What to Do Before You Quit Your Day Job
Don't quit your day job to become a full-time entertainer until:
- You have a strong reputation
- You have produced a significant body of work
- You have built up a sizable audience
- You have run financial projections estimating your future income and expenses
- You understand exactly how you will cover your basic expenses if you cannot yet do so using income earned as an entertainer (e.g. through some savings or a year-end bonus)
- You have a clear understanding of how you will make money as an entertainer
- You have an informed estimate of when you will be able to fully support yourself as an entertainer
- You have an emergency fund that can support you in the event that you are not earning sufficient income by the time your transitional savings or income streams run out
- You have a backup plan should your venture as an online entertainer not pan out
Not every artist who quits his or her job to enter the entertainment industry does so much to prepare, but not every individual who takes the leap succeeds. If you want to quit your day job to start a successful career, you had better have your act together.
Do not underestimate the amount of work you can do while also holding down a steady job. Is establishing a career as an entertainer difficult when one is working eight to nine hour days five days a week? Absolutely. But if you aren't driven to create during every hour of your free time, you probably lack the drive, passion, and devotion you'll need to succeed as a full-timer in the first place. Consider your ability to build a solid entertainment career foundation while maintaining a day job to be an initial test. If you can check off everything on the list above, your odds of actually making it as a pro will be significantly higher.
Potential Career Paths for Online Entertainers
Those who provide entertainment online typically make an income through one of three avenues:
- Entrepreneurship: This involves building and monetizing a business that offers products and services related to the entertainment you provide
- Contract-based entertainment: The most "traditional" of the three paths, this avenue involves signing contracts with record labels, studios, or publishers (or getting part of full time jobs with these corporations)
- Independent entertainment: This alternative approach is adopted by entertainers who independently monetize their work (rather than an entire business related to it) though sales, sponsorship, fundraising, ad revenue, royalties, and public appearances
Income Levels to Expect as an Online Entertainer
In 2012, the United States Bureau of Labor Statistics reported arts, design, sports, entertainment, and media occupations to earn a mean hourly wage of $26.20 and a mean annual wage of $54,490. Specific professions within this category yielded the following median hourly and annual wages:
- Musicians and Singers: $31.94 (annual incomes were not computed as people within this profession seldom work year-round and full time)
- Actors: $35.97 (again, annual incomes were not computed)
- Multimedia Artists and Animators: $33.44, $69,560
- Music Directors and Composers: $25.68, $53,420
- Producers and Directors: $44.42, $92,390
- Motion Picture and Video Industries: $41.75, $86,840
- Independent Artists, Writers, and Performers: $33.75, $70,210
- Performing Arts Companies: $28.22, $58,690
- Film and Video Editors: $30.80, $64,060
- Photographers: $17.47, $36,330
- Camera Operators, Television, Video, and Motion Picture: $23.56, $49,010
- Broadcast Technicians: $21.18, $44,050
- Sound Engineering Technicians: $26.60, $55,340
- Audio and Video Equipment Technicians: $22.13, $46,040
- Radio and Television Announcers: $20.13, $41,860
As this course addresses entertainment as a broad subject (and from the perspective of those likely to build independent, internet-based careers), these figures should be taken with a grain of salt- especially if your intention is not to be hired full time by a production company or some other established employer.
Estimating how much you might make as an entertainer through online sales, downloads, and views is difficult, as we don't have much organized data to work with. What is clear is that depending on views or ads alone for income is not practical. One would need an incredibly large number of views or listens to garner even minimum wage (Don't believe us? Check out this infographic created by David McCandless of InformationIsBeautiful.com in 2010).
Primary Sources of Income for Online Entertainers
If ad revenue alone is not likely to be enough to sustain you, what will? Most internet-based entertainers make a living through a combination of the following monetization streams:
- Ad revenue
- Premium content sales
- Premium subscription sales
- Product sales
- Consulting services related to key skills
- Income from an internet-based studio
- Live appearances
- Partnering with institutions
- Deals with major record labels, publishers or production studios
Donations and crowdfunding work best when you have already a large and devoted fan base. Do not depend on these monetization streams to support you before you have built up a significant following.
Though not to be depended on as a primary source of income, ad revenue makes a significant difference for many entertainers and should not be completely discounted. Sponsorships, on the other hand, offer a source of promotion-related revenue that is easier to control and turn into significant chunks of change. Both monetization streams require high levels of viewership.
