The music industry consists of the companies and individuals that make

money by creating and selling music. Among the many individuals and
organizations that operate within the industry are: the musicians who
compose and perform the music; the companies and professionals who
create and sell recorded music (e.g., music publishers, producers, recording
studios, engineers, record labels, retail and online music stores, performance
rights organizations; those that present live music performances (booking
agents, promoters, music venues, road crew; professionals who assist
musicians with their music careers (talent managers, business managers,
entertainment lawyers; those who broadcast music (satellite, internet and
broadcast radio; !ournalists; educators; musical instrument manufacturers;
as well as many others.
The current music industry emerged around the middle of the "#th century,
when records had supplanted sheet music as the largest player in the music
business: in the commercial world, people began speaking of $the recording
industry$ as a loose synonym of $the music industry$. Along with their
numerous subsidiaries, a large ma!ority of this market for recorded music is
controlled by three ma!or corporate labels: the %rench&owned 'niversal (usic
)roup, the *apanese&owned +ony (usic ,ntertainment,-./ and the '+&owned
0arner (usic )roup. 1abels outside of these three ma!or labels are referred
to as independent labels. The largest portion of the live music market is
controlled by 1ive 2ation, the largest promoter and music venue owner. 1ive
2ation is a former subsidiary of 3lear 3hannel 3ommunications, which is the
largest owner of radio stations in the 'nited +tates. 3reative Artists Agency is
a large talent management and booking company.
The music industry has been undergoing drastic changes since the advent of
widespread digital distribution of music. A conspicuous indicator of this is
total music sales: since "###, sales of recorded music have dropped o4
substantially-"/-5/ while live music has increased in importance.-6/ The
largest music retailer in the world is now digital: Apple 7nc.8s iTunes +tore.-9/
The two largest companies in the industry are 'niversal (usic )roup
(recording and +ony:AT; (usic <ublishing (publisher. 'niversal (usic )roup,
+ony =(), ,(7 )roup (now a part of 'niversal (usic )roup (recording and
+ony:AT; (usic <ublishing (publisher and 0arner (usic )roup were
collectively known as the $=ig %our$ ma!ors. 1abels outside of the =ig %our
were referred to as independent labels.
>istory-edit/
,arly history-edit/
-icon/ This section re?uires e@pansion. (*uly "#."
'ntil the .Ath century, the processes of formal composition and of the
printing of music took place for the most part with the support of patronage
from aristocracies and churches. 7n the mid&to&late .Ath century, performers
and composers such as 0olfgang Amadeus (ozart began to seek commercial
opportunities to market their music and performances to the general public.
After (ozart8s death, his wife (3onstanze 0eber continued the process of
commercialization of his music through an unprecedented series of memorial
concerts, selling his manuscripts, and collaborating with her second husband,
)eorg 2issen, on a biography of (ozart.-B/
7n the .Cth century, sheet&music publishers dominated the music industry. 7n
the 'nited +tates, the music industry arose in tandem with the rise of black
face minstrelsy. 7n the late part of the century the group of music publishers
and songwriters which dominated popular music in the 'nited +tates became
known as Tin <an Alley.
Advent of recorded music-edit/
At the dawn of the early "#th century, the recording of sound began to
function as a disruptive technology to the commercial interests publishing
sheet music. 3ommercially released phonograph records of musical
performances starting in the late .AA#s, and later the onset of widespread
radio broadcasting starting in the .C"#s, forever changed the way music was
heard. Dpera houses, concert halls, and clubs continued to produce music
and perform live, but the power of radio allowed obscure bands to become
popular on a nationwide and sometimes worldwide scale.
