Where Is The Music Industry Headed?

Hey Biz Talkers! Well, by now it should be no secret that music streaming is quickly becoming the future direction of the music industry. The music industry as a whole is down 64% from its 1999 peak. Streaming is outpacing digital downloading as the preferred way for consumers to enjoy music. Spotify has paid out over 2 billion dollars in royalties to record labels and artists to date and 500 million dollars alone in 2013.

So what does all of this mean for the music industry moving forward? First, don’t feel sorry for the “big three” major record labels (Universal, Warner and Sony). Although they are still trying to recover from losses in overall record sales in recent years, they are still earning 73% of the post tax payouts from music streaming revenues. As such, as the music streaming industry continues to boom in the next few years, the full financial recovery of the major record labels is all but assured.

What about recording artists? Are they receiving a fair share of these significant music steaming earnings? You guessed it, NO! In fact, statistics show that recording artists are only receiving 10.9 percent of the post tax payouts for streaming revenues. Songwriters and music publishers are not faring much better as they are receiving 16% of the post tax revenues on streaming. This indicates that the artists and songwriters should direct their wrath against the record labels as opposed to the streaming services as the labels are getting the largest share of the streaming revenues but  are pocketing the lions share of the cash while trickling a small portion of the earnings to the creators and performers of the music. This trend will change as artists an their representatives begin to fight for and obtain a bigger piece of the streaming pie.

What about indie record labels and indie recording artists? In my opinion, the surge of streaming popularity has opened a bright new world as new music can be independently marketed and placed with consumers at a whole new level and at significantly less cost than traditional forms of marketing. This will allow independent labels to get much more out of their limited budgets and focus more on developing enduring careers for their artists. The indie recording artist can use streaming to broaden their brands and gain access to consumer revenue that previously would only have been possible with the help of a major record label. In fact, I believe that the next few years will see many independent artists emerging as stars purely on streaming and marketing savvy without help from the major labels. Of course, the major labels and their machine will remain relevant for many artists, but the landscape will provide new found freedom and options for emerging artists. Stay tuned folks, the music industry is entering it’s most innovative and exciting period of development since the CD. I am glad to be a part of what the future holds!

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