The Music Industry – CMU Library

The music industry consists of people and companies that help music-makers – including frontline artists, backing vocalists, session musicians, composers, songwriters, beat-makers, studio producers and audio engineers – to make money out of their music making. It’s as simple as that.

Each of those music-makers runs their own business. A frontline artist has a consumer-facing business connected with a fanbase. Other music-makers have an industry-facing business providing their creativity, talent and time to other artists, and companies like labels, studios, brands and cultural organisations.

Each music-maker then partners with people and companies in the music industry to help them run and grow their music-maker business. Different music industry partners often focus on different music-maker revenue streams, so to understand the music industry you need to understand how music-makers make money.

ARTIST REVENUE STREAMS
For frontline artists – ie those artists who directly build brands and fanbases around their music – there are a number of different ways of making money. Some of these apply to other music-makers too, but all of them apply to frontline artists.

That includes making money:
> from streaming and other digital services.
> by selling CDs and vinyl.
> from royalties paid when music is broadcast or played in public.
> by licensing music to TV shows, movies, games and ads.
> by selling merchandise.
> from touring and tickets.
> from brand partnership deals.
> through selling products, content and experiences direct-to-fan.

We can organise all the different potential revenue streams into three main groups:
> intellectual property revenue streams.
> live performance revenue streams.
> fan relationship revenue streams.

ORGANISING THE MUSIC INDUSTRY
Most people and companies in the music industry specialise in and focus on one of a frontline artist’s revenue streams.

So some people primarily focus on intellectual property revenue streams, some on live performance revenue streams, and some on fan relationship revenue streams.

Within the first group, people also usually focus on one kind of intellectual property – eg the copyright in songs, the copyright in recordings or the copyright in visual works.

Therefore we can organise the music industry by revenue stream. We have:
> the music rights industry.
> the live music sector.
> the direct-to-fan business.

The music rights industry can be further split into:
> the music publishing sector.
> the record industry.
> the merchandise business.

WHO WORKS WITH WHO
Most frontline artists will have multiple business partners at any one time, each one focused on a different revenue stream – eg a record label, a music publisher, a merchandiser, a booking agent, a promoter, and so on.

There are then other companies in the music industry that provide services and infrastructure to those business partners, like recording studios; music distributors; rights administrators; marketing, press, promotion and social agencies; venues; ticket agents; tour and concert production companies; etc etc.

COLLECTING SOCIETIES
On the music rights side there are also the collecting societies that issue licences and collect royalties for artists, songwriters, record labels and music publishers in various different scenarios when third parties make use of recordings and songs.

The collecting societies also manage the music industry’s main databases of recordings and songs. They also usually support their members and the wider music community through various educational, funding and lobbying initiatives.

The music industry has set up different collecting societies in each country. In the UK there are three main societies: PRS and MCPS both work for songwriters and music publishers, PPL for artists and record labels.

ARTIST MANAGEMENT
A frontline artist will also often hire a manager or management team to help run their artist business day-to-day, who will be involved in all the revenue streams. Other music-makers like songwriters and producers may also engage a manager.

As well as helping the music-maker run and grow their business, the manager also usually helps to select and negotiate deals with all the other business partners, and to manage the ongoing relationships with those partners once they are in place.

Music-makers will also usually hire a lawyer to advise on deals and an accountant to manage the finances. The manager, lawyer and accountant then all work together to advise on and oversee the long term development of the music-maker’s business.

CMU RESOURCES

The CMU Explainer on Making Money From Music introduces the different ways that frontline artists make money from their music-making – and the music industry business partners they work with along the way.

EXTERNAL LINKS

UK Music brings together organisations representing artists, musicians, songwriters, studio producers, labels, publishers and managers in the UK.

LIVE brings together organisations representing everyone involved in live music in the UK – including promoters, agents, venues and festivals.