Before you put money into a studio, it helps to know what the numbers look like for studios that already exist. There is not much public data. The best I found is a 2021 government-commissioned market assessment of studios in England, which I use here alongside Paul White’s thinking on the cost of equipment and the US Small Business Administration’s guide to funding a business.
One caution on the main source: the DCMS report was written by Sound Diplomacy for the UK’s culture department, and its survey was small. It had 125 studio responses and the authors say it didn’t meet the threshold for statistical representation and shouldn’t be used to generalise about the overall studio market. Treat the figures as signs, not benchmarks.
What studios earned before the pandemic
The report says the studio market was financially sustainable before COVID-19, with an average annual gross income of £109.7K (that figure is gross income, not profit). It adds that rehearsal studios were the most profitable, at £132.4K. The pandemic then hurt: of the studios surveyed, 73% had lost more than 25% of annual gross income, though 31% expected to recover within a year and another 29% within one to two years.
Image: A 72-channel analog mixing desk at Chalice Studios, Hollywood by Osher Günsberg, CC BY-SA 2.0, via Wikimedia Commons.
Where the money goes
Rent is the line that matters most. The report says space rental, which includes rent and business rates, was the largest part of operating costs for surveyed studios, on average 34%. For recording studios specifically, rent and wages were each 26% of costs, utilities 15%, and other administrative and operating costs, such as licences and equipment, 33%. Production rooms, 55% of which were home studios, spent only 23% on space.
In other words, the building costs more than the gear. The report links rent and rate rises to urban regeneration and a 2017 business rates revaluation, and says focus group participants saw this as the primary cause of studio closures.
Prices are under pressure
Studio owners in the focus groups said service rates had declined or stagnated compared with 20 years ago. They put this down to democratization and new competitors entering where barriers to entry are low. The report’s own view is that supply is sufficient, barriers to entry are low, and there are no signs of market dominance.
The same report found that 57.1% of surveyed home studio users also use commercial studios. That means home studios compete with commercial studios but are not a pure substitute for them. If you are weighing home against studio as a customer, the series post Careers in Audio, and When to Book a Studio Instead of Recording at Home covers that decision.
Where value is added
The report’s conclusion is that traditional studios need to distinguish themselves with added value, for example through particular production and creative processes, the reputation of their staff and artistic development services. The report says studios have diversified into education and training, consulting and coaching, and audio work outside music such as voiceover and audiobooks.
Equipment is not the main long-term cost, but it still needs thinking
White, writing about buying equipment, uses a formula with length of service on top and price on the bottom. He says analog items with jack or XLR connectors generally have the longest expected life, a microphone can last a lifetime with little servicing, and interfaces and software carry the risk that driver support will end or connectors become obsolete. His closing test is to ask whether a purchase will really affect sales of your music. For a business, I would rephrase it this way, as my own suggestion: will this item bring in bookings?
Image: The exterior of Doppler Studios by Stephen at Doppler., CC BY-SA 3.0, via Wikimedia Commons.
How people fund it
The SBA describes three main routes: self-funding, which keeps complete control but puts all the risk on you; investors, usually through venture capital in exchange for an ownership share; and crowdfunding, where backers don’t generally take ownership and often expect a gift or perk. It also lists the small business loan, and says that to improve your chances you should have a business plan, expense sheet and financial projections for the next five years. The SBA is a US agency, so details differ elsewhere.
Questions to answer first
My own checklist, not taken from a source:
- Could you run it from a room in your home for a year before signing a lease?
- What share of your costs would be rent, and what happens if rent rises?
- What can you offer that a home studio can’t?
- What other revenue could you add besides recording?
- How many booked hours would cover your fixed costs?
None of that guarantees a return. The sources say this is a market with low barriers, rising property costs and competition from home setups.
Sources
- DCMS / Sound Diplomacy: Music Studio Market Assessment (June 2021, England)
- Sound On Sound: Cost Vs Value (Paul White, November 2016)
- US Small Business Administration: Fund your business