The 360 Music Industry

If you want a career in today's entertainment and music industry you've got to understand how much the business has changed over the past few years. It's not the same old let's pick up a guitar, learn how to sing, put on a few local shows, get discovered, sign a label deal, and become rich and famous. It's better than the old business by far for both artists and business minded people who want to break into the business, and yet, it's more difficult to make serious money, as it's almost impossible to sell albums. Digital devices and personal consumer preferences, for streaming music and movies online, has also saved consumers billions of dollars and they can acquire it anywhere, anytime, and for free or pay a low subscription rate. However, many in the industry use the term value gap to describe the differences between the money generated from an album sale and the 1,500 streams that are supposed to equal one unit sold. It's a numbers game and as consumers continue to stream music products the gap will continue to narrow. And streaming is increasing at nearly a double rate, which means in a few years, we'll be back to the profits the industry generated in 1999.

In today's world, inventions, innovation, and digital technology have reinvented almost everything we do, every day of our lives. Netflix, Spotify, e-books and all the other Internet-based programming we consume are actually in competition for our spare time and available dollars. However, labels are coming back as they are estimated to annually invest $4.5 billion worldwide in Artist & Repertoire (the Department of A&R), responsible for the signing of new acts, songs, studio recordings and artist development) combined with Marketing (The Department of Marketing), which is responsible for distribution, promotions, publicity and sales of the signed acts. And while each deal is different, the investments paid by labels for advances, recordings, video production, tour support, and promotion, is between $500,000 to $2,000,000 to break a new act into the music market.

The three major labels (Sony Music, Warner Music Group, and Universal Music Group) in 2016 (as reported in 2017) gross revenue streams are music publishing, digital downloads, streaming, physical sales and multiple rights management. Two things to consider, the streaming, and digital right management are connected to 360 deals and the future trends in revenues point toward significant decreases in physical and digital download sales and increases in streaming. Already in early 2017, streaming revenues had passed physical sales revenues indicating how quickly the revenue figures are changing. The labels are also in the touring or live ticket game as they have provided the front money (tour support) for the act to start their concert business and they receive 10-12% of all the artist's gross revenues.