In this modern computer world there has been a flourish of all types of industries to try and stay in the game by embracing the internet. The music industry as a whole is no exception, at first the fans of music who were used to popping down to their local record store to buy the latest songs were the first ones to download music on electronic files.
Then the record labels themselves began to decline due to lack of physical sales of CD’s and the like. These were dark days for the labels and recorded music. Some artists bucked the trend and the likes of Rihanna and Adele still sold millions of albums, but on the whole the music labels were losing money hand over fist. And as sales and therefore revenues declined, a plethora of legal battles took place between giant corporations and teenagers who had illegally downloaded their favorite songs. Campaigns were started about warning of the dangers of flouting copyright laws.
It was hard to feel sorry for the big record labels as for decades they had been ripping the music public off for large sums of money every time a fan wanted to buy the latest CD. The Labels of course swallowed the lion’s share of the profits, with often only a small percentage going to the artists.
The Crash of the Record Labels
Then came along the digital music file, and at the start of 2000 and for the next decade the music industry basically collapsed. Revenues fell from $15 billion to just over $6 billion in 2009. The artists that focused on live shows and merchandise fared better and did reasonably well. But the labels had no choice but to slash their workforce and cut costs, hidden slush funds for drugs and booze were the first to be discarded. And worse still for new artists starting in the industry, the labels only backed certainties and would not gamble on anyone new. They stuck to chart music by middle of the road acts that had larger appeal to a wider audience, this was termed nan appeal!
The Arrest of the Decline
During these gloomy days of the 2000s people predicted the worse for the record industry but by 2015 things started to change. The largest company in the music industry worldwide, Universal Music Group, posted new higher revenues of $5 billion dollars and an incredible $1 billion of this came from streaming revenues. And in 2017 the recording industry announced that for the first time ever that streaming revenues eclipsed those sales of traditional formats. In Britain the second largest market in the world it was announced that British record companies grew their streaming revenues by 45%. Spotify also went public and is valued today at $25 billion.
But there has not been a trip down memory lane in terms how record labels operate. The slick business ideals that were put in place in 2000 are still being followed and there are no longer any slush funds hidden away in off-shore bank accounts. In the concluding part of this blog we look at just where the money is going in today’s music industry.