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Music industry

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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.

History

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.

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. 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.

Just as radio and television did before it, the advent of file sharing technologies may change 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 re-launch of Napster as a legally licensed download site in 2003 (in the US), along with the advent of Apple Computer's iTunes online music store in the same year, the major record companies have begun to embrace digital downloading as the future of the music industry.

Business structure

The music industry is made up of various elements, including:

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.

Statistics

Nielsen SoundScan reported that the big four accounted for 81.87% of the US music market in 2005:

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. Total annual unit sales (CDs, 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:

  • 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:

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%
EU 30-32% 31-34%
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%
16 Sweden 0.7-0.9% 0.7-1.0%
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 90s-00s and digital single sales in 2005.

N Country Physical Sales Share Digital Sales Share in 2005
EU 34-50% 13.2%
1 Japan 26-32% 1.7%
2 USA 4-25% 85%
3 UK 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 RSA 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 Interim Physical Retail Sales in 2005

all figures in millions

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 Spain 1 17.5 1.1 19.1 231.6 180 -13.40% -15.70%
10 Netherlands 1.2 8.7 1.9 11.1 190.3 147.9 -31.30% -19.80%
11 Russia - 25.5 0.1 42.7 187.9 5234.7 -9.40% 21.20%
12 Mexico 0.1 33.4 0.8 34.6 187.9 2082.3 44.00% 21.50%
13 Brazil 0.01 17.6 2.4 24 151.7 390.3 -20.40% -16.50%
14 Austria 0.6 4.5 0.2 5 120.5 93.6 -1.50% -9.60%
15 Switzerland ** 0.8 7.1 0.2 7.8 115.8 139.2 n/a n/a
16 Belgium 1.4 6.7 0.5 7.7 115.4 89.7 -13.80% -8.90%
17 Norway 0.3 4.5 0.1 4.8 103.4 655.6 -19.70% -10.40%
18 Sweden 0.6 6.6 0.2 7.2 98.5 701.1 -29.00% -20.30%
19 India - 10.9 - 55.3 79.2 3456.6 -19.20% -2.40%
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 SEC, Seagram reported that Universal Music Group was responsible for 40% of worldwide classical music sales over the preceding year.

Music industry organizations

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.

References

See also

External links

  • Find Music - Online Music search.
  • http://www.musicindustrylinks.com - Online Music Industry Links Directory
  • http://www.themusicconnect.com - Music industry tips and advice
  • http://www.move.de/amm/ECON.htm - CD-Markets size in 1996
  • 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.TheMusicSnob.com - The brains of the music industry.
  • http://www.DownhillBattle.org - Fighting the "big four" monopoly.



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