Are Revenues on the Rise?

  Author: Jason Davis,                                 President One One 7  Entertainment

Author: Jason Davis,                                President One One 7  Entertainment

        With all of the changes in the music industry, there are those who question, if there’s still money to be made in music? If yes, where are the revenues and what do they look like? With independent artists on the rise, are labels still warranted or can an independent artist survive financially without a major record label? Regardless of an artist’s affiliation to a label or not, the method of distribution continues to be the driving factor in the revenue and the reports indicate the music industry is back on the rise.

       Reports have confirmed that 2017 was a phenomenal year for the music industry. According to the IFP Global Music Report, global recorded music revenues reached 17.3 billion in 2017.[3] That was an 8.5% increase from 16 billion in 2016. [3] Many discussed the decline, because in 2008 the statistics show music earnings at 17.7 billion.[3]  The 2017 information along with comparisons from previous years, clearly indicate that the music industry is once again on the rise with continued increases in financial gains. The statistics do not exceed the music industries peak year back in 1999, but it is a trend that is expected to continue.

        Even though there may be slight differences in the published financial statistics there was not enough discrepancy to comment. Regardless of the slight variances which may be due to the currency conversions, the increase in streaming statistics was undeniable in all reports. All intelligences agreed that streaming is the reason behind the continued upward progression of the financial gains within the industry. Consequently, all eyes are continuing to follow the ever increasing streaming possibilities. The reviewed reports showed streaming revenue growths between 39% to 41% which represented 38% to 43% of all music proceeds. [3] [5]  The exciting news in streaming revenues out-weighed the 5.4% decrease in downloads, so 2017 was still considered another win.

        Record companies expect the growth to continue and are continuing to make investments to ensure that artists and the industry have the ability to collect fair payment for their services and music. Universal Music Group is definitely one making investments and believing the rise in profits will continue. Their ventures are paying off, because of all the music corporations, according to the statistics, Universal Music group was happy to report they were the front runner in growth.  The Universal Music Group reports revenues produced $901.7 million in operating income on revenues that grew to $6.41 billion, for 2017. [2]  That represented an 18.5% increase since 2016. [2] Sony and Warner may not have had as large of an increase as Universal Music Group, but all three companies reported gains and their best year since the music industry decline in profits began. [2]

        With the use of social media, ability to distribute their own music and an increase in emerging distribution platforms, the independent artists have to be considered as a growing force in the industry’s revenues as well. The reported revenue from distribution platforms such as CD Baby, Tunecore and Bandcamp collectively generated $472 million in revenues in 2017 which was an increase from the $371 million in 2016. [6]  Even with the increase, the independent artists are reported as only 2.7% of the global market; thereby concluding that artists who sign with a record label still have a clear advantage. [6]  Nonetheless, it can’t be denied that Independent artists and labels are a group that will continue to increase. Since Independents or “Indies”, labels and artists together, made 30.3% of overall music proceeds, the reports are likely to continue to place some emphasis on their progress.

        The reports and statistics are showing that the transformations in the music industry are once again headed in an upward trend indicating that yes, the industry is healthy and profitable. Independent artists and labels are also on an upward slope, but the large labels are still showing their overall dominance. Nonetheless, the Independents are now being monitored closer than ever before. Irrespective of which music company was reviewed, labels and artists, independent or signed, streaming continues to be the major influence in their revenue and it is predicted that the streaming increases will be seen again in 2018.

Works Cited

 1.     Burgos, Jenzia, et al. “Physical Music Sales Are Outpacing Downloads for the First Time Since 2011.” Pastemagazine.com, Paste Media Group, 26 Mar. 2018, www.pastemagazine.com/articles/2018/03/physical-music-sales-are-outselling-downloads-for.html.

2.     Christman, Ed. “Universal Music Group Saw 10 Percent Revenue Growth in 2017.” Billboard, Billboard, 16 Feb. 2018, www.billboard.com/articles/business/8100011/universal-music-groups-revenues-10-percent-7-billion-2017.

3.     “An Explosion in Global Music Consumption Supported by Multiple Platforms.” Music Piracy - IFPI - Representing the Recording Industry Worldwide, IFPI, 24 Apr. 2018, www.ifpi.org/facts-and-stats.php.

4.     Ingham, Tim. “The Major Labels' Revenues Grew by $1bn in 2017. But Who Had the Biggest Year?” Music Business Worldwide, MBW, 19 Feb. 2018, www.musicbusinessworldwide.com/major-labels-revenues-grew-1bn-2017-biggest-year/.

5.     “RIAA 2017 Year End Music Industry Revenue Report.” RIAA, RIAA, 22 Mar. 2018,  www.riaa.com/riaa-releases-2017-year-end-music-industry-revenue-report/.

6.     Sanchez, Daniel. “Unsigned Artists Account for Just 2.7% of Global Recording Sales.” Digital Music News, Digital Music News, 24 Apr. 2018, www.digitalmusicnews.com/2018/04/20/midia-research-unsigned-artists-2/