One Recipe (of many) for Securing Financing in the Music Biz
For every aspiring artist, producer, songwriter, etc., there comes a time when you decide to either keep your musical dreams as a hobby or really try for a chance at making a career for yourself in the music industry. It is important to be honest with yourself and decide which path you want to take. If you are still young and music is just a fun pastime, more power to you. If you are grown and have kids or other responsibilities, be honest and start off this new year with a bang. Go after your dreams!
The first thing you will need to do, if you actually want success, is make a plan. You will eventually need a detailed business plan, but for now, a more broad plan is all I am talking about. So, for example, if we were talking about making a cake...this is not the part where I give you the recipe...this is the part where you decide (first and foremost) whether or not you actually want a cake, what kind of cake, how long are you willing to spend making it, will you buy a box mix or make it from scratch, ...etc. You follow?
So before you get too overwhelmed with more advanced stuff...just really decide about what you want. Do you want fame or money or both? Do you want to make enough noise to get a record deal or publishing deal or do you want to stay independent and own it all yourself? In 2011, artists like Kreayshawn and Tyler The Creator (OFWGKTA) secured record deals worth over $1 million dollars each. They seemingly accomplished this with little financial investment. However, saying it that way would really discredit all that they were able to accomplish along their journey as indy artists. I only bring them up to illustrate that it can be done without a giant budget. On the other hand, an artist like Tech N9ne, has been able to have huge success while remaining independent and in control of every aspect of his career. Immortal Technique is another hugely successful indy artist. However, please understand that all these artists are exceptional examples, and not the norm at all. If you are an exception, more power to you. If you want a more concrete plan...keep reading.
So, try and decide what you want first and foremost. There are many great articles online and tons of great info available from people on Twitter. Read my previous rant to get the contacts of some key resources.
Once you have decided what kind of cake you want, then it is time to begin the designing of a plan. Obviously, the plan is going to vary depending on what kind of cake you feel like eating, but overall, I am going to share some information to help you get the base recipe started.
The most important part of the recipe is that you have to understand and accept that making it big in the music industry will cost lots of money. Whether you try to make the cake from scratch (with lots of trial and error) or you go out and buy a ready-mix box, it is going to take some effort on your part to raise money and also to LEARN the way the industry works. Even if you want to be anti-industry and independent, you have to understand how it works so you can bash it intelligently and not just be a pretender.
The cake mix in a box is a pretty hard path to take. When I say "a mix in a box", I mean hiring the right people who can do a lot of the work for you. Hiring a consultant can either make you or break you. Mainly because, in the music industry more than any other (maybe the film biz too) there are 10 frauds for every 1 REAL person. However, in lieu of spending years meeting people and learning the business yourself, it may be the best bet. A GOOD business consultant will help you create a business plan, find the right people to hire for radio, video, promo, etc. A GREAT business consultant will help you learn the business and create bonds with all the contacts you meet along the way, while you are doing all of the above. I tell my clients/associates, "Make sure you keep in touch with everyone you meet through me. They will become your contacts eventually and you won't need me anymore."
See, I am not one of those people that keeps their clients in the dark in order to keep a job. I know that the REAL value is in the contacts and the relationships and so I encourage everyone I work with to make great impressions and exchange contact info with everyone I hook them up with. I also require that everyone I work with really learns the business and makes an effort to truly understand how it all works. I say, "Please learn and watch and research so that you don't have to trust me. I don't want you to trust me. I want you to KNOW that what I am doing is correct and in your best interest...no "trust" or "faith" or "hope" involved whatsoever.
So back to the recipe. Here are the ingredients you will need:
1. Money (in two forms...SEED MONEY and BUDGET MONEY)
First, you need money. So I will explain to you how you can get that...assuming you don't already have it. How many people in your life constantly tell you that your music is dope? "Oh you are so talented." "Your music is better than what's on the radio." "You should be on MTV." "I would buy your music over this other stuff." ...etc, etc., etc.
