead of trying to find one source of income that makes $12,000 in one year, we are going to search for 10 separate streams of income that generate only $100 per month (10 revenue streams @ $100 each = $1000/month, or $12,000/year).

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Why have multiple revenue streams for your label?

Here’s why it is important for your record label to diversify how it makes money…

Less pressure on any one singular initiative

Reaching our yearly (or monthly) revenue goals by way of one, singular source of income can be challenging. It is far more achievable when we spread the responsibility out across multiple areas of income.

Redistributing the financial responsibility across multiple channels helps us make our annual goals less daunting. For example, instead of trying to make $1000 per month on streaming income, we look for other sources of revenue to share some of the income burden. In this example, we may only need streaming revenue to be $500 per month if the remaining 50% is earned through things like music licensing, publishing royalties, or in-person events.

Creating “revenue insurance”

Having more than one source of income can help sustain your record label financially when other streams “dry up.”

In fact, in 2020 when the pandemic hit, Disney had to close down their theme parks, movie productions, retail stores, and loss revenue from cinemas. Lucky for them, they had just launched their streaming platform Disney+, a few months prior. This income-diversification helped them survive something as unpredictable as a global shutdown.

The Disney analogy may be a little far-fetched for small indie labels, but the financial security that multiple revenue streams provides, applies equally to businesses of all sizes.

Diversifying your label’s opportunities

The other great thing about having multiple sources of revenue is how it opens your label up to more chances of success. Let’s say this month you’re releasing a new record on vinyl through your Bandcamp. and you’re expecting the majority of your profit to come from physical sales. However, you’re surprised to learn a single from the album gets placed on a major Spotify playlist, which far out-earns your vinyl sales.

Or even something as simple as a Patreon program or a special live event might exceed your financial expectations.

All of these multiple sources of income expose your label to more and more opportunities for success.