Appendix 1:
The Music Industry—Mapping the Complex Ecosystem
Key Takeaways
Header image: Bibi Club by Manoushka Larouche
Key stakeholders
Kassian
The music industry comprises diverse jobs, skills, and supply chains.
Each part plays a vital role, whether that’s the artists and composers who create the music individuals around the world enjoy every day, the record labels that nurture their artistic vision and support their career development, distributors and streaming platforms (DSPs) that connect music with global audiences, music publishers that nurture songwriting talent, booking agents and promoters who make concerts and tours happen, copyright organizations managing rights and collecting royalties, or merchandising companies that turn artist popularity into T‑shirts, tote‑bags and additional revenue for artists and rights holders.
Klô Pelgag by Benoit Paillé
These jobs are the primary source of the $41.5 billion in global value generated by the music industry, and form the bedrock of an industry that employs millions worldwide, including over 2.4 million in the United States alone.
This section explains who the primary stakeholders in the music industry are and the roles they play in driving the value of music worldwide.
The Music Industry — Key Stakeholders
Artists and musicians
Artists—which encompass musicians, performers, and composers of all kinds—are the heart of the music industry.
Nothing happens without the artist, their compositions, and recordings. The music industry, from ORCA’s member businesses to multinational record labels, music publishers, and the live sector, would not exist without artists.
The roles artists and musicians play are as varied as the music they produce. Artists are most visible as the public face of the music industry: writing, recording, and performing the songs that audiences love. There are also specialized songwriters and composers who pen musical creations brought to life in recordings—sometimes by other performers. Likewise, producers collaborate with artists to bring their visions to recorded life, while session musicians perform on tracks, sometimes contributing to their development. There can be dozens of artists represented on a single recording, each responsible for a different element.
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Record labels
There are two primary types of record labels.
The first is the major labels, made up of three multinational companies: Universal Music Group, Sony Music Entertainment and Warner Music Group. The majors have grown over time through consolidation and the acquisition of many sub-labels and imprints dedicated to genre, geography, or discipline.[39]
The second is independent record labels. There are thousands of these companies globally, spanning genre, size, jurisdiction, and more.[40] Record labels—both major and independent—develop and market sound recordings and work as partners with artists to advance their careers. As mentioned earlier in this report, Independent music businesses, a categorization that includes labels and artist service companies (described below), represent approximately 40% of the global music industry.
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As of the end of 2023, Billboard reports that the major labels represent 64.25% of overall record label market share, by label ownership, with indies representing 35.74% of overall market share.
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As a rough comparison of the scale of major labels to independent labels, Warner Music Group, the smallest of the three major labels brought in $5.919 billion in revenue in 2022 (including publishing), while Beggars Group, one of the largest independent music groups, generated $112.3 million in revenues in 2022 (including sub-labels and their publishing arm, Beggars Music). Likewise, in terms of the overall album market, Beggars Group represented 1.2% (UK) and 1.39% (USA) in 2023, as compared to Warners’ 15.1% (UK) and 17.1% (USA)—according to numbers from the Official Charts Company (UK) and Luminate (USA).
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Artist and label service companies
Artist and label service companies offer a range of services similar to record labels, but on an à la carte basis.
Some firms support artists to upload music to digital platforms, some provide specific marketing or press distribution, and others offer social media marketing, ad purchasing, or royalty administration. Unlike record labels, the services provided by these companies are generally offered on a flat‑fee, release‑by‑release basis, and the business model tends to be focused on a per‑release basis, rather than across a longer period of time.
While these companies have democratized access to the music industry by allowing more artists to distribute their music, there is a wide diversity of approaches, with some prioritizing sound over music, and volume[41] over partnership. This open approach to distribution can contribute to contemporary music industry challenges such as oversaturation, which lowers the value of music released by actual artists.
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Recently, some DSPs have attempted to disincentivize the volume of music being uploaded for streaming. Spotify’s new royalty system, for instance, will update its payout model in 2024 so that tracks will need to meet at least 1,000 streams in the previous 12 months to generate recorded music royalties. It is also implementing new rules to limit the amount of noise music recordings (i.e. white noise, etc.) that are eligible to generate royalties. Likewise, Deezer introduced a new payment model—currently being tested alongside specific label partners—that will ‘double boost’ royalties for artists who receive at least 1,000 monthly streams from at least 500 unique listeners, and remove noise content from the platform.
