safe

6y

There’s a lot of talk about the music industry on this site and as someone who tries to generally keep up with the music industry – it’s a career interest for me – I notice that a lot of people here don’t seem to understand some stuff around the industry. I wanted this to be a topic for one of my threads to give people an overview and some specific information about topics I see discussed here a lot. This thread is NOT about sales within the industry – I’m planning to do a thread specifically about sales, bundles, charts, label tactics etc. later on.

Labels are probably the most important player in the music industry. Three companies – often referred to as ‘The Big 3’ – cover the vast majority of music within the market. These are Warner Music Group, Sony Music Group (formerly Sony Music Entertainment) and Universal Music Group. In the past there was another major market player called EMI however in 2012 Universal Music Group despite significant regulatory setbacks took over EMI creating the current industry landscape. Globally these companies make up around 70% of the revenue within the market and in the US this market share can be as high as 80%. Universal is the largest of the three both globally and domestically and Sony is the second largest.

The rest of the market share in the music industry is made up of what’s called independent labels or direct to artist. Direct to artist means revenue goes directly to the artist and is probably what you think of when you hear that an artist is independent, but this is very rarely the case. I’ll expand on independence later.

Subsidiary labels is something that I see misunderstood more than almost anything else on this site. A subsidiary label or a vanity label is a label that is either partially but often fully owned by a larger parent label. Typically, you won’t hear an artist signing to Universal or Sony – you’ll hear about them signing to one of their smaller subsidiaries. These can also be called imprints. These subsidiaries have multiple purposes – they make the market appear less oligopolistic (less dominated by a few firms), they tend to have their own profiles (some are largely pop labels, some rock etc.) and they can operate essentially as their own smaller label that just answers to and generates revenue for the larger group. Artist labels fit in this category. When an artist signs to an artist label like GOOD, at the end of the day they are signing with a much, much larger music group. While decisions made will largely be the decision of the management of GOOD, they ultimately answer to their parent label.

Warner is run by Stephen Cooper. It has struggled recently largely thanks to being late on streaming but over the past few years has made significant ground on Sony. They have four flagship subsidiaries but the two most notable for users here are Atlantic Records and Warner Records. These labels have their own subsidiary labels – 300 Ent & MMG are both subsidiaries of Atlantic and OVO Sound is a subsidiary of Warner. Some of Warner’s notable artists are Ed Sheeran, YB, Thug, Meek, Lil Baby, Uzi, Bruno Mars and many more. Notably Warner recently went public on the NASDAQ so you can buy shares in the company.

Sony is run by Rob Stringer. Sony adapted well to streaming but is losing headway to Warner in the battle for 2nd. Sony has several flagship subsidiaries – most notable are Columbia, Epic and RCA. Notable subsidiaries of these are ASAP Worldwide (RCA) and Freebandz (Epic). Sony’s artists include Travis Scott, Future, A$AP Rocky, Childish Gambin, Khalid and more.

Universal is run by Lucian Grange. Far and away the biggest music group, Universal has dominated in market share over recent years. Their important subsidiary labels are Interscope (parent label of Dreamville, Aftermath and TDE), Capitol (parent label of QC and G-Unit), Republic (parent label of XO, Cash Money and Young Money) and Def Jam (parent label of GOOD). From these labels you can get an idea of the artists universal has under contract but they include Taylor Swift, Gaga, Rihanna, Adele, Jay-Z, Kanye, Wayne and Prince among many others. Notably with Universal the company recently sold a 10% stake to Chinese media giant Tencent – QQ (social network), various video game companies including League of Legends, Fornite and more and heavily invested in Spotify.

So that’s a basic rundown of labels.

Rhetoric I see a lot here is that the music industry is dying. This is unequivocally false. I’m not going to talk individual sales here but observe the following chart. Note that the drop in the early 2000s is largely due to piracy and the advent of the digital era. Streaming is a massive lifeline for the music industry – revenues for the big 3 labels was over $1m per HOUR during the last quarter of 2019 – and the music industry has grown for the last four consecutive years. The music industry is if anything undergoing a resurgence after a difficult decade.

Some more trends you should be aware of. Physical revenue is declining – vinyl, CDs, etc. particularly in the US. Digital revenue is growing rapidly (21% in 2018 despite a drop of 20% in digital downloads) thanks almost exclusively to streaming. The US is the biggest music market and latin America is the fastest growing music market – why you see a lot of latin America stars breaking through into the US market and why a lot of US artists are featuring them or remixing their songs. Labels are investing in ‘high-potential’ markets – markets like China, India, much of Latin America that have significant populations that are quickly becoming more digital. Record labels are investing a lot at the moment in artists, in marketing and etc. which is helping to push growth in the market.

etant

6y

Insight full write up, do you think spotify and other streaming services could break into the big3? Spotify is already trying to become their own record label, with promoting artist and spotify singles, do you think they could disrupt the industry?

etant

6y

Insight full write up, do you think spotify and other streaming services could break into the big3? Spotify is already trying to become their own record label, with promoting artist and spotify singles, do you think they could disrupt the industry?

retiredfromhere

6y

tyler is signed to an independant label

Retired Artist

6y

Trust me, you don't want artists like Frank to be independent...

safe

6y

??

TTC

6y

Aren’t physical sales dying anyway though so what is the need for cds and vinyls? Would be great if there was a company that could help artists raise independent funding

etant

6y

Insight full write up, do you think spotify and other streaming services could break into the big3? Spotify is already trying to become their own record label, with promoting artist and spotify singles, do you think they could disrupt the industry?

Gettinmoney8

6y

This is amazing and a ton of people need to see this, please write some more !!!

safe

6y

Tryna do one a week or so but thank you!

Retired Artist

6y

They would rarely ever release music, merchandise and vinyls will always be late as f***, their presence in music will be less visible

EuroNymous

6y

i am ok with it if they play fair and we don't have streaming wars pt 2 where artists become exclusive to their platform

Gettinmoney8

6y

This is amazing and a ton of people need to see this, please write some more !!!

EuroNymous

6y

i am ok with it if they play fair and we don't have streaming wars pt 2 where artists become exclusive to their platform

safe

6y

As a music consumer streaming wars is probably the most scary possibility that could happen soon

Gettinmoney8

6y

You might want to also elaborate on the role of executive producers. Especially on just singles instead of complete albums. Exec's play a bigger part in music creation than what people think (when actually involved in a project.)

They oversee the whole recording process and add a bit of their sauce to everything.

I think what's written in OP is definitely an understatement

safe

6y

good point I know it varies a lot but I kinda only showed the one side of it

Retired Artist

6y

Trust me, you don't want artists like Frank to be independent...