World music market
Encyclopedia
The music industry or music business sells composition
s, recording
s and performances of music. Among the many individuals and organizations that operate within the industry are the musicians who compose and perform the music; the companies and professionals who create and sell recorded music (e.g., music publishers, producers
, studios, engineers
, record label
s, retail and online music store
s, performance rights organizations); those that present live music
performances (booking agents
, promoters
, music venue
s, road crew
); professionals who assist musicians with their careers (talent manager
s, business manager
s, entertainment law
yers); those who broadcast music (satellite
and broadcast radio); journalists; educators; musical instrument
manufacturers; as well as many others.
In the late 19th century and early 20th century, the music industry was dominated by the publishers of sheet music. By the middle of the century record
s had supplanted sheet music as the largest player in the music business: in the commercial world people began speaking of "the recording industry" as a loose synonym of "the music industry". Since 2000, sales of recorded music have dropped off substantially, while live music
has increased in importance.
Three "major corporate labels" dominate recorded music — Universal Music Group
(after purchasing EMI
in November 2011), Sony Music Entertainment
, and Warner Music Group
— each of which consists of many smaller companies and labels serving different regions and market
s. The live music industry is dominated by Live Nation
, the largest promoter and music venue
owner. Live Nation
is a former subsidiary of Clear Channel Communications
, which is the largest owner of radio stations in the United States. Other important music industry companies include Creative Artists Agency (a management and booking company) and Apple Inc. (which runs the world's largest music store, the iTunes Store
).
from aristocracies
and churches
. In the mid-to-late 18th century, performers and composers such as Wolfgang Amadeus Mozart
began to seek commercial opportunities to market their music and performances to the general public. After Mozart's death, his wife (Constanze Weber) continued the process of commercialization of his music through an unprecedented series of memorial concerts, selling his manuscripts, and collaborating with her second husband, Georg Nissen, on a biography of Mozart.
publishers dominated the music industry. In the United States, the music industry arose in tandem with the rise of blackface
minstrelsy
. In the late part of the century the group of music publishers and songwriters which dominated popular music in the United States became known as Tin Pan Alley
.
in music markets. With the invention of the phonograph
, invented by Thomas Edison
in 1877, and the onset of widespread radio communications, the way music is heard was changed forever. Opera houses, concert halls, and clubs continued to produce music and perform live, but the power of radio allowed obscure bands to become popular on a nationwide and sometimes worldwide scale.
The "record industry" eventually replaced the sheet music publishers as the industry's largest force. A multitude of record labels came and went. Some note-worthy labels of the earlier decades include the Columbia Records
, Crystalate, Decca Records
, Edison Bell, The Gramophone Company, Invicta, Kalliope, Pathé
, Victor Talking Machine Company
and many others.
Many record companies died out as quickly as they had formed, and by the end of the 1980s, the "Big 6" — EMI
, CBS
, BMG, PolyGram
, WEA
and MCA
— dominated the industry. Sony
bought CBS Records in 1987 and changed its name to Sony Music in 1991. In mid-1998, PolyGram
merged into Universal Music Group
(formerly MCA), dropping the leaders down to a "Big 5".
Genre-wise, music entrepreneurs expanded their industry models into areas like folk music
, in which composition and performance had continued for centuries on an ad hoc
self-supporting basis. Forming an independent record label
, or "indie" label, continues to be a popular choice for up-and-coming musicians to have their music heard, despite the financial backing associated with major labels.
, cassettes and digital download
s in the world dropped 25% from $38.6 billion in 1999 to $27.5 billion in 2008 according to IFPI. Same revenues in the U.S. dropped from a high of $14.6 billion in 1999 to $10.4 billion in 2008. The Economist
and The New York Times
report that the downward trend is expected to continue for the foreseeable future —Forrester Research
predicts that by 2013, revenues in USA may reach as low as $9.2 billion. This dramatic decline in revenue has caused large-scale layoffs inside the industry, driven retailers (such as Tower Records
) out of business and forced record companies, record producers, studios, recording engineers and musicians to seek new business model
s.
The "Big 5" major record companies became the "Big 4" in 2004 when Sony acquired BMG, and the "Big 3" when EMI was acquired by Universal in 2011.
In the early years of the decade, the record industry took aggressive action against illegal file sharing
. In 2001 it succeeded in shutting down Napster
(the leading on-line source of digital music), and it has threatened thousands of individuals with legal action. This failed to slow the decline in revenue and proved a public-relations disaster. However, some academic studies have suggested that downloads did not cause the decline.
Legal digital downloads became widely available with the debut of the iTunes Store
in 2003. The popularity of internet music distribution has increased and in 2009 more than a quarter of all recorded music industry revenues worldwide are now coming from digital channels.
However, as The Economist reports, "paid digital downloads grew rapidly, but did not begin to make up for the loss of revenue from CDs." The 2008 British Music Rights survey showed that 80% of people in Britain wanted a legal P2P service, however only half of the respondents thought that the music's creators should be paid. The survey was consistent with the results of earlier research conducted in the United States, upon which the Open Music Model
was based. According to Nielson Soundscan, by 2009 CDs accounted for 79 percent of album sales, with 20 percent coming from digital, representing both a 10 percent drop and gain for both formats in 2 years.
The turmoil in the recorded music industry changed the twentieth-century balance between artists, record companies, promoters, retail music-stores and the consumer. , big-box store
s such as Wal-Mart
and Best Buy
sell more records than music-only stores, which have ceased to function as a player in the industry. Recording artists now rely on live performance
and merchandise for the majority of their income, which in turn has made them more dependent on music promoters like Live Nation (which dominates tour promotion and owns a large number of music venue
s.) In order to benefit from all of an artist's income streams, record companies increasingly rely on the "360 deal
", a new business-relationship pioneered by Robbie Williams
and EMI in 2007.
At the other extreme, record companies can offer a simple manufacturing and distribution deal
, which gives a higher percentage to the artist, but does not cover the expense of marketing and promotion. Many newer artists no longer see any kind of "record deal" as an integral part of their business plan at all. Inexpensive recording hardware and software made it possible to record reasonable quality music in a bedroom and distribute it over the internet to a worldwide audience.
This, in turn, caused problems for recording studios, record producers and audio engineers: the Los Angeles Times
reports that as many as half of the recording facilities in that city have failed.
Changes in the music industry have given consumers access to a wider variety of music than ever before, at a price that gradually approaches zero. However, consumer spending on music-related software and hardware increased dramatically over the last decade, providing a valuable new income-stream for technology companies such as Apple Inc.
that are created and sold by the recording industry: compositions
, recording
s and media (such as CD
s or MP3
s). There may be many recordings of a single composition and a single recording will typically be distributed into many media.
s or composer
s and are originally owned by the composer. The composer may sell the copyright to another party. Compositions are (traditionally) licensed or "assigned" to publishing companies. A publishing contract
specifies the business relationship between the copyright owner and the publishing company. The publishing company (or a collection society operating on behalf of many such publishers, songwriters and composers) collects fees (known as "publishing royalties") when the composition is used. A portion of the royalties are paid by the publishing company to the copyright owner, depending on the terms of the contract. Typically (although not universally), the publishing company will provide the owner with an advance against future earnings when the publishing contract is signed. A publishing company will also promote the compositions, such as by acquiring song "placements" on television
or in film
s.
s and audio engineers. They were traditionally made in recording studio
s (who are paid a daily or hourly rate) in a recording session. In the 21st century, advances in recording technology have allowed many producers and artists to create "home studios", bypassing the traditional role of the recording studio. The record producer
oversees all aspects of the recording, making many of the logistic, financial and artistic decisions in cooperation with the artist. Audio engineers (including recording, mixing
and mastering engineer
s) are responsible for the audio quality of the recording. A recording session may also require the services of an arranger
or studio musicians.
Recordings are (traditionally) owned by record companies. A recording contract
specifies the business relationship between a recording artist and the record company. In a traditional contract, the company provides an advance to the artist who agrees to record music that will be owned by the company. The A&R
department of a record company is responsible for finding new talent and overseeing the recording process. The company pays for the recording costs and the cost of promoting
and marketing
the record. For physical media (such as CD
s), the company also pays to manufacture and distribute
the physical recordings. Smaller record companies (known as "indies
") will form business relationships with other companies to handle many of these tasks. If contractually bound to do so, the record company pays the recording artist a portion of the income from the sale of the recordings, generally known as a mechanical royalty. (This is distinct from the publishing royalty, described above.) This portion is similar to a percentage, but may be limited or expanded by a number of factors (such as free goods, recoupable expenses, bonuses, etc.) that are specified by the record contract. Session musicians and orchestra members (as well as a few recording artists in special markets) are under contract to provide work for hire
; they're typically only paid one-time fees or regular wages for their services, rather than royalties.
ers and are owned by the consumer. A music distributor delivers the physical media from the manufacturer to the retailer and maintains relationships with retailers and record companies. The music retailer pays the distributor, who in turn pays the record company for the recordings. The record company pays mechanical royalties to the publisher, composer, and songwriter via a collection society. The record company then pays royalties, if contractually obligated, to the recording artist. In the case of digital downloads, there is no physical media other than the consumer's hard drive. The distributor is optional in this situation; large online shops may pay the labels directly, but digital distributors do exist to service vendors large and small. When purchasing digital downloads, the consumer may be required to agree to record company and vendor licensing terms beyond those which are inherent in copyright; for example, some may allow freely sharing the recording, but others may restrict the user to storing the music on a specific number of hard drives.
provides an income stream that is paid exclusively to the composer
s and their publishing company. When a recording is broadcast (either on radio or by a service such as Muzak
), performance rights organisation
s (such as the ASCAP and BMI
in the US or MCPS
and PRS in the UK), collect a third type of royalty known as a performance royalty, which is paid to composers and recording artists. This royalty is typically much smaller than publishing or mechanical royalties. When recordings are used in television
and film
, the composer and their publishing company are typically paid through a synchronization license
. Subscription services (such as Rhapsody
) also provide an income stream directly to record companies, and through them, to artists, contracts permitting.
