Music Production & Distribution
Brief Excerpt from Industry Overview Chapter:
Companies in this industry produce, sell, and license musical recordings; they may also own and license musical copyrights. Major companies include Sony Music Entertainment, Universal Music Group, and Warner Music Group (all based in the US), as well as Avex Group (Japan); Edel (Germany); and GMM Grammy (Thailand).
Demand is driven by consumer spending. The profitability of individual companies depends on discovering and promoting new musical talent and generating revenue from the company’s asset base of recordings and publications. Large companies have advantages in marketing and distribution. Smaller companies, many of which are independent record labels (often referred to as “indies”), can compete effectively by focusing on artists within local markets or music genres. The US industry is highly concentrated: the top 20 companies account for more than 80% of industry revenue.
PRODUCTS, OPERATIONS & TECHNOLOGY
US industry revenue comes from mainly from digital delivery (about 75% of total revenue) and physical recordings (about 20%), according to the Recording Industry Association of America (RIAA). The industry also generates revenue from synchronization, or the use of music in content such as films, TV programs, advertising, and video games (less than 5% of revenue). In the digital delivery category, streaming services (subscriptions and advertising sales) account for about twice as much as revenue as downloads of albums, individual tracks, and ringtones.
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