The $record industry$ eventually replaced the sheet music publishers as the
industry8s largest force. A multitude of record labels came and went. +ome
note&worthy labels of the earlier decades include the 3olumbia Eecords,
3rystalate, Fecca Eecords, ,dison =ell, The )ramophone 3ompany, 7nvicta,
Galliope, <athH, ;ictor Talking (achine 3ompany and many others.-I/
(any record companies died out as ?uickly as they had formed, and by the
end of the .CA#s, the $=ig B$ J ,(7, 3=+, =(), <oly)ram, 0,A and (3A J
dominated the industry. +ony bought 3=+ Eecords in .CAI and changed its
name to +ony (usic in .CC.. 7n mid&.CCA, <oly)ram merged into the
'niversal (usic )roup (formerly (3A. +ince then, +ony and =() merged in
"##6,-A/ and 'niversal took over the ma!ority of ,(78s recorded music
interests in "#.".-C/ ,(7 (usic <ublishing, also once part of the now defunct
=ritish conglomerate, is now co&owned by +ony as a subsidiary of +ony:AT;
(usic <ublishing.-.#/
)enre&wise, music entrepreneurs e@panded their industry models into areas
like folk music, in which composition and performance had continued for
centuries on an ad hoc self&supporting basis. %orming an independent record
label, or $indie$ label, continues to be a popular choice for up&and&coming
musicians to have their music heard, despite the Knancial backing associated
with ma!or labels.
Eise of digital distribution-edit/
(ain article: "###s in the music industry
Fespite increasing digital sales, the largest record labels have all reported a
considerable decline in overall revenues from sales of recorded music to
consumers in the Krst decade of the ".st century.-../ Eevenues in the '.+.
dropped by half over a decade, from a high of L.6.B billion in .CCC to LB.5
billion in "##C, according to %orrester Eesearch.-5/ Atlantic Eecords reports
that digital sales have surpassed physical sales.-."/ 0orldwide revenues for
3Fs, vinyl, cassettes and digital downloads fell from L5B.C billion in "### -.5/
to L.9.C billion in "#.#-.6/ according to 7%<7. The ,conomist and The 2ew
Mork Times report that the downward trend is e@pected to continue for the
foreseeable future-."/-.9/ This dramatic decline in revenue has caused large&
scale layo4s inside the industry, driven retailers (such as Tower Eecords out
of business and forced record companies, record producers, studios,
recording engineers and musicians to seek new business models.-.B/
As of *uly "#.", 'niversal8s parent company, ;ivendi, is attempting to gain
approval for a proposed ac?uisition of ,(7 music.-.I/
7n response to the rise of widespread illegal Kle sharing, the record industry
took aggressive legal action. 7n "##. it succeeded in shutting down 2apster,
and threatened legal action against thousands of individuals who
participated.-.B/ >owever, this failed to slow the decline in revenue and
proved a public&relations disaster.-.B/ +ome academic studies have even
suggested that downloads did not cause the decline.-.A/ 1egal digital
downloads became widely available with the debut of the iTunes +tore in
"##5. The popularity of internet music distribution has increased and by "#."
digital music sales topped physical sales of music.-.C/ >owever, as The
,conomist reports, $paid digital downloads grew rapidly, but did not begin to
make up for the loss of revenue from 3Fs.$-.9/ The "##A =ritish (usic Eights
survey-"#/ showed that A#N of people in =ritain wanted a legal <"< service,
however only half of the respondents thought that the music8s creators
should be paid. The survey was consistent with the results of earlier research
conducted in the 'nited +tates, upon which the Dpen (usic (odel was
based.-"./
The turmoil in the recorded music industry altered the twentieth&century
balance between artists, record companies, promoters, retail music&stores
and the consumer. As of "#.#, big&bo@ stores such as 0al&(art and =est =uy
sell more records than music&only stores, which have ceased to function as a
player in the industry. Eecording artists now rely on live performance and
merchandise for the ma!ority of their income, which in turn has made them
more dependent on music promoters like 1ive 2ation (which dominates tour
promotion and owns a large number of music venues.-6/ 7n order to beneKt
from all of an artist8s income streams, record companies increasingly rely on
the $5B# deal$, a new business&relationship pioneered by Eobbie 0illiams and
,(7 in "##I.-""/ At the other e@treme, record companies can o4er a simple
manufacturing and distribution deal, which gives a higher percentage to the
artist, but does not cover the e@pense of marketing and promotion. (any
newer artists no longer see a record deal as an integral part of their business
plan at all. 7ne@pensive recording hardware and software made it possible to
record reasonable ?uality music in a bedroom and distribute it over the
internet to a worldwide audience.-"5/ This, in turn, caused problems for
recording studios, record producers and audio engineers: the 1os Angeles
Times reports that as many as half of the recording facilities in that city have
failed.-"6/ 3hanges in the music industry have given consumers access to a
wider variety of music than ever before, at a price that gradually approaches
zero.-.B/ >owever, consumer spending on music&related software and
hardware increased dramatically over the last decade, providing a valuable
new income&stream for technology companies such as Apple 7nc. As of now,
consumers are witnessing the beginning of the end for record labels. +ervices
such as Feezer, <andora, +potify, and AppleOs iTunes Eadio hasten the death
of the modern music industry with their Ppay to streamQ services. >owever,
the industry is not !ust dying from how music is formatted and distributed,
but also from increasingly ine@pensive audio recording e?uipment and the
help of the 7nternet to distribute self&produced albums. 3ompanies like
Gickstarter help independent musicians produce their albums through fans
funding bands they want to listen to.-"9/
=usiness structure-edit/
The music industry is a comple@ system of many di4erent organizations,
Krms and individuals and has undergone dramatic changes in the ".st
century. >owever, the ma!ority of the participants in the music industry still
fulKll their traditional roles, which are described below.-"B/
There are three types of property that are created and sold by the recording
industry: compositions, recordings and media (such as 3Fs or (<5s. There
may be many recordings of a single composition and a single recording will
typically be distributed into many media.