In addition to these traditional business relationships, new ways of doing business are being developed in the 21st century. The traditional lines that once divided artist, publisher, record company, distributor, retail and consumer electronics have become blurred. Artists may own their own publishing companies, artist management companies may promote and market recordings on behalf of their clients, artists may promote and market themselves using only free services such as YouTube
or social media
, consumer electronics
companies have become digital music retailer
s, and so on, in many variations. New digital music distribution technologies have also forced both government and industry to re-examine the definitions of intellectual property and the rights of all the parties involved.
brings together a performing artist and a venue
owner and arranges contracts. A booking agency represents the artist to promoters, makes deals and books performances. Consumers usually buy tickets either from the venue or from a ticket distribution service such as Ticketmaster
. In the US, Live Nation
is the dominant company in all of these roles: they own most of the large venues in the US, they are the largest promoter, and they own Ticketmaster
.
Choices about where and when to tour are decided by the artist's management and the artist, sometimes in consultation with the record company. Record companies may provide tour support; they may finance a tour in the hopes that it will help promote the sale of recordings. However, in the 21st century, it has become more common to release recordings to promote tours, rather than book tours to promote records.
Successful artists will usually employ a road crew
: a semi-permanent touring organization that travels with the artist. This is headed by a tour manager
and provides stage lighting
, live sound reinforcement
, musical instrument tuning and maintenance
and transportation. On large tours, the road crew may also include an accountant, stage manager and catering. Local crews are typically hired to help move equipment on and off stage. On small tours, all of these jobs may be handled by just a few roadies, or by the musicians themselves.
yer assists them with the details of their contracts with record companies and other deals. A business manager
handles financial transactions, taxes and bookkeeping. Unions, such as AFTRA in the U.S., provide health insurance
and other services for musicians.
and, as such, may derive income from many other streams, such as merchandise or internet-based services. These are typically overseen by the artist's manager and take the form of relationships between the artist and companies that specialize in these products.
Nielsen SoundScan reported that the big four accounted for 81.87% of the US music market in 2005:
Independent labels — 18.13%
and in 2004, 82.64%:
The global market was estimated at $30–40 billion in 2004. Total annual unit sales (CDs, music videos, MP3
s) in 2004 were 3 billion.
According to an IFPI report published in August 2005, the big four accounted for 71.7% of retail music sales:
Prior to December 1998, the industry was dominated by the "Big Six": Sony Music and BMG had not yet merged, and PolyGram
had not yet been absorbed into Universal Music Group. After the PolyGram-Universal merger, the 1998 market shares reflected a "Big Five", commanding 77.4% of the market, as follows, according to MEI World Report 2000:
Note: the IFPI and Nielsen Soundscan use different methodologies, which makes their figures difficult to compare casually, and impossible to compare scientifically.
According to the IFPI more than 95% of the total revenue from music in 2003 was derived from the
30 major countries in the proportions shown above, organized roughly by geographic location. In the industry, it is commonly
accepted that the three major music markets are the United States, Japan and the United Kingdom.
Approximately 21% of the gross CD revenue numbers in 2003 can be attributed to used CD sales growing to approximately 27% in 2007 (the growth is attributed to increasing on-line sales of used product by outlets such as Amazon.com, the growth of used music media is expected to continue to grow as the cost of digital downloads continues to rise.)
In its June 30, 2000 annual report filed with the U.S. Securities and Exchange Commission, Seagram reported that Universal Music Group made 40% of the worldwide classical music
sales over the preceding year.
Musical composition
Musical composition can refer to an original piece of music, the structure of a musical piece, or the process of creating a new piece of music. People who practice composition are called composers.- Musical compositions :...
s, recording
Sound recording and reproduction
Sound recording and reproduction is an electrical or mechanical inscription and re-creation of sound waves, such as spoken voice, singing, instrumental music, or sound effects. The two main classes of sound recording technology are analog recording and digital recording...
s and performances of music. Among the many individuals and organizations that operate within the industry are the musicians who compose and perform the music; the companies and professionals who create and sell recorded music (e.g., music publishers, producers
Record producer
A record producer is an individual working within the music industry, whose job is to oversee and manage the recording of an artist's music...
, studios, engineers
Audio engineering
An audio engineer, also called audio technician, audio technologist or sound technician, is a specialist in a skilled trade that deals with the use of machinery and equipment for the recording, mixing and reproduction of sounds. The field draws on many artistic and vocational areas, including...
, record label
Record label
In the music industry, a record label is a brand and a trademark associated with the marketing of music recordings and music videos. Most commonly, a record label is the company that manages such brands and trademarks, coordinates the production, manufacture, distribution, marketing and promotion,...
s, retail and online music store
Online music store
An online music store is an online business which sells audio files, usually music, on a per-song and/or subscription basis. It may be differentiated from music streaming services in that the music store offers the actual music file, while streaming services offer partial or full listening without...
s, performance rights organizations); those that present live music
Live Music
Live Music is a reggaeton company owned by DJ Giann.-Artists:* Jowell & Randy* Tony Lenta* Watussi* De La Ghetto* Guelo Star* Galante "El Emperador"-Producers:*DJ Blass*Dexter*Mr. Greenz*DJ Giann*Los Hitmen*Dirty Joe*ALX...
performances (booking agents
Talent agent
A talent agent, or booking agent, is a person who finds jobs for actors, authors, film directors, musicians, models, producers, professional athletes, writers and other people in various entertainment businesses. Having an agent is not required, but does help the artist in getting jobs...
, promoters
Promoter (entertainment)
An entertainment promoter i.e. music, wrestling, boxing etc is a person or company in the business of marketing and promoting live events such as concerts/gigs, boxing matches, sports entertainment , festivals, raves, and nightclubs.- Business model :Promoters are typically hired as independent...
, music venue
Music venue
A music venue is any location used for a concert or musical performance. Music venues range in size and location, from an outdoor bandshell or bandstand or a concert hall to an indoor sports stadium. Typically, different types of venues host different genres of music...
s, road crew
Road crew
The road crew are the technicians or support personnel who travel with a band on tour, usually in sleeper buses, and handle every part of the concert productions except actually performing the music with the musicians...
); professionals who assist musicians with their careers (talent manager
Talent manager
A talent manager, also known as an artist manager or band manager, is an individual or company who guides the professional career of artists in the entertainment industry...
s, business manager
Business manager
In a general context, a business manager is a person who manages the work of others in order to run a business efficiently and make a large profit...
s, entertainment law
Entertainment law
Entertainment law or media law is a term for a mix of more traditional categories of law with a focus on providing legal services to the entertainment industry. The principal areas of Entertainment Law overlap substantially with the well-known and conventional field of intellectual property law...
yers); those who broadcast music (satellite
Satellite radio
Satellite radio is an analogue or digital radio signal that is relayed through one or more satellites and thus can be received in a much wider geographical area than terrestrial FM radio stations...
and broadcast radio); journalists; educators; musical instrument
Musical instrument
A musical instrument is a device created or adapted for the purpose of making musical sounds. In principle, any object that produces sound can serve as a musical instrument—it is through purpose that the object becomes a musical instrument. The history of musical instruments dates back to the...
manufacturers; as well as many others.
In the late 19th century and early 20th century, the music industry was dominated by the publishers of sheet music. By the middle of the century record
Gramophone record
A gramophone record, commonly known as a phonograph record , vinyl record , or colloquially, a record, is an analog sound storage medium consisting of a flat disc with an inscribed, modulated spiral groove...
s had supplanted sheet music as the largest player in the music business: in the commercial world people began speaking of "the recording industry" as a loose synonym of "the music industry". Since 2000, sales of recorded music have dropped off substantially, while live music
Live Music
Live Music is a reggaeton company owned by DJ Giann.-Artists:* Jowell & Randy* Tony Lenta* Watussi* De La Ghetto* Guelo Star* Galante "El Emperador"-Producers:*DJ Blass*Dexter*Mr. Greenz*DJ Giann*Los Hitmen*Dirty Joe*ALX...
has increased in importance.
Three "major corporate labels" dominate recorded music — Universal Music Group
Universal Music Group
Universal Music Group is an American music group, the largest of the "big four" record companies by its commanding market share and its multitude of global operations...
(after purchasing EMI
EMI
The EMI Group, also known as EMI Music or simply EMI, is a multinational music company headquartered in London, United Kingdom. It is the fourth-largest business group and family of record labels in the recording industry and one of the "big four" record companies. EMI Group also has a major...
in November 2011), Sony Music Entertainment
Sony Music Entertainment
Sony Music Entertainment ' is the second-largest global recorded music company of the "big four" record companies and is controlled by Sony Corporation of America, the United States subsidiary of Japan's Sony Corporation....
