Do you think of your music as a product? If you want to be paid for your music then you probably should.

Here's something that musicians don't always get. In financial terms music, like any product, is worthless unless somebody wants to buy it. Although many of us would like to think of music as something outside the realm of dirty capitalism, the reality is that selling music or a musical performance is subject the same rules of supply and demand that govern all other financial transactions.

I'm no economist so I'm not going to attempt to into a detailed economic discussion here, but the basic principles for musicians to remember about supply and demand are:

  • If demand for a product is high and it is in short supply, the price will be high.
  • If there is demand but supply is plentiful, the price will be lower.
  • If there is no demand at all then supply and price is irrelevant, because nobody wants that product.

In a nutshell, the higher the demand and shorter the supply, the higher the price can be. This is why ticket touts can resell tickets for popular gigs and sporting events for far more than the original price. When the stadium was empty, demand may have been high but the supply was plentiful. As the seats started to sell out, the supply became dramatically reduced. When an event is sold out, if there is still high demand for the tickets the tout can command a much higher price.

This explains why local musicians playing standards in scratch bands earn less per gig than established artists like Herbie Hancock or Pat Metheny. It also explains why those guys earn less per gig than Bruce Springsteen or U2.

Your average jazz scratch band sounds more or less like any other average jazz scratch band and you can hear that kind of music played all over the place regularly. As a result, supply is plentiful and demand is pretty low - therefore the pay for these gigs sucks. Nobody is going to pay £50 for a ticket to come and listen to people they've never heard of jamming on Autumn Leaves.

By contrast Herbie Hancock and Pat Metheny are two of the most popular artists in the jazz world. They both have unique styles and sounds and unique voices on their instruments. They have built reputations as special players and people want to listen to them.

As a result, the demand for their performances is much higher than for a scratch band of local players. Also, supply is limited because they can only be in one place at one time - and it could be years before they return to your country or city to do another gig. These factors mean that ticket prices can be pretty high.

Despite the fact that messrs Metheny and Hancock are at the top of the jazz tree, jazz is still a niche market in the music industry. The demand for rock artists like U2 and Bruce Springsteen is much greater, but the supply is just as limited. This means that those guys can charge even more per gig than the top jazz players.

However, the artists above haven't always been able to charge top dollar for their performances. At one point they were unknowns and there was no demand for their music at all. At one point, they were as anonymous as most of us! The incomes of these musicians will have increased exponentially with their popularity. As demand for their music increased, so did their incomes.

As a musician, it's imperative to realise that you can't charge for something that there's no demand for. As a result it's pointless expecting to command top dollar when nobody knows who you are and there's nothing unique about what you do. Essentially, you need to create demand first, then you can charge for it.

So how much do you charge? Well, the more unique your music/performance (product) is and the fewer places people can get something similiar, the more you can charge. Here are the rules:

  • Generic product and no demand - no work at all
  • Unique product and no demand - no work at all
  • Generic prodcut and in demand - low paid work
  • Unique product and in demand - Kerching!

So, the easiest path to making money from music is to play something there's already a demand for. This is good because you don't have to be unique, just competent. The more competent you are (or the better your presentation and advertising), the more you can charge because it positions you as slightly unique. This is the world of covers bands.

In my area, if you wanted to listen to a 4-piece rock band playing 60s and 70s music in jeans and T-shirts, then you can find loads of them in pubs on a Friday or Saturday night. They are earning money because there's some demand, but it's not much money because there are loads of other bands doing what they do.

On the other hand, if you were organising a high-class wedding and you wanted to book a super-tight, professionally turned out covers band with backing vocals and a live horn section, you don't have as many bands to choose from. There is still quite a lot of choice, but the reduced supply means that these bands can charge more for their services than the 4-piece pub band.

The most lucrative path of all is to have a unique product and create a demand for it. This is the pot of gold at the end of the musical rainbow. People will pay far more to see you because they can't get what you do anywhere else or from anybody else. Of course, this is easier said than done - but that's why the rewards are bigger if you pull it off.

The final thing to remember is that you don't get to charge premium prices until you have both developed the unique product AND created the demand. It doesn't matter how good your music is if nobody wants to hear it. This is why some musicians are now giving their music away, or playing for free. They are trying to create a demand for their product and hoping that this will result in them being able to make money in the future.

In some cities it has actually got to the point where there are so many musicians and so few venues that it becomes impossible to get paid for playing. In some cases, the venues will even start charging musicians to play!

This is because the willingness of musicians to play for nothing to try and create some demand has now made the stage at that venue a saleable product. There is high demand for the product and the supply is low (i.e. loads of bands, not many venues).

Some people think that musicians deserve to be paid for music because of the time and effort required to learn to play and the fact that music in general is of benefit to the human race. Maybe this is true from a philosophical or altruistic point of view, but in most places, unless there is a demand for your specific kind of music making, then you're not going to be financially rewarded.

There are many factors that musicians must consider in producing and attempting to sell music, but we ignore the basic rules of supply and demand at our peril. The sooner we can lose the belief that learning to play automatically means we should now be entitled to be paid well, the sooner we can start work on producing something we can charge for.

It may sad, but it's true: When it comes to making money from music, it doesn't matter how good we are, only how high the demand for our product is.