MUSIC INDUSTRY

 

The music industry consists of companies and individuals raise and make money by creating and selling music. In order to do this, withiin the organisation there are musicians who compose & perform the music, the companies & professionals who create and sell recorded music (e.g. music publishers, producers, recording studios, engineers, record labels, retail and online music stores, performance rights organizations). There are also those, who organise and present the music, live, through performances such as booking agents, promoters, music venues and road crew. There are also professionals who assist musicians with their music careers to help them become better as they know what it takes to do so, this would involve people such as: talent managers, artists and repertoire managers, business managers and entertainment lawyers. The last crew that's involved within the organization, is those who broadcast music e.g. by satellite, internet and broadcast radio. There are also journalists, educators, musical instrument manufacturers, as well as many others. 

 

The current music industry emerged around the middle of the 20th century. In 2013, brands put in £104.8 million into the UK music industry and rose to 6% from 2011. Mostly those brands jump on the opportunity of taking artists and working with them to develop their brands and become more famous. In the modern era, most of the music market is controlled by three major corporate labels:  the French-owned Universal Music Group, the Japanese-owned Sony Music Entertainment and the US – owned Warner Music Group. Labels that are outside of these three major labels are called ‘independent labels’. Live nation is the largest portion of the live music market, the largest promoter and music venue owner.

 

Since 2000 sales of recorded music has dropped while live music gained much more importance. The largest music retailer in the world is now digital: Apple Inc.’s iTunes Store. The two largest companies in the industry are Universal Music and Sony/ATV Music Publishing, Universal Music Group, Sony BMG, EMI Group and Warner Music Group- these were known as the “Big Four”, the labels outside of the Big Four are called independent labels. 

 

Advent of recorded music-

 

At the start of the 20th century, there has been an interest to publish sheet music. During the sheet music era, if people wanted to listen to the newest songs, they’d have to buy the sheet music and play it at home. In late 1880s, there were phonograph records of musical performances that were released and at the start of 1920s the onset of widespread radio broadcast changed the way music was heard. Opera houses, concert halls and clubs were continuing to produce music and perform live for their audience, the radio has also helped bands to become popular on a nationwide and sometimes even on a worldwide scale. Soon, the ‘record industry’ has replaced the sheet music and a multitude of the record labels cam and went. There have been many companies that died out when they formed and by the end of 1980s the ‘Big 6’  who where the EMI, CBS, BMG, PolyGram, WEA and MCA that dominated the industry. 

 

Rise of digital distribution-

 

In the first decade of the twenty first century, music was digitally downloaded and streamed however most of it was done illegally but became more popular than physical recordings e.g. CD’s and tapes. This gave the consumer a wider range of access to the music industry than ever before, it cost them less money on recorded music than they did in the 1990s. The total revenue dropped massively to half the amount- from $14.6 billion in 1999 to $6.3 billion in 2009 as well as the revenue for CDs and other physical recordings.

As the illegal recordings became more and more known, the record industry took aggressive legal action. In 2001, they succeeded shutting some of the illegal websites and threatened those who participated in the illegal action. Although this action was taken, the decline in revenue didn’t change by much. After some time, legal digital downloads became very known in the iTunes Store in 2003. This technique became very famous and by 2012 digital music sales topped physical sales of music. Many people said that the industry got a lot of money for the downloaded music from the internet however it didn’t make up the lost money from the CDs.

 

Business structure:

 

The music industry is a complex thing as there are many organisations, firms and individuals involved in it. However, there are many people who still stick to their traditional roles such as: compositions, recordings, other uses of recorded music and compositions, live music, artist management, representation and staff and emerging business models.

 

Compositions:

 

Compositions are created by songwriters that may originally be owned by other composers that may be sold. The copyright owner then signs a publishing contract which licenses some of the rights they have when it comes to distribution. The publishing company collects fees so that when the composition is used, some of the fees are paid by the publishing company to the copywriter depending on what contract they made. The sheet music provides an income that goes straight to the composers and the publishing company. The publishing company will promote the compositions such as doing song ‘placements’ on television or in films.

 

Recordings:

 

Recordings are produced by recording artist sometimes with the help from record producers and audio engineers. Recordings are traditionally made in the recording studios however some had a ‘home studio’ as the recording technology allowed many producers and artists to create that. The record producer sees all aspects of the recording making many logistics, financial and artistic decisions whilst working with the artist.

There are also audio engineers who look and work on the quality of the recording, there are also other people involved in the recordings such as: the arranger, studio musicians, session musicians and vocal coaches.

Recordings are usually owned by the recording companies that have a contract specifying the relationship they have. In the traditional contract, the company will give the artist all the reason why they should sign a contract with them to see how they’d benefit from that. The A&R department within the recording company are responsible for finding any new talent and seeing the progress that is made within the recordings and if anything should be improved. The recording company will pay for all the costs to make the recording and all the costs from marketing and promoting, the company must also pay for physical recordings such as the CDs for the manufacturing and distribution.

 

Media:

 

Physical Medias such as CDs are sold by music retailers and are owned by consumers. A music distributor delivers the physical media from the manufacturer to the retailer and maintains a relationship with them as well as the record companies. The distributor gets paid by the music retailer who then pays the record company for the recordings. The record company then pays the publisher, composer and the songwriter.

Large online shops may pay labels directly however when it comes to digital downloads or streams there is no other physical media except the consumer’s hard drive. When purchasing the digital downloads, the consumer will need to give the permission for example some may allow freely sharing the recording however some may have a restriction of where the media should be.

 

Live music:

 

Performing artists and the venue owner gets brought by the promoter. The booking agency will make deals with the artists to promote them and book performances. However, the decision of where to perform will depend and be chosen by the artist’s manager and the artist and at times the record company. Record companies sometimes provide support financially.

Successful and famous artists will employ a road crew that will travel to tours with them that organise everything. This may be useful as the tour manager will be the head of the performance controlling the: lighting, live sound reinforcement, musical instrument tuning and maintenance, bodyguards and transportation. Big road crews will also have people involved like: accountants, stage manager, hairdressers, makeup artists and catering. Local crews will help to move the equipment on and off the stage.

 

Artist management, representation and staff:

 

Artists have or may hire people who will manage them or to give them support and advice for their future career. The artist manager will be able to see what the future will be holding for the artist and will help them to rise in exchange for a percentage of the artist’s income. People such as the entertainment lawyer will provide them with details about the contracts they have a chance of signing with record companies and other deals that are out there. A business manager handles things such as: financial transactions, taxes and bookkeeping.

 

Emerging business models:

 

Technology such as music production software and the internet is one of the biggest ways in which the music is created and distributed. Traditional lines used to be that once they divided the artists, publishers, record companies, distributors, retail and consumer electronics have become blurred out. Now, artists own their own publishing companies, artist management and may promote and market records on behalf of themselves or their clients. Some artists may decide to promote themselves using only free services such as YouTube or other social Medias or electronic companies. Also, the issue with ‘copyright’ came in where it varies from country to country and region.

 

Digital album volume sales growth in 2014:

 

 

 

 

 

 

 

 

 

 

 

 

Consolidation:

 

In December 1998, the industry was dominated by the “Big Six”. Sony Music and BMG had not yet merged and PolyGram hasn’t yet been absorbed into Universal Music Group. However later on, the 1998 market shares reflected a “Big Five” commanding 77.4% of the market. According to MEI World Report 2000: