How Well Do You Know the Music Industry?

Overview of the Music Industry

• The music industry includes individuals and organizations that earn money by writing songs and musical compositions, creating and selling recorded music and sheet music, presenting concerts, and aiding music creators.

• The industry also includes talent managers, artists and repertoire managers, business managers, entertainment lawyers, music journalists, music critics, DJs, music educators and teachers, musical instrument manufacturers, and many others.

• The modern Western music industry emerged between the 1930s and 1950s when records replaced sheet music as the most important product in the music business.

• The largest portion of the live music market for concerts and tours is controlled by Live Nation, the largest promoter and music venue owner.

• In the first decades of the 2000s, the music industry underwent drastic changes with the advent of widespread digital distribution of music via the Internet.

• The recording industry produces three separate products: compositions, recordings, and media.

• Compositions are owned by composers, recordings by record companies, and media by consumers.

• Recordings are created by recording artists, with the assistance and guidance from record producers and audio engineers.

• Recordings are traditionally owned by record companies, but some artists own their own record companies.

• When a recording is broadcast, performance rights organizations collect a third type of royalty known as a performance royalty, which is paid to songwriters, composers, and recording artists.

• A promoter 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.

• In the 2000s, traditional lines that once divided singers, instrumentalists, publishers, record companies, distributors, retail and consumer electronics have become blurred or erased.A Brief History of the Music Industry

• Printed music using machine-printed sheet music developed during the Renaissance music era in the mid-15th century.

• Ottaviano Petrucci was the pioneer of modern music printing, who secured a twenty-year monopoly on printed music in Venice during the 16th century.

• At the dawn of the early 20th century, sound recording began to function as a disruptive technology to the commercial interests which published sheet music.

• In the first decade of the 2000s, digitally downloaded and streamed music became more popular than buying physical recordings.

• Total "music-business" revenues in the U.S. dropped by half, from a high of $14.6 billion in 1999 to $6.3 billion in 2009.

• In 2001, the record industry succeeded in shutting down the popular music-website Napster, and threatened legal action against thousands of individuals who participated in sharing music-song sound-files.

• Legal digital downloads became widely available with the debut of the Apple iTunes Store in 2003.

• After 2010, Internet-based services such as Deezer, Pandora, Spotify, and Apple's iTunes Radio began to offer subscription-based "pay to stream" services over the Internet.

• Spotify pays artists based on their "market share" (the number of streams for their songs as a proportion of total songs streamed on the service).

• The Recording Industry Association of America (RIAA) revealed in its 2015 earnings report that streaming services were responsible for 34.3 percent of the year's U.S. recorded-music-industry revenue.

• Music-performing artists now rely on live performance and merchandise sales for the majority of their income.

• The music industry is characterized by many mergers and/or acquisitions, for the major companies as well as for middle-sized business.Overview of the Music Industry

• The "360 deal" is a new business-relationship that increasingly relies on the record companies.

• Record companies can offer a simple manufacturing- and distribution-deal that gives a higher percentage to the artist but does not cover the expenses of marketing and promotion.

• Independent musicians can produce their albums through crowdfunding platforms like Kickstarter.

• The availability of inexpensive recording-hardware and -software makes it possible to record and distribute music worldwide.

• The changes in the music industry have given consumers access to a wider variety of music at a price that gradually approaches zero.

• Consumer spending on music-related software and hardware increased dramatically over the last decade, providing a valuable new income-stream for technology companies.

• The global digital album sales grew by 6.9% in 2014.

• The industry was dominated by the "Big Six" until the PolyGram-Universal merger in 1998. After the merger, the "Big Five" commanded 77.4% of the market.

• The joint venture of Sony and BMG created the 'Big Four' in 2004, and in 2011, the "big four" controlled about 88% of the market.

• After the absorption of EMI by Sony Music Entertainment and Universal Music Group in December 2011, the "big three" were created.

• The largest players in the music industry own more than 100 subsidiary record labels or sublabels, each specializing in a certain market niche.

• Total album sales have declined in the early decades of the 21st century, leading some music critics to declare the death of the album.

• The Nielsen Company & Billboard's 2012 Industry Report shows overall music sales increased 3.1% over 2011.