The
music industry (or
music
business) sells
composition,
recording and
performance 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,
studio,
engineers,
record
labels,
retail and
online music stores,
performance rights
organisations); those that present
live
music performances (
booking agents,
promoters,
music venues,
road
crew); professionals who assist musicians with their careers
(
talent managers,
business managers,
entertainment lawyers); those who
broadcast music (
satellite and
broadcast radio);
journalist;
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
publisher of
sheet music. By mid-century
record
had supplanted sheet music as the largest player in the music
business. Since 2000, sales of recorded music have dropped off
substantially, while
live music has
increased in importance.There are four "major labels" that dominate
recorded music —
Sony Music
Entertainment,
Universal Music
Group,
Warner Music Group and
EMI — each of which consists of many smaller
companies and labels serving different regions and markets. 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,
iTunes
Store, and sells the
iPod and
iPhone).
History
1700s
Until the 1700s, the process of composition and printing of music
was for the most part supported by
patronage from
aristocracies and
churches. In the mid-to-late 1700s, 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.
1800s
In the 1800s, the music industry was dominated by
sheet music publishers.
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 was known as Tin Pan Alley
.
1900s
In the early 20th century, the
phonograph
industry grew greatly in importance, and the record industry
eventually replaced the sheet music publishers as the industry's
largest force. A multitude of record labels came and went, but a
handful of label corporations prospered for decades. By the end of
the 1980s, the "Big 6" —
EMI,
Sony,
BMG,
PolyGram,
WEA and
MCA —
dominated the industry. In mid-1998,
PolyGram merged into Universal Music Group
(formerly MCA), dropping the leaders down to a "Big 5". They became
the "Big 4" in 2004 when Sony merged with BMG.
2000s
In the 21st century, consumers spent far less money on recorded
music than they had in 1990s, in all formats. Total revenues for
CDs,
vinyl,
cassettes and
digital downloads in the U.S. dropped from
a high of $14.6 billion in 1999 to $10.4 billion in 2008. The
downward trend is expected to continue for the foreseeable
future—
Forrester Research
predicts that by 2013, revenues will reach as low as $9.2 billion.
This dramatic decline in revenue has caused large scale layoffs
inside the industry, driven music retailers out of business (such
as
Tower Records) and forced record
companies, record producers, studios, recording engineers and
musicians to seek new
business
models.
In the early years of the decade, the record industry took
aggressive action against illegal
file
sharing, successfully shutting down
Napster in 2001 (the leading online source of
digital music) and threatening thousands of individuals with legal
action. This failed to slow the decline in revenue and was a public
relations disaster. Some academic studies have even suggested that
downloads were not the true cause of 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 by 2007 more units were sold over the internet than
in any other form. 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 turmoil in the industry has changed the balance between
artists, record companies, promoters, retail music stores and the
consumer.
The leading music retailers are now box stores (Wal-Mart
and Best Buy) and music-only stores are no longer 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 venues.) In
order to benefit from all of an artist's income streams, record
companies are increasingly relying 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 has made it possible to
create high quality music in a bedroom and distribute it over the
internet to a worldwide audience.This, in turn, has 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 is gradually
approaching zero.
However, consumer spending on music related
software and hardware has increased dramatically over the last
decade, providing a valuable new income stream for technology
companies such as Apple
Computer
.
Business structure
The music industry is made up of various players, including
individuals, companies, unions, not-for-profit associations, rights
collectives, and other bodies. Professional
musicians, including band leaders,
rhythm section members,
musical ensembles, vocalists, conductors,
composers/arrangers, and sound engineers create sound recordings of
music or perform live in venues ranging from small clubs to
stadiums. Occasionally professional musicians negotiate their
wages, contractual conditions, and other conditions of work through
Musicians' Unions or other guilds.
Composers and
songwriters write the music and lyrics to songs
and other musical works, which are sold in print form as sheet
music or scores by
music
publisher. Composers and performers get part of their income
from writers'
copyright
collectives and
performance rights
organisation such as the
ASCAP
and
BMI (or
MCPS and
PRS respectively for the UK). These societies
and collectives ensure that composers and performers are
compensated when their works are used on the radio or TV or in
films. When musicians and singers make a CD or DVD, the creative
process is often coordinated by a
record
producer, whose role in the recording may range from suggesting
songs and backing musicians to having a direct hands-on role in the
studio, coaching singers, giving advice to session musicians on
playing styles, and working with the senior sound engineer to shape
the recorded sound through effects and mixing.
