Utilizing Compound Interest To Build A Music Career

What is compound interest?

In the money and finance world compound interest occurs when you reinvest the interest earned off an initial principle / investment. Then your principle plus the interest earns more interest which you can reinvest to earn more interest which you can reinvest to earn more interest and so on… The ‘ole logarithmic millionaire maker..

However, we can see the effects of compound interest in our lives in many other areas as well.

Let’s take exercise for example. Let’s say you pick up running as a hobby. You go from running zero times a week to running two miles three times a week. At first, the exercise is miserable and you’re grumpy and dang wouldn’t it be nice to get back inside and turn on Netflix and finish season two of Outlander.. Alas, you persist and after a month you start noticing you have more energy at work, you are sleeping better, and you’ve lost 5 lbs. Woah that’s cool. In month two it’s easier to get up and run then when you started. In month three you’re feeling real good and have come to enjoy running. You’re in better shape which makes running easier and now you can run faster and longer. The effect of running has compounded in your life and the longer you do it the more benefits you achieve.

Now let’s talk about your music career and the easiest way to blow up any potential of compound interest.

1) Quitting Too Early

So many things to quit. So many ways to blow it all up and kill the potential of compound interest. Here are a few example:

• Implementing a new content marketing strategy you know is probably a good idea but then giving up on it after one month b/c you’re disappointed in the results. Disclosure: some content marketing strategies are stupid and not helpful but others if you stick to them for a long time can have a compounding interest effect.

 

• Working with new collaborators on every single project you do. Don’t get me wrong, I am a huge advocate for collaborating with new folks. However, there is a such thing as relational compounding interest. The more time you make music with someone the more built up trust, comfort, candidness, etc… you cultivate. Those are important things in the studio and when writing or producing songs with people. Every time you change it up you risk having to start from zero. Four creatives in a room with years of built up trust, comfort, respect, integrity, candidness can make WAY better art then four strangers.

 

• Redefining your sound every single song. If the people (your fans) have spoken and let you know they like your melancholy indie folk song then maybe don’t release a jazz polka song for your next release. I’m not saying all your songs need to be a reiteration or derivative of whats already been done, but if you have one song that has 100x more positive engagement than all your other music, then maybe it’s worth digging deeper into that.

2) Making Bad Investments

• You won’t make any money if you put it into a fund with an annual return of - 10%. You won’t cultivate a loving relationship with someone who spits in your face every time you hangout. You won’t improve your health and wellness very much by only doing bicep curls. Though your arms will be freakin’ ripped!!!!!!!!!! It’s hard to know what is a good and what is a bad investment. Consider this: will future you thank current you for doing this? Whatever it is you’re considering doing, starting, making, etc… What will future say? Will yourself in 20 years, were he / she sitting in front of you, say thank you younger me for doing this?

Homework for the people who care:

Try writing down three ways you can utilize the effects of compound interest in your music career. This could be really investing in your relationship with a co-writer, choosing 10 cities to really really focus on and play shows in until you can fill 100+ rooms, reinvesting your earnings from one release into the marketing of the next released and so on…