Recording Artist Advocate: ROI…

ROI is return on investment. Most people just say “return”. Another term you’ll hear is “margin” for the difference between what something costs and what you sell it for. If you buy band shirts for $5 each and sell em’ for $10, you have a $5 margin. Using those numbers, when you sell half your shirts, you'll start to have some return. 

Here’s a break-down for a recording project: Spend 10 thousand dollars to record 10 or 12 songs. Send em’ through TuneCore to iTunes and others, and duplicate a thousand CD’s. Now you have something to sell at your shows and give radio stations and reviewers. Sell the first batch of CD’s and you’ve made your original investment back. Your second batch can make you that much again. I know of several Texas Country bands that spend thirty thousand or more to produce their CD’s. (That’s just production with no CD duplication or downloads.) Obviously they sell a lot.           

Think about how many ways you can make more money as a band. You get paid to perform. You sell CD’s and merchandise. Can you get sponsors? Will a company pay you to wear their clothes? Drink their beer on stage? You’ll never know if you don’t ask. 

As you get more popular it gets easier. With a break-out song you can think about licensing for commercials or movies. Are you willing to make money that way? Some folks aren’t. You have to decide how you feel about that.

My advice is to know who you are and only seek out or accept sponsorships for something you would do anyway. If you already wear Vans, why not get paid for it. Or Levi shirts… or whatever.  

Your fans will follow your lead. If they perceive that you like something they will look at it more favorably. There is value in that. Don’t waste it.

In the same way you are willing to invest in t-shirts and CD’s to make more money, (...return) companies are willing to invest in you to sell more of their stuff.