3ompositions-edit/
3ompositions are created by songwriters or composers and are originally
owned by the composer, although they may be sold. %or e@ample, in the case
of work for hire, the composition is owned immediately by another party.
Traditionally, the copyright owner licenses or $assigns$ some of their rights
(e.g. distribution and sales to publishing companies, by means of a
publishing contract. The publishing company (or a collection society
operating on behalf of many such publishers, songwriters and composers
collects fees (known as $publishing royalties$ when the composition is used.
A portion of the royalties are paid by the publishing company to the copyright
owner, depending on the terms of the contract. +heet music provides an
income stream that is paid e@clusively to the composers and their publishing
company. Typically (although not universally, the publishing company will
provide the owner with an advance against future earnings when the
publishing contract is signed. A publishing company will also promote the
compositions, such as by ac?uiring song $placements$ on television or in
Klms.
Eecordings-edit/
Eecordings are created by recording artists, often with the assistance of
record producers and audio engineers. They were traditionally made in
recording studios (who are paid a daily or hourly rate in a recording session.
7n the ".st century, advances in recording technology have allowed many
producers and artists to create $home studios$, bypassing the traditional role
of the recording studio. The record producer oversees all aspects of the
recording, making many of the logistic, Knancial and artistic decisions in
cooperation with the artist. Audio engineers (including recording, mi@ing and
mastering engineers are responsible for the audio ?uality of the recording. A
recording session may also re?uire the services of an arranger or studio
musicians.
Eecordings are (traditionally owned by record companies. A recording
contract speciKes the business relationship between a recording artist and
the record company. 7n a traditional contract, the company provides an
advance to the artist who agrees to record music that will be owned by the
company. The ARE department of a record company is responsible for Knding
new talent and overseeing the recording process. The company pays for the
recording costs and the cost of promoting and marketing the record. %or
physical media (such as 3Fs, the company also pays to manufacture and
distribute the physical recordings. +maller record companies (known as
$indies$ will form business relationships with other companies to handle
many of these tasks. The record company pays the recording artist a portion
of the income from the sale of the recordings, generally known as a
mechanical royalty. (This is distinct from the publishing royalty, described
above. This portion is similar to a percentage, but may be limited or
e@panded by a number of factors (such as free goods, recoupable e@penses,
bonuses, etc. that are speciKed by the record contract. +ession musicians
and orchestra members (as well as a few recording artists in special markets
are under contract to provide work for hire; they8re typically only paid one&
time fees or regular wages for their services, rather than royalties.
(edia-edit/
<hysical media (such as 3Fs are sold by music retailers and are owned by
the consumer. A music distributor delivers the physical media from the
manufacturer to the retailer and maintains relationships with retailers and
record companies. The music retailer pays the distributor, who in turn pays
the record company for the recordings. The record company pays mechanical
royalties to the publisher, composer, and songwriter via a collection society.
The record company then pays royalties, if contractually obligated, to the
recording artist.
