|
overview
publishing
labels
performance
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overview
shape
of the market
A handful of music companies (operating through several
hundred subsidiaries and over a thousand labels) account
for most records sold in the advanced economies. Music
publishing - production of scores and licensing of intellectual
property (IP)
rights - is even more concentrated.
With the exception of EMI all the major companies are
part of larger entertainment conglomerates. While the
popular image of 'the music industry' is that of record
companies - pressing and distributing bits of shellac
or plastic - since the 1950s most of the commercial action
has involved groups that embrace record manufacture/distribution,
rights licensing and print publishing. For much of that
time rights licensing has been more profitable than pushing
plastic.
evolution
Over
the past 100 to 150 years we've seen the 'music industry'
evolve through three basic stages, characterised by different
technologies and different publishing organisations:
1. prior to the gramophone, when sheet music was the
primary vehicle for disseminating popular music, the
industry was dominated by music publishing houses
2. with the rise of recording (and subsequently broadcasting,
which was driven by the availability of 'canned content'),
those publishers were displaced by the record companies
3. increasingly the industry has involved entertainment
groups that bring together a broad range of content
distribution and repackaging activities - broadcast,
film, video, booking and performance management agencies,
records, music licensing, print publishing.
value
There
are no authoritative figures for the number of people
listening to recordings (or enjoying the creativity of
particular composers/performers).
The London-based International Federation of the Phonographic
Industry (IFPI),
one of the industry associations, claims that in 2000
the global music market was worth US$38.5 billion.
structure
In 1999 the five largest record companies controlled 84%
of the 755 million albums sold in the US: 26.3% by what's
now Vivendi Universal (eg Polygram),
16.2% by Sony Music (eg Columbia),
16% by Bertelsmann (eg BMG
and RCA Victor), 15.7% by AOL Time
Warner, 9.4% by EMI.
A 1998 estimate suggests that global shares were Vivendi
with 27%, AOL Time Warner with 20%, Sony with 18%, EMI
(inc Virgin) with 16% and Bertelsmann with 14%.
The US appears to account for 37% share of global sales
in 1998. The next largest markets were Japan (16.7%),
the United Kingdom (7.6%), Germany (7.4%), France (5.2%),
Canada (2.3%), Brazil (1.7%), Australia (1.7%), Spain
(1.7%), and Mexico (1.6%). Per capita consumption thus
varies considerably.
volatility
It is often imagined that the
industry has always consisted of a few large, stable businesses
making very large amounts of money. An historical perspective
indicates that life in the music business has been more
volatile.
The 'majors' trace their history to the 1880s and 1890s,
predating the film studios and broadcasters by whom they
were absorbed last century. As with the automobile industry,
the majors have leveraged what Alfred Chandler characterised
as 'scale and scope' in dealing with recurrent outbreaks
of competition from independent record labels.
In essence, they've had better access to capital, licensing
and distribution arrangements (although often poorer skills
in identifying and nurturing talent) than the 'independents'.
Periodically a new wave of independents has appeared -
for example in contemporary music in the late 1940s and
1970s - only to be coopted through distribution deals
and then bought out. When majors couldn't buy their smaller
competitors they've tended to simply buy the performers.
As an example of that volatility during the period
from 1955 to 1959 four major labels
in the US lost 34% of their market share (down from 78%
to 44%), with a further 18% decline up to 1962.
Independent record companies went from a 21.6% share of
the pop market in 1955 to a 66.3% share in
1959, although that market had tripled
in size. By 1973 the top four had
51% of the US market (the top ten had 92%) through acquisition
of the independents or their artists and natural attrition.
Looking at the overall industry in the US, revenue from
record sales reached what was probably an historic peak
(allowing for inflation and purchasing power) in 1921.
Sales in that year were US$106 million,
dropping by 40% over the following three years with the
growth of broadcasting and further declining to
US$6 million in 1933. By 1954 sales in the US were US$213
million, climbing to US$603 million in 1959. Rock and
roll increased from 15.7% of the popular market in 1955
to 42.7% in 1959.
In 1969 one industry estimate was that international sales
of recorded music were over US$2 billion. By 1978 that
had increased to US$10 billion. Five international groups
had over 70% of those sales. Three were US-owned and New
York-based. The fourth was UK-owned. The US RCA and CBS
groups reported that over half their sales were from overseas
subsidiaries or licencing.
In 1980 global sales were an estimated US$11.4
billion, declining to US$9.4 billion in 1983. Three
years later, as the first wave of digital technology crashed
onto the shore,
sale of 53 million CDs generated roughly as much income
(US$930 million) as that from 125 million LPs (US$983
million).
By the end of 2000, after a decade
of acquisition and asset trading, only one of the Big
Five - part of the AOL Time Warner conglomerate - was
US owned.
| Global
Market Shares of Major Players in 1996 |
| |
Polygram
% |
Sony
% |
Warner
% |
EMI
% |
BMG
% |
Market
Value
US$bn |
| Australia |
13 |
27 |
18 |
18 |
6 |
0.7 |
| Canada |
20 |
13 |
24 |
10 |
8 |
1.1 |
| US |
13 |
14 |
22 |
10 |
12 |
12.1 |
| Japan |
13 |
18 |
7 |
14 |
8 |
7.6 |
| Germany |
23 |
12 |
13 |
22 |
15 |
3.3 |
| UK |
22 |
13 |
11 |
22 |
9 |
2.6 |
| France |
32 |
25 |
13 |
19 |
11 |
2.4 |
| Netherlands |
23 |
14 |
8 |
15 |
13 |
0.7 |
| Italy |
19 |
16 |
17 |
15 |
24 |
0.6 |
| Korea |
10 |
5 |
4 |
5 |
5 |
0.5 |
| Sweden |
20 |
19 |
13 |
26 |
22 |
0.3 |
| Taiwan |
17 |
5 |
14 |
6 |
5 |
0.3 |
| World |
13 |
13 |
14 |
16 |
14 |
35.5 |
background
Particular studies are included in accounts
of specific media groups.
Singers
in the Marketplace: The Economics of the Singing Profession
(Oxford: Oxford
Uni Press 1993)
by Ruth Towse
The Composer in the Marketplace (London:
Faber 1975)
by
Alan Peacock & Ronald Weir
Entertainment Industry Economics:
A Guide for Financial Analysis (Cambridge:
Cambridge Uni Press 1996)
by Harold Vogel
When The Music Stops (New York: Simon & Schuster
1996)
by Norman Lebrecht
The Global Jukebox: The International Music Industry
(London: Routledge 1996)
by Robert Burnett
American Popular Music & Its Business (New
York: Oxford Uni Press 1988)
by Russell Sanjek
Music & Copyright (Edinburgh: Edinburgh Uni
Press 1993)
edited by Simon Frith
Rock n Roll Is Here to Pay: The History and Politics
of the Music Industry (Chicago: Nelson-Hall 1977)
by
Steve Chapple & Reebee Garofalo
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