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US History Encyclopedia:

Music Industry

The music industry involves the production, distribution, and sale of music in a variety of forms as well as the promotion of live musical performance. People arguably have bought, sold, and bartered music for as long as it has been made. Street singers, roving minstrels, broadside sellers, and traveling music teachers developed makeshift grassroots music industries that differed more in scale than in kind when compared to the modern music business.

In the mid-nineteenth century, printed sheet music was the industry's primary product. Publishers marketed sentimental ballads and parlor songs for use by the growing number of private piano owners. Advertised nationally, sheet music sales were boosted by the inclusion of songs in touring musical reviews. Blackface minstrelsy, the most popular form of live entertainment in the United States through much of the nineteenth century, provided one of the central vehicles for publishers to acquaint audiences with their wares. Large minstrel companies became celebrities by touring relentlessly through established national theater circuits. Their endorsement of a song could result in significant sales throughout the nation.

Beginning in the early 1880s, publishing firms became concentrated around Manhattan's 28th Street, dubbed Tin Pan Alley by the newspaper writer and songwriter Monroe H. Rosenfeld. The city's publishers perfected the mass production and distribution of songs. Usually paying staff or freelance composers a flat rate per song, Tin Pan Alley firms issued thousands of titles in the hope that a few would hit with the nation's public. Publishers courted popular vaudeville singers, often paying them handsomely to include a song of choice in their act.

Thomas Edison invented the phonograph in 1877. Few initially imagined the invention would be used primarily for music. Yet by the 1890s, "nickel-in-the-slot" talking machines graced urban arcades, introducing the nation to the novelty of mechanically reproduced music. A few companies controlled the patents to competing phonograph technologies. Edison controlled his wax cylinder playback technology. He licensed it to the fledgling Columbia Phonograph Company and the two introduced the first talking machines designed for home use in 1896. By this time, the competing gramophone disk machines and records made by Emile Berliner were already liberally distributed. In 1901, Eldridge Johnson, a Camden, New Jersey, engineer, formed the Victor Talking Machine Company to market Berliner's technology.

These firms raced to establish their technology as the consumer standard throughout the United States and the world. Victor eventually won the technology wars by focusing on the home consumer trade, creating celebrity recording artists such as the opera singer Enrico Caruso, and expanding internationally. In 1901, Victor and licensee Gramophone divided the globe into distinct markets and established distribution networks, retail outlets, and recording operations from China to Latin America. Other companies quickly followed suit.

In 1917, the end of initial patent restrictions resulted in the creation of a number of small firms that catered to previously marginalized consumers. African American and southern white vernacular artists introduced blues, jazz, country, and folk to the industry. In 1919, the Radio Corporation of America (RCA) was founded and began to market consumer-friendly radios. The United States had over one million sets by the early 1920s. Radio raised concerns among copyright holders, especially as broadcasters started selling airtime. Yet phonograph companies soon realized the advertising potential of the new medium. In 1929, RCA acquired Victor and the phonograph and the radio industries continued to increase their ties. Recording artists demanded compensation for the broadcast of their material through the American Society of Composers, Authors, and Publishers (ASCAP).

The Great Depression decimated the industry. Record sales plummeted from 150 million in 1929 to 10 million in 1933. Businesses failed, and the industry was again comprised of a few powerhouse corporations. ASCAP, overseeing royalty collection for the vast majority of published music, continued to demand compensation for radio broadcasts. In 1941, they forbade radio stations to play the music they represented. Their rival, Broadcast Music, Inc. (BMI), offered stations its collection of music that had not been accepted by ASCAP—music by African American composers and artists, working-class styles, and industry unknowns. The result was another wave of decentralization within the industry, as previously scorned artists, styles, and companies gained access to the airwaves and recording studios. The shift opened the door for African American styles to be the guiding force behind the industry's postwar expansion.

Throughout the century, musicians organized to protect their rights and promote their careers. Musician unions typically failed—or refused—to bring most recording and performing artists into their ranks, yet garnered rights for their members, including closed shops and union pay scales in established theater circuits, symphony orchestras, society dance networks, and recording studios. They were less successful in countering the loss of jobs to new technologies and garnering higher royalty rates for record sales.

The postwar decade witnessed three developments that again transformed the music industry: tape recording, the long-playing (LP) record, and the rise of rock and roll. Magnetic tapes finally enabled the easy recording of long segments of music, and the LP allowed their playback. With the concurrent introduction of the 45-rpm single and the growing jukebox trade, the LP heightened sales of new consumer technology, as it would again with the introduction of stereo in the late 1950s. Hundreds of independent labels entered the industry during the era, many promoting regional styles ignored by the majors. Often embraced by smaller radio stations, disks from small startups such as Chess Records and Sun Records introduced the sounds of black rhythm and blues to young audiences throughout the country, contributing to the rise of rock and roll and the reorientation of the industry toward the youth market.