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Distributors and platforms
Recorded music is disseminated to audiences in a variety of ways.
It can be released on a streaming or digital platform; manufactured and sold as a physical product (such as a CD or vinyl record); played on the radio; used to support the promotion of something else, such as in an advertisement; employed as a soundtrack to a video game; sung in a karaoke bar; or synced in a film. Partners in this process include distribution companies, manufacturers, physical retailers, and streaming platforms like Spotify or Apple Music.
Physical distributors oversee the manufacturing, packaging, and distribution of physical copies of music sold in shops, at merch tables, and online. Digital distributors make sound recordings available online, from digital music stores to app-based music experiences and streaming services.[42]
While physical record stores and sales still make up an important segment of the global music industry, over the past 15 years, digital service providers (“DSPs” or streaming platforms) have emerged as the primary medium through which music is consumed. Interactive streaming platforms like Spotify, Anghami, Boomplay, and Apple Music offer “on‑demand streaming”, where audiences can select the individual songs they are listening to, and the order in which they are played. In contrast, non‑interactive platforms, including traditional terrestrial radio and internet radio stations like SiriusXM or Pandora, provide audiences with pre‑selected playlists.
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While a large number of artists and labels work with digital distributors, there are also some labels that handle digital distribution in‑house, through direct relationships with digital platforms.
Music publishers
Every recorded musical work has two primary copyrights, or forms of intellectual property, assigned to it.
The master right represents the recording, and the publishing right represents the original song or composition. The industry supporting the exploitation of publishing rights is substantial, complex, and of significant economic and social value to the music industry and communities. Think of them as two adjoined houses that could have either the same or different owners. They may look similar, but are distinct and have different needs and associated stakeholders. Part 3 of this report provides more information on this distinction.
$15.5bn
Publishing copyrights revenues generated for artists, their publishers, and global rights collection organizations in 2022
Music publishers monetize and promote musical compositions, actively seek opportunities for songwriting collaborations and usage of musical works, and ensure songwriters are paid for their work. Publishing copyrights generated $15.5 billion in revenues for artists, their publishers, and global rights collection organizations in 2022, and this figure is rising each year. Record labels sometimes act as music publishers, but the recorded music element (creating and disseminating the sound recording) and the publishing side (disseminating the composition) are usually treated as separate entities. This is true for major labels and independents.
Publishers (and record labels) also work with music supervisors, either in‑house or with third parties. The music supervisor’s role is to find opportunities for music across audio‑visuals, including film, TV, advertisements, sports, gaming, and other usages.
Rights collection organizations
These organizations are often called performing rights organizations (PROs), collective management organizations (CMOs), independent management entities (IMEs), or neighboring rights organizations.
They track the use of sound recordings and compositions—from plays on the radio, TV, and in film, to music broadcast into public spaces like cafes or office buildings. They also negotiate licensing, and collect royalties on behalf of rights holders, including artists, labels, songwriters, and publishers.[43] Essentially, they act as intermediaries to ensure those who use music pay for it, and those who create it and own it are compensated.
These organizations exist around the world, and their capacities vary from country to country. Unfortunately, over 50 countries around the world lack such an organization, demonstrating the incredible opportunity globally across the value chain to expand such societies. CISAC, the global network representing rights collection societies (on the composition side), reported total music collections of ~$11.5 billion in 2022.
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There exist a huge variety of different rights collections organizations worldwide, each working to collect royalties related to specific uses of music (for e.g. broadcast; streaming, etc.) that align with specific legal copyrights (e.g. sound recording, composition) and sub-rights (e.g. reproduction, public performance, etc.). Part 3 of this report elaborates further on how rights and royalties work.
Daan Evers/Unsplash
Artist managers
Managers are invaluable partners and contributors to the economic and social development of artists.
