How do the world’s highest-paid musicians make their money? Not by making music.
As shown in the Forbes list of the world’s highest paid musicians of 2015, elite stars cash in from touring, forming endorsement deals with brands, and by launching their own business ventures. Consumers just don’t buy enough recorded music anymore to support the performers we say we love.
The annual Forbes list, created by Zack O’Malley Greenburg, is a snapshot of the music industry and as such offers some clues about those who create music and those of us who listen to it. My analysis of the list uncovers a number of trends, such as the influence of baby boomer and millennial-era consumers and the dearth of women superstars in country music. I’ll explore those topics in future posts in my series on the world’s biggest musical moneymakers. Today’s post focuses on how successful stars have become moguls, extending their reach beyond music into businesses such as spirits, food, and clothing.
An Industry Snapshot
Forbes ranked 30 musicians based on pre-tax income earned from June 2014-June 2015. The top earners reflect genres ranging from country to hip-hop. Collectively, they earned nearly $1.5 billion. All of them made huge bucks, starting with Katy Perry, the top-ranked musician with $135 million earned. The lowest ranking musicians, Dr. Dre and Maroon 5, made $33 million each. The entire list looks like this:
|1||Katy Perry||$135 million|
|2||One Direction||$130 million|
|3||Garth Brooks||$90 million|
|4||Taylor Swift||$80 million|
|5||The Eagles||$73.5 million|
|6||Calvin Harris||$66 million|
|7||Justin Timberlake||$63.5 million|
|9||Fleetwood Mac||$59.5 million|
|10||Lady Gaga||$59 million|
|11||The Rolling Stones||$57.5 million|
|12||Ed Sheeran||$57 million|
|13||Jay Z||$56 million|
|15||Elton John||$53.5 million|
|16||Toby Keith||$53 million|
|17||Paul McCartney||$51.5 million|
|18||Michael Buble||$45.4 million|
|19||Jason Aldean||$43.5 million|
|20||Luke Bryan||$42.5 million|
|21||Kenny Chesney||$42 million|
|22||Bruno Mars||$40 million|
|24||Foo Fighters||$38 million|
|Tim McGraw||$38 million|
|26||David Guetta||$37 million|
|27||Florida Georgia Line||$36.5 million|
|28||Jimmy Buffett||$36 million|
|30||Maroon 5||$33 million|
|Dr. Dre||$33 million|
All the music superstars, regardless of their genre, have risen to the top by playing by the new rules of the music industry: build your audience through recorded music, but make your money elsewhere. Katy Perry made her $135 million from touring (playing 126 shows and earning $2 million per venue) and endorsing products such as Claire’s, Coty, and CoverGirl.
“Music has changed,” she told Forbes. “The record is that launching pad for all kinds of other creative branches.”
The record has to be a launching pad for something else if an artist is to make it. Digital long ago killed music recording as a viable form of moneymaking. First came the singles-friendly download format, which destroyed the more lucrative album as an art form. Then came streaming, which has been eroding the commercial value of singles and albums. Almost every artist on our list was touring — and usually heavily so — in 2015, with album releases providing the music content for the tour. It has taken months for Taylor Swift’s 1989 to sell an impressive 8.6 million copies worldwide, for which she probably earned millions, but Taylor Swift can pull down millions for a single show in one day.
Musicians have been earning money from product endorsements and co-branding deals for years, and in 2015, the biggest names continued to cash in on lucrative relationships with businesses. But what’s especially interesting about the 2015 class is the number of musicians who have their own branded products and business outside their music.
Diddy and Jay Z are the quintessential moguls, setting the gold standard for other artists. In 1996, Jay Z cofounded of Roc-A-Fella Records, and then a few years later cofounded Rocawear clothing line. (He would go on to sell his rights to Rocawear for $204 million.) Today Jay Z operates businesses such as his entertainment company Roc Nation (founded in 2008) and Armand de Brignac champagne (which he acquired in 2014). As he famously put it, “I’m not a business man, I’m a business, man.” (It remains to be seen how successful his Tidal streaming service will be — Tidal is rumored to be up for sale after a rocky reception.)
But Diddy is something like two businesses, man. At age 24, he founded Big Boy Records and never looked back. In the 1990s, he focused mostly on building a music empire as producer, performer, and impresario. In 1998, he expanded beyond music, founding the Sean John clothing line, and throughout the 2000s, he diversified his business ventures, including the establishment of DeLeon tequila, as well as a cobrand with Cirac vodka and stakes in Revolt TV and Aquahydrate. He has a reported net worth of $735 million.
Meantime, many other artists have carved out their own entrepreneurial paths. Lady Gaga has been hawking Fame perfume since 2012. Kenny Chesney, Toby Keith, and Justin Timberlake have their own branded spirits. And let’s not forget Dr. Dre, who famously enjoyed a $620 million payday in 2014 due to the sale of his Beats Electronics to Apple and continues to benefit from his relationship with Apple.
Then there’s the curious case of Jimmy Buffett, who has parlayed the popularity of one hit song from 1977 into a business empire that includes restaurants, food, booze, and book publishing. He is one of only seven authors — whose company includes Ernest Hemingway and John Steinbeck — to have a Number One book on both The New York Times Fiction and Nonfiction bestseller lists. Yes, that Jimmy Buffett.
The superstars on the Forbes list understand that they are brands as well as artists. Their non-music business ventures are a natural extension of how they operate inside the music industry. Music will always be the heart and soul of the artists, or else they would not make the Forbes list. But music is a means to a bigger end.
My next post will examine what the Forbes lists says about the role of women performers in country music. Stay tuned.
A note about how Forbes created the list: as O’Malley Greenburg notes, “To form our list, we looked at pretax income from June 2014-June 2015 from concerts, record sales, publishing, endorsements and other business ventures. As usual, we did not deduct fees for managers, agents and lawyers. We used data from Nielsen SoundScan, Pollstar and RIAA, and information from industry sources including some of the artists themselves.”