By the late 1960s, the LP dominated industry profits. Major labels soon perfected promotional strategies that combined well-advertised albums, large-scale tours, and airplay on "album-oriented rock" stations. Industry profits increasingly derived from a small number of high-selling artists. The 1981 advent of MTV added the music video to the list of powerful marketing tools at the industry's disposal.

In the last decades of the twentieth century, the music industry was characterized by a wave of corporate mergers and transnational expansion. In 1994, 90 percent of worldwide gross music sales accrued to six multinational corporations. The century ended much as it had begun, even as the industry giants grappled with the copyright repercussions of the digital revolution.

Bibliography

Burnett, Robert. The Global Jukebox: The International Music Industry. London: Routledge, 1996.

Gronow, Pekka, and Ilpo Saunio. An International History of the Recording Industry. London: Cassell, 1998.

Hamm, Charles. Yesterdays: Popular Song in America. New York: Norton, 1979.

Sanjek, Russell. Pennies from Heaven: The American Popular Music Business in the Twentieth Century. Updated by David Sanjek. New York: Da Capo, 1996.

 
 
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Wikipedia: music industry

The music industry is the business of music. Although it encompasses the activity of many music-related businesses and organizations, it is currently dominated by the "big four" record groups, a.k.a. "the major labels"/"the majors" — Sony BMG, EMI, Universal and Warner — each of which consists of many smaller companies and labels serving different regions and markets.

Usage

When the term music industry is used in a narrow sense, it refers only to the businesses and organizations that record, produce, publish, distribute, and market recorded music (e.g., music publishers, recording industry, record production companies). This corresponds to the International Standard Industrial Classification (ISIC) that includes sound recording and music publishing activities (J-59).

When the term is used more broadly, it refers to a range of sub-industries that come from a number of different industrial classifications, including Information and Communication (which includes sound recording and music publishing activities), programming and broadcasting activities (e.g., radio stations), education (e.g., music training schools), Arts, entertainment and recreation, and manufacturing and retail sales (e.g., of musical instruments). In this broader sense, the term usually also encompasses not-for-profit organizations such as Musicians' Unions and writers' copyright collectives and performance rights organisations.

History

Until the 1700s, the process of composition and printing of music was mostly supported by patronage from the aristocracy and church. In the mid-to-late 1700s, performers and composers such as Wolfgang Amadeus Mozart began to seek commercial opportunities to market their music and performances to the general public. After Mozart's death, his wife (the soprano Constanze Weber) continued the process of commercialization of his music through an unprecedented series of memorial concerts, selling his manuscripts, and collaborating with her second husband, Georg Nissen, on a biography of Mozart.[1]

In the 1800s, the music industry was dominated by sheet music publishers. In the United States, the music industry arose in tandem with the rise of blackface minstrelsy. The group of music publishers and songwriters which dominated popular music in the United States was known as Tin Pan Alley. In the early 20th century the phonograph industry grew greatly in importance, and the record industry eventually replaced the sheet music publishers as the industry's largest force.

Just as radio and television did before it, the advent of file sharing technologies may change the balance between record companies, song writers, and performing artists. Bands such as Metallica have fought back against peer-to-peer programs such as the infamous Napster, and the arguments for and against technology to circumvent them - digital rights management systems - remain controversial.

With the re-launch of Napster as a legally licensed download site in 2003 (in the US), along with the advent of Apple Computer's iTunes online music store in the same year, the major record companies have begun to embrace digital downloading as the future of the music industry.

Both Napster and iTunes, with the support of the majors, are promoting a digital music subscription service. This may lead to a fundamental change in the way music is consumed, as a utility that "flows" into a person's house rather than as a commodity that is bought one-by-one. Music may well become purchased 'like water' (Leonhard, 2004), in that people will pay for their monthly consumption of music.

Business structure

The music industry is made up of various elements, including:

A record company is an entity that manages sound recording-related brands and trademarks which consist of their owned labels; their owned and licensed master recordings; and various related ancillary businesses such as home video and DVDs.

The music groups coordinate the production, licensing, and copyright protection of sound recordings & videos and maintain contracts with recording artists and production companies as well as provide a distribution structure for their various owned and non-owned labels.

Record companies sign, market, publicize, develop and promote as well as provide sales support to the larger distribution companies for their releases and artists.

Labels may comprise a record group which is, in turn, controlled by a music group. As such, a larger umbrella label may have a number of sub-labels releasing music.

Music publishers exist separately (even if sharing the same ultimate holding company or brand name), and they represent the rights in the compositions - i.e. the music as written rather than as recorded.

