Thirty years ago, music stars made records and fans went out and bought them. Touring promoted the album, merchandise was largely a souvenir and appearing in an advert or hawking their own products could provoke accusations of selling out. Streaming has turned that model upside down.

A song can reach millions of listeners while generating surprisingly little up front for its performer or writer, so today's artists increasingly use music to sell something more profitable, from stadium tickets and VIP access to makeup, tech products and even pictures of their feet.

Read on to discover how the music industry's money machine really works in 2026.

All dollar values in US dollars

At the height of the late-1990s CD boom, a fan would spend around $16 (£12) on an album, creating a substantial pot for the retailer, distributor, label and artist to divide. Radio play, TV appearances and tours served mainly to spark those purchases.

Today, a Spotify subscription or free access through YouTube unlocks almost every album ever released. Music consumption has soared, but the music itself is harder to monetise. The relationship has reversed: now the songs help sell the tours, merchandise, brand partnerships and other ventures where the real money is made.

Global recorded music revenue hit a nominal record of $31.7 billion (£23.7bn) in 2025, showing a remarkable recovery from its 21st-century low of $13.1 billion (£9.8bn) in 2014.

Yet the 1999 peak of $22.3 billion (£16.7bn) would be worth around $45 billion (£33.6bn) today, meaning the market remains roughly 30% smaller in real terms.

Individual plays are also far less valuable. A typical late-1990s newly signed label artist or band earned about $1.22 (91p) per $16 (£12) CD album, but may now need thousands of streams to generate a comparable royalty.

Scale that up to one million album sales, and the difference becomes startling. That late-1990s artist or band's royalties would be worth around $2.6 million (£1.9m) today.

Back in 1999, for instance, 88 albums sold over a million units in the US alone, so it wasn't all that incredible a feat. Using an estimated average streaming payout of $0.004 (£0.003), with 17.5% reaching the act, the same artist or band would need approximately 3.7 billion streams to earn as much.

The two achievements are not directly comparable, but the financial contrast is clear: streaming requires vastly more listening to generate the same artist royalty.

The streaming era has fragmented both audiences and ownership. Albums, charts and number one singles still matter, but they're no longer the key measures of success in a world of playlists, social media and countless online niches.

Hit songs are also divided among more people. Billboard number ones averaged 1.8 credited songwriters in the 1970s. In the 2010s, the number had risen to 5.3. More names make for leaner pickings for individual songwriters.

Making serious money from recorded music may be harder than it once was, but it's still possible, especially for performers who also write or co-write their songs. On top of performance royalties, they earn from the recording itself and collect publishing royalties whenever the composition is streamed, sold, played on radio, performed live, covered or licensed out.

Songwriting credits can therefore turn a famous performer into a fabulously wealthy one, which helps explain the increasingly fierce scramble to appear in the credits.

In recent years, it's become commonplace for performers to secure a lucrative place in the credits, which they can wangle by doing as little as changing a minor lyric. The industry expression "change a word, take a third" refers to the practice, which has prompted its fair share of pushback.

In 2021, prominent songwriters including Amy Allen, Justin Tranter and Victoria Monét (pictured) formed a group called the Pact, urging artists to stop demanding publishing rights from songs they hadn't genuinely helped compose.

A songwriting credit is only half the prize. Every track contains two valuable copyrights: the composition, covering the music and lyrics; and the master, covering the recorded version. Performers who own a share of both can collect from both, while those singing another writer's song on a label-owned recording may receive only their contractual royalty.

Taylor Swift highlighted the difference by rerecording her early albums after failing to gain owernship of the masters earlier in her career, before buying back the originals in 2025.

Yet even top artists might have to wait years to receive royalties. Stars are lavished with bumper record label advances, but these are recouped from future earnings, along with agreed costs such as recording, videos and promotion.

During the CD boom, strong album sales could clear that debt relatively quickly. Today, each stream generates so little that even a popular artist may be in for a long wait to enjoy the windfall. That makes touring, merchandise, sponsorships and side businesses far more important than they once were.

Lily Allen provided perhaps the funniest and bleakest illustration of the new economics. In 2024, the singer said she earned more from around 1,000 subscribers paying for pictures of her feet on OnlyFans than from almost eight million monthly Spotify listeners.

Allen was not suggesting that every musician should follow her example. Her point was that a relatively small number of people paying directly for exclusive content can be worth more than millions consuming music through an intermediary.

Streaming does offer musicians a major advantage, though. The physical format era produced much larger upfront royalties, but most of the money arrived while a single or album was new and occupying valuable shop space. Sales abruptly fell off when the track left the charts and stores.

Streaming gives successful songs a potentially endless shelf life. In 2025, 57% of US on-demand audio plays went to music more than five years old. A song may produce less revenue in the short term these days, but its long-term earning prospects are now vastly improved.