, and Warner Music Group
Warner Music Group
Warner Music Group is the third largest business group and family of record labels in the recording industry, making it one of the big four record companies...
— each of which consists of many smaller companies and labels serving different regions and market
Market
A market is one of many varieties of systems, institutions, procedures, social relations and infrastructures whereby parties engage in exchange. While parties may exchange goods and services by barter, most markets rely on sellers offering their goods or services in exchange for money from buyers...
s. The live music industry is dominated by Live Nation
Live Nation
Live Nation is a live-events company based in Beverly Hills, California, focused on concert promotions. Live Nation formed in 2005 as a spin-off from Clear Channel Communications, which then merged with Ticketmaster in 2010 to become Live Nation Entertainment....
, the largest promoter and music venue
Music venue
A music venue is any location used for a concert or musical performance. Music venues range in size and location, from an outdoor bandshell or bandstand or a concert hall to an indoor sports stadium. Typically, different types of venues host different genres of music...
owner. Live Nation
Live Nation
Live Nation is a live-events company based in Beverly Hills, California, focused on concert promotions. Live Nation formed in 2005 as a spin-off from Clear Channel Communications, which then merged with Ticketmaster in 2010 to become Live Nation Entertainment....
is a former subsidiary of Clear Channel Communications
Clear Channel Communications
Clear Channel Communications, Inc. is an American media conglomerate company headquartered in San Antonio, Texas. It was founded in 1972 by Lowry Mays and Red McCombs, and was taken private by Bain Capital LLC and Thomas H. Lee Partners LP in a leveraged buyout in 2008...
, which is the largest owner of radio stations in the United States. Other important music industry companies include Creative Artists Agency (a management and booking company) and Apple Inc. (which runs the world's largest music store, the iTunes Store
ITunes Store
The iTunes Store is a software-based online digital media store operated by Apple. Opening as the iTunes Music Store on April 28, 2003, with over 200,000 items to purchase, it is, as of April 2008, the number-one music vendor in the United States...
).
18th Century
Until the 18th century, the processes of formal composition and of the printing of music took place for the most part with the support of patronagePatronage
Patronage is the support, encouragement, privilege, or financial aid that an organization or individual bestows to another. In the history of art, arts patronage refers to the support that kings or popes have provided to musicians, painters, and sculptors...
from aristocracies
Aristocracy (class)
The aristocracy are people considered to be in the highest social class in a society which has or once had a political system of Aristocracy. Aristocrats possess hereditary titles granted by a monarch, which once granted them feudal or legal privileges, or deriving, as in Ancient Greece and India,...
and churches
Religion
Religion is a collection of cultural systems, belief systems, and worldviews that establishes symbols that relate humanity to spirituality and, sometimes, to moral values. Many religions have narratives, symbols, traditions and sacred histories that are intended to give meaning to life or to...
. In the mid-to-late 18th century, performers and composers such as Wolfgang Amadeus Mozart
Wolfgang Amadeus Mozart
Wolfgang Amadeus Mozart , baptismal name Johannes Chrysostomus Wolfgangus Theophilus Mozart , was a prolific and influential composer of the Classical era. He composed over 600 works, many acknowledged as pinnacles of symphonic, concertante, chamber, piano, operatic, and choral music...
began to seek commercial opportunities to market their music and performances to the general public. After Mozart's death, his wife (Constanze Weber) continued the process of commercialization of his music through an unprecedented series of memorial concerts, selling his manuscripts, and collaborating with her second husband, Georg Nissen, on a biography of Mozart.
19th Century
In the 19th century, sheet-musicSheet music
Sheet music is a hand-written or printed form of music notation that uses modern musical symbols; like its analogs—books, pamphlets, etc.—the medium of sheet music typically is paper , although the access to musical notation in recent years includes also presentation on computer screens...
publishers dominated the music industry. In the United States, the music industry arose in tandem with the rise of blackface
Blackface
Blackface is a form of theatrical makeup used in minstrel shows, and later vaudeville, in which performers create a stereotyped caricature of a black person. The practice gained popularity during the 19th century and contributed to the proliferation of stereotypes such as the "happy-go-lucky darky...
minstrelsy
Minstrel show
The minstrel show, or minstrelsy, was an American entertainment consisting of comic skits, variety acts, dancing, and music, performed by white people in blackface or, especially after the Civil War, black people in blackface....
. In the late part of the century the group of music publishers and songwriters which dominated popular music in the United States became known as Tin Pan Alley
Tin Pan Alley
Tin Pan Alley is the name given to the collection of New York City music publishers and songwriters who dominated the popular music of the United States in the late 19th century and early 20th century...
.
20th Century
At the dawn of the early 20th century, the recording of sound began to function as a disruptive technologyDisruptive technology
A disruptive technology or disruptive innovation is an innovation that helps create a new market and value network, and eventually goes on to disrupt an existing market and value network , displacing an earlier technology there...
in music markets. With the invention of the phonograph
Phonograph
The phonograph record player, or gramophone is a device introduced in 1877 that has had continued common use for reproducing sound recordings, although when first developed, the phonograph was used to both record and reproduce sounds...
, invented by Thomas Edison
Thomas Edison
Thomas Alva Edison was an American inventor and businessman. He developed many devices that greatly influenced life around the world, including the phonograph, the motion picture camera, and a long-lasting, practical electric light bulb. In addition, he created the world’s first industrial...
in 1877, and the onset of widespread radio communications, the way music is heard was changed forever. Opera houses, concert halls, and clubs continued to produce music and perform live, but the power of radio allowed obscure bands to become popular on a nationwide and sometimes worldwide scale.
The "record industry" eventually replaced the sheet music publishers as the industry's largest force. A multitude of record labels came and went. Some note-worthy labels of the earlier decades include the Columbia Records
Columbia Records
Columbia Records is an American record label, owned by Japan's Sony Music Entertainment, operating under the Columbia Music Group with Aware Records. It was founded in 1888, evolving from an earlier enterprise, the American Graphophone Company — successor to the Volta Graphophone Company...
, Crystalate, Decca Records
Decca Records
Decca Records began as a British record label established in 1929 by Edward Lewis. Its U.S. label was established in late 1934; however, owing to World War II, the link with the British company was broken for several decades....
, Edison Bell, The Gramophone Company, Invicta, Kalliope, Pathé
Pathé
Pathé or Pathé Frères is the name of various French businesses founded and originally run by the Pathé Brothers of France.-History:...
, Victor Talking Machine Company
Victor Talking Machine Company
The Victor Talking Machine Company was an American corporation, the leading American producer of phonographs and phonograph records and one of the leading phonograph companies in the world at the time. It was headquartered in Camden, New Jersey....
and many others.
Many record companies died out as quickly as they had formed, and by the end of the 1980s, the "Big 6" — EMI
EMI
The EMI Group, also known as EMI Music or simply EMI, is a multinational music company headquartered in London, United Kingdom. It is the fourth-largest business group and family of record labels in the recording industry and one of the "big four" record companies. EMI Group also has a major...
, CBS
Sony Music Entertainment
Sony Music Entertainment ' is the second-largest global recorded music company of the "big four" record companies and is controlled by Sony Corporation of America, the United States subsidiary of Japan's Sony Corporation....
, BMG, PolyGram
PolyGram
PolyGram was the name of the major label recording company started by Philips from as a holding company for its music interests in 1945. In 1999 it was sold to Seagram and merged into Universal Music Group.-Hollandsche Decca Distributie , 1929-1950:...
, WEA
Warner Music Group
Warner Music Group is the third largest business group and family of record labels in the recording industry, making it one of the big four record companies...
and MCA
MCA Records
MCA Records was an American-based record company owned by MCA Inc., which later gave way to the larger MCA Music Entertainment Group , of which MCA Records was still part. MCA Records was absorbed by Geffen Records in 2003...
— dominated the industry. Sony
Sony
, commonly referred to as Sony, is a Japanese multinational conglomerate corporation headquartered in Minato, Tokyo, Japan and the world's fifth largest media conglomerate measured by revenues....
bought CBS Records in 1987 and changed its name to Sony Music in 1991. In mid-1998, PolyGram
PolyGram
PolyGram was the name of the major label recording company started by Philips from as a holding company for its music interests in 1945. In 1999 it was sold to Seagram and merged into Universal Music Group.-Hollandsche Decca Distributie , 1929-1950:...
merged into Universal Music Group
Universal Music Group
Universal Music Group is an American music group, the largest of the "big four" record companies by its commanding market share and its multitude of global operations...
(formerly MCA), dropping the leaders down to a "Big 5".
Genre-wise, music entrepreneurs expanded their industry models into areas like folk music
Folk music
Folk music is an English term encompassing both traditional folk music and contemporary folk music. The term originated in the 19th century. Traditional folk music has been defined in several ways: as music transmitted by mouth, as music of the lower classes, and as music with unknown composers....
, in which composition and performance had continued for centuries on an ad hoc
Ad hoc
Ad hoc is a Latin phrase meaning "for this". It generally signifies a solution designed for a specific problem or task, non-generalizable, and not intended to be able to be adapted to other purposes. Compare A priori....
self-supporting basis. Forming an independent record label
Independent record label
An independent record label is a record label operating without the funding of or outside the organizations of the major record labels. A great number of bands and musical acts begin on independent labels.-Overview:...