Record companies and record labels that are not under the control of the Big Four music groups and music publishers that are not one of the Big Four are generally considered to be independent, even if they are part of large corporations with complex structures. Some prefer to use the term indie label to refer to only those independent labels that adhere to criteria of corporate structure and size, and some consider an indie label to be almost any label that releases non-mainstream music, regardless of its corporate structure.

Statistics

US music market shares, according to Nielsen SoundScan (2005)
Enlarge
US music market shares, according to Nielsen SoundScan (2005)

Nielsen SoundScan reported that the big four accounted for 81.87% of the US music market in 2005:[2]

and in 2004, 72.64%:

  • Universal Music Group — 29.59%
  • Sony BMG — 28.46% (13.26% Sony, 15.20% BMG)
  • Warner Music Group — 14.68%
  • EMI Group — 9.91%
  • independent labels — 27.36%
World music market sales shares, according to IFPI (2005)
Enlarge
World music market sales shares, according to IFPI (2005)

The global market was estimated at $30-40 billion in 2004.[3] Total annual unit sales (CDs, music videos, mp3s) in 2004 were 3 billion.

According to an IFPI report published in August 2005,[4] the big four accounted for 71.7% of retail music sales:

  • Universal Music Group — 25.5%
  • Sony BMG Music Entertainment — 21.5%
  • EMI Group — 13.4%
  • Warner Music Group — 11.3%
  • independent labels — 28.4%

Prior to December 1998, the industry was dominated by the "Big Six": Sony Music and BMG had not yet merged, and PolyGram had not yet been absorbed into Universal Music Group. After the PolyGram-Universal merger, the 1998 market shares reflected a "Big Five", commanding 77.4% of the market, as follows, according to MEI World Report 2000:

  • Universal Music Group including PolyGram — 21.1%
  • Sony Music — 17.4%
  • EMI — 14.1%
  • Warner Music Group — 13.4%
  • BMG — 11.4%
  • independent labels — 22.6%

Albums sales and market value

The following table shows album sales and market value in the world in the 1990s–2000s.

N Country Album Sales Share Share of World Market Value
1 USA 37-40% 30-35%
EU 30-32% 31-34%
2 Japan 9-12% 16-19%
3 UK 7-9% 6.4-9.1%
4 Germany 7-8% 6.4-5.3%
5 France 4.5-5.5% 5.4-6.3%
6 Canada 2.6-3.3% 1.9-2.8%
7 Australia 1.5-1.8% 1.5-2.0%
8 Brazil 2.0-3.8% 1.1-3.1%
9 Italy 1.7-2.0% 1.5-2.0%
10 Spain 1.7-2.3% 1.4-1.8%
11 Netherlands 1.2-1.8% 1.3-1.8%
12 Mexico 2.1-4.6% 0.8-1.8%
13 Belgium 0.7-0.8% 0.8-1.2%
14 Switzerland 0.75-0.9% 0.8-1.1%
15 Austria 0.5-0.7% 0.8-1.0%
16 Sweden 0.7-0.9% 0.7-1.0%
17 Russia 2.0-2.9% 0.5-1.4%
18 Taiwan 0.9-1.6% 0.5-1.1%
19 Argentina 0.5-0.7% 0.5-1.0%
20 Denmark 0.45-0.65% 0.5-0.8%

Singles sales

Physical single sales in the world in the 90s-00s and digital single sales in 2005.

N Country Physical Sales Share Digital Sales Share in 2005
EU 34-50% 13.2%
1 Japan 26-32% 1.7%
2 USA 4-25% 85%
3 UK 14.5-16% 6.3%
4 Germany 9-12% 5%
5 France 4-12.5% 1.9%
6 Australia 1.8-4.6% 0.48%
7 Netherlands 1.3-1.7% < 0.2%
8 Belgium 0.8-1.8% < 0.2%
9 Sweden 0.6-0.96% < 0.2%
10 Switzerland 0.5-0.92% < 0.2%
11 Austria 0.58-0.82% < 0.2%
12 Italy 0.3-1.0% < 0.2%
13 Spain 0.3-0.7% < 0.2%
14 Norway 0.3-0.47% < 0.2%
15 Ireland 0.2-0.5% < 0.2%
16 Canada 0.1-0.6% < 0.2%
17 Portugal 0.01-1.0% < 0.2%
18 RSA 0.02-0.45% < 0.1%
19 New Zealand 0.19-0.29% < 0.1%
20 Denmark 0.10-0.25% < 0.1%

