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

                                    Nov 15, 2023 - Increasing Personal Consumption Expenditures may Boost Sales
                                    • Personal consumption expenditures, an indicator of demand for music, increased moderately in the first half of 2023. Industry employment decreased to January 2023 levels in July and August after increasing significantly during the first half of the year. Wages for nonsupervisory employees decreased during the first eight months of the year.
                                    • Streaming service giant Spotify plans to implement changes to its streaming royalty model in early 2024 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.
                                    • The four ‘major’ recorded music companies – Universal Music, Sony Music, and Warner Music, plus indie collective Merlin – have cumulatively lost 12% of market share on the Spotify streaming service over the past five years, according to Spotify. Rob Stringer, Chairman of Sony Music Group, noted in 2022 that Sony Music’s overall distribution market share was being “diluted by default” from “the sheer volume of tracks” being released each day via DIY distribution companies. Over 100,000 new tracks are now being uploaded to streaming services like Spotify every 24 hours, according to Universal Music Group CEO and Chairman Sir Lucian Grainge and the outgoing CEO of Warner Music Group, Steve Cooper.
                                    • The Justice Department has opened an antitrust investigation into the owner of ticket sales and distribution company Ticketmaster, according to The New York Times. The investigation is focused on whether Live Nation Entertainment has abused its power over the multibillion-dollar live music industry. Members of the antitrust division’s staff at the Justice Department have contacted music venues and players in the ticket market in recent months, asking about Live Nation’s practices and the wider dynamics of the industry, said sources who spoke to The New York Times on the condition of anonymity. The inquiry appears to be broad, the sources said, and is focused on whether the company maintains a monopoly over the industry
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