Earlier quoted context omitted.
The best ways for artists to earn money are not tours and merchandise. I don't know why that assertion keeps getting passed around as fact. No one ever seems to post data supporting it. For your basic indie musician tour (plus merchandise), you're doing really well if you are making enough money to pay for the food and lodging costs of the tour.
http://www.techdirt.com/articles/20100712/23482610186.shtml Here you go the numbers. The High point is your average signed artist gets $23 out of $1000 in sales or 2.3%.
Yes, it is true that big-label acts made most of their money from touring and merchandise. My point is that that fact does not translate to smaller-time indie artists.
A lot of people tend to improperly point to the RIAA practices (of capturing most of the licensing/royalty pie), and use it to make the case that indie musicians should also not expect any revenue from their product and instead focus on touring and merchandise. It's a self-serving argument from those that are in favor of "free" streaming music. In other words, there's a difference between claiming that RIAA has historically captured most of that pie, and claiming that the pie doesn't exist.