, or "indie" label, continues to be a popular choice for up-and-coming musicians to have their music heard, despite the financial backing associated with major labels.
21st Century
In the 21st century, consumers spent less money on recorded music than they had in 1990s, in all formats. Total revenues for CDs, vinylGramophone record
A gramophone record, commonly known as a phonograph record , vinyl record , or colloquially, a record, is an analog sound storage medium consisting of a flat disc with an inscribed, modulated spiral groove...
, cassettes and digital download
Music download
A music download is the transferral of music from an Internet-facing computer or website to a user's local computer. This term encompasses both legal downloads and downloads of copyright material without permission or payment...
s in the world dropped 25% from $38.6 billion in 1999 to $27.5 billion in 2008 according to IFPI. Same revenues in the U.S. dropped from a high of $14.6 billion in 1999 to $10.4 billion in 2008. The Economist
The Economist
The Economist is an English-language weekly news and international affairs publication owned by The Economist Newspaper Ltd. and edited in offices in the City of Westminster, London, England. Continuous publication began under founder James Wilson in September 1843...
and The New York Times
The New York Times
The New York Times is an American daily newspaper founded and continuously published in New York City since 1851. The New York Times has won 106 Pulitzer Prizes, the most of any news organization...
report that the downward trend is expected to continue for the foreseeable future —Forrester Research
Forrester Research
Forrester Research is an independent technology and market research company that provides its clients with advice about technology's impact on business and consumers. Forrester Research has five research centers in the US: Cambridge, Massachusetts; New York, New York; San Francisco, California;...
predicts that by 2013, revenues in USA may reach as low as $9.2 billion. This dramatic decline in revenue has caused large-scale layoffs inside the industry, driven retailers (such as Tower Records
Tower Records
Tower Records was a retail music chain that was based in Sacramento, California. It currently exists as an international franchise and an online music store....
) out of business and forced record companies, record producers, studios, recording engineers and musicians to seek new business model
Business model
A business model describes the rationale of how an organization creates, delivers, and captures value...
s.
The "Big 5" major record companies became the "Big 4" in 2004 when Sony acquired BMG, and the "Big 3" when EMI was acquired by Universal in 2011.
In the early years of the decade, the record industry took aggressive action against illegal file sharing
File sharing
File sharing is the practice of distributing or providing access to digitally stored information, such as computer programs, multimedia , documents, or electronic books. It may be implemented through a variety of ways...
. In 2001 it succeeded in shutting down Napster
Napster
Napster is an online music store and a Best Buy company. It was originally founded as a pioneering peer-to-peer file sharing Internet service that emphasized sharing audio files that were typically digitally encoded music as MP3 format files...
(the leading on-line source of digital music), and it has threatened thousands of individuals with legal action. This failed to slow the decline in revenue and proved a public-relations disaster. However, some academic studies have suggested that downloads did not cause the decline.
Legal digital downloads became widely available with the debut of the iTunes Store
ITunes Store
The iTunes Store is a software-based online digital media store operated by Apple. Opening as the iTunes Music Store on April 28, 2003, with over 200,000 items to purchase, it is, as of April 2008, the number-one music vendor in the United States...
in 2003. The popularity of internet music distribution has increased and in 2009 more than a quarter of all recorded music industry revenues worldwide are now coming from digital channels.
However, as The Economist reports, "paid digital downloads grew rapidly, but did not begin to make up for the loss of revenue from CDs." The 2008 British Music Rights survey showed that 80% of people in Britain wanted a legal P2P service, however only half of the respondents thought that the music's creators should be paid. The survey was consistent with the results of earlier research conducted in the United States, upon which the Open Music Model
Open Music Model
The Open Music Model is an economic and technological framework for the recording industry based on research conducted at the Massachusetts Institute of Technology...
was based. According to Nielson Soundscan, by 2009 CDs accounted for 79 percent of album sales, with 20 percent coming from digital, representing both a 10 percent drop and gain for both formats in 2 years.
The turmoil in the recorded music industry changed the twentieth-century balance between artists, record companies, promoters, retail music-stores and the consumer. , big-box store
Big-box store
A big-box store is a physically large retail establishment, usually part of a chain. The term sometimes also refers, by extension, to the company that operates the store...
s such as Wal-Mart
Wal-Mart
Wal-Mart Stores, Inc. , branded as Walmart since 2008 and Wal-Mart before then, is an American public multinational corporation that runs chains of large discount department stores and warehouse stores. The company is the world's 18th largest public corporation, according to the Forbes Global 2000...
and Best Buy
Best Buy
Best Buy Co., Inc. is an American specialty retailer of consumer electronics in the United States, accounting for 19% of the market. It also operates in Mexico, Canada & China. The company's subsidiaries include Geek Squad, CinemaNow, Magnolia Audio Video, Pacific Sales, and, in Canada operates...
sell more records than music-only stores, which have ceased to function as a player in the industry. Recording artists now rely on live performance
Concert
A concert is a live performance before an audience. The performance may be by a single musician, sometimes then called a recital, or by a musical ensemble, such as an orchestra, a choir, or a musical band...
and merchandise for the majority of their income, which in turn has made them more dependent on music promoters like Live Nation (which dominates tour promotion and owns a large number of music venue
Music venue
A music venue is any location used for a concert or musical performance. Music venues range in size and location, from an outdoor bandshell or bandstand or a concert hall to an indoor sports stadium. Typically, different types of venues host different genres of music...
s.) In order to benefit from all of an artist's income streams, record companies increasingly rely on the "360 deal
360 deal
In the music industry, a 360 deal is a business relationship between an artist and a music industry company. The company agrees to provide financial support for the artist, including direct advances as well as funds for marketing, promotion and touring...
", a new business-relationship pioneered by Robbie Williams
Robbie Williams
Robert Peter "Robbie" Williams is an English singer-songwriter, vocal coach and occasional actor. He is a member of the pop group Take That. Williams rose to fame in the band's first run in the early- to mid-1990s. After many disagreements with the management and certain group members, Williams...
and EMI in 2007.
At the other extreme, record companies can offer a simple manufacturing and distribution deal
Distribution deal
A distribution deal is a legal agreement between one party and another, to handle distribution of a product....
, which gives a higher percentage to the artist, but does not cover the expense of marketing and promotion. Many newer artists no longer see any kind of "record deal" as an integral part of their business plan at all. Inexpensive recording hardware and software made it possible to record reasonable quality music in a bedroom and distribute it over the internet to a worldwide audience.
This, in turn, caused problems for recording studios, record producers and audio engineers: the Los Angeles Times
Los Angeles Times
The Los Angeles Times is a daily newspaper published in Los Angeles, California, since 1881. It was the second-largest metropolitan newspaper in circulation in the United States in 2008 and the fourth most widely distributed newspaper in the country....
reports that as many as half of the recording facilities in that city have failed.
Changes in the music industry have given consumers access to a wider variety of music than ever before, at a price that gradually approaches zero. However, consumer spending on music-related software and hardware increased dramatically over the last decade, providing a valuable new income-stream for technology companies such as Apple Inc.
Business structure
The music industry is a complex system of many different organizations, firms and individuals and has undergone dramatic changes in the 21st century. However, the majority of the participants in the music industry still fulfill their traditional roles, which are described below.Recorded music and compositions
There are three types of propertyProperty
Property is any physical or intangible entity that is owned by a person or jointly by a group of people or a legal entity like a corporation...
that are created and sold by the recording industry: compositions
Musical composition
Musical composition can refer to an original piece of music, the structure of a musical piece, or the process of creating a new piece of music. People who practice composition are called composers.- Musical compositions :...
, recording
Sound recording and reproduction
Sound recording and reproduction is an electrical or mechanical inscription and re-creation of sound waves, such as spoken voice, singing, instrumental music, or sound effects. The two main classes of sound recording technology are analog recording and digital recording...
s and media (such as CD
Compact Disc
The Compact Disc is an optical disc used to store digital data. It was originally developed to store and playback sound recordings exclusively, but later expanded to encompass data storage , write-once audio and data storage , rewritable media , Video Compact Discs , Super Video Compact Discs ,...
s or MP3
MP3
MPEG-1 or MPEG-2 Audio Layer III, more commonly referred to as MP3, is a patented digital audio encoding format using a form of lossy data compression...
s). There may be many recordings of a single composition and a single recording will typically be distributed into many media.
Compositions
Compositions are created by songwriterSongwriter
A songwriter is an individual who writes both the lyrics and music to a song. Someone who solely writes lyrics may be called a lyricist, and someone who only writes music may be called a composer...
s or composer
Composer
A composer is a person who creates music, either by musical notation or oral tradition, for interpretation and performance, or through direct manipulation of sonic material through electronic media...
s and are originally owned by the composer. The composer may sell the copyright to another party. Compositions are (traditionally) licensed or "assigned" to publishing companies. A publishing contract
Publishing contract
A publishing contract is a legal contract between a publisher and a writer or author , to publish written material by the writer or author...
specifies the business relationship between the copyright owner and the publishing company. The publishing company (or a collection society operating on behalf of many such publishers, songwriters and composers) collects fees (known as "publishing royalties") when the composition is used. A portion of the royalties are paid by the publishing company to the copyright owner, depending on the terms of the contract. Typically (although not universally), the publishing company will provide the owner with an advance against future earnings when the publishing contract is signed. A publishing company will also promote the compositions, such as by acquiring song "placements" on television
Television
Television is a telecommunication medium for transmitting and receiving moving images that can be monochrome or colored, with accompanying sound...
or in film
Film
A film, also called a movie or motion picture, is a series of still or moving images. It is produced by recording photographic images with cameras, or by creating images using animation techniques or visual effects...
s.
