In the 21st century, consumers spent far less money on recorded music than they had in 1990s, in all formats. Total revenues for CDs, vinyl, cassettes and digital downloads in the U.S. dropped from a high of $14.6 billion in 1999 to $10.4 billion in 2008. The downward trend is expected to continue for the foreseeable future—Forrester Research predicts that by 2013, revenues will reach as low as $9.2 billion. This dramatic decline in revenue has caused large scale layoffs inside the industry, driven music retailers out of business (such as Tower Records) and forced record companies, record producers, studios, recording engineers and musicians to seek new business models.
In the early years of the decade, the record industry took aggressive action against illegal file sharing, successfully shutting down Napster in 2001 (the leading online source of digital music) and threatening thousands of individuals with legal action. This failed to slow the decline in revenue and was a public relations disaster. Some academic studies have even suggested that downloads were not the true cause of the decline. Legal digital downloads became widely available with the debut of the iTunes Store in 2003. The popularity of internet music distribution has increased and by 2007 more units were sold over the internet than in any other form. However, as the Economist reports, "paid digital downloads grew rapidly, but did not begin to make up for the loss of revenue from CDs."
The turmoil in the industry has changed the balance between artists, record companies, promoters, retail music stores and the consumer. The leading music retailers are now box stores (Wal-Mart and Best Buy) and music-only stores are no longer a player in the industry. Recording artists now rely on live performance and merchandise for the majority of their income, which in turn has made them more dependent on music promoters like Live Nation (which dominates tour promotion and owns a large number of music venues.) In order to benefit from all of an artist's income streams, record companies are increasingly relying on the "360 deal", a new business relationship pioneered by Robbie Williams and EMI in 2007. At the other extreme, record companies can offer a simple manufacturing and distribution deal, which gives a higher percentage to the artist, but does not cover the expense of marketing and promotion. Many newer artists no longer see any kind of "record deal" as an integral part of their business plan at all. Inexpensive recording hardware and software has made it possible to create high quality music in a bedroom and distribute it over the internet to a worldwide audience. Consumers now have access to a wider variety of music than ever before, at a price that is gradually approaching zero.
Nielsen SoundScan reported that the big four accounted for 81.87% of the US music market in 2005:[10]
The music industry is made up of various players, including individuals, companies, unions, not-for-profit associations, rights collectives, and other bodies. Professional musicians, including band leaders, rhythm section members, musical ensembles, vocalists, conductors, composers/arrangers, and sound engineers create sound recordings of music or perform live in venues ranging from small clubs to stadiums. Occasionally professional musicians negotiate their wages, contractual conditions, and other conditions of work through Musicians' Unions or other guilds. Composers and songwriters write the music and lyrics to songs and other musical works, which are sold in print form as sheet music or scores by music publishers. Composers and performers get part of their income from writers' copyright collectives and performance rights organisation such as the ASCAP and BMI (or MCPS and PRS respectively for the UK). These societies and collectives ensure that composers and performers are compensated when their works are used on the radio or TV or in films. When musicians and singers make a CD or DVD, the creative process is often coordinated by a record producer, whose role in the recording may range from suggesting songs and backing musicians to having a direct hands-on role in the studio, coaching singers, giving advice to session musicians on playing styles, and working with the senior sound engineer to shape the recorded sound through effects and mixing.
labels, which are companies that finance the recording process in return for part or full share of the rights to the recording. Record label companies manage brands and trademarks in the course of marketing the recordings, and they can also oversee the production of videos for broadcast or retail sale. Labels may comprise a record group — one or more label companies, plus ancillary businesses such as manufacturers and distributors. A record group may be, in turn, part of a music group which includes music publishers. Publishers represent the rights in the compositions — the music as written, rather than as recorded — and are traditionally separate entities from the record label companies. The publisher of the composition for each recording may or may not be part of the record label's music group; many publishers are wholly independent and are owned by the artists themselves.
Until the 1700s, the process of composition and printing of music was for the most part supported by patronage from aristocracies and churches. 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 (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.[4] 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 late 19th century and early 20th century, the music industry was dominated by the publishers of sheet music. By mid-century records had supplanted sheet music as the largest player in the music business. Since 2000, sales of recorded music have dropped off substantially,[1] while live music has increased in importance.[2] There are four "major labels" that dominate recorded music — Universal Music Group, Sony Music Entertainment,[3] Warner Music Group and EMI — each of which consists of many smaller companies and labels serving different regions and markets. The live music industry is dominated by Live Nation, the largest promoter and music venue owner. Live Nation is a former subsidiary of Clear Channel Communications, which is the largest owner of radio stations in the United States. Other important music industry companies include Creative Artists Agency (a management and booking company) and Apple Inc. (which runs the world's largest music store, iTunes Store, and sells the iPod and iPhone).
The music industry (or music business) sells compositions, recordings and performances of 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, studios, engineers, record labels, retail and online music stores, performance rights organisations); those that present live music performances (booking agents, promoters, music venues, road crew); professionals who assist musicians with their careers (talent managers, business managers, entertainment lawyers); those who broadcast music (satellite and broadcast radio); journalists; educators; musical instrument manufacturers; as well as many others.
