The Band’s Guide to Getting Paid at Music Venues

A band is like any other business, except with drums. Like it or not, all bands gotta pay the bills. Performing gigs for venues is the best way to do this. But how do music venues pay bands?

Venue owners have complete discretion on how they pay performers. Some may divide earnings after the night is over, while others pay bands in advance. Naturally, the popularity of the venue and the band play a huge role in which method is used.

First, we need to consider how money flows. Knowing this can help bands understand their true worth — and negotiate better pay.

How Do Venues Make Money?

In most arrangements, cash flows from customer to venue to performer. Venue owners charge in different ways. Some clubs have admittance fees, while others have free entrance with pricey drinks. Many include both.

Think of venues like movie theatres. When famous bands perform, they receive a large share of entry fees. Therefore, most venue owners profit from selling concessions at a steep markup. In some cases, venues also charge bands a merch cut for selling merch on their property.

While this may sound blunt, drunk patrons are profitable. Intoxication leads to bad decisions — like buying more absurdly expensive drinks. This might not be healthy for customers, but it’s healthy for performers’ paychecks.

How Profitable are Music Venues?

Different businesses have different profit margins. A smartphone game company nets more than a local restaurant, for example. It’s all about keeping expenses lower than revenue.

So, how do music venues fare in that respect? Sadly, they are not much better than restaurants. Small venues typically don’t charge such high prices on drinks (where their revenue originates) to rip people off.

Instead, they’re trying to ensure that they can cover their overhead costs. These include staffing, rent, utilities, liquor license fees, insurance, and more for a club or bar owner. Once those are taken care of, they can begin to pay their bands.

If you’re seeking a number, venue drinks generate 75% profit. However, the owner may need to set this figure higher depending on rent costs and the average number of customers.

Of course, you can make a killing running an event space. You need to do it right, as this video explains:

Common Ways Bands Get Paid

The relationship between venues and artists is complicated. Arrangements depend on expected profits, demand for the performing band, and owner generosity. Both venue owners and bands consider these when deciding who to have on and where to play, respectively.

Generally, bands consider profits more than anything. We explore four common payment scenarios from most to least desirable (for bands).

Venue’s Guarantee

For bands seeking gigs, the venue’s guarantee is the ideal offer. No matter what happens, the venue owner promises a flat payment in advance of the event. Plus, there’s always the possibility of tips.

Unfortunately, many venue owners don’t like to do this. Guaranteeing payment could put them at a loss if turnout is low. After all, running a venue is a risky business. Depending on the size of the venue, the owner may barely be scraping by.

Therefore, the venue’s guarantee is usually reserved when one of the parties is exceptionally successful. If the venue is rolling in revenue, they can take more risks if it means getting great live music. Meanwhile, if the band has a large local following, their presence alone will ensure a high turnout wherever they book.

The 50-50 Split

The 50-50 split holds up most of the gigging industry. Both parties get a decent deal, meaning both bands and venue owners end the night with feelings of fairness.

Furthermore, splitting income is less risky for smaller venues and lesser-known bands. Worst case scenario, there are two parties to absorb the financial blow. But if things go great, everyone (except the patrons) can cash in.

This isn’t to say that venues must take a share to profit. However, many owners find it more manageable — and it’s fair for the hard-working performers.

Audience Donations

Some venues either don’t earn enough or aren’t generous enough to pay their bands. While not ideal, this situation offers bands a chance to gain new fans. This can help them gain publicity to negotiate better pay in the future. And hey, sometimes patrons are pretty generous.

Plus, audience donations are a fair wager for venues letting on new bands. Most bands can afford to do a free show or two, and decent live music is beneficial for the business owner.

The exception to the rule is if a band is atrocious. In this case, charging them is good for nobody. A horrible band won’t gain any fans. On the other hand, a venue will receive payment from the band, but it won’t cover lost business costs.

Pay-to-Play

Most bands try to avoid pay-to-play shows like a virus. However, some bands can’t. Instead, venues do everything they can to earn more money. Some owners may see no other way than to charge artists an “opportunity” fee.

But why would bands accept this? The investment can pay off in the form of exposure. More listeners mean more money down the road. Then again, the same goes for paid gigs.

Venues that pay tend to source the best bands they know will make their clientele happy. Bands that don’t have considerable gigging experience will have a more challenging time demonstrating their worth. If these bands can’t find a chance to play for free, the easiest way to gain exposure is to do a few pay-to-play gigs.

However, “easy” doesn’t mean “best.” There are cheaper options for marketing-savvy bands.

How Do Bands Make Most of Their Money?

Nowadays, making money as a band is more challenging than ever. Selling music alone isn’t enough. US music sales peaked in 1999 at $22.7 billion (adjusted for inflation). In 2021, they sat at $12.2 billion. Most of those numbers come from streaming platforms.

It’s not all bleak, though. We know that musicians don’t rely exclusively on music sales. But what do they rely on?

Gigging and Touring

Unsurprisingly, venue gigs are the #1 income source for most bands. U2, for example, earned about 95% of their total revenue from touring in 2017. Live music offers an experience Spotify cannot, as fans can interact with bands and feel more engaged with the music.

Live music also offers food, drink, and socialization opportunities. People can meet others with similar music tastes and even start their own band. These factors combine to create a musical experience people are still willing to pay for in 2022.

Another reason gigging is profitable is because of performance royalties. Licensed venues must pay songwriters whenever their music is performed to an audience. For bands that play original music, the venue owes them a royalty payment on top of everything else.

Royalties

There are three main types of royalties due to songwriters. They include performance royalties, mechanical royalties, and synch royalties. There are also print royalties, but these don’t apply to most bands.

Performance royalties, as we discussed, come into play whenever a song is played to an audience. This includes bands performing original setlists. However, bands also receive performance royalties from streaming platforms. Even if the audience is just one guy wearing Air Pods, the law still considers it a performance.

Mechanical royalties, on the other hand, are all about distribution. Whenever someone creates a CD, digital recording, or vinyl record, they must pay songwriters mechanical royalties.

Finally, sync royalties apply when a band’s work is used in films, ads, and more. These hefty payments are usually reserved for ultra-famous bands, though.

With all forms of royalty combined, bands can make a wide range of passive income. But, for most bands (barring names like Metallica and Twenty One Pilots), it’s merely “a little extra.”

Selling Merch

Sure, it takes hours of painstaking work to write a song people care to hear. But who can turn down a t-shirt? Financially speaking, the music business is about more than making music.

Fans pay for experiences with live performances. However, merchandise allows them to have tangible evidence that they went to an incredible live show. Sure, an Instagram post does that job nowadays. Nevertheless, selling merch is a massive part of building healthy band revenue.

Remember when we said that music sales were $12.2 billion in 2021? Merch sales generate over $12 billion each year in the United States. Bands like The Grateful Dead often make more than $70 million a year in merch sales alone. Thus, music is merely a form of advertising to sell clothes and phone cases.

Conclusion

The relationship between venues and bands is a tricky one. But despite what many believe, club owners aren’t trying to rob their customers. Likewise, bands who request payments from venues aren’t greedy.

Ultimately, there are two ways venues pay musicians (and two ways they don’t). Some owners promise a flat payment in advance of gig night, while others wait to see how things go and offer a split. However, sometimes club owners don’t pay their bands at all. Instead, they either leave the job to the audience or demand bands pay them.

I think you know what our stance is on that one.