Music Business Essentials
Overview:
The Commercial
Music Industry
© 2006 musicbizclasses.com

MUSIC INDUSTRY SECTORS
• The Music Industry is not just the Record Label
Business
• The Music Industry is comprised
of many vibrant “sectors”:
sectors :
Business Sector= economic category or area
• These Sectors include:
• Radio
• Live Performance
• P bli hi
Publishing
• Technology Development
• Recorded Music
© 2006 musicbizclasses.com

MUSIC INDUSTRY REVENUE
Source: IFPI research report, 2006
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INDUSTRY SECTORS KEY FUNCTIONS:
A.
A Recorded Music
• Product- New releases; Back catalog;
Specialty Products/Private-Label;
• Marketing and Promotions Promo
Promotions-
Events, Press, Sponsorships
• Production Creative (Producers);
Production-
Technical (Engineers)
• Distribution- Bricks and Mortar;
Internet; Mobile
• Licensing & Reproduction-
Sound Recording Exploitation
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Revenue Sources
Recorded Music-
• %Sales Revenue; wholesale and retail
• % of some artist promotional and sponsorship
p p p
revenue
• Creative and product fees
• R
Royalties and li
lti d licensing f
i fees
(mechanical & performance)
• Work for Hire fees
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INDUSTRY SECTORS KEY FUNCTIONS:
B. Music Publishing
• Song Exploitation
• Sub
• Sheet music
C. Live P f
C Li Performance
• Concerts- Tours, Performing
Arts
• Events- Festivals; Fundraisers;
Corporate
C
© 2006 musicbizclasses.com

Revenue Sources
Music Publishing
• Sheet music--%retail sales
music %retail
• Royalties- Songs, Lyrics
• Licensing fees & Sales fees for royalty
g y y
free collections
Live P f
Li Performance MusicM i
• % of Ticket Sales
• % of Door
• Contract fees; salaries
• % of Corporate sponsorships
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INDUSTRY SECTORS KEY FUNCTIONS
D. Music in Broadcast
• Film- Soundtracks, Promos
• TV- Music Videos, Soundtracks
• Video Games- Soundtracks, Ambient
• Advertising- Jingles Sonic Branding
Advertising Jingles,
• Radio- Internet; Digital; Analog
• Corporate & Retail- Background Music
Services; Videos
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Revenue Sources
Music in Broadcast
• Advertising Revenue
• Royalties
• Marketing development fees
• Work for hire fees
• Monthly subscription fees
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INDUSTRY SECTORS KEY FUNCTIONS
E. Music Instrument & Equipment Sales
•Manufacturing
•Retail/Merchandising
R t il/M h di i
•Rental and Services
F. Music Technology Products & Services
•Software & Hardware- iPod, iTunes
•Online services MySpace YouTube
services- MySpace,
G. Music Merchandise
•Additional Products-t-shirts; posters
H.
H Music Education & Therapy
•Client Services
© 2006 musicbizclasses.com

Revenue Sources
Music Instrument & Equipment Sales
• Sales Revenue; wholesale a d retail
Sa es e e ue; o esa e and e a
• Rental Revenue
Music Technology Products
• Retail Sales Revenue
• Advertising revenue
• Subscription fees
• Licensing fees
© 2006 musicbizclasses.com

Revenue Sources
Music Merchandise
• Royalties
• % of Manufacturing income
Music Education & Therapy
• Session fees
• Consultation fees
• S l i
Salaries
© 2006 musicbizclasses.com

The Artist Ecosystem
PRODUCER
BIZ MNGR
Self-Licensing
Artist
Record Label
Self-Distribution
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Key Industry Functions
Key Functions in the artist ecosystem
can be divided into two main categories:
g
•Artist/Creative
•Product/Marketing
P d /M k i
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Artist-Centered
Main focus=Creativity
Who they are-
•Musicians
•Performers
•Songwriters/Composers
•Producers
Producers
•Photographers/Videographers
© 2006 musicbizclasses.com

Product-centered
Main focus=Marketing and Sales
Who they are-
are
•Record Labels
•Managers- P
M Personal, b i
l business
•Promoters – event, PR/Publicist
•Producers
•Distributors/Merchandisers
•Publicists
•Booking age ts
oo g agents
© 2006 musicbizclasses.com

Key Take-Aways:
The Commercial Music Industry
is much broader than the
Recorded Music Industry (Record Labels)
Labels).
The Commercial Music Industry includes:
Recorded Music
Live Performance
Music Publishing & Licensing
Music Instrument and Equipment Sales
Digital and Electronic Music Services
Merchandising g
Music Education and Therapy
© 2006 musicbizclasses.com

Key Take-Aways:
• M i I d t t
Music Industry top revenue sectors (annually):
t ( ll )
• Recorded Music=$20-25 Billion
• Musical Instruments/
Equipment= $19-23 Billion
• Live Music= $17-20 Billion
Music $17 20
• The traditional record label business
may be declining, but the overall
industry is very vibrant
• There are many, exciting opportunities
for
f creative, technical, b i
ti t h i l business and d
legal thinkers in the Music Industry
© 2006 musicbizclasses.com

For Educational Use Only
Please do not copy or distribute
This slide presentation is p
p part
of the Music Business Essentials
series.
Contact
C t t
info@musicbizclasses.com
for more information
© 2006 musicbizclasses.com