Music Production, Publishing & Distribution

Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 3,500 companies in the sound recording industry in the US produce and distribute musical recordings, publish music, and provide sound recording and related services. Recorded music companies, also known as record “labels,” generate revenue through the sale of physical products (CDs, vinyl albums) and digital products (downloads, streaming). Distributors generate revenue through wholesale sales of music to online and brick-and-mortar stores. Music publishers generate revenue from royalties received through the exploitation of musical compositions, which include licenses to reproduce and perform music.

Music Piracy

Piracy is one the music industry’s most serious issues and significant source of lost revenue.

Industry Concentration

The musical production, publishing, and distribution industry is highly concentrated and dominated by large multi-national firms.

Industry size & Structure

The average company operates out of a single location, employs about 6-7 workers, and generates almost $4 million annually. Employment averages within the industry range from 3 to 17 workers, and average revenue ranges from $640,000 to $15 million annually.

    • The music publishing and distribution industry consists of about 3,500 firms that employ about 23,600 workers and generate almost $16 billion annually.
    • Record production/distribution companies account for 53% of revenue and 16% of firms; music publishers account for 35% of revenue and 20% of firms; sound recording studios account for 8% of revenue and 53% of firms; other sound recording firms account for 4% of revenue and 11% of firms.
    • The music publishing and record production/distribution sectors of the industry are concentrated; the top 50 companies account for 93-96% of sector revenue. The sound recording sector of the industry is more fragmented; the top 50 companies account for 38% of sector revenue.
    • The largest music publishers and integrated production/distribution firms include Kobalt, Warner Music Group, BMG (Bertelsmann), Universal Music Group (Viviendi), and Sony Music Entertainment (Sony). Major digital music distributors include CD Baby, Ditto, and Octiive. Major recording studios include Capitol Studios, Conway Recording Studios, and Sterling Sound.
    • The US accounts for the biggest percentage of music sales globally and is the largest exporter of music, according to IFPI.
                                    Industry Forecast
                                    Music Production, Publishing & Distribution Industry Growth
                                    Source: Vertical IQ and Inforum

                                    Recent Developments

                                    Nov 5, 2022 - Live Event Attendance Rebounds
                                    • Attendance at concerts and live events broke records during the summer of 2022, Live Nation Entertainment executives said. Executives at hotel chains, cruise-line operators, vacation-booking platforms, and other leisure companies said in recent earnings reports that the desire to spend on experiences is overcoming concerns about inflation and the economy. Lodging executives say the resilience in demand comes as Americans seek out travel and connections in person after spending heavily on goods during the pandemic. “People at the beginning of the pandemic were spending unlimited amounts on home improvement, on Pelotons, you name it, and the bloom is off that rose entirely,” Hyatt Hotels CEO Mark Hoplamazian said. “What they’re now spending on is experiences.”
                                    • Industry experts say that the recorded music market is again taking on its former hourglass shape, this time with the streaming platforms replacing labels and publishers at the center and acting as a gatekeeper between artists and listeners. A key element for streaming platforms is the playlist, which has become so important that being left off can tank even megastar releases. Experts say that, by nudging listeners toward playlists, streaming services train them to outsource their decisions about what to listen to. The more listeners automatically head to playlists, the more streaming comes to mimic radio.
                                    • Music publishers, songwriters, and musicians have struck a deal with streaming services for US mechanical streaming rates for 2023-2027. The National Music Publishers’ Association (NMPA), Nashville Songwriters Association International (NSAI), and Digital Media Association (DiMA) agreed on a 15.35% rate. That's up only mildly from the 2018-2022 rate of 15.1%. It's also less than expected, according to Variety, as the NMPA previously said it was pushing for 20%. The agreement will reportedly also modernize the way "bundle" rates offered to students and families are treated, and increase so-called Total Content Costs, to make up some of the difference.
                                    • Selling songwriting rights ramped up during the pandemic among legacy artists. Big names including Bob Dylan, Shakira, Neil Young, Stevie Nicks, David Crosby, Paul Simon, and Bruce Springsteen have cashed out their catalogs. Industry watchers suggest aging artists may wish to sell their rights to leave liquid assets to their heirs instead of songwriting estates.
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