Music Production & Distribution Industry Profile

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. Major companies include Universal Music Group, Sony Music Entertainment, and Warner Music Group. The industry is highly concentrated: the top eight companies account for 80 percent of industry revenue.

The US is the world's largest recorded music market by sales, followed by Japan and Germany. Physical records, such as CDs and vinyl, account for 71 percent of worldwide sales; digital music sales comprise 29 percent, according to the International Federation of the Phonographic Industry (IFPI). Leading music production and distribution companies based outside the US include UK-based EMI Group, GMM Grammy of Thailand, and German firm edel.

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 capital-intensive: average annual revenue per employee is about $550,000.

Most of the major companies involved in music production and distribution are operate internationally. Sony Music Entertainment's parent company is Sony, a Japanese company. Universal Music Group is owned by Vivendi (France) and EMI is a UK company. Each markets its ...