The flexibility of small, independent labels gives them a needed advantage over the majors
Los Angeles, CA (PRWEB) February 10, 2012
The digital revolution has turned the music industry upside down for labels large and small. The four largest record labels (Warner, Universal, EMI and Sony) are facing the potential collapse of the industry as they know it, and independent record labels (indie labels) are not doing much better. According to IBISWorld industry analyst Kathleen Ripley, “CD sales in America have dropped by more than half in less than a decade, and revenue from digital music sales has failed to recoup the losses.” As such, IBISWorld estimates revenue for the Independent Label Music Production industry to fall at a 1.8% average annual rate to $343.1 million over the five years to 2012. In 2011, total album sales increased for the first time in over six years, with growth of 1.4%. In 2012, IBISWorld projects that industry revenue will rise 1.3% as indie labels benefit from rising disposable incomes and diminishing distribution costs.
In addition to the digitization of music, advancements in technology and online media platforms are creating a second wave of challenges for indie labels. As recording, mastering and distributing music grows easier through widely available and more affordable means, new competitors are entering the industry faster than industry revenue growth. “At the same time,” Ripley says, “technology is also affording artists the ability to record, market and distribute their own music.” Such self-distribution is decreasing demand for industry services and causing an ever-growing number of players to share a shrinking amount of revenue. 'Independent' operators are often considered synonymous with 'small' players, indicating the absence of a multitude of major competitors. There are no large players dominating the market; in 2012, the industry features only one major player, Concord Music Group, a label that produces music across the genre spectrum. The concentration level of this industry is complicated by the absence of the four largest record labels, which are considered part of the Major Label Music industry (IBISWorld report 51222).
Looking forward, lackluster improvements will typify the industry through 2017. Labels must now determine how to create growth in digital and other nontraditional revenue streams in order to offset continuing declines in CD sales. From within the industry, successful firms will need to implement innovative business models to counter the negative forces constricting growth. Industry operators are small, and the industry is highly fragmented; however, their small size provides indie labels with a significant advantage during these tumultuous times: flexibility. Small labels are able to adapt their business models quickly to improve efficiencies, keep up with changing preferences and profit from nontraditional revenue streams. Externally, improvements in the general economy and consumer spending will help support marginal increases in overall revenue.
For more information, visit IBISWorld’s Independent Label Music Production report in the US industry page.
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IBISWorld industry Report Key Topics
Record labels are responsible for finding musical talent, recording songs and selling the work to retail outlets. Independent labels tend to have small budgets and operations, while major labels have the capacity to distribute physical media and oversee comprehensive publishing operations. Major labels are included in the Major Label Music Production industry (IBISWorld report 51222).
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.