Recordings
Recordings are created by recording artists, often with the assistance of record producerRecord producer
A record producer is an individual working within the music industry, whose job is to oversee and manage the recording of an artist's music...
s and audio engineers. They were traditionally made in recording studio
Recording studio
A recording studio is a facility for sound recording and mixing. Ideally both the recording and monitoring spaces are specially designed by an acoustician to achieve optimum acoustic properties...
s (who are paid a daily or hourly rate) in a recording session. In the 21st century, advances in recording technology have allowed many producers and artists to create "home studios", bypassing the traditional role of the recording studio. The record producer
Record producer
A record producer is an individual working within the music industry, whose job is to oversee and manage the recording of an artist's music...
oversees all aspects of the recording, making many of the logistic, financial and artistic decisions in cooperation with the artist. Audio engineers (including recording, mixing
Mixing engineer
A mix engineer is the person responsible for incorporating all the different recorded elements of music to make the final version of a song. These mixing professionals have many years of experience and training with audio equipment which has enabled them to master the art of audio mixing...
and mastering engineer
Mastering engineer
A mastering engineer is one skilled in the practice of taking audio that has been previously mixed in either the analog or digital domain as mono, stereo, or multichannel formats and preparing it for use in distribution, whether by physical media such as a CD, vinyl record, or as some method of...
s) are responsible for the audio quality of the recording. A recording session may also require the services of an arranger
Arranger
In investment banking, an arranger is a provider of funds in the syndication of a debt. They are entitled to syndicate the loan or bond issue, and may be referred to as the "lead underwriter". This is because this entity bears the risk of being able to sell the underlying securities/debt or the...
or studio musicians.
Recordings are (traditionally) owned by record companies. A recording contract
Recording contract
A recording contract is a legal agreement between a record label and a recording artist , where the artist makes a record for the label to sell and promote...
specifies the business relationship between a recording artist and the record company. In a traditional contract, the company provides an advance to the artist who agrees to record music that will be owned by the company. The A&R
A&R
Artists and repertoire is the division of a record label that is responsible for talent scouting and overseeing the artistic development of recording artists. It also acts as a liaison between artists and the record label.- Finding talent :...
department of a record company is responsible for finding new talent and overseeing the recording process. The company pays for the recording costs and the cost of promoting
Radio promotion
Radio promotion is the division of a record company which is charged with placing songs on the radio. They maintain relationships with program directors at radio stations and attempt to persuade them to play singles to promote the sale of recordings, such as CDs, sold by the record company...
and marketing
Marketing
Marketing is the process used to determine what products or services may be of interest to customers, and the strategy to use in sales, communications and business development. It generates the strategy that underlies sales techniques, business communication, and business developments...
the record. For physical media (such as CD
Compact Disc
The Compact Disc is an optical disc used to store digital data. It was originally developed to store and playback sound recordings exclusively, but later expanded to encompass data storage , write-once audio and data storage , rewritable media , Video Compact Discs , Super Video Compact Discs ,...
s), the company also pays to manufacture and distribute
Distribution (business)
Product distribution is one of the four elements of the marketing mix. An organization or set of organizations involved in the process of making a product or service available for use or consumption by a consumer or business user.The other three parts of the marketing mix are product, pricing,...
the physical recordings. Smaller record companies (known as "indies
Independent record label
An independent record label is a record label operating without the funding of or outside the organizations of the major record labels. A great number of bands and musical acts begin on independent labels.-Overview:...
") will form business relationships with other companies to handle many of these tasks. If contractually bound to do so, the record company pays the recording artist a portion of the income from the sale of the recordings, generally known as a mechanical royalty. (This is distinct from the publishing royalty, described above.) This portion is similar to a percentage, but may be limited or expanded by a number of factors (such as free goods, recoupable expenses, bonuses, etc.) that are specified by the record contract. Session musicians and orchestra members (as well as a few recording artists in special markets) are under contract to provide work for hire
Work for hire
A work made for hire is an exception to the general rule that the person who actually creates a work is the legally recognized author of that work...
; they're typically only paid one-time fees or regular wages for their services, rather than royalties.
Physical media
Physical media (such as CDs) are sold by music retailRetail
Retail consists of the sale of physical goods or merchandise from a fixed location, such as a department store, boutique or kiosk, or by mail, in small or individual lots for direct consumption by the purchaser. Retailing may include subordinated services, such as delivery. Purchasers may be...
ers and are owned by the consumer. A music distributor delivers the physical media from the manufacturer to the retailer and maintains relationships with retailers and record companies. The music retailer pays the distributor, who in turn pays the record company for the recordings. The record company pays mechanical royalties to the publisher, composer, and songwriter via a collection society. The record company then pays royalties, if contractually obligated, to the recording artist. In the case of digital downloads, there is no physical media other than the consumer's hard drive. The distributor is optional in this situation; large online shops may pay the labels directly, but digital distributors do exist to service vendors large and small. When purchasing digital downloads, the consumer may be required to agree to record company and vendor licensing terms beyond those which are inherent in copyright; for example, some may allow freely sharing the recording, but others may restrict the user to storing the music on a specific number of hard drives.
Other uses of recorded music and compositions
Sheet musicSheet music
Sheet music is a hand-written or printed form of music notation that uses modern musical symbols; like its analogs—books, pamphlets, etc.—the medium of sheet music typically is paper , although the access to musical notation in recent years includes also presentation on computer screens...
provides an income stream that is paid exclusively to the composer
Composer
A composer is a person who creates music, either by musical notation or oral tradition, for interpretation and performance, or through direct manipulation of sonic material through electronic media...
s and their publishing company. When a recording is broadcast (either on radio or by a service such as Muzak
Muzak
Muzak Holdings LLC is a company based in metro Fort Mill, South Carolina, United States, just outside of Charlotte, North Carolina. Founded in 1934, Muzak Holdings is best known for distribution of background music to retail stores and other companies....
), performance rights organisation
Performance rights organisation
Performance rights organizations provide intermediary functions, particularly royalty collection, between copyright holders and parties who wish to use copyrighted works publicly such as shopping and dining venues. Legal consumer purchase of works, such as buying CDs from a music store, confer...
s (such as the ASCAP and BMI
Broadcast Music Incorporated
Broadcast Music, Inc. is one of three United States performing rights organizations, along with ASCAP and SESAC. It collects license fees on behalf of songwriters, composers, and music publishers and distributes them as royalties to those members whose works have been performed...
in the US or MCPS
Mechanical-Copyright Protection Society
The Mechanical-Copyright Protection Society is an organisation that pay royalties to composers, songwriters and music publishers when a composition is manufactured into any format. This includes copies of the music alone such as CDs and downloads, and also products that use the music as a part of...
and PRS in the UK), collect a third type of royalty known as a performance royalty, which is paid to composers and recording artists. This royalty is typically much smaller than publishing or mechanical royalties. When recordings are used in television
Television
Television is a telecommunication medium for transmitting and receiving moving images that can be monochrome or colored, with accompanying sound...
and film
Film
A film, also called a movie or motion picture, is a series of still or moving images. It is produced by recording photographic images with cameras, or by creating images using animation techniques or visual effects...
, the composer and their publishing company are typically paid through a synchronization license
Synchronization rights
Synchronization in a recording contract is when the recording artist's music is synchronized to a video: music video, movie, television, commercial, etc. The record company can receive all the money from that if the contract states the company gets all synchronization rights...
. Subscription services (such as Rhapsody
Rhapsody
Rhapsody may refer to:* Rhapsody , an enthusiastic instrumental composition of indefinite form* A work of epic poetry, or part of one, that is suitable for recitation at one time...
) also provide an income stream directly to record companies, and through them, to artists, contracts permitting.
Regional variations and industry evolution
The industry is further complicated by the fact that the definition of "royalty" and "copyright" varies from country to country and region to region, which changes the terms of some of these business relationships.In addition to these traditional business relationships, new ways of doing business are being developed in the 21st century. The traditional lines that once divided artist, publisher, record company, distributor, retail and consumer electronics have become blurred. Artists may own their own publishing companies, artist management companies may promote and market recordings on behalf of their clients, artists may promote and market themselves using only free services such as YouTube
YouTube
YouTube is a video-sharing website, created by three former PayPal employees in February 2005, on which users can upload, view and share videos....
or social media
Social media
The term Social Media refers to the use of web-based and mobile technologies to turn communication into an interactive dialogue. Andreas Kaplan and Michael Haenlein define social media as "a group of Internet-based applications that build on the ideological and technological foundations of Web 2.0,...