7n the case of digital downloads or streams, there is no physical media other
than the consumer8s hard drive. The distributor is optional in this situation;
large online shops may pay the labels directly, but digital distributors do e@ist
to service vendors large and small. 0hen purchasing digital downloads, the
consumer may be re?uired to agree to record company and vendor licensing
terms beyond those which are inherent in copyright; for e@ample, some may
allow freely sharing the recording, but others may restrict the user to storing
the music on a speciKc number of hard drives.
Dther uses of recorded music and compositions-edit/
0hen a recording is broadcast (either on radio or by a service such as
(uzak, performance rights organisations (such as the A+3A< and =(7 in the
'+, +D3A2 in 3anada, or (3<+ and <E+ in the 'G, collect a third type of
royalty known as a performance royalty, which is paid to composers and
recording artists. This royalty is typically much smaller than publishing or
mechanical royalties. 0hen recordings are used in television and Klm, the
composer and their publishing company are typically paid through a
synchronization license. +ubscription services (such as Ehapsody also
provide an income stream directly to record companies, and through them, to
artists, contracts permitting.
1ive music-edit/
A promoter brings together a performing artist and a venue owner and
arranges contracts. A booking agency represents the artist to promoters,
makes deals and books performances. 3onsumers usually buy tickets either
from the venue or from a ticket distribution service such as Ticketmaster. 7n
the '+, 1ive 2ation is the dominant company in all of these roles: they own
most of the large venues in the '+, they are the largest promoter, and they
own Ticketmaster.
3hoices about where and when to tour are decided by the artist8s
management and the artist, sometimes in consultation with the record
company. Eecord companies may provide tour support; they may Knance a
tour in the hopes that it will help promote the sale of recordings. >owever, in
the ".st century, it has become more common to release recordings to
promote tours, rather than book tours to promote records.
+uccessful artists will usually employ a road crew: a semi&permanent touring
organization that travels with the artist. This is headed by a tour manager
and provides stage lighting, live sound reinforcement, musical instrument
tuning and maintenance and transportation. Dn large tours, the road crew
may also include an accountant, stage manager and catering. 1ocal crews are
typically hired to help move e?uipment on and o4 stage. Dn small tours, all of
these !obs may be handled by !ust a few roadies, or by the musicians
themselves.
Artist management, representation and sta4-edit/
Artists may hire a number of people from other Kelds to assist them with their
career. The artist manager oversees all aspects of an artist8s career in
e@change for a percentage of the artist8s income. An entertainment lawyer
assists them with the details of their contracts with record companies and
other deals. A business manager handles Knancial transactions, ta@es and
bookkeeping. 'nions, such as A%TEA in the '.+., provide health insurance and
other services for musicians. A successful artist functions in the market as a
brand and, as such, may derive income from many other streams, such as
merchandise or internet&based services. These are typically overseen by the
artist8s manager and take the form of relationships between the artist and
companies that specialize in these products.
,merging business models-edit/
7n addition to these traditional business relationships, new ways of doing
business are being developed in the ".st century. The traditional lines that
once divided artist, publisher, record company, distributor, retail and
consumer electronics have become blurred. Artists may own their own
publishing companies, artist management companies may promote and
market recordings on behalf of their clients, artists may promote and market
themselves using only free services such as MouTube or social media,
consumer electronics companies have become digital music retailers, and so
on, in many variations. 2ew digital music distribution technologies have also
forced both government and industry to re&e@amine the deKnitions of
intellectual property and the rights of all the parties involved. Also
compounding the issue of deKning copyright boundaries is the fact that the
deKnition of $royalty$ and $copyright$ varies from country to country and
region to region, which changes the terms of some of these business
relationships.
+ales statistics-edit/
Figital album volume sales growth in "#.6-edit/
According to 7%<7,-"I/ the Figital album volume sales growth in "#...
3ountry <ercentage
'+ S.CN
'G S"IN
%rance S"5N
)lobal (est S"5N
+ource: 2ielsen +ound+can, DTcial 3harts 3ompany:=<7, )fG and 7%<7
estimate.
)lobal music industry market share data
'+ music market shares, according to 2ielsen +ound+can ("#..
