In the world of finance, there are two main categories to understand: liabilities and assets. The distinction between them is simple: a liability takes money out of your pocket, while an asset puts money into your pocket. For musicians and producers, the most valuable asset you own is your music—and it’s crucial to protect it.
The Role of Money in Building Assets
While money itself isn’t an asset—it’s a tool. Hoarding money shouldn’t be your goal because it loses value over time due to inflation. The money system we live in today is backed primarily by debt, which is why the value of money declines each year. However, the real goal of generating money is to use it to create revenue streams and build assets.
For musicians, your biggest asset is your intellectual property—your music. By monetizing your music, through royalties, licensing, and other avenues, you can create ongoing income streams that will free you from needing to focus solely on making money. This gives you the freedom to focus on your real goals as an artist.
The Importance of Asset Building
When you focus on money as the primary goal, you can become trapped in the pursuit of it, becoming a "slave" to financial goals. By contrast, when you focus on creating assets, you’re developing avenues to generate income that don’t constantly drain your time and energy. In the case of a musician, your music is that asset that can continuously generate income.
Protecting Your Music as an Asset
While your music can be a powerful asset that generates income, there are dangers you need to be aware of. Investors, business people, and labels understand the value of intellectual property, and they may look for ways to control or profit from your assets. If you aren’t careful, you could find yourself in a situation where you lose control of your music, and it becomes a liability for you while benefiting someone else.
Ownership and the Reversion Clause
When it comes to protecting your music, ownership is everything. If you sign away the rights to your music without certain protections, you risk losing control of your asset indefinitely. This is why it’s critical to include a reversion clause in any contract. A reversion clause ensures that after a set period, ownership of the music returns to you. Without this, signing away music rights in perpetuity can be a disaster for artists, as it leaves them with no control over the very asset that could generate ongoing revenue for years.
Avoiding 360 Deals and Maintaining Control
One of the toughest challenges in today’s music industry is navigating 360 deals—contracts where record labels take a percentage of all aspects of an artist’s career, including touring, merchandise, and publishing. While these deals offer upfront benefits, they often involve relinquishing a great deal of control over your assets. The more control you can retain over your music’s publishing and licensing rights, the better off you’ll be in the long run.
By maintaining ownership and focusing on building revenue streams from your music, you can ensure that your creative output continues to work for you, rather than for others.
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