Music Production & Distribution
Description
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 (Japan), Edel (Germany), and GMM Grammy (Thailand). Music streaming services from companies such as Amazon and Apple (both based in the US) and Spotify (Sweden) are increasingly important to the industry.
Global streaming revenue grew by about 10% driven by paid streaming with over 667 million users of paid subscription accounts at the end of 2023, according to the International Federation of the Phonographic Industry (IFPI). Middle East and North Africa experienced the fastest regional growth, up by 14.4%. Europe, the second-largest recorded music region in the world, grew about 8.9%, while the US & Canada region grew about 7%.
The US music production and distribution industry includes about 4,000 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $14 billion.
COMPETITIVE LANDSCAPE
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 50 largest firms account for 85% of industry revenue.
PRODUCTS, OPERATIONS & TECHNOLOGY
US industry revenue comes from mainly from streaming services (about 85% of total revenue); physical recordings (11%); and digital downloads of albums, individual tracks, and ringtones (3%), according to the Recording Industry Association of America (RIAA). The industry also generates revenue form synchronization, or the use of music in content such as films, TV programs, advertising, and video games (less than 5% of revenue).
A performance by an artist is recorded in a sound studio on multiple tracks (two to 24 tracks are common). Sound engineers can then optimize the mix by editing and enhancing individual tracks. Historically, musical recordings were commonly sold as albums, or collections of tracks issued as a single item. Because digital technology has drastically changed the way listeners consume music, the industry has newer metrics for comparing downloads and streams of individual tracks to sales of full albums: every ten downloaded digital tracks is counted as one track-equivalent album (TEA); and 1,250 premium streams or 3,750 ad-supported streams is counted as one stream-equivalent album (SEA).
Major studios have musical artists – singers, rappers, and musicians – under contract to produce recordings that are either marketed as standalone products or combined with other recordings. The studios then promote the new recordings by sponsoring concert tours; providing music to radio stations to play on air; and advertising via radio, TV, print, and online. Studios also promote the sale of music from their catalogs of recordings that are more than 18 months old.
Small studios may only produce sound recordings or may also promote and distribute them. Small, integrated studios focus on finding new (undiscovered) talents and promoting them in selected markets. The studios may specialize in a particular music genre, such as hip-hop or jazz, and develop relationships with local entertainment businesses, such as nightclubs, casinos, and concert halls. Smaller studios also develop relationships with radio and TV stations that specialize in particular genres. The studios also acquire rights to the lyrics and scores produced by and for their musicians.
Global streaming revenue grew by about 10% driven by paid streaming with over 667 million users of paid subscription accounts at the end of 2023, according to the International Federation of the Phonographic Industry (IFPI). Middle East and North Africa experienced the fastest regional growth, up by 14.4%. Europe, the second-largest recorded music region in the world, grew about 8.9%, while the US & Canada region grew about 7%.
The US music production and distribution industry includes about 4,000 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $14 billion.
COMPETITIVE LANDSCAPE
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 50 largest firms account for 85% of industry revenue.
PRODUCTS, OPERATIONS & TECHNOLOGY
US industry revenue comes from mainly from streaming services (about 85% of total revenue); physical recordings (11%); and digital downloads of albums, individual tracks, and ringtones (3%), according to the Recording Industry Association of America (RIAA). The industry also generates revenue form synchronization, or the use of music in content such as films, TV programs, advertising, and video games (less than 5% of revenue).
A performance by an artist is recorded in a sound studio on multiple tracks (two to 24 tracks are common). Sound engineers can then optimize the mix by editing and enhancing individual tracks. Historically, musical recordings were commonly sold as albums, or collections of tracks issued as a single item. Because digital technology has drastically changed the way listeners consume music, the industry has newer metrics for comparing downloads and streams of individual tracks to sales of full albums: every ten downloaded digital tracks is counted as one track-equivalent album (TEA); and 1,250 premium streams or 3,750 ad-supported streams is counted as one stream-equivalent album (SEA).
Major studios have musical artists – singers, rappers, and musicians – under contract to produce recordings that are either marketed as standalone products or combined with other recordings. The studios then promote the new recordings by sponsoring concert tours; providing music to radio stations to play on air; and advertising via radio, TV, print, and online. Studios also promote the sale of music from their catalogs of recordings that are more than 18 months old.
Small studios may only produce sound recordings or may also promote and distribute them. Small, integrated studios focus on finding new (undiscovered) talents and promoting them in selected markets. The studios may specialize in a particular music genre, such as hip-hop or jazz, and develop relationships with local entertainment businesses, such as nightclubs, casinos, and concert halls. Smaller studios also develop relationships with radio and TV stations that specialize in particular genres. The studios also acquire rights to the lyrics and scores produced by and for their musicians.
Table of Contents
- Industry Overview
- Quarterly Industry Update
- Business Challenges
- Business Trends
- Industry Opportunities
- Call Preparation Questions
- Financial Information
- Industry Forecast
- Web Links and Acronyms
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