Introduction

"It's not how you start out in this business, it's how you end up."  A recording artist signed to Warner Brothers told me this when I first moved to LA to pursue a career in the music business.  Prophetic words, however, before all of the words had left his mouth, the label had dropped him, and his record never saw the light of day.  Seventeen years later I find myself still working in the music industry, and I too have seen my projects shelved, mishandled, under promoted, poorly managed, and basically ruined by the music business, that great incinerator of dreams.  The only difference between that artist and myself is that I'm still here.  I realized from this vantage point after creating a career as a touring sideman, songwriter, producer, and recording artist that I have really seen them come and go.  I have been witness to many a rising and plummeting star.  And it is true that what goes up must come down; even the music charts adhere to Newtonian physics.  I have watched as friends have amassed small fortunes, and then viewed the reverse metamorphosis from bling-bling to broke-broke.  Many, if not most, are staring at 40 without a dime.  Most are also mired in credit card debt and unpaid back taxes.

However, of my peers who are still around and prospering, I noticed that the majority had one thing in common:  Somewhere along the way they figured out how to manage their money.  Of course, a few just made so much money that it didn't really matter how they managed it, and I'm sure that all of you are planning on this path to fame and fortune.  You are all going to be big rock stars and for the first time in the history of the music business, every CD that you release is going to be multi-platinum!  But just in case it doesn't work out that way, you might want to continue reading.

Musicians do not have a monopoly on money mismanagement and financial fiascos.  Unfortunately, most folks are extremely uneducated in basic financial matters.  However, the situation becomes much worse for those who are self employed.  In corporate America, which from here on out I will refer to as the ‘real world’, most employers have savings and pension plans already set up for employees to take advantage of so that even if your personal/home finances are a mess, you will still have some form of retirement and pension when you retire.  I know quite a lot about this because I worked for four years as an integrated circuit designer for Bell Laboratories (then Lucent Technologies—now Alcatel) before quitting to make a career in music.

Once I arrived in LA, I realized that there was virtually nothing of the sort in place for musicians:  zilch, nada, zero.  There is a pension fund for musicians that do a lot of session work for records and film scores, however, most of that work has dried up except for the lucky few, and you will have to wait until they die to take their spot!  I saw musicians happily bouncing from gig to gig naively thinking that they were never going to get older and that a new generation of musicians was not on the way to take their place.

The only safety net you have if you are self-employed is Social Security.  Social Security is a program of the federal government that provides retirement income, senior health care, and disability coverage for eligible workers and their dependents.  It is funded through an income tax during your working years.  When you receive a W-2 from an employer, you can see where a Social Security deduction has been made.  The amount of Social Security that you will receive at age 65 is based upon how much you earned over the course of your life.  This calculation is important because most musicians do not earn that much over the course of their lives, and their low income will be reflected in a low Social Security check.  How much will you get?  I’ll show you how to find out where you stand later in this book, but trust me, if you are like most musicians, it is not going to be much.  In fact, with the current state of the Social Security program, the amount you think you will get will probably be reduced because the baby boomers are going to seriously deplete the fund over the next 30 years.

The instability of an artist’s income exacerbates the situation simply because our earnings can wildly fluctuate from year to year making the average a little less impressive.  Take the case of a songwriter who may have a few hit songs and earns close to a million dollars over a few years.   Then the hits stop coming as they usually do.  Within 5 years, that same songwriter could be working a ‘real job’ earning $20,000/year or worse.  By the time he reaches 65, his Social Security benefits may not sustain him without a serious reduction in his standard of living.  Therefore, all self-employed artists need to have aggressive savings plans to adequately cover them in retirement, and unfortunately, if you don’t set it up for yourself, no one is going to do it for you – no one.

With all of the self help books available on 'How to get a record deal', 'How to make it in the music business',  'How to make and sell your own CD independently', 'How to get rich quick' etc ...  I realized that there is a shortage of information out there specifically for the self-employed and especially for the musician/artist in terms of financial advice.  This was the primary motive for me to write this book.  I simply want to offer some help with the day-to-day grind while you are on the road to superstardom.  I know first hand that life happens along this road, and life equals à rent, phone bill, cellular bill, internet bill, cable bill, unexpected bills, doctor bills, dentist bills, car expenses, insurance payments, dating expenses, and eventually the costs of starting a family.

Another motivation for this book is that I really want to give creative people the tools they need to make great and meaningful music because that is what’s missing most from the music industry.  By lessoning the distractions of the day-to-day grind, creative people will be able to do what they were put on earth to do – create.  So many musicians are not in control of their lives financially or musically.  They find themselves reacting to events as they come along instead of taking charge.  Like a pinball they bounce from one gig to another while constantly hoping that another gig (hit of the flipper) will push them higher in the machine.  Often things go horribly wrong, and they fall into a slot and exit the game.  Some get another chance -- most don’t.
 
What shows like "American Idol" teach people about the music business is extremely one-dimensional.  Not to say that the winners are not talented, but most of our pop icons would have never won that kind of contest.  Artists like Sting, Björk, Springsteen, Meshell N’degeocello, Madonna, Radiohead, Cold Play, John Mayer, Dave Matthews, Jimi Hendrix, etc...  Can you imagine Paula Abdul critiquing Dave Matthews on his performance?  In addition, with the downsizing and consolidation of the major labels, it's becoming harder and harder for the true singer-songwriter to get any attention.  Since being sold to shareholders, major labels are only concerned with quarterly results and have no interest in developing an artist over a few records.  If you don't hit it big on your first record, you're done.

So what is an aspiring artist to do?  You're going to have to develop your craft on your own in the indie record or DIY (Do It Yourself) world until you're doing well enough that a major becomes interested.  At that point, you are more likely to negotiate a deal in which you retain at least some creative control.  You also might have the option of not signing at all if things are going right!  However, most artists get lost along the way and are unable to do this, and a lack of funding is a leading cause.  That is a major reason why there are so few artists like Radiohead, Dave Matthews, Ani DiFranco, Feist, Prince, Bruce Springsteen, and Bjork.  Truly unique and talented artists frequently succumb to the pressures of life long before they are able to achieve some level of success.  As a result, we are force-fed a never-ending diet of corporate pop stars that come and go in the blink of an eye while the true artists fall by the wayside, often due to poor money management.

Therefore, my intent is to show you how to lead a creative life ­and prosper while doing it.  Whether you become a superstar or not, managing your finances will be the key to your longevity.  This book contains the bare financial essentials that all self-employed artists should have in place or they might be better off just playing the lottery.  Even if you are not trying to be a recording artist or trying to achieve superstardom, this book is for all musicians who would like to lead a creative life playing music and not end up broke in the process.

In addition, all self-employed artists can use the concepts presented in this book.  Whether you are a dancer, painter, filmmaker, actor, or graphic designer, it should be quite easy for you to recast my musical examples into your artistic disciplines.

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