Even Music Celebrities Go Bankrupt

There's an interesting study on The Economics of Making Music put together by Bear Share that outlines just how difficult it is to make a buck in the music biz unless you happen to be a big corporation. As you can see by the chart on the left (which comes via MinorityFortune.com), there's a lot of money being made in the business, but the musicians who make it all possible are benefiting poorly, typically taking in only $23.40 for every $1,000 earned.
The study goes on to outline some shocking details regarding some major stars with giant earning power that were forced into bankruptcy, in some cases as a way to be released from an unfair contract. According to the study:
"Some music lovers are surprised to hear news of their favorite artists going bankrupt, but it does happen - and not always because the artist went on a wild spending spree. Bankruptcy is one of musicians' only defenses against bad record contracts.
Despite TLC's overwhelming success as an R&B group in the 90's, they were for forced to file for bankruptcy due to the massive overhead costs they weren't able to pay. They earned less than 2 percent of the $175 million dollars generated by CD sales - about 40 times less than the profit that was divided among their management, production and record companies. Likewise, Toni Braxton declared bankruptcy in 1998 after generating $188 million dollars from CD sales; her record contract paid her less than 35 cents per album.
The Goo Goo Dolls have generated $2 million in album sales, but filed bankruptcy because they owed so much money to their record label. Bankruptcy has become increasingly common over the years, even with many successful musicians. Even Jerry Lee Lewis and Michael Jackson, both members of the Rock and Roll Hall of Fame, have filed bankruptcy.
Sometimes legal troubles, debts or taxes are to blame for famous musicians filing bankruptcy. Other times; however, it is simply a way to get out of a contract. The Recording Industry Association of America (RIAA) is lobbying to change bankruptcy laws, making it more difficult for artists to file bankruptcy for the sole purpose of getting out of a contract."
Music has never been an easy business to make a buck in. Go back a hundred years and stories abound how an unsuspecting musician made pennies on the dollar for their work while someone else benefited. Even today with artists having a greater awareness and access to expert legal council doesn't necessarily mean that the outcome will be any different.
    The best way to protect yourself is to be in the business for the right reason in the first place, and that's for the music, but you still have to surround yourself with the best team of professionals that you can afford.