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.
Industry Concentration
The musical production, publishing, and distribution industry is highly concentrated and dominated by large multi-national firms.
Music Piracy
Piracy is one the music industry’s most serious issues and significant source of lost revenue.
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
Recent Developments
Mar 19, 2024 - Increasing Personal Consumption Expenditures may Boost Sales
- Personal consumption expenditures, an indicator of demand for music, increased moderately during the first nine months of 2023, according to the US Bureau of Economic Analysis. Employment in the motion picture and sound recording industry varied significantly during 2023 and was down slightly year over year in December, according to the US Bureau of Labor Statistics (BLS). Employment level variance was largely due to strikes by major unions during 2023. Average wages for nonsupervisory employees were down moderately year over year in December 2023, according to the BLS. Industry sales are forecast to grow at a 3.86% compounded annual rate from 2023 to 2027, slower than the growth of the overall economy, according to Inforum and the Interindustry Economic Research Fund, Inc.
- The National Music Publishers’ Association (NMPA) said in early March that the organizations’ license with TikTok ends April 30 and it “do[es] not anticipate” to renew, extend or form a new license with the platform, according to a letter obtained by Billboard. The move could add to the number of music takedowns from the platform, as Universal Music Group began pulling its recorded music and publishing catalogs in February. The NMPA license is used by a number of independent music publishers, according to Billboard. The NMPA negotiates its TikTok license as an optional offering for its membership, allowing them to bypass the time and cost of negotiating directly with the video platform. If publishers wish to continue licensing their works to TikTok, the NMPA’s letter urges them to “engage directly with TikTok to negotiate a license beyond April 30.”
- 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 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.
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