The Music Industry is a collection of business models and professions that are related to the creation, distribution and performance of music. The three main music industries are the recorded music industry, which focuses on recording and distributing music to consumers; the music licensing industry, which primarily licenses music compositions to businesses; and the live music industry, which focuses on producing and promoting live entertainment, such as concerts and tours. There are also other companies that may be considered members of the music industry, such as makers of musical instruments and software, stage equipment and music merchandise.
The introduction of the Internet has fundamentally changed these relationships, and the three core music industries have evolved to adapt to the new paradigm. This has left each sector with its own unique characteristics and strengths, as well as its own set of business practices that differ from country to country.
For example, the streaming market is dominated by a few large players who are able to offer a personalized, high-quality experience at a competitive price. This has allowed streaming revenues to grow at a fast pace, largely offsetting the decline in physical and download sales. IFPI estimates that digital streaming revenues will be double the global recorded music industry’s in 2025.
Streaming has also created other opportunities for music IP owners, such as short-form video platforms (e.g., TikTok and Triller) and e-fitness brands like Peloton that are beginning to sign licensing deals with rightsholders. These partnerships have the potential to become a significant source of future monetization for the music industry.
Recorded music revenues have held up relatively well during the COVID-19 pandemic, as streaming growth has offset a drop in consumption and a shift to other forms of entertainment. However, it is important to note that other revenue streams from the music industry are still in decline, particularly live revenues.
Regardless of the challenges, there are many exciting developments in the music industry. Whether it’s virtual album releases that come with unique digital swag, or blockchain-based music trading platforms offering fans the chance to own a piece of their favorite artists’ work, the future looks bright for the music industry.