Piracy has done damage, but cost cutting and new revenue streams will benefit the industry.
Los Angeles, CA (PRWEB) September 20, 2013
The Major Label Music Production industry locates and develops musical talent in the United States. Prior to the emergence of the internet, major music labels enjoyed healthy profit margins and revenue growth, because consumers had limited ways to buy and to listen to music. As high-speed internet access proliferated throughout the United States, the market for music shifted and record labels have struggled to adapt. Album sales have declined by an annualized rate of 7.0% in the five years to 2013, and they are expected to decline further in the five years to 2018. Consequently, industry revenue will decline by an annualized rate of 4.4% to $7.7 billion in 2013.
According to IBISWorld Industry Analyst James Crompton, “In order to combat falling album sales, industry operators have been continuously adapting to the digital landscape.” While music piracy has been a threat to the industry, major record labels are increasingly attempting to direct consumers toward legal platforms to access music. Currently, the Major Label Music Production industry is emphasizing streaming platforms, such as Pandora and Spotify, as legitimate ways to access music. However, these platforms generate less revenue for record labels than physical album sales. Given that consumers can now choose to buy a single song online, rather than purchase the entire album, industry operators must therefore rely on large volumes of consumers, through these channels, in order to bolster revenue.
“Although the industry's revenue has been falling rapidly for the past decade, both demand and access to music are now more widespread than ever,” says Crompton. For example, technological advances in the internet and portable devices enable consumers to access music at their leisure. Instead of buying a vinyl record and listening to it at home, consumers can currently buy a digital file and play it on their cell phone. This drastic shift in music consumption demands a response from the major record labels, and the largest record labels have taken note of these advancements. Though major record labels will not enjoy the high profit margins experienced prior to digital music sales, major company efforts to comply with changing consumer preferences will spur revenue growth moving forward.
For more information, visit IBISWorld’s Major Label Music Production in the US industry report page.
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IBISWorld industry Report Key Topics
Companies in the Major Label Music Production industry are responsible for finding musical talent, recording their work and selling it to retail outlets. Major labels’ ability to distribute the physical media and oversee comprehensive publishing operations, produces the fundamental difference between independent and major labels. Major labels also have deeper and broader talent rosters.
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