Whether starting in the music industry as a performer, producer, or distributor, you may find yourself in need of extra funding, which can be provided by music investors. Either for covering expenses of album pressing, demo recording, technical support of a tour, etc.
AlaptaWan born Felicity Nketia is a budding talented singer, songwriter, and performer from the Upper East region of Ghana. Predominantly, she does Reggae and dancehall music though she is versatile. She has many awards and popular songs such as Africa is bleeding, Bossu, One Ghana, etc, in her discography.
Abbi Ima on the other hand is an Afro-Dancehall singer and performer from the Upper East region of Ghana but based in Kintampo. Known outside the music industry as Abigail Ayizah, Abbi Ima is popularly known for songs such as Fakers, Give Me Love, Bronya, Only You, and African Girl. She has many awards to her credit.
These two young female talents were hosted in an interview on Joy Prime’s Morning Show on Tuesday, December 6, 2022. The interview was based on the topic; “Having a role model vs walking in the shadows of your role model: when to draw the line”.
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Hosted by KMJ, they both emphasized on the fact that the entertainment landscape in the Northern part of the country lacks business persons who are willing to invest in talents.
Through the media, they appealed to music investors to extend their wings to artistes from other regions because many talented artistes in those regions have been left to their fate and continue to enjoy very little spotlight since Accra has “hijacked” the industry.
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This unfortunate factor has had a massive diverse effect on the talents based in the North’s ability to have their songs gain nationwide attention, and amass impressive records on streaming platforms, hence, making it rigid for them to make returns from their day-to-day toils.
Investors
industry investors are people who are very knowledgeable and personally invested in music. And that is a good thing for two reasons.
Due to their specialization, they are much more likely to understand the potential your startup has. Your business plan will not be just a collection of numbers and their sums. They most likely will understand the passion behind them. They will know to ask the right questions that will challenge your presumptions and thus help you tune your plans, and not just dismiss them as invalid. At the same time, they will be able to provide you with, probably, much-needed expertise and advice. Not that they are knowledgeable about the industry. But many of them once were where you are at the moment, either as entrepreneurs in the music industry or as artists. They can be great allies and not just business partners.
One of the peculiar characteristics of investments in the music industry is that the big players are interested in investing in upstarts of the sort. If you are starting an indie label, you might find a major publisher interested in supporting you. While in some industries this kind of support to direct competition might seem odd, the problem is that only on the surface it looks like you would be their competition. In music, publishing competition between companies is for artists, not for buyers of music. Thus a major label might find it advantageous to invest in an indie label. Such they can see them as a feeder of music talent for them, as someone who will invest the most expensive resource, the time, in finding the next big star. In such an arrangement, you shouldn’t be surprised that your artists will eventually move on from you. But, the start-up funding from major labels usually come to people who have them some success as an indie label, or strong sale as an artist, in the past.
Very often, major labels are interested in investing in the label of a particular genre. Some are primarily hip-hop music investors or country music investors, and so on, especially if they are a label specialized in a specific genre.
Distributors
The music industry is a type of publishing industry. In a way, you can say that there are companies interested in just moving the product, music, from producers to customers. And distributors can be potential sources of funding for any type of music business they can find an audience for. That is the only drawback of this type of investment. If the distributor doesn’t think that they can find someone willing to buy what you are making, then they will not be interested in investing in your business. While other types of investors will ask, in return for their capital, some level of equity in your startup, distributors will generally provide financial injection asking for a percentage of the future earnings. They will most often provide an advance against them. This situation brings two limiting factors. Distributors are willing to invest only in projects which have almost guaranteed success, for example, if you are a label working with an already established artist. It will also delay the start of cash inflow for you, as more often than not, distributors will demand that their advances be paid back in full.
If a distributor willing to work with your startup is big enough, it can also assist with securing a loan from a bank or similar lending institution. Potentially they could function as a guarantee for it.