music industry
The music industry is the business of music. Although it encompasses the activity of many music-related businesses and organizations, it is currently dominated by the "big four" record groups, also known as "the major labels"/"the majors" — Sony BMG, EMI, Universal and Warner — each of which consists of many smaller companies and labels serving different regions and markets.
Usage
When the term music industry is used in a narrow sense, it refers only to the businesses and organizations that record, produce, publish, distribute, and market recorded music (e.g., music publishers, recording industry, record production companies). This corresponds to the International Standard Industrial Classification (ISIC) that includes sound recording and music publishing activities (J-59).
When the term is used more broadly, it refers to a range of sub-industries that come from a number of different industrial classifications, including Information and Communication (which includes sound recording and music publishing activities), programming and broadcasting activities (e.g., radio stations), education (e.g., music training schools), Arts, entertainment and recreation, and manufacturing and retail sales (e.g., of musical instruments). In this broader sense, the term usually also encompasses not-for-profit organizations such as Musicians' Unions and writers' copyright collectives and performance rights organizations.
Early commoditization of music
Until the 1700s, the process of composition and printing of music was mostly supported by patronage from the aristocracy and church. 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.[Dear Constanze The Guardian]
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. The group of music publishers and songwriters which dominated popular music in the United States was known as Tin Pan Alley.
The phonographic age
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 combined with BMG.
21st Century changes
Just as radio and television did before it, the advent of file sharing technologies has changed the balance between record companies, song writers, and performing artists. Bands such as Metallica have fought back against peer-to-peer programs such as the infamous Napster, and the arguments for and against technology to circumvent them - digital rights management systems - remain controversial. With the advent of Apple Inc.'s iTunes online music store in 2003, legal music downloads became widely available.
By June 2008, digital music sales generated around $2 billion in revenue, with tracks available through 500 online services located in 40 countries, representing around 10 percent of the total global music market. Revenue from retail CD sales, however, continued to fall. IBISWorld reported in June 2008 that "the industry's financial future looks bleak," but noted that, although revenues have decreased, artists have suffered less than record companies, since they can "make most of their money on merchandise sales and touring."[June 2008, The Tables Have Turned: Rock Stars – Not Record Labels – Cashing In On Digital Revolution, IBISWorld]
Business structure
The music industry is made up of various elements, including:
 Musicians
Musical ensembles
Musicians' Unions
Composers and songwriters
Publishers
Writers' copyright collectives and performance rights organization like ASCAP and BMI (or MCPS and PRS respectively for the UK)
Record producers
Record labels
Record distributors
A&R
Royalties
Business managers
Band managers
Tour promoters
Bookers
Roadies
A record company is an entity that manages sound recording-related brands and trademarks which consist of their owned labels; their owned and licensed master recordings; and various related ancillary businesses such as home video and DVDs.
Labels may comprise a record group which is, in turn, controlled by a music group. As such, a larger umbrella label may have a number of sub-labels releasing music.
Music publishers exist separately (even if sharing the same ultimate holding company or brand name), and they represent the rights in the compositions - i.e. the music as written rather than as recorded.
Record companies and record labels that are not under the control of the Big Four music groups and music publishers that are not one of the Big Four are generally considered to be independent, even if they are part of large corporations with complex structures. Some 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. According to US Market Research Firm NPD Group, iTunes recently surpassed Wal-Mart as America's largest music distributor.
A record distributor is a company (often a record label) that works with record labels to promote and distribute their records, either in their home market or overseas.
Statistics
Nielsen SoundScan reported that the big four accounted for 81.87% of the US music market in 2005:
Universal Music Group (France based) — 31.71%
Sony BMG Music Entertainment, inc. (Japan/Germany based) — 25.61% (13.83% Sony, 11.78% BMG)
Warner Music Group (USA based) — 15%
EMI Group (UK based) — 9.55%
— 18.13%
and in 2004, 72.64%:
Universal Music Group — 29.59%
Sony BMG — 28.46% (13.26% Sony, 15.20% BMG)
Warner Music Group — 14.68%
EMI Group — 9.91%
independent labels — 27.36%
The global market was estimated at $30-40 billion in 2004.[According to the RIAA the world music market is estimated at $40 billion, but according to IFPI (2004) it is estimated at $32 billion.] Total annual unit sales (CDs, music videos, mp3s) in 2004 were 3 billion.
According to an IFPI report published in August 2005,[IFPI releases definitive statistics on global market for recorded music] the big four accounted for 71.7% of retail music sales:
Universal Music Group — 25.5%
Sony BMG Music Entertainment — 21.5%
EMI Group — 13.4%
Warner Music Group — 11.3%
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:
Universal Music Group including PolyGram — 21.1%
Sony Music — 17.4%
EMI — 14.1%
Warner Music Group — 13.4%
BMG — 11.4%
Independent labels — 22.6%
Note: the IFPI and Nielsen Soundscan use different methodologies, which makes their figures difficult to compare casually, and impossible to compare scientifically. "Digital Music Futures and the Independent Music Industry", Clicknoise, February 1, 2007.
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.
Singles sales
Physical single sales in the world in the 90s-00s and digital single sales in 2005.
Recorded Music Interim Physical Retail Sales in 2005
all figures in millions
In its June 30, 2000 annual report filed with the SEC, Seagram reported that Universal Music Group was responsible for 40% of worldwide classical music sales over the preceding year.[BUSINESS AND PROPERTIES The Seagram Company Ltd.]
Music industry organizations
Recording Industry Association of America aka RIAA
American Federation of Musicians aka AFM
American Federation of Television and Radio Artists aka AFTRA
American Society of Composers, Authors, and Publishers aka ASCAP
Broadcast Music Incorporated aka BMI
SESAC
Alliance of Artists and Recording Companies aka AARC
Recording Artists' Coalition aka RAC
Musicians' Union
SoundExchange
Country Music Association
Harry Fox Agency
Academy of Country Music aka ACM
MCPS
Performing Right Society
National Academy of Recording Arts and Sciences aka NARAS
Australian Recording Industry Association aka ARIA
Further reading
Krasilovsky, William; Shemel, Sidney: This Business of Music, Billboard Books, ISBN 978-0823077236
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.
See also
List of record labels and
Best selling music artists - World's top-selling music artists chart.
Record industry
Album cover
file-sharing
External links
http://www.musicindustrylearning.com - Music Industry learning "Making It In Music"
http://www.musicindustrylinks.com - Online Music Industry Links Directory
http://www.zobbel.de/ - World records sales in years 1994/95/97/98.
http://www.HitQuarters.com - World Top 20 A&R Chart
http://www.TheIndustryConnect.com - Music Industry Forum
http://www.TheMusicSnob.com - The brains of the music industry.
http://www.allmusicindustrycontacts.com - Music Industry Contacts
www.TheIndieMusic.com - All About Indie Music
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