2ielson +ound+can in their "#.. report noted that the $big four$ controlled
about AAN of the market:-"A/
'niversal (usic )roup ('+A based J "C.A9N
+ony (usic ,ntertainment ('+A based J "C."CN
0arner (usic )roup ('+A based J .C..5N
7ndependent labels J ."...N
,(7 )roup & C.B"N
After absorption of ,(7 by +ony (usic ,ntertainment and 'niversal (usic
)roup in Fecember "#.. the $big three$ were created and on *anuary A, "#.5
after the merger there were layo4s of forty workers from ,(7. ,uropean
regulators forced 'niversal (usic to spin o4 ,(7 assets which became the
<arlophone 1abel )roup which was ac?uired by 0arner (usic )roup.-"C/
2ielson +ound+can issued a report in "#.", noting that these labels
controlled AA.9N of the market, and further noted:-5#/
'niversal (usic )roup ('+A based which owns ,(7 (usic J 5".6.N S B.IAN
of ,(7 )roup
+ony (usic ,ntertainment ('+A based which owns publishing arm of ,(7
)roup J 5#."9N
0arner (usic )roupJ .C..9N
7ndependent labelsJ ...6"N
0orld music market sales shares, according to 7%<7 ("##9
+i@ years earlier, the global market was estimated at L5#U6# billion in "##6.
-5./ Total annual unit sales (3Fs, music videos, (<5s in "##6 were 5 billion.
Additionally, according to an 7%<7 report published in August "##9,-5"/ the big
four accounted for I..IN of retail music sales:
7ndependent labelsJ"A.5N
'niversal (usic )roupJ"9.9N
+ony (usic ,ntertainmentJ"..9N
,(7 )roupJ.5.6N
0arner (usic )roupJ...5N
<rior to Fecember .CCA, the industry was dominated by the $=ig +i@$: +ony
(usic and =() had not yet merged, and <oly)ram had not yet been
absorbed into 'niversal (usic )roup. After the <oly)ram&'niversal merger,
the .CCA market shares reVected a $=ig %ive$, commanding II.6N of the
market, as follows, according to (,7 0orld Eeport "###:
'niversal (usic )roup J "A.AN
7ndependent labels J "".BN
+ony (usic ,ntertainment J "...N
,(7 J .6..N
0arner (usic )roup J .5.6N
2ote: the 7%<7 and 2ielsen +oundscan use di4erent methodologies, which
makes their Kgures diTcult to compare casually, and impossible to compare
scientiKcally.-55/
Albums sales and market value-edit/
The following table shows album sales and market value in the world in "#.".
+ource: %igures within the table are based on 7%<7 "#." annual report
published in "#.5.-56/
(usic markets, with total retail value, and share of <hysical, Figital records,
"#."
(arket Eetail value
'+ L
(millions N 3hange <hysical Figital<erformance Eights
+ynchronization
'nited +tates 6,6A..A &#.9N 56N 9AN 6N 6N
*apan 6,6"".# 6N A#N .IN "N .N
'nited Gingdom .,5"9.A &B..N 6CN 5CN .#N "N
)ermany .,"CI.C &6.BN I9N .CN 9N .N
%rance C#I.B &".CN B6N "5N ..N "N
Australia 9#I.6 B.AN 69N 6IN BN "N
3anada 695.9 9.AN 6AN 65N IN "N
=razil "9I." A.CN B"N "IN CN "N
7taly ".I.9 &..AN B"N "IN CN "N
2etherlands ".B.5 &6.IN 9AN "IN .6N .N
+outh Gorea .AI.9 &6.5N 99N 65N "N #N
+weden .IB.I .A.IN5"N 9CN AN .N
+pain .BB.B &9N 95N "IN .CN .N
7ndia .6B.I "..BN5.N B#N IN "N
(e@ico .66.9 A."N B5N 59N .N .N
+witzerland ."A.9 &.6."N B.N 5"N IN 2:A
=elgium ."..9 &B.5N B6N .AN .IN 2:A
2orway ..A.5 B.IN 5.N 9IN ..N .N
Austria CB." &.".6N B9N ".N .5N .N
3hina C".6 CN .AN A"N 2:A 2:A
Eecorded music retail sales-edit/
"###-edit/
7n its *une 5#, "### annual report Kled with the '.+. +ecurities and ,@change
3ommission, +eagram reported that 'niversal (usic )roup made 6#N of the
worldwide classical music sales over the preceding year.-59/
"##9-edit/
7nterim physical retail sales in "##9. All Kgures in millions.
