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 3,800 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 over $5 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 3,800 firms that employ about 24,000 workers and generate almost $19.3 billion annually.
    • 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.
    • Record production/distribution companies account for 20% of establishments; music publishers account for 19% of establishments; sound recording studios account for 49% of establishments; and other sound recording firms account for 12% of establishments.
    • 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

                                    May 18, 2024 - Increasing Personal Consumption Expenditures may Boost Sales
                                    • Personal consumption expenditures, an indicator of demand for music, increased slightly during the first quarter of 2024, according to the US Bureau of Economic Analysis. Employment in the motion picture and sound recording industry decreased moderately during the first quarter of 2024 while average wages for nonsupervisory employees were unchanged, according to the US Bureau of Labor Statistics. Industry sales are forecast to grow at a 2.78% compounded annual rate from 2024 to 2028, slower than the growth of the overall economy, according to Inforum and the Interindustry Economic Research Fund, Inc.
                                    • More than 200 major musical artists have signed an open letter by the Artist Rights Alliance which protests the “predatory use of AI” in music. The letter – titled ‘Stop Devaluing Music’ – warns that artificial intelligence has the potential to “steal professional artists’ voices and likeness, violate creators’ rights, and destroy the music ecosystem” if left unchecked. The letter comes shortly after Tennessee became the first state to enact legislation protecting musicians and artists from AI in an act called the Ensuring Likeness, Voice, and Image Security Act or "ELVIS Act." The measure, set to go into effect on July 1, is intended to prevent AI from using the voices of artists without their consent. Those who violate the law may face civil legal action.
                                    • Legislation introduced in the US Congress seeks to make it easier for independent music-makers to negotiate collectively over payments from streaming services and over the use of their works by AI algorithms. Independent artists typically get their music onto digital services platforms (DSPs) like Spotify via music distributors like TuneCore or DistroKid, which negotiate licensing deals with the DSPs, or rely on agreements negotiated by digital rights music licensing network Merlin. The Protect Working Musicians Act of 2023 would create an exemption to US antitrust laws that would allow music creators to come together to jointly negotiate licensing deals with a “dominant online music distribution platform or a company engaged in development or deployment of generative artificial intelligence.” “The ‘Protect Working Musicians Act’ will give small and independent artists a shot at facing these challenges by allowing them to negotiate collectively with the large and powerful entities who profit from musicians’ hard work,” said Artists Rights Alliance Executive Director Jen Jacobsen.
                                    • Streaming service giant Spotify plans to implement changes to its streaming royalty model that would affect the lowest-streaming acts, non-music noise tracks, and distributors and labels committing fraud, according to Billboard magazine. A new threshold of minimum annual streams that a track must meet before it starts to generate royalties is expected to be implemented. The threshold, according to Music Business Worldwide, will de-monetize tracks that had previously received 0.5% of Spotify’s royalty pool. Financial penalties will be implemented for music distributors and labels when fraudulent activity on tracks that they have uploaded to Spotify has been detected. A minimum play-time length that non-music noise tracks, such as bird sounds or white noise, must reach to generate royalties is also planned.
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