, consumer electronics
Consumer electronics
Consumer electronics are electronic equipment intended for everyday use, most often in entertainment, communications and office productivity. Radio broadcasting in the early 20th century brought the first major consumer product, the broadcast receiver...
companies have become digital music retailer
Online music store
An online music store is an online business which sells audio files, usually music, on a per-song and/or subscription basis. It may be differentiated from music streaming services in that the music store offers the actual music file, while streaming services offer partial or full listening without...
s, and so on, in many variations. New digital music distribution technologies have also forced both government and industry to re-examine the definitions of intellectual property and the rights of all the parties involved.
Live music
A promoterPromoter (entertainment)
An entertainment promoter i.e. music, wrestling, boxing etc is a person or company in the business of marketing and promoting live events such as concerts/gigs, boxing matches, sports entertainment , festivals, raves, and nightclubs.- Business model :Promoters are typically hired as independent...
brings together a performing artist and a venue
Music venue
A music venue is any location used for a concert or musical performance. Music venues range in size and location, from an outdoor bandshell or bandstand or a concert hall to an indoor sports stadium. Typically, different types of venues host different genres of music...
owner and arranges contracts. A booking agency represents the artist to promoters, makes deals and books performances. Consumers usually buy tickets either from the venue or from a ticket distribution service such as Ticketmaster
Ticketmaster
Ticketmaster Entertainment, Inc. is an independent American ticket sales and distribution company based in West Hollywood, California, USA, with operations in many countries around the world. In 2010 it merged with Live Nation to become Live Nation Entertainment...
. In the US, Live Nation
Live Nation
Live Nation is a live-events company based in Beverly Hills, California, focused on concert promotions. Live Nation formed in 2005 as a spin-off from Clear Channel Communications, which then merged with Ticketmaster in 2010 to become Live Nation Entertainment....
is the dominant company in all of these roles: they own most of the large venues in the US, they are the largest promoter, and they own Ticketmaster
Ticketmaster
Ticketmaster Entertainment, Inc. is an independent American ticket sales and distribution company based in West Hollywood, California, USA, with operations in many countries around the world. In 2010 it merged with Live Nation to become Live Nation Entertainment...
.
Choices about where and when to tour are decided by the artist's management and the artist, sometimes in consultation with the record company. Record companies may provide tour support; they may finance a tour in the hopes that it will help promote the sale of recordings. However, in the 21st century, it has become more common to release recordings to promote tours, rather than book tours to promote records.
Successful artists will usually employ a road crew
Road crew
The road crew are the technicians or support personnel who travel with a band on tour, usually in sleeper buses, and handle every part of the concert productions except actually performing the music with the musicians...
: a semi-permanent touring organization that travels with the artist. This is headed by a tour manager
Tour Manager
A tour manager is the person who helps to organize the administration for a schedule of appearances of a musical group or artist at a sequence of venues .-Background:...
and provides stage lighting
Stage lighting
Modern stage lighting is a flexible tool in the production of theatre, dance, opera and other performance arts. Several different types of stage lighting instruments are used in the pursuit of the various principles or goals of lighting. Stage lighting has grown considerably in recent years...
, live sound reinforcement
Audio engineering
An audio engineer, also called audio technician, audio technologist or sound technician, is a specialist in a skilled trade that deals with the use of machinery and equipment for the recording, mixing and reproduction of sounds. The field draws on many artistic and vocational areas, including...
, musical instrument tuning and maintenance
Guitar technician
A guitar technician is a member of a music ensemble's road crew who maintains and sets up the musical equipment for one or more guitarists during a concert tour...
and transportation. On large tours, the road crew may also include an accountant, stage manager and catering. Local crews are typically hired to help move equipment on and off stage. On small tours, all of these jobs may be handled by just a few roadies, or by the musicians themselves.
Artist management, representation and staff
Artists may hire a number of people from other fields to assist them with their career. The artist manager oversees all aspects of an artist's career in exchange for a percentage of the artist's income. An entertainment lawEntertainment law
Entertainment law or media law is a term for a mix of more traditional categories of law with a focus on providing legal services to the entertainment industry. The principal areas of Entertainment Law overlap substantially with the well-known and conventional field of intellectual property law...
yer assists them with the details of their contracts with record companies and other deals. A business manager
Business manager
In a general context, a business manager is a person who manages the work of others in order to run a business efficiently and make a large profit...
handles financial transactions, taxes and bookkeeping. Unions, such as AFTRA in the U.S., provide health insurance
Health insurance
Health insurance is insurance against the risk of incurring medical expenses among individuals. By estimating the overall risk of health care expenses among a targeted group, an insurer can develop a routine finance structure, such as a monthly premium or payroll tax, to ensure that money is...
and other services for musicians.
Other income streams
A successful artist functions in the market as a brandBrand
The American Marketing Association defines a brand as a "Name, term, design, symbol, or any other feature that identifies one seller's good or service as distinct from those of other sellers."...
and, as such, may derive income from many other streams, such as merchandise or internet-based services. These are typically overseen by the artist's manager and take the form of relationships between the artist and companies that specialize in these products.
Statistics
- Universal Music GroupUniversal Music GroupUniversal Music Group is an American music group, the largest of the "big four" record companies by its commanding market share and its multitude of global operations...
(USA based) — 31.71% - Sony Music EntertainmentSony Music EntertainmentSony Music Entertainment ' is the second-largest global recorded music company of the "big four" record companies and is controlled by Sony Corporation of America, the United States subsidiary of Japan's Sony Corporation....
(USA based) — 25.61% - Warner Music GroupWarner Music GroupWarner Music Group is the third largest business group and family of record labels in the recording industry, making it one of the big four record companies...
(USA based) — 15% - EMI GroupEMIThe EMI Group, also known as EMI Music or simply EMI, is a multinational music company headquartered in London, United Kingdom. It is the fourth-largest business group and family of record labels in the recording industry and one of the "big four" record companies. EMI Group also has a major...
(UK based) — 9.55%
Independent labels — 18.13%
and in 2004, 82.64%:
- Universal Music Group—29.59%
- Sony Music Entertainment—28.46% (13.26% Sony, 15.20% BMG)
- Warner Music Group—14.68%
- EMI Group—9.91%
- Independent labels—17.36%
MP3
MPEG-1 or MPEG-2 Audio Layer III, more commonly referred to as MP3, is a patented digital audio encoding format using a form of lossy data compression...
s) in 2004 were 3 billion.
According to an IFPI report published in August 2005, the big four accounted for 71.7% of retail music sales:
- Universal Music Group—25.5%
- Sony Music Entertainment—21.5%
- EMI Group—13.4%
- Warner Music Group—11.3%
- Independent labels—28.3%
Prior to December 1998, the industry was dominated by the "Big Six": Sony Music and BMG had not yet merged, and PolyGram
PolyGram
PolyGram was the name of the major label recording company started by Philips from as a holding company for its music interests in 1945. In 1999 it was sold to Seagram and merged into Universal Music Group.-Hollandsche Decca Distributie , 1929-1950:...
had not yet been absorbed into Universal Music Group. After the PolyGram-Universal merger, the 1998 market shares reflected a "Big Five", commanding 77.4% of the market, as follows, according to MEI World Report 2000:
- Universal Music GroupUniversal Music GroupUniversal Music Group is an American music group, the largest of the "big four" record companies by its commanding market share and its multitude of global operations...
— 28.8% - Sony Music EntertainmentSony Music EntertainmentSony Music Entertainment ' is the second-largest global recorded music company of the "big four" record companies and is controlled by Sony Corporation of America, the United States subsidiary of Japan's Sony Corporation....
— 21.1% - EMIEMIThe EMI Group, also known as EMI Music or simply EMI, is a multinational music company headquartered in London, United Kingdom. It is the fourth-largest business group and family of record labels in the recording industry and one of the "big four" record companies. EMI Group also has a major...
— 14.1% - Warner Music GroupWarner Music GroupWarner Music Group is the third largest business group and family of record labels in the recording industry, making it one of the big four record companies...
— 13.4% - Independent labelsIndependent record labelAn independent record label is a record label operating without the funding of or outside the organizations of the major record labels. A great number of bands and musical acts begin on independent labels.-Overview:...
— 22.6%
Note: the IFPI and Nielsen Soundscan use different methodologies, which makes their figures difficult to compare casually, and impossible to compare scientifically.
Total value by country
30 major countries in the proportions shown above, organized roughly by geographic location. In the industry, it is commonly
accepted that the three major music markets are the United States, Japan and the United Kingdom.