3ountry info 'nits ;alue 3hange (N
Eanking 3ountry name +ingles 3F F;F Total 'nits L (in
'+F 1ocal 3urrency 'nits ;alue
. '+A .6.I 5##.9 ...B 5"B.A 6IA5." 6IA5." W9.I#N
W9.5#N
" *apan "A.9 C5.I A.9 ..5.9 ""9A." "5CI9C WB.C#N
WC."#N
5 'G "6.5 BB.A ".C I6.A ."6A.9 BBB.I W..I#N
W6.##N
6 )ermany A.9 9A.I 6.6 I. AAI.I BAC.I WI.I#N
W9.A#N
9 %rance ...9 6I.5 6.9 9B.C AB... BBC.. I.9#NW".9#N
B 7taly #.9 .6.I #.I .I "IA ".B WA.6#N W.".5#N
I 3anada #.. "#.A ..9 "".5 "B".C 5"9 #.I#NW6.B#N
A Australia 5.B .6.9 ..9 .I." "9C.B 559.C W"".C#N
W...A#N
C 7ndia U .#.C U 99.5 "5C.B ..9##W.C."#N W".6#N
.# +pain . .I.9 ... .C.. "5..B .A# W.5.6#N W.9.I#N
.. 2etherlands .." A.I ..C .... .C#.5 .6I.C W5..5#N
W.C.A#N
." EussiaU "9.9 #.. 6".I .AI.C 9"56.I WC.6#N
".."#N
.5 (e@ico #.. 55.6 #.A 56.B .AI.C "#A".5 66.##N
"..9#N
.6 =razil #.#. .I.B ".6 "6 .9..I 5C#.5 W"#.6#N W.B.9#N
.9 Austria #.B 6.9 #." 9 ."#.9 C5.B W..9#N
WC.B#N
.B +witzerland XX #.A I.. #." I.A ..9.A .5C." n:a n:a
.I =elgium ..6 B.I #.9 I.I ..9.6 AC.I W.5.A#N
WA.C#N
.A 2orway #.5 6.9 #.. 6.A .#5.6 B99.B W.C.I#N
W.#.6#N
.C +weden #.B B.B #." I." CA.9 I#... W"C.##N
W"#.5#N
"# Fenmark #.. 6 #.. 6." I5.. 6"5.9 5.I#NW6."#N
Top "# I6.9 I9I.. 6".A C.9." ."5IA.I WB.B#N
WB.5#N
"##5U"##I-edit/
Appro@imately ".N of the gross 3F revenue numbers in "##5 can be
attributed to used 3F sales.-citation needed/ This number grew to
appro@imately "IN in "##I.-citation needed/ The growth is attributed to
increasing on&line sales of used product by outlets such as Amazon.com, the
growth of used music media is e@pected to continue to grow as the cost of
digital downloads continues to rise.-citation needed/
The sale of used goods Knancially beneKts the vendors and online
marketplaces, but in the 'nited +tates, the Krst&sale doctrine prevents
copyright owners (record labels and publishers, generally from $double
dipping$ through a levy on the sale of used music.
"#..-edit/
7n mid&"#.., the E7AA trumpeted a sales increase of 9N over "#.#, stating
that $thereOs probably no one single reason$ for the bump.-5B/
"#."-edit/
The 2ielsen 3ompany R =illboardOs "#." 7ndustry Eeport shows overall music
sales increased 5..N over "#... Figital sales caused this increase, with a
Figital Album sales growth of .6..N and Figital Track sales growth of 9..N,
whereas <hysical (usic sales decreased by .".AN versus "#... Fespite the
decrease, physical albums were still the dominant album format. ;inyl Eecord
sales increased by .I.IN and >oliday +eason Album sales decreased by
I..N.-5#/
Total revenue by year-edit/
)lobal trade revenue according to the 7%<7.
Mear Eevenue 3hange 2otes
"##9 L"#.I billion &5N -5I/-5A/
"##B L.C.B billion &9N -5I/
"##I L.A.A billion &6N -5C/
"##A L.A.6 billion &AN -6#/
"##C L.I.6 billion &9N -6./
"#.# L.B.A billion &A.6N -6"/
"#.. L.B." billion &5N -6"/-65/ (7ncludes sync revenues
"#." L.B.9 billion S#.5N -65/