Recorded Music Interim Physical Retail Sales in 2005

all figures in millions

COUNTRY UNITS VALUE CHANGE
Singles CD DVD Total Units $US Local Currency Units Value
1 USA 14.7 300.5 11.6 326.8 4783.2 4783.2 -5.70% -5.30%
2 Japan 28.5 93.7 8.5 113.5 2258.2 239759 -6.90% -9.20%
3 UK 24.3 66.8 2.9 74.8 1248.5 666.7 -1.70% -4.00%
4 Germany 8.5 58.7 4.4 71 887.7 689.7 -7.70% -5.80%
5 France 11.5 47.3 4.5 56.9 861.1 669.1 7.50% -2.70%
6 Italy 0.5 14.7 0.7 17 278 216 -8.40% -12.30%
7 Canada 0.1 20.8 1.5 22.3 262.9 325 0.70% -4.60%
8 Australia 3.6 14.5 1.5 17.2 259.6 335.9 -22.90% -11.80%
9 Spain 1 17.5 1.1 19.1 231.6 180 -13.40% -15.70%
10 Netherlands 1.2 8.7 1.9 11.1 190.3 147.9 -31.30% -19.80%
11 Russia - 25.5 0.1 42.7 187.9 5234.7 -9.40% 21.20%
12 Mexico 0.1 33.4 0.8 34.6 187.9 2082.3 44.00% 21.50%
13 Brazil 0.01 17.6 2.4 24 151.7 390.3 -20.40% -16.50%
14 Austria 0.6 4.5 0.2 5 120.5 93.6 -1.50% -9.60%
15 Switzerland ** 0.8 7.1 0.2 7.8 115.8 139.2 n/a n/a
16 Belgium 1.4 6.7 0.5 7.7 115.4 89.7 -13.80% -8.90%
17 Norway 0.3 4.5 0.1 4.8 103.4 655.6 -19.70% -10.40%
18 Sweden 0.6 6.6 0.2 7.2 98.5 701.1 -29.00% -20.30%
19 India - 10.9 - 55.3 79.2 3456.6 -19.20% -2.40%
20 Denmark 0.1 4 0.1 4.2 73.1 423.5 3.70% -4.20%
Top 20 74.5 757.1 42.8 915.2 12378.7 -6.60% -6.30%

In its June 30, 2000 annual report filed with the SEC, Seagram reported that Universal Music Group was responsible for 40% of worldwide classical music sales over the preceding year.[5]

Music industry organizations

Further reading

  • Krasilovsky, William; Shemel, Sidney: This Business of Music, Billboard Books, ISBN 978-0823077236
  • Lebrecht, Norman: When the Music Stops: Managers, Maestros and the Corporate Murder of Classical Music, Simon & Schuster 1996
  • Imhorst, Christian: The ‘Lost Generation’ of the Music Industry, published under the terms of the GNU Free Documentation License 2004
  • Leonhard, Gerd: Music Like Water - the inevitable music ecosystem
  • The Methods Reporter: Music Industry Misses Mark with Wrongful Suits
  • Music CD Industry - a mid-2000 overview put together by Duke University undergraduate students
  • d’Angelo, Mario: Does globalisation mean ineluctable concentration ? in The Music Industry in the New Economy, Report of the Asia-Europe Seminar, Lyon, 25-28 oct. 2001, IEP de Lyon/Asia-Europe Foundation/Eurical, Editors Roche F., Marcq B., Colomé D., 2002, pp. 53-54.
  • d'Angelo, Mario: Perspectives of the Management of Musical Institutions in Europe, OMF, Musical Activities and Institutions Sery, ParisIV-Sorbonne University, Ed. Musicales Aug. Zurfluh, Bourg-la-Reine, 2006.

References

  1. ^ Dear Constanze The Guardian
  2. ^ Paul Cashmere (2006-01-05). Universal Is The Biggest Music Company of 2005. Undercover (Australia). Retrieved on 2006-05-27.
  3. ^ According to the RIAA the world music market is estimated at $40 billion, but according to IFPI (2004) it is estimated at $32 billion.
  4. ^ IFPI releases definitive statistics on global market for recorded music
  5. ^ BUSINESS AND PROPERTIES The Seagram Company Ltd.

See also

Music
History Ancient music · Medieval music · Renaissance music · Baroque music · Classical music · Romantic music · 20th century music · Contemporary music GClef.svg
Composition Musical notation · Musical improvisation · Music theory
Education Music history · Musicology · Ethnomusicology · Music cognition  · Music therapy
Production Music genre · Album · Song · Suite · Lyrics · Record label · Record producer · Musician · Composer · Musical form · Compilation album
Lists Basic Topics · Topics · Terminology · Musical forms
Miscellaneous Definition of music · Music theory · Musical instrument · Music and politics · Music and mathematics · Music industry
Category · Portal · Project

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