Hip-hop has officially surpassed rock as America’s most popular music genre. Rappers appear to be in better financial shape than ever before, but have you ever wondered how do rappers make money? Or are you an aspiring hip-hop artist who wants to know what it’s like to work in the industry?
Rappers generate money through record sales, live performances, and tour appearances. They also get royalties from third parties when their music is sold, distributed, broadcasted, or monetized. Rappers can also generate money by selling their own branded stuff or endorsing products.
Hip-hop artists can now get compensated for having their tracks played on online streaming platforms, including YouTube, in addition to these traditional cash streams. However, these newer forms of income are not without their drawbacks, and they have sparked considerable controversy in the music industry. Continue reading to find out why, as well as how do rappers make money.
Sales of Albums
This may surprise you, especially given the massive decline in physical CD and digital music sales over the last decade. Album sales, at least for the top-earning rappers, remain a significant source of revenue.
What evidence do we have for this?
Since 1956, Billboard magazine has published an annual Billboard 200 chart that tracks the best-selling albums in the United States. Things became a little murky in 2015 when the magazine revised its ranking algorithm to include album sales and album-equivalent unit sales. Digital track sales and on-demand streaming on sites like Apple Music, Google Play, Spotify, and YouTube are examples.
Billboard still publishes a chart named Top Album Sales, which ranks just album sales. While Billboard does not disclose the actual number of albums sold, Eminem’s Kamikaze and Travis Scott’s ASTROWORLD were among the top 10 best-selling albums in 2018.
In 2013, the best-selling rap albums averaged 304,400 units, according to the pre-2015 timeframe, which was not long ago.
Kendrick Lamar’s Good Kid Maad City topped the charts with 746,000 copies sold the same year. If each component of the CD sold for $15, the total would be $11,190,000. While most of the money goes to the merchant, manufacturer, label, distributor, and studio and production fees, rappers get a cut.
Of course, such staggering numbers are out of grasp for lesser-known and inexperienced hip-hop performers. On the other hand, Album sales are a cash source you should explore tapping into if you’ve built up a more extensive and more loyal fan base.
Live Performances and Tours
Consumers have never had simpler or cheaper access to all of their favorite musicians than they have now, thanks to on-demand streaming services. This is likely to have harmed live performances, just as it did on album sales. This, on the other hand, could not be further from the truth.
In actuality, attendance at live shows is smashing records. Music festivals are attracting more people than ever before, and tours are getting bigger every year.
The mid-year gross for the live music business in 2018 reached an all-time high of $2.21 billion, according to Pollstar, an online trade newspaper for the global concert industry. In comparison to the previous year, this represented a 12 percent gain. The average ticket cost $96.31, which was the highest it had ever been.
Surprisingly, industry analysts feel that digital music’s ubiquity is to blame for the industry’s unparalleled rise. More demand is being driven by the fact that listeners are consuming more music than ever before. Furthermore, the more time individuals spend staring at their phones or laptop displays, the more they yearn for face-to-face interaction with their favorite musicians and other fans.
What’s the result? Live performances are now regarded mainly as the most lucrative way for musicians to profit from their work and it is also how do rappers make money.
Royalties on Copyright
If you wish to know how do rappers make money, like other artists and professionals in the creative industries, Rappers get paid royalties because they own the copyrights to their music and any related intellectual property. Rappers get paid royalties when their songs or albums are sold, distributed, reproduced in other media, or monetized in general.
Sound recording copyrights vs. composition copyrights
Things get a little more tricky when it comes to tunes. Each song has not one but two different copyrights. On the one hand, the composition copyrights belong to the people who wrote the song’s lyrics and melody. Sound recording copyrights, on the other hand, are a different story. These are owned by the recording artists and record labels and protect the song’s audio recording.
Copyright holders make money by selling sound recording licenses to others who want to make money off their music. Sound recording permits come in a variety of forms, including:
Rights of Reproduction
Physical CDs or digital files can be sold and distributed with reproduction rights. As a result, whenever you purchase a CD or a song from a digital store like iTunes or Google Play, the copyright owners earn a portion of the proceeds. They are also compensated when their music is played on on-demand streaming services, companies and retail establishments, and any other commercial purpose.
The payout rates are determined by several factors, including the terms agreed upon between the label and distributor and any other parties involved.
Rights to Sync
Sync rights allow a song or piece of music to be used in films, television shows, advertising, and other forms of media. Synchronization is another name for this procedure, and it can be highly profitable. Copyright owners are paid a fee upfront; then, royalties are paid once the film or television show is disseminated and broadcast.
Sync licensing can help lesser-known rappers, and hip-hop artists break into the industry and earn lucrative partnerships. Rather than chart-topping singles, most filmmakers and TV directors use the music they enjoy or fit their artistic vision.
A song’s performance rights enable it to be broadcast on AF/FM radio, Internet radio, satellite radio, and streaming services. The owners of copyrights are compensated for allowing their songs to be posted on the radio.
Brand Sponsorships and YouTube Monetization
We live in the golden age of YouTube, where everyone and their dog appear to be a YouTuber. Like everyone else in the music industry, hip-hop musicians are now creating and running monetized YouTube channels. And things seem to be going well for them: Psy, a South Korean musician, rapper, and songwriter, is said to have gained over $2 million from his global hit Gangnam Style, which has had over 2 billion views.
YouTube monetization can provide a good source of extra cash. Furthermore, it is accessible to everyone with an internet connection. So, if you’re an inexperienced, or lesser-known rapper, YouTube should be a viable money stream and a terrific method to attract a larger audience. It is a way on how do rappers make money.