Traditionally, a hit track would gain a second life when it was covered by another artist and introduced to a new generation.

The standout example is Dolly Parton's I Will Always Love You. Originally recorded by the country legend in the 1970s, the song became a global phenomenon in 1992 after Whitney Houston covered it for The Bodyguard soundtrack.

Houston's label owned the new master recording, but Parton retained rights in the underlying song. She reportedly earned a whopping $10 million (£7.5m), equivalent to $24 million (£17.9m) in 2026.

Another tried-and-tested way for a hit song to become a major money-spinner again is through a prominent placement in a TV show or movie. For starters, the artist or band may receive a considerable licensing fee. And these days streaming and social media can send the track viral.

Kate Bush's 1985 recording Running Up That Hill became a worldwide smash again in 2022 after featuring in Stranger Things, reportedly generating $2.3 million (£1.7m) in streaming royalties within weeks.

More recently, Saltburn propelled Sophie Ellis-Bextor's Murder on the Dancefloor back into the charts and helped secure her first US headline tour.

Adverts have long generated licensing income for music rights holders while doubling as powerful promotion.

Levi's campaigns of the 1980s and 1990s revived soul, blues and rock classics, including Marvin Gaye's I Heard It Through the Grapevine, and later propelled new songs to number one.

TV adverts no longer command the same shared audience, but 'sync' opportunities have multiplied. Music is now licensed for everything from video games to apps and branded online videos.

Basically the new radio, TikTok, YouTube Shorts and Instagram Reels can turn a few seconds of music into a global trend. The direct royalty from each short clip may be modest, but the promotional impact can be enormous. As well as hyping up new songs and making them massive hits, social media can also revive older tracks.

Fleetwood Mac's 1977 classic Dreams returned to the charts in 2020 thanks to a viral skateboarding video, with Warner Music reporting a 314% increase in daily Spotify listening among people aged 23 to 27. Other veteran acts who've enjoyed viral social media-led resurgences include Phil Collins, Radiohead and Eminem.

On top of promoting their music, the savviest artists use social media to turn their following into a separate income stream. Companies pay them to showcase clothes, cosmetics, drinks, holidays, tech and more to millions of fans.

Industry estimates suggest musicians can earn anywhere from a few hundred dollars to more than $10,000 (£7k) for a sponsored post, while global superstars may command far more.

In the physical format era, tours often promoted album sales. In the streaming era, the recording increasingly promotes the tour. The biggest acts can generate humongous revenues in a single evening, with the top 100 worldwide touring artists averaging more than $2.5 million (£1.9m) per show in 2025.

Taylor Swift's Eras Tour grossed more than $2 billion (£1.5bn), while Beyoncé's 2025 Cowboy Carter run reportedly pulled in over $400 million (£297m) from only 32 shows. These figures are exceptional, but they reveal why an artist may release comparatively unprofitable music. It keeps the audience emotionally invested enough to buy a costly concert ticket.

With the record industry increasingly reliant on touring income, concert tickets have surged in price. Globally. the average ticket price rose from $96.17 (£72) in 2019 to $132.62 (£99) in 2025, compared with just $25.81 (£19) in 1996, which is the equivalent of around $52 (£39) today. But younger fans are willing to pay.

Many Gen Z concertgoers cut back on bars, clubs and routine nights out, spending weekends at home or at the gym instead. They then pour those savings into a blockbuster show, braving dynamic pricing, hours-long online queues, technical glitches, confusing 'premium' packages and a resale market plagued by eye-watering markups and scams.

The old concert model sold most people broadly similar tickets. Modern tours divide audiences into increasingly expensive tiers. A must for many Gen Z and Millennial fans, a VIP package may include a luxury seat, early entry, soundchecks, exclusive merchandise, hospitality, photographs or meet-and-greets.

Ticketmaster says premium experiences accounted for around 18% of live music revenue in 2025, double their 2019 share, with artists clearly laughing all the way to the bank.

Still, touring is an expensive business. Promoters, venues, agents, managers, musicians, dancers, security teams, caterers, insurers and transport companies must all be paid. Stages, screens, costumes and special effects can cost millions before opening night. Smaller acts may lose money despite selling out venues, particularly when fuel, accommodation and crew costs rise.

In 2024, indie star Kate Nash launched an OnlyFans campaign called Butts for Tour Buses, saying the subscription income helped fund touring. For most musicians, playing live remains work rather than access to a money-printing machine.

Artists also decide how much tour income to retain and how much to invest in staff, production and goodwill.

Taylor Swift doled out a reported $197 million (£146.8m) in bonuses to Eras Tour workers on top of their salaries. Recipients included dancers, musicians, truck drivers, caterers, security personnel and technical crews. The staggering figure represented almost 10% of the tour's ticket gross.

Meanwhile, other stars are notorious for paying crew peanuts and keeping a bigger revenue share for themselves.