Commissions are particularly popular amongst comic artists, who often sell custom-made comics or drawings on the side. Even those who are not in a position to create unique content for their fans can provide fans with a unique, exclusive experience by providing premium content to monthly subscribers or high-level donors.
Those who take an entrepreneurial approach to entertainment often make the lion's share of their income through product sales. Common products include shirts, bags, mugs, and other merchandise emblazoned with a logos, art, or show-related references. Some entrepreneurial entertainers also provide services that leverage their personal brands and unique abilities. For example, many artists who share animated shorts on YouTube also help small business create animated product demos. Some artists go so far as to develop entire studios related to sound or video production (or go on to launch YouTube partner networks).
Musicians clearly make a sizable proportion of income through live performances, though they are not the only class of entertainers who can monetize in-person appearances. Many YouTube stars and even a handful of well-known comic creators have been paid to speak at special conferences and corporate events.
Entertainers who provide work with educational value are among those most likely to garner funding from nonprofit and educational institutions. For an example of an entertainer who has had success gaining institutional support, refer to Brady Haran, the man behind YouTube channels including Computerphile, Numberphile, Periodic Videos, and Sixty Symbols.
Finally, it is not uncommon for particularly famous and successful online entertainers to transition into the traditional entertainment industry by signing contracts with publishers, studios, and record labels. Those who seem to garner the most from such arrangements maintain digital rights to their work (and are therefore able to maintain their existing incomes- with higher royalty rates- while reaching entirely new audience segments).
Because some of your income may come directly from individuals and businesses, you should be prepared to accept a variety of payment types online. For an overview of your major options, review our guide to accepting payments online (and beyond).
Establishing Financial Security as an Online Entertainer
The simplest means by which you can reduce financial risk in this line of work is by diversifying your income streams. The less you depend on any one contract, product, platform, or service to make ends meet, the better.
Cultivating multiple income streams is not easy. You only have so much time to create fresh content and value. That said, there are things you can do to maximize time spent on value creation and minimize time spent on administrative tasks. Common methods include:
- Automating as much of your life as possible
- Avoiding distractions (email, social media, etc.)
- Hiring an assistant to help with emails, scheduling, and other administrative tasks
- Hiring an accountant to help you manage finances
- Outsourcing aspects of your content creation process that need not be handled by you (such as editing, publishing, or distribution)
The point is to only do that which nobody else can do.
In addition to building up multiple sources of revenue, you can reduce risk by living modestly and carefully allocating savings for big future expenses (cars, homes, children), emergencies (unforeseen medical expenses, life events that prevent you from working for six to twelve months), and retirement. When your income increases, maintain your present lifestyle, boost your savings rates, pay off any debt you might have, and reinvest in your career.
Finally, maintain a backup plan that ensures you will be able to make money should your entertainment career not pan out or take a terrible nose dive. Hopefully you will never have to go down that path- but in the event that don't work out, you would be better off just losing your dream job and not everything else (your home, car, and ability to buy food) with it.d
Administrative Tips for Online Entertainers
Taking risks as an entertainer is a good idea. Taking risks with your health is not. Even if you're just scraping by and pulling together an independent income, we strongly recommend getting health insurance (especially considering that, should the Affordable Care Act pass, you may be fined for foregoing coverage).
Visit Healthcare.gov as a starting point and utilize the United States’ Health Department of Health and Human Services’ Insurance Finder Tool to find viable options. You may also review the optional benefits provided by the National Association for the Self Employed (basic membership in the organization ranges from $25 to $120 per year). Should you be concerned about the affect health care legislation may have on your fledgling independent business, read the Small Business Administration’s guide to the Affordable Care Act.
Taxes need not be a complicated affair. Simply:
- Collect receipts for all deductible business expenses (qualifying expenses must be “both ordinary and necessary“)
- Collect and record all invoices sent and checks / payment received
- Familiarize yourself with Schedule C and Schedule SE (Form 1040) if you qualify as self-employed (it's better to know about the information you'll need to provide well ahead of time)
- Keep your tax returns and receipts for at least three years
Make a point of recording profits and losses as they arise- not every three months or so. In addition to keeping physical records in a centralized, organized place, maintain digital records in a spreadsheet (which will make it far easier to calculate totals when filling out tax forms). Maintain special folders in your email account(s) for deductible electronic receipts and business-related payment notices related to a certain year.
Use the IRS’ Small Business and Self-Employed Tax Center and Small Business Association’s guide to filing and paying taxes for additional guidance and help. Should you know yourself well enough to understand that you will never keep sound financial records, hire a patient and trustworthy CPA to organize your finances on your behalf.
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