Happy Thursday! Today is National Mom-and-Pop Business Owners Day in the U.S.—a great opportunity, and long-term reminder, to show support for your local indie businesses and entrepreneurs (if you’re not convinced, this tweet
should do the trick). :D
Today’s subject line draws from a blog post
by indie game developer Jay Weston about how passive income streams have helped grow his career. More specifically, Weston is funding development costs for his upcoming indie game EXO ONE
entirely from selling… pictures of skies.
In his blog post, Weston lists key questions that developers and creators can ask themselves to determine which passive income streams would be most appropriate for their own careers: Where do my skills lie? What do other developers, creators and peers in my circle need? What could I potentially teach them? What niches are currently underserved?
As for the passive income streams themselves, Weston recommends honing in on a product that “can be sold for a higher price” (i.e. has premium value) and “has a creative aspect that can’t be easily copied.”
Reading Weston’s post made me realize that I rarely hear about the concept of “passive income” in everyday conversations about the music business. Sure, one could argue that Spotify streams, brick-and-mortar music sales and even merch are all technically “passive” revenue sources, in the sense that the artist/creator does not have to be present or directly engaged in real time in order for a transaction to occur.
Yet, Weston’s framework for identifying the best passive income opportunities complicates this claim somewhat. As any distressed indie artist will tell you, the transaction of a Spotify stream arguably does not have “premium value.” Nor do tracks on streaming services or online merch items truly have “a creative aspect that can’t be easily copied"—the democratization of the creative process also democratizes inspiration, which in turn democratizes imitation. Finally, perhaps with the exception of the mood-playlist or production-music ecosystem, artists usually make music for the purpose of self-expression, rather than solely to satisfy some sort of "underserved niche” in the market.
Sync placements in film/TV/games may fit Weston’s criteria slightly better, as their valuations are steadily increasing and blockbuster placements are more difficult to replicate across several artists than simply uploading a song to Spotify. But that latter point is also a weakness: unlike sky photos, sync by nature cannot always point to an easily repeatable transaction in an open marketplace.
Beyond streaming or sync royalties alone, there are a few other passive income sources that could be priced at a more premium level, marketed with a more service-oriented mindset and created in a way that is difficult to replicate by other artists. The markets for song stems
and sample/loop packs
are a good example, with increasing competition from the likes of Stemifi
, Splice Sounds
and Native Instruments’ Sounds.com
(although the pricing for the latter is still only $9.99/month, so is not yet “premium” in the true sense). Another potential passive income stream could be paid e-books and video courses
about the creative or commercial side of the music industry, from which other burgeoning artists could benefit.
Despite all these possibilities, very rarely do I hear of an artist actually funding an entire album, tour or other large-scale project entirely from one of these passive income sources. Instead, artists typically rely on active income sources to make up for the losses they make on passive ones (e.g. tour margins making up for streaming losses). Vulfpeck’s Sleepify stunt
—in which the band funded an entire, admission-free concert tour across the U.S. thanks to streams from an album of ten, 30-second-long tracks of silence—is a wonderful exception to this rule.
If artists do set up stems, sample packs, e-books, video courses and/or other passive income streams, they tend to be solely for the sake of experimentation and strategic positioning, rather than as a legitimate financial bedrock like what Weston is experiencing with Hyperfocal Design. There seems to be a spectrum of approaches to passive income across industries—from high-scale, low-margin and secondary (Spotify streams), to low-scale, high-margin and primary (VHDRI sky photos).
I’m curious to hear your take on passive income opportunities in music, beyond streaming royalties. Are there any other legitimate passive sources I’m missing, from which real artists are making a tangible, sustainable living today? If you yourself have tried to set up any of these aforementioned passive income streams, did they contribute meaningfully to your active projects? Why or why not?