Albums sales and market value
The following table shows album sales and market value in the world in the 1990s–2000s.| # | Country | Album Sales Share | Share of World Market Value |
|---|---|---|---|
| 1 | USA | 37–40% | 30–35% |
| 2 | Japan | 9–12% | 16–19% |
| 3 | UK | 7–9% | 6.4–9.1% |
| 4 | Germany | 7–8% | 5.3–6.4% |
| 5 | France | 4.5–5.5% | 5.4–6.3% |
| 6 | Canada | 2.6–3.3% | 1.9–2.8% |
| 7 | Australia | 1.5–1.8% | 1.5–2.0% |
| 8 | Brazil | 2.0–3.8% | 1.1–3.1% |
| 9 | Italy | 1.7–2.0% | 1.5–2.0% |
| 10 | Spain | 1.7–2.3% | 1.4–1.8% |
| 11 | Netherlands | 1.2–1.8% | 1.3–1.8% |
| 12 | Mexico | 2.1–4.6% | 0.8–1.8% |
| 13 | Belgium | 0.7–0.8% | 0.8–1.2% |
| 14 | Switzerland | 0.75–0.9% | 0.8–1.1% |
| 15 | Austria | 0.5–0.7% | 0.8–1.0% |
| 17 | Russia | 2.0–2.9% | 0.5–1.4% |
| 18 | Taiwan | 0.9–1.6% | 0.5–1.1% |
| 19 | Argentina | 0.5–0.7% | 0.5–1.0% |
| 20 | Denmark | 0.45–0.65% | 0.5–0.8% |
Singles sales
Physical single sales in the world in the 1990s–2000s and digital single sales in 2005.| # | Country | Physical Sales Share | Digital Sales Share in 2005 |
|---|---|---|---|
| EU | 34–50% | 13.2% | |
| 1 | UK | 26–32% | 1.7% |
| 2 | Japan | 4–25% | 85% |
| 3 | USA | 14.5–16% | 6.3% |
| 4 | Germany | 9–12% | 5% |
| 5 | France | 4–12.5% | 1.9% |
| 6 | Australia | 1.8–4.6% | 0.48% |
| 7 | Netherlands | 1.3–1.7% | < 0.2% |
| 8 | Belgium | 0.8-1.8% | < 0.2% |
| 9 | Sweden | 0.6-0.96% | < 0.2% |
| 10 | Switzerland | 0.5-0.92% | < 0.2% |
| 11 | Austria | 0.58-0.82% | < 0.2% |
| 12 | Italy | 0.3-1.0% | < 0.2% |
| 13 | Spain | 0.3-0.7% | < 0.2% |
| 14 | Norway | 0.3-0.47% | < 0.2% |
| 15 | Ireland | 0.2-0.5% | < 0.2% |
| 16 | Canada | 0.1-0.6% | < 0.2% |
| 17 | Portugal | 0.01-1.0% | < 0.2% |
| 18 | Republic of Korea | 0.02-0.45% | < 0.1% |
| 19 | New Zealand | 0.19-0.29% | < 0.1% |
| 20 | Denmark | 0.10-0.25% | < 0.1% |
Recorded music retail sales
Interim physical retail sales in 2005 - all figures in millions.Approximately 21% of the gross CD revenue numbers in 2003 can be attributed to used CD sales growing to approximately 27% in 2007 (the growth is attributed to increasing on-line sales of used product by outlets such as Amazon.com, the growth of used music media is expected to continue to grow as the cost of digital downloads continues to rise.)
| COUNTRY | UNITS | VALUE | CHANGE | ||||||
|---|---|---|---|---|---|---|---|---|---|
| Singles | CD | DVD | Total Units | $US | Local Currency | Units | Value | ||
| 1 | USA | 14.7 | 300.5 | 11.6 | 326.8 | 4783.2 | 4783.2 | −5.70% | −5.30% |
| 2 | Japan | 28.5 | 93.7 | 8.5 | 113.5 | 2258.2 | 239759 | −6.90% | −9.20% |
| 3 | UK | 24.3 | 66.8 | 2.9 | 74.8 | 1248.5 | 666.7 | −1.70% | −4.00% |
| 4 | Germany | 8.5 | 58.7 | 4.4 | 71 | 887.7 | 689.7 | −7.70% | −5.80% |
| 5 | France | 11.5 | 47.3 | 4.5 | 56.9 | 861.1 | 669.1 | 7.50% | −2.70% |
| 6 | Italy | 0.5 | 14.7 | 0.7 | 17 | 278 | 216 | −8.40% | −12.30% |
| 7 | Canada | 0.1 | 20.8 | 1.5 | 22.3 | 262.9 | 325 | 0.70% | −4.60% |
| 8 | Australia | 3.6 | 14.5 | 1.5 | 17.2 | 259.6 | 335.9 | −22.90% | −11.80% |
| 9 | India | – | 10.9 | – | 55.3 | 239.6 | 11500 | −19.20% | −2.40% |
| 10 | Spain | 1 | 17.5 | 1.1 | 19.1 | 231.6 | 180 | −13.40% | −15.70% |
| 11 | Netherlands | 1.2 | 8.7 | 1.9 | 11.1 | 190.3 | 147.9 | −31.30% | −19.80% |
| 12 | Russia | – | 25.5 | 0.1 | 42.7 | 187.9 | 5234.7 | −9.40% | 21.20% |
| 13 | Mexico | 0.1 | 33.4 | 0.8 | 34.6 | 187.9 | 2082.3 | 44.00% | 21.50% |
| 14 | Brazil | 0.01 | 17.6 | 2.4 | 24 | 151.7 | 390.3 | −20.40% | −16.50% |
| 15 | Austria | 0.6 | 4.5 | 0.2 | 5 | 120.5 | 93.6 | −1.50% | −9.60% |
| 16 | Switzerland ** | 0.8 | 7.1 | 0.2 | 7.8 | 115.8 | 139.2 | n/a | n/a |
| 17 | Belgium | 1.4 | 6.7 | 0.5 | 7.7 | 115.4 | 89.7 | −13.80% | −8.90% |
| 18 | Norway | 0.3 | 4.5 | 0.1 | 4.8 | 103.4 | 655.6 | −19.70% | −10.40% |
| 19 | Sweden | 0.6 | 6.6 | 0.2 | 7.2 | 98.5 | 701.1 | −29.00% | −20.30% |
| 20 | Denmark | 0.1 | 4 | 0.1 | 4.2 | 73.1 | 423.5 | 3.70% | −4.20% |
| Top 20 | 74.5 | 757.1 | 42.8 | 915.2 | 12378.7 | −6.60% | −6.30% | ||
In its June 30, 2000 annual report filed with the U.S. Securities and Exchange Commission, Seagram reported that Universal Music Group made 40% of the worldwide classical music
Classical music
Classical music is the art music produced in, or rooted in, the traditions of Western liturgical and secular music, encompassing a broad period from roughly the 11th century to present times...
sales over the preceding year.
Music industry organizations
- Academy of Country MusicAcademy of Country MusicThe Academy of Country Music was founded in 1964 in Los Angeles, California as the Country & Western Music Academy. Whereas the Country Music Association, founded in 1958, was based in Nashville, the Academy sought to promote country music in the western states. Among those involved in the...
aka ACM - Alliance of Artists and Recording CompaniesAlliance of Artists and Recording CompaniesThe Alliance of Artists and Recording Companies. is a non-profit US royalty collective, assembled by the US music industry in conjunction with the Audio Home Recording Act of 1992, that protects the rights of featured artists and recording companies both domestically and abroad in the areas of...
aka AARC - American Association of Independent MusicAmerican Association of Independent MusicThe American Association of Independent Music, or A2IM, is a not-for-profit trade organization serving the Independent music community as a unified voice representing a sector that comprises over 30% of the music industry's market share in the United States...
aka A2IM - American Federation of MusiciansAmerican Federation of MusiciansThe American Federation of Musicians of the United States and Canada is a labor union of professional musicians in the United States and Canada...
aka AFM - American Federation of Television and Radio ArtistsAmerican Federation of Television and Radio ArtistsThe American Federation of Television and Radio Artists is a performers' union that represents a wide variety of talent, including actors in radio and television, as well as radio and television announcers and newspersons, singers and recording artists , promo and voice-over announcers and other...
aka AFTRA - American Society of Composers, Authors and Publishers aka ASCAP
- Asosiasi Industri Rekaman IndonesiaAsosiasi Industri Rekaman IndonesiaAsosiasi Industri Rekaman Indonesia is a trust that represents the recording industry interests in Indonesia....
aka ASIRI - Association of Independent MusicAssociation of Independent MusicThe Association of Independent Music is a non-profit trade body established in 1998 by UK independent record labels to represent the independent record sector, which constitutes approximately 25% of the UK market....
aka AIM - Australian Recording Industry AssociationAustralian Recording Industry AssociationThe Australian Recording Industry Association is a trade group representing the Australian recording industry which was established in 1983 by six major record companies, EMI, Festival, CBS, RCA, WEA and Universal replacing the Association of Australian Record Manufacturers which was formed in 1956...
aka ARIA - Billboard Magazine, known for the Billboard Hot 100Billboard Hot 100The Billboard Hot 100 is the United States music industry standard singles popularity chart issued weekly by Billboard magazine. Chart rankings are based on radio play and sales; the tracking-week for sales begins on Monday and ends on Sunday, while the radio play tracking-week runs from Wednesday...
- British Phonographic IndustryBritish Phonographic IndustryThe British Phonographic Industry is the British record industry's trade association.-Structure:Its membership comprises hundreds of music companies including all four "major" record companies , associate members such as manufacturers and distributors, and hundreds of independent music companies...
(BPI) - Broadcast Music IncorporatedBroadcast Music IncorporatedBroadcast Music, Inc. is one of three United States performing rights organizations, along with ASCAP and SESAC. It collects license fees on behalf of songwriters, composers, and music publishers and distributes them as royalties to those members whose works have been performed...
aka BMI - Canadian Recording Industry AssociationCanadian Recording Industry AssociationMusic Canada is a Toronto-based, non-profit trade organization that was founded 9 April 1963 to represent the interests of companies that record, artists, manufacture, production, promotion and distribution of music in Canada...