So, there is your open door to SEED MONEY. Those people are your first tier of potential investors. Have you ever heard anyone say, "It takes money to make money?" Well, it does. In order to convince a potential investor to pour $200k into your project, you have to spend some money first. You have to have a great presentation. You can't go up to someone and rap in their face (believe me, people have done this to me) and expect them to be blown away. You need a plan and a presentation. The SEED money will help you get your presentation together. Then, if you are lucky and your plan and presentation work, you will need some good music. Sometimes, the music may be part of the presentation. However, if the investor is not a "music person" they will honestly not really care about the music at this early stage in the process. I have heard people say things like, "I couldn't tell you if it was good or not, I'm not really a music expert." That is what a smart investor would say. But you WILL need to have great music at some point because a smart investor may also say something like, "I have a friend who knows more about this stuff"...etc.."and I would love for him to hear your music before I invest in it."
Btw, if the number $200k I threw out above seems high to you...please stop reading my blog right now and leave to another place on the internet. JK. But really, that is a VERY LOW AND CONSERVATIVE figure for a budget to make an impact in the industry. Most industry insiders agree that it takes in the range of $350k to really give it a good shot. I have accomplished a lot in the $200k range...at least enough to get more $$ and keep it all going.
10 years ago in the music biz, a band or artist who was being courted by A&R reps could ask for a Demo Deal, and receive a demo budget. You could get say $10k to get yourself into a good studio and cut a few songs in a professional manner. This is obviously before everyone thought they were producers themselves. Everyone thinks they are a producer now because they have "home studios." I have a studio in my home, but it is not a "home studio"...it is a studio in my home. Feel me? Buying an MBox or whatever else is out there on the cheap, does not give you a studio. I am not knocking these tools, just trying to make sure people realize that there is another level in the game and you need money, experience and a whole lot of talent to reach it. Too many people nowadays believe that because they have a camera in their phone, iMovie and access to YouTube, they have the "potential" to get signed. Believe it or not, it still takes talent to make a good video. It takes talent, money and business sense to market a video online and on TV. Spamming people on Twitter is NOT marketing, it's just annoying.
So...my point is...SEED Money. In lieu of a demo deal and demo budget, you have to come up with some front money to help you get the real MONEY. You need small money to help you find bigger MONEY. If you have a few thousand yourself, more power to you. That's great. You obviously get it and have taken the time to save or set aside a small budget to invest into your business. If you don't have a penny to your name, this is where you need to hit up your closest fans/family/friends for SEED money. Make it a loan if you want, but I suggest you try and make it an investment. Gather up a few thousand and get your business going. Make it professional and make it a business transaction, not a family favor. Write a proposal or hire someone to write one for you. Explain that this is SEED financing for a bigger goal. The ROI (Return On Investment) will not depend on whether or not you become the next Jay Z, rather, just on whether or not you secure the next level of financing. So it is not such a long shot. It is a well-calculated plan and it is a recipe I have followed many, many times in my career. I have helped a lot of artists get their businesses going with these kinds of plans.
1. You need, say, $5k-$10k to make a good presentation for a potential investor/label.
2. Your uncle/aunt/friend can loan it to you or, preferably, invest it into your career.
3. The ROI for your SEED investor will be based on your success with securing the bigger MONEY.
4. When you secure your first $30k or $50k or even $200k, you will pay back the SEED investor plus add in a generous ROI. That is their incentive, besides just helping you out because they BELIEVE in you so much.
If you don't have anyone in your life right now who believes in you enough to help you out with a small investment or loan for SEED money, maybe you should RE-THINK starting your own business. Really. I'm not trying to be mean, but for any other business in any other industry, you would see that what I'm saying makes complete sense. Making it in the music business is not for everyone. You have to be a special person. You have to have a personality that attracts attention, inspires and impresses people. You have to be amiable and as personable as possible in order to sell yourself. If you can't sell yourself, how do you expect a label to sell you? If your friends and family won't invest in you, why would you expect a label (run by strangers) to invest in you?
Anyway, let's assume you are able to secure some SEED money. Next, you will need a great Offering Memorandum. This consists of an Executive Summary and a Business Plan. This is the proper way to ask for the big MONEY. You will need to spend some of your SEED money on this part. You will need to hire someone to write and prepare this part for you. Unless you are a good writer and can research this enough to trust your own skills in making the attempt. If that is the case, again, more power to you. If you are not able to do this yourself, you can hire someone like me. As a hired business consultant, I would prepare this process for you. I would line up contacts to commit (with commitment letters) to your project, contingent upon the raising of the necessary funding. I would include impressive names and detailed info about radio, video, marketing and promotions. I would outline every aspect of the budget and explain how the money would be used. This is where contacts and experience come into play and if you don't have those yourself, you need to hire someone else who does. I am not saying you need to hire me, but you DO need to hire someone who can get it done correctly.
