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.
- 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
Recent Developments
May 5, 2023 - Vinyl Pressing Plants Thrive As Sales Surge
- Record pressing plants are reporting order backlogs as vinyl records make a comeback, according to National Public Radio. Consumers bought more new vinyl records than CDs in 2022. It’s the first time that’s happened since 1987, according to the Recording Industry Association of America (RIAA). Two industry leaders, both in Tennessee, finished or announced multi-million-dollar expansions in April. The vinyl resurgence started in earnest in the mid-2000s, according to Josh Friedlander, senior vice president of research and economics at the RIAA. “2005, I think, was the year that vinyl sales were actually at their lowest in the US,” he said. Sales have climbed since, driven first by indie labels and small record stores. Target, Wal-Mart, and Best Buy then started selling reissues of classic albums. Vinyl revenues increased over $450 million between 2020 and 2021, according to the RIAA.
- A German court has issued an injunction stopping the distribution of youtube-dl, a stream-ripping tool that allows people to grab permanent downloads of temporary streams. Stream-ripping tools and websites have been a top piracy concern of the music industry, according to experts. Music companies have been trying to get stream-ripping services blocked by internet service providers and have taken or threatened legal action against the operators of such services. The Hamburg Regional Court has issued an injunction stopping the distribution of the software via a webpage hosted in Germany. The music industry tried in 2020 to get the code for youtube-dl removed from developer platform Github. Those attempts were initially successful but, after some controversy, Github restored the code to its platform.
- 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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