Music Production & Distribution Industry Overview

Excerpt from Music Production & Distribution Report

Companies in this industry produce musical recordings, license rights to use musical compositions, and generate in-broadcast revenue. Major companies include Universal Music Group, Sony Music Entertainment, and Warner Music Group. The US music production and distribution industry includes about 3,700 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $15 billion. The industry is forecast to grow at a low rate over the next two years. Competition from illegal downloads is a major challenge.

Competitive Landscape

Demand is driven by consumer spending. The profitability of individual companies depends on discovering and promoting new musical talent and generating revenue from the company’s asset base of recordings and publications. Large companies have advantages in marketing and distribution. Smaller companies, referred to as indies, compete by focusing on artists within local markets or music genres. The industry is highly concentrated: the top eight companies account for 80 percent of industry revenue.

Products, Operations & Technology

Major products of the industry are musical recordings (50 percent of revenue), licensing of rights to use musical compositions (20 percent), and in-broadcast performance revenue (10 percent). Other products and services include the production of master recordings, the manufacture and packaging of physical CDs, and the production of databases to distribute downloads of recordings.