Las Vegas residencies were once associated with veteran entertainers in their golden years, but they've become prestigious extravaganzas that current stars now embrace.

Celine Dion grossed an incredible $681 million (£507m) across her run of Vegas shows, while Adele was reportedly paid $2 million (£1.5m) per performance for her Caesars Palace stint. She then exported the model to Germany, selling more than 730,000 tickets for 10 concerts at a temporary venue in Munich.

A residency eliminates constant travel and repeated setup, although the production can still be enormously expensive.

Festivals allow stars to perform for immense crowds without personally organising an entire stadium tour or lavish residency. The promoter supplies the site, much of the infrastructure and a ready-made audience, while the headliner receives an agreed fee.

Contracts are private, but deals can be huge these days, eclipsing what artists earned in the past.

For instance, headliner Justin Bieber pulled in an estimated $10 million (£7.5m) across Coachella 2026's two weekends. In contrast, the highest-paid act at 1969's Woodstock, Jimi Hendrix, walked away with $18,000 (£13k), equivalent to a mere $163,000 (£121k) today.

Tour shirts once served mainly as mementos. Today, clothes, dolls, jewellery, posters, fragrances, limited-edition objects and myriad other products are de rigueur. Merchandise has even been credited with saving the music industry. The UK's Musicians' Union notes that merch income usually sits outside label and publishing recoupment, making it particularly attractive.

For smaller acts, sales at the merch table may determine whether a tour breaks even. Venues sometimes claim substantial commissions, however, prompting campaigns demanding that artists keep 100% of their sales.

The vinyl revival is less a return to the old mass market than an extension of the superfan economy. US vinyl revenue passed $1 billion (£744m) in 2025 for the first time since 1983. With Taylor Swift at the vanguard, stars now sell coloured discs, alternate artwork, signed editions and retailer exclusives, often encouraging dedicated fans to buy several versions of the same album.

The listener may play the music digitally while displaying the pristine record as an object, turning a recording format into a cherished collectable and visible badge of loyalty.

Patreon, Bandcamp, Substack and artist-run membership platforms allow musicians to charge their most dedicated supporters directly. Subscribers might receive demos, private livestreams, early tickets, unreleased songs or access to an online community.

Crowdfunding can also finance an album before it exists. The attraction is recurring or upfront income without a conventional label loan. The drawback is that fans expect regular attention and rewards, turning the artist into the manager of a demanding subscription service.

Gaming platforms have created revenue streams that didn't exist during the CD era.

More than 36 million people watched Lil Nas X's 2020 virtual Roblox concert, which included mini-games and digital merchandise. That same year, Travis Scott's Fortnite event reportedly made around $20 million (£15m), despite lasting only minutes and requiring no physical stadium.

Artists can also license avatar outfits, dance moves and virtual accessories that cost almost nothing to reproduce.

Corporate endorsements are hardly new, but attitudes have transformed. A credible musician advertising cars or soft drinks once risked accusations of compromising their art. Today, brand partnerships are often presented as proof of entrepreneurial success.

Deals can include cash fees, royalties, free promotion or even equity. But the money comes with conditions: artists must protect the brand's reputation.

Adidas terminated its hugely profitable Yeezy partnership with Kanye West in 2022 after his antisemitic remarks, instantly wiping out one of music's biggest commercial deals.

The shrewdest musicians increasingly build companies rather than merely advertise them. While artists have been doing this for years, with Les Paul's collaboration with Gibson in 1952 an early example, the trend has really taken off in the 21st century.

In 2006, Dr Dre co-created Beats, which Apple purchased for $3 billion (£2.2bn) in 2014. Other notable examples include Rihanna's Fenty Beauty, which is now a billion-dollar-scale cosmetics business. Both stars ended up becoming billionaires courtesy of these business moves.

Streaming transformed old songs into predictable, continuously paying assets. Investment funds, labels and publishers consequently began buying catalogues for colossal multiples of annual royalties, particularly while interest rates were low.

In 2021, Bruce Springsteen smashed the record after selling his recorded and publishing rights for a reported $500 million (£372m). A long list of acts have since followed suit, from Pink Floyd and Britney Spears to Queen, which set a new record in 2024 after landing a $1.2 billion (£1bn) deal.

The old system was never fair. TLC, one of the most successful girl groups of all time, filed for bankruptcy in 1995 despite selling millions of records, with a contemporary report stating the group had received only $1.2 million (£1m) from an estimated 14 million album sales. Streaming did not invent predatory contracts, recoupment or unequal bargaining power. It changed which assets are most valuable.

In 2026, the strongest position belongs to an artist who writes the songs, owns the masters, controls their brand and can sell directly to loyal fans. Music remains the foundation, but the fortune increasingly comes from everything built around it.

Now take a look at the biggest music catalogue sales