(CRIA) - Country Music AssociationCountry Music AssociationThe Country Music Association was founded in 1958 in Nashville, Tennessee. It originally consisted of only 233 members and was the first trade organization formed to promote a music genre...
- Federation of the Italian Music IndustryFederation of the Italian Music IndustryThe Federation of the Italian Music Industry is an umbrella organization that keeps track of virtually all aspects of the music recording industry in Italy....
(FIMI) - Gesellschaft für musikalische Aufführungs- und mechanische VervielfältigungsrechteGesellschaft für musikalische Aufführungs- und mechanische VervielfältigungsrechteGesellschaft für musikalische Aufführungs- und mechanische Vervielfältigungsrechte is a performance rights organization from Germany. It is the only such institution in Germany and a member of BIEM and CISAC...
(GEMA) in Germany - Harry Fox AgencyHarry Fox AgencyThe Harry Fox Agency is the United States of America's largest agency collecting and distributing mechanical license fees on behalf of music publishers.-External links:*...
(for-profit branch of the NMPANational Music Publishers AssociationThe National Music Publishers Association is the trade association representing American music publishers and their songwriting partners. The NMPA’s mandate is to protect and advance the interests of music publishers and songwriters in matters relating to the domestic and global protection of...
) - Indian Music IndustryIndian Music IndustryThe Indian Music Industry is a trust that represents the recording industry distributors in India. It was founded on February 28, 1936 as Indian Phonographic Industry ...
(IMI) - International Federation of the Phonographic Industry (IFPI)
- Irish Recorded Music AssociationIrish Recorded Music AssociationIrish Recorded Music Association is the Irish record industry association. IRMA is a non-profit association set up to manage and control the music industry in the Republic of Ireland.-Goals and activities:...
(IRMA) - Latin Academy of Recording Arts & SciencesLatin Academy of Recording Arts & SciencesThe Latin Academy of Recording Arts & Sciences , is a multinational membership-based association composed of music industry professionals, musicians, producers, recording engineers, and other creative and technical recording professionals...
(LARAS) - Mechanical-Copyright Protection SocietyMechanical-Copyright Protection SocietyThe Mechanical-Copyright Protection Society is an organisation that pay royalties to composers, songwriters and music publishers when a composition is manufactured into any format. This includes copies of the music alone such as CDs and downloads, and also products that use the music as a part of...
(MCPS) - Musicians' UnionMusicians' UnionOrganizations calling themselves the Musicians' Union include:*Musicians' Union *Musicians' Union *Several locals of the American Federation of Musicians, e.g. Musicians' Union Local No. 6 San Francisco*Musicians Union of South Africa...
- National Academy of Recording Arts and SciencesNational Academy of Recording Arts and SciencesThe National Academy of Recording Arts & Sciences, Inc., known variously as The Recording Academy or NARAS, is a U.S. organization of musicians, producers, recording engineers and other recording professionals dedicated to improving the quality of life and cultural condition for music and its...
(NARAS) - National Association of Recording MerchandisersNational Association of Recording MerchandisersThe National Association of Recording Merchandisers is a United States not-for-profit trade association based in Marlton, New Jersey that serves music retailing businesses in lobbying and trade promotion...
(NARM) - National Music Publishers AssociationNational Music Publishers AssociationThe National Music Publishers Association is the trade association representing American music publishers and their songwriting partners. The NMPA’s mandate is to protect and advance the interests of music publishers and songwriters in matters relating to the domestic and global protection of...
(NMPA) - Philippine Association of the Record Industry (PARI)
- PRS for Music
- Recording Artists' CoalitionRecording Artists' CoalitionThe Recording Artists' Coalition is an American music industry organization that represents recording artists, and attempts to defend their rights and interests. Compare and contrast with the RIAA, which represents the recording industry...
aka RAC - Recording Industry Association of AmericaRecording Industry Association of AmericaThe Recording Industry Association of America is a trade organization that represents the recording industry distributors in the United States...
(RIAA) - Recording Industry Association of JapanRecording Industry Association of JapanThe Recording Industry Association of Japan is an industry trade group composed of Japanese corporations involved the music industry...
(RIAJ) - Recording Industry Association of New ZealandRecording Industry Association of New ZealandThe Recording Industry Association of New Zealand is a non-profit trade association of record producers, distributors and recording artists who sell music in New Zealand...
(RIANZ) - Recording Industry of South AfricaRecording Industry of South AfricaThe Recording Industry of South Africa is a trade association that represents the collective interests of producers of music sound recordings, major and independent record labels in South Africa. Formerly known as the Association of the South African Music Industry it was established in the 1970s...
(RISA) - Society of European Stage Authors & ComposersSESACSESAC, originally the Society of European Stage Authors & Composers, is the smallest of the three performance rights organizations in the United States. SESAC was founded in 1930, making it the second-oldest performing rights organization in the U.S. SESAC is also the fastest-growing PRO in the...
(SESAC) - SoundExchangeSoundExchangeSoundExchange is a non-profit performance rights organization that collects royalties on the behalf of sound recording copyright owners and featured artists for non-interactive digital transmissions, including satellite and Internet radio.-History:Prior to 1995, SRCOs in the United States did not...
See also
- List of record labels and :Category:Record labels
- List of best-selling music artists – World's top-selling music artists chart.
- MIDEMMidem-MIDEM:Short for Marché International du Disque et de l'Edition Musicale, MIDEM is the world's largest music industry trade fair, which has been held annually at and around the Palais des Festivals in Cannes, France, since 1967...
–The World's Music market. - Album coverAlbum coverAn album cover is the front of the packaging of a commercially released audio recording product, or album. The term can refer to either the printed cardboard covers typically used to package sets of 10" and 12" 78 rpm records, single and sets of 12" LPs, sets of 45 rpm records , or the front-facing...
- Music Directory CanadaMusic Directory CanadaMusic Directory Canada – first edition published in 1983. Published by Norris-Whitney Communications based in St. Catharines, Ontario. Ninth edition is now available to purchase at bookstores across Canada and online at ....
(book)
Further reading
- Lebrecht, Norman: When the Music Stops: Managers, Maestros and the Corporate Murder of Classical Music, Simon & Schuster 1996
- Imhorst, Christian: The ‘Lost Generation’ of the Music Industry, published under the terms of the GNU Free Documentation LicenseGNU Free Documentation LicenseThe GNU Free Documentation License is a copyleft license for free documentation, designed by the Free Software Foundation for the GNU Project. It is similar to the GNU General Public License, giving readers the rights to copy, redistribute, and modify a work and requires all copies and...
2004 - Gerd Leonhard: Music Like Water – the inevitable music ecosystem
- The Methods Reporter: Music Industry Misses Mark with Wrongful Suits
- Music CD Industry – a mid-2000 overview put together by Duke University undergraduate students
- d’Angelo, Mario: Does globalisation mean ineluctable concentration ? in The Music Industry in the New Economy, Report of the Asia-Europe Seminar, Lyon, Oct. 25–28, 2001, IEP de Lyon/Asia-Europe Foundation/Eurical, Editors Roche F., Marcq B., Colomé D., 2002, pp. 53–54.
- d'Angelo, Mario: Perspectives of the Management of Musical Institutions in Europe, OMF, Musical Activities and Institutions Sery, ParisIV-Sorbonne University, Ed. Musicales Aug. Zurfluh, Bourg-la-Reine, 2006.
- The supply of recorded music: A report on the supply in the UK of prerecorded compact discs, vinyl discs and tapes containing music. Competition Commission, 1994.
- Tschmuck, Peter: Creativity and Innovation in the Music Industry, Springer 2006.
- Ulrich Dolata: The Music Industry and the Internet. A Decade of Disruptive and Uncontrolled Sectoral Change. Research Contributions to Organizational Sociology and Innovation Studies. Discussion Paper 2011-02. full text online
External links
- New York Metro article by Michael Wolff analyzing the decline of the record industry
- Salon article on Courtney Love's criticism of record industry business practices
- Federal Trade Commission press release regarding price fixing
- Antitrust settlement in Nevada price-fixing case
- Songwriter Janis IanJanis IanJanis Ian is an American songwriter, singer, musician, columnist, and science fiction author. Ian first entered the folk music scene while still a teenager in the mid-sixties; most active musically in that decade and the 1970s, she has continued recording into the 21st century...
's critique of the record industry's policies - The Net is the Independent Artist's Radio – August 10, 2005 MP3 NewswireMP3 NewswireFounded in 1998, the same year as MP3.com, MP3 Newswire is the oldest active news site devoted to digital media technology. Notable for its series of essays that chronicled the rise of digital music and the Internet’s acrimonious relationship with the record industry, MP3 Newswire initially was...
article - Music Downloads: Pirates- or Customers?. Silverthorne, Sean. Harvard Business School Working KnowledgeHarvard Business SchoolHarvard Business School is the graduate business school of Harvard University in Boston, Massachusetts, United States and is widely recognized as one of the top business schools in the world. The school offers the world's largest full-time MBA program, doctoral programs, and many executive...
, 2004. - The British Library - Music Industry Guide (sources of information)
- The ASCAP Resource Guide: Recording Industry
- BPI: Music business – Industry Structure
- Academic articles about the music industry The Music Business Journal