You can't just say in a proper Offering Memo, "we will hire someone to work radio, video, etc." If you want to secure financing, you have to be specific and have a specific plan of action, including names and bios of people and companies you intend to hire and work with, once you get the MONEY. You have to make the investor feel comfortable about the investment. Encourage the investor to look up and research the companies themselves. It should all be positive feedback. There is no hustle here...just good business and experience. And again, if you don't have the resume yourself to accomplish this, hire someone who does. Use your SEED money...that's what it's for...to get you to the next level.
Your Business Plan should be an exciting and fact-filled masterpiece. You have to use stats and figures to outline potential income streams and projected revenue. Give specific examples of how you expect to make money from your music. List the various income streams from ancillary products and site examples of REAL occurrences in the business where people are making money from those ideas. There are NO GUARANTEES. Investors understand this. People who have investment portfolios have won some and lost some. An investor told me once,
"I lost over $200k in the stock market last year. If I had invested that money with you then, at least I would have had some fun along the way."
He was referring to the fact that he attended a few concerts and video shoots for the artist he invested in with me. The money he lost in the stock market...he never knew exactly where it went. On the project he invested in with me, he actually saw and experienced a lot of the action. He really appreciated that.
I did some production work many years ago for a record label owned by a famous ex L.A. Laker. I won't name him here, but he blew over $2million on the label in one year...all in the wrong places. I wasn't a consultant for the label, just a hired-hand producer, so it wasn't my fault. I actually tried to steer him in the right direction a few times on GP, but he had too many "yes men" in his ear giving him bad advice. I bring that up because people need to understand that it takes ALL of the ingredients and a recipe for HOW and WHEN to use them in order to succeed...to make a great cake. You can't throw eggs, milk, flour and icing into the oven and expect a cake to come out. I have worked with people who had the money, but no contacts or experience. I have worked with people who had tons of experience, but no money or current contacts. Lots of industry journeymen know a great deal about the biz, but have no relevant contacts in the present-day industry. Make sure you understand who you are hiring and make sure their resume is current.
Again, it takes all of the ingredients (Money, Contacts, Experience and Great Music) to have success in this business. You can't bake a cake if you are missing one of the key elements. And please, I don't need any expert bakers to correct me on that...lol...it is just an illustration. You know what I mean.
I hope this latest rant sheds some light on how to secure some financing. It is not easy, but it is very possible and accessible for anyone who makes a real effort. It will obviously take a more detailed and personalized plan for each individual case, but I hope you get a clearer picture of ONE way to start to build your company. This is a proven method. Use $5k to make $30k and $30k to make $100k and so on. At some point, it will start to turn into REAL concrete income and either spawn a record deal or a self-sufficient independent company. And I hope that is your goal...success...not pretend props or accolades, but REAL, tangible success!
I am here, as always, as a resource. Feel free to ask questions. Use me. Use the other people online as well (especially on Twitter), who are constantly offering FREE advice and suggestions. Anyone who is truly in the music industry and is making a living in this business knows that there is value in information. However, I am not confined to getting value from information. Let me clarify...I don't NEED to SELL info. I see more value in giving info away. The more educated people get about the business, the more VALUE they will see in what someone like me can do for them. Anyone who is learning and growing their business in the proper fashion will eventually see the REAL VALUE in what someone like me can offer. It is NOT about the "secret" recipe. It is about the diligent implementation of a REAL plan. I will be compensated 100 times over if people really start to see how it all works and a new and improved attitude toward chasing a career in music is born. I am confident about that and that is why I take the time to share ideas and recipes. I hope my blogs help at least one person. That will be one more person on the REAL side of the business and one less person bringing our industry down with losing plans and failed attempts.
Follow me on twitter @shystimusic. I write and produce Hip-Hop, R&B, Dance, Electro, Pop and Dubstep music. I consult for indy labels and artists in every aspect of the business, from securing financing (writing/preparing Offering Memorandums) to writing and implementing budgets and marketing strategies, radio promo, video promo and more. I also own and operate a boutique music publishing company with many current MS contacts and blanket deals. Hit me anytime.