Some professional musicians, bands, and singers are signed with
record labels, which are companies that
finance the recording process in return for part or full share of
the rights to the recording. Record label companies manage
brands and
trademarks in the
course of marketing the recordings, and they can also oversee the
production of videos for broadcast or retail sale. Labels may
comprise a
record group — one or more label companies,
plus ancillary businesses such as manufacturers and distributors. A
record group may be, in turn, part of a
music group which
includes music publishers. Publishers represent the rights in the
compositions — the music as written, rather than as recorded — and
are traditionally separate entities from the record label
companies. The publisher of the composition for each recording may
or may not be part of the record label's music group; many
publishers are wholly independent and are owned by the artists
themselves.
Record labels that are not part of or under the control of the "Big
Four" music groups are generally considered to be
independent or "indie" labels, even if they are part of
large, well-financed corporations with complex structures. Some
music critics prefer to use the term
indie label to refer
to only those independent labels that adhere to criteria of
corporate structure and size, and some consider an indie label to
be almost any label that releases non-mainstream music, regardless
of its corporate structure.
Record labels may use an "
A&R" (Artist
and Repertoire) manager to not just seek out bands & singers to
sign, but to also help develop the performing style of those
already signed to the label. A&R managers may organize shared
tours with similar bands or find playing opportunities for the
label's groups which will broaden their musical experience. For
example, an A&R manager may decide to send an emerging young
singer-songwriter with little live playing experience on a major
tour with an established electric folk rock act from the same
label, so that this person will gain more confidence.
A
record distributor is a company that works with record
labels to promote and distribute sound recordings. Once a CD is
recorded, record distribution companies organize the shipping of
the CDs to music stores and department stores.
When CDs sell in stores or on websites such as the iTunes Store,
part of the money obtained by the record label for the sales may be
paid to the performers in the form of
royalties. Of the recordings which generate
substantial revenues for the labels, most do so only for a short
period after they are released, after which the song becomes part
of the label's "back catalogue" or library. A much smaller number
of recordings have become "classics", with longstanding popularity,
such as CDs by the Beatles or the Rolling Stones. These albums have
continued to generate revenue for the labels and often, in turn,
royalties for artists, long after their original release.
Successful artists may hire a number of people from other fields to
assist them with their career. The
band
manager oversees all aspects of an artist's career in exchange
for a percentage of the artist's income. An
entertainment lawyer assists them with the
details of their contracts with record companies and other deals. A
business manager handles financial
transactions, taxes and bookkeeping. A
booking agency represents the artist to
promoter, makes deals and books
performances. A
travel agent makes
travel arrangements. A
road crew is a
semi-permanent
tour organization that
travels with the artist. This is headed by a
tour manager and includes staff to move
equipment on and off-stage, drive tour buses or vans, and do
stage lighting,
live sound reinforcement and
musical instrument tuning and maintenance.
The tour manager's tasks can vary widely depending on the type of
tour and where the group is playing. The tour manager's typical
tasks of ensuring that hotel, restaurant and travel arrangements
are confirmed may expand into other tasks, if the venue where the
band is playing does not have certain equipment. For example, if
the venue lacks a grand piano or Hammond organ that the band needs
for the show, the tour manager will be responsible for finding a
rental instrument for the show and having it moved onstage. Or, if
a band member needs an emergency instrument repair, the tour
manager and/or the guitar tech will help to find a repair person or
replacement instrument. The most high-profile celebrity performers
may also have personal assistants, a chef, and
bodyguards. Singers may hire a
vocal coach to give them suggestions on how to
take care of their voice or develop their singing range.
Statistics
US music market shares, according to Nielsen SoundScan (2005)
Nielsen SoundScan reported that the big four accounted for 81.87%
of the US music market in 2005:
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%
World music market sales shares, according to IFPI (2005)
The global market was estimated at $30–40 billion in 2004. Total
annual unit sales (
CD,
music videos,
MP3s) 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:
- Sony Music Entertainment — 32.8%
- Universal Music Group — 25.5%
- EMI Group — 13.4%
- independent labels — 28.4%
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.
Total Value by country
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.
Albums sales and market value
The following table shows album sales and market value in the world
in the 1990s–2000s.
N |
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% |
6.4–5.3% |
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.
N |
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 millionsIt
is estimated that 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 sales 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 was
responsible for 40% of worldwide
classical music sales over the preceding
year.
Music industry organizations
See also
Notes
- Sony Corporation announced October 1st, 2008 that it had
completed the acquisition of Bertelsmann’s 50% stake in Sony BMG,
which was originally announced on August 5, 2008. Ref:
- Dear Constanze The Guardian
- According to the RIAA the world music market is estimated at $40
billion, but according to IFPI (2004) it is estimated at $32 billion.
- IFPI releases definitive statistics on global market for
recorded music
- [1]"Digital Music Futures and the Independent
Music Industry", Clicknoise, February 1, 2007.
- BUSINESS AND PROPERTIES The Seagram Company Ltd.
References
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 License 2004
- Leonhard, Gerd: 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, 25–28 oct. 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.
External links