In music, success can be measured by many yardsticks: Billboard No. 1s, Grammy Awards, AA medallions. But as acts from Barrett Strong to Pink Floyd to Sean “Diddy” Combs have testified in song, when you come right down to it, it’s all about the benjamins.
The fourth edition of our annual countdown of music’s highest earners finds wide-eyed youngsters ( Kings of Leon, Taylor Swift) rubbing elbows with their well-heeled elders ( Bruce Springsteen, Fleetwood Mac). As the music industry grows ever more complicated, so does our top-secret* Money Makers formula — comprising, among other variables, monies earned from CD and digital sales, publishing royalties and all forms of streaming. But one thing remains constant: Touring is the prime fattener of bank accounts, as evidenced most dramatically in the eye-popping, chart-topping tally of high-end road hog U2.
*Making Money Makers
For the first time, Billboard’s annual Money Makers ranking, which is the most comprehensive report card of its kind, is based on the artist’s share of revenue as opposed to total dollars generated by each artist in the ranking.
In compiling these rankings, the editors used proprietary data from the Billboard Boxscore archives (concert grosses), Nielsen SoundScan (sales of physical albums, digital albums and digital tracks), Nielsen BDS (tethered downloads, on-demand streams and noninteractive streaming at Rhapsody, Napster, AOL and Yahoo) and Nielsen RingScan (master ringtone sales), and then applied the corresponding mechanical rates and estimates where necessary for each category to determine the industry’s top-earning artists. The ranking covers the one-year period from the first week of 2009 (which ended Jan. 4) through the last tracking week of the calendar year ended Jan. 3. It combines an artist’s estimated take from those products with box-office results from concert performances that took place during the calendar year.
Sales data tallies all available titles for each artist during the tracking period. Artists receive 100% credit for sales of a title if credited as the lead artist or as an equally billed lead artist. In calculating an artist’s share of revenue from recorded-music sales, Billboard used a royalty rate of 20% for superstars and 16% for newer artists, minus producer fees and the usual packaging and free-goods deductions for CDs.
An artist’s take of revenue from on-demand streams was calculated based on the average wholesale rate paid to labels, while revenue from non-interactive streams was based on SoundExchange’s rate settlement with webcasters. An artist’s share of revenue from tethered downloads was calculated on an average-per-download basis. In instances when the artist is a songwriter, Billboard estimated the share of songs written by the artist. CD mechanical royalties for artist/songwriters were calculated by assuming the standard royalty rates. For digital downloads for track, album and ringtone sales, Billboard used the current statutory rates, assuming 12 tracks per album. Billboard also subtracted a 10% manager’s fee for each revenue category. For touring revenue, we credited each artist with 34% of gross tour receipts, after the promoter’s fee, the artist manager’s fee and other costs are subtracted.
Our figures do not include revenue from merchandise sales, sponsorships, synchronization deals and songwriter performance royalties. The data used in this report was compiled and calculated by Billboard Research manager Gordon Murray, senior Billboard correspondent Ed Christman, Nielsen Music special projects manager Deborah Schwartz and Boxscore chart manager Bob Allen.