They are the artists’ primary advocates and support their day‑to‑day affairs and strategic decision‑making, acting as liaisons with record labels, booking agents, and publishers, among others. Artists will sometimes have separate managers for day‑to‑day operations and business administration.
Managers primarily invest in artists through their time and expertise, in exchange for a percentage of total gross earnings, whereas record labels provide support through financial capital.
Music media
The music media ecosystem comprises a diverse variety of roles, including public relations professionals, social media managers, advertising experts and analysts, ad buyers, brand partnership executives, journalists, radio presenters, marketing agencies, advertising firms, naming rights professionals, endorsement executives, and playlist editors, among others.
Music has always been one of the first movers to take advantage of, and respond to, technological change, and many of these roles represent the cutting‑edge of new media and technology.
These jobs can be created and incubated anywhere and have helped promulgate, alongside other creative industries, the rise of the digital nomad, where individuals perform their roles from anywhere in the world, bringing economic opportunities to regions outside of major metropolitan areas.
Soundtrap/Unsplash
Live music industry
Live music is the extension of one’s experience with recorded music and is one of the main economic drivers for artists at all levels.
This ecosystem supports a wide variety of jobs, including booking agents, ticketing companies, venues, tour managers, live audio engineers, caterers, transport specialists, equipment companies, accountants and more. The live music industry generates massive economic returns, estimated at $25.27 billion in 2022, including $20.35 billion in ticket sales. As a result of concerts being rescheduled due to Covid lockdowns, 2023 saw exceptional growth, including double‑digit increases across measures such as total grosses for the Top 100 Tours worldwide.
These tours brought in $9.17 billion, up 46% from 2022 (although Covid shutdowns impacted that year). While this report does not explore the live music industry in the same detail as it does the recorded music industry, the integral value of live music to communities is indisputable. Venues are community gathering spaces. Audiences travel to and from venues, eat locally, and buy merchandise. Live music makes places better. It is the ultimate storyteller.
Adi Goldstein/Unsplash
Merchandisers
From the creatives producing original merch designs, to manufacturers overseeing physical production, retailers operating digital and physical storefronts, shipping companies fulfilling orders for fans worldwide, and merch sellers supporting direct sales at live shows, the music merchandising industry provides an important revenue stream to artists.
The global value of music merchandise sales is in the billions of dollars, offering a revenue value‑add opportunity to artists beyond their music itself. Merch enables artists to develop unique offerings for their superfans, who see owning artist merch (such as a T‑shirt) as a way to express their fandom outwardly. Likewise, the creation of merchandise offers an additional creative outlet for artists, through which they can tell their stories and develop their identity.
Brand partners
Some artists work with brands to develop mutually beneficial partnerships.
These collaborations take many forms, from artists directly promoting a brand and their products on their digital media channels, to artist sponsorships, where a brand provides financial support for an artist to develop a creative project in exchange for formal recognition and association with the artist.
Like merchandising, brand partnerships offer artists a way of generating value beyond their music. This value can take multiple forms. Along with direct financial compensation, brand partnerships also enable artists to reach new, and often larger, audiences, tapping directly into fans of a partner brand and introducing them to their music.
Annie Spratt/Unsplash
Trade associations
The industry is also supported by associations who provide essential services and stability at national, regional and international level.
In the independent label sector, trade associations add scale and impact and take on essential work that can’t be done at the level of an individual business. In sectors such as music where most businesses are micro and small operators, with very few medium or large companies, associations and other collective structures help their members punch above their weight and achieve visibility and influence. Many of the independent music trade associations are mentioned in appendix 2.
And then there’s more
Multiple additional sub‑sectors of the music industry further support and contribute to the breadth and depth of the ecosystem. These are businesses that use or support music—in one way or another—contributing to the further development of artistry, recordings, compositions, and usage.
Examples include studio engineers, producers and architects; business professionals like lawyers, accountants, and data analysts; tech companies working to create new experiences using music across areas like AI, blockchain and the metaverse; healthcare professionals such as therapists and elder‑care workers; the breadth of music educators across all age groups and disciplines; venue and facility designers; acousticians; cultural policy experts and arts administrators; and more. It is important to recognize their work and how each contributes to the development and expansion of the music economy.
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