Every artist dreams of having a long and successful music career, whether they admit it or not. To achieve this, you must understand what the end of that journey looks like, beyond just envisioning a life of never having to work a regular job and becoming rich doing what you love. The problem is, nobody teaches you about exiting when you start, making it easy to believe that your career can last forever. If all storytellers craft an end for their stories, what makes yours an exception?
Reinvest in Your Music
From some of my more recent videos, you understand why I say reinvest in your music. That’s because out of any standard artist’s portfolio, music brings the lowest return and is the most cash-hungry. So, whenever you start to run a profit based on all of the revenue you bring in from your music endeavors, pull some off the top and reinvest in your music. Financing your music is not a good move when it’s just you or a small team.
Invest Your Profits into Other Financial Avenues
Because music is not a regular job, you’ll want to sit with a financial planner and figure out a strategy to invest your profits into other financial assets. Consider IRAs, 401(k)s, stocks, T-bills, gold, silver, and real estate. Some investments will help you retain money for when you are a little bit wiser to make bigger investments, and some can get you going right out the gate.
Retain as Much Ownership as Possible
You will want to retain as much ownership as possible because, as Sir Mix-a-Lot famously put it, “music publishing is your retirement check,” so you don’t want to cash in on that early in the game. Keep as much ownership of your masters and publishing as possible.
Catalog the Intellectual Property
From the beginning, all DIY artists will catalog their records; however, many will not play the copyright game the right way. Either you don’t register them for copyright at all, or it belongs to you personally, risking your protection. All intellectual property must be handled with care because it is the seed that births all of your golden geese.
Sell or Retain?
Once you’ve had enough of the game, the question is, do you sell your catalog or retain it? Many will shoot for retaining after watching this video. However, if you decide to sell, make sure you sell for an amount that equates to ten times or more the amount that you would have received every year for the rest of your life if possible. Some may choose to sell a percentage of ownership to get a cash bonus or a percentage in exchange for administration work. Either way, if you retain or sell, somebody will have to do the admin work, so selling should be thought about further down the line in your career.
Why Did I Not Say Reinvest in Merch?
Because if you remember from my earlier videos about when to use business credit, you’ll know that credit is great for flipping, and music deserves a cash investment that will run at a loss for a long time. Merch is a calculated item that can be sold over and over again, while music is not as strong in that regard.
When Should I Exit the Game?
Exit the game when the returns of your intellectual property begin to drop with each album cycle or each year of single releases. As the revenue begins to drop, it may be time to consider your exit strategy.
Hook with the Right Headline?
Selling should be done at the beginning of your retroactive period, 15-20 years after your first release. This is when the next generation begins to pick up on what you were putting down and what made you hot. This will also make buyers give you the price you were looking for when it comes to selling.
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If You Successfully Exit
You will either sell or retain; no option is a bad option.
You’ll have the flexibility to choose the best path for your legacy and financial future.
You’ll be in a strong position to leverage your hard-earned intellectual property.
If You Don’t Have a Successful Exit
Chances are you lost a massive portion of your intellectual property.
This makes the time and energy you invested into this part of your life only partially fruitful.
For some, this can be a painfully bittersweet outcome.
Conclusion
If you were struggling with understanding what the end of your music journey would look like, you now have the means to better understand and plan for it. Develop an exit strategy that ensures your legacy and financial security, allowing you to transition from your music career smoothly and successfully.
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