What is the music industry market share?

Market share in the music industry refers to the percentage of total market revenue attributed to different entities or segments within the industry. This measure enables comparison of the relative size and market presence of companies, genres, or distribution channels in the music market.

The first step is to gain a comprehensive understanding of the industry’s market share. This involves analysing the top companies that control assets such as recordings and songs/compositions, and evaluating their year-on-year (YoY) performance. This analysis includes comparing their performance to previous years and to each other.

We measure YoY because it coincides with the release of earnings and performance reports by public corporations, providing an accurate assessment of the current status.

The view from above: who runs the music industry?

The story at the top remains largely the same: major companies like Universal Music Group (UMG), Sony Music Entertainment (SME), and Warner Music Group (WMG) have consistently held the top three positions in the recorded music industry market share since 2012. This demonstrates the significant dominance of major companies, which account for approximately 70% of the market, while independent music holds a relatively smaller share of 30%.

While there’s been a noticeable uptick in physical sales and a moderate growth in independent label music production in recent years, these trends are more evident in the latter part of the decade.

Additionally, recent developments in the industry include the music rights gold rush and the acquisition of independent music companies by major labels. These developments attracted a significant amount of venture capital to the industry, but this influx of investment is now dwindling.

I believe there will be a slowdown in outside venture capital (VC) investment in the music industry. This is because generating a return on investment from music assets often requires a long-term commitment, which few venture capitalists are willing to patiently wait for.

Soloing the independent music sector

To comprehend the significance of music industry market share for independent artists and labels, it is necessary to distinguish between the market share of major companies and the market share of independent music. This means we need to delve deeper into the specifics of that “30%” figure above.

To analyse the market share of the music industry, it is important to understand its various segments and determine their relevance to your study. Whether you are a record label, publisher, music licensee/licensor, artist, or DSP specialist, these key performance indicators (KPIs) will be applicable to you. In this section, I will explain the significance of these metrics, and in the following section, I will elaborate on why they are important.

Music recordings market share

The recorded music market share is the most tracked and culturally significant metric in the music industry. It is the one that determines the charts.

Record label KPIs

• Revenue from album and single sales, digital downloads.
• Market share of different record labels.
• Artist royalty pay-outs.
• Genre performance.
• Territory performance.

How to interpret record label KPIs

• How many records did I sell (or streams did I generate) within a given period compared with the general top sellers?
• How did my records perform compared with the top sellers in my genre?
• How did my records perform with the top sellers in my territory, and other territories (as well as specifically for my genre)?

Publishing market share

The publishing market share refers to revenue streams associated with the songwriting and composition exploitation.

Music publishing KPIs

• Revenue from mechanical, performance, and synchronisation royalties.
• Market share of different publishing companies.
• Licensing agreements and revenue.

How to interpret music publishing KPIs

• How many radio plays did our song get?
  • How did this compare with other artists in our genre competing for airplay on our target stations?
  • Did we reach the C, B or A list?
• How many syncs did our song get?
  • What kind of media were these syncs?
  • How are we comparing with the top sync houses and production music companies?
  • Revenue from licensing music for use in TV, films, commercials, video games, etc.
  • Number of sync licenses obtained.
  • Market share of different sync licensing companies.
• Did we play the song live enough in credible venues?
• How are our songs performing in microsync environments such as YouTube and TikTok?

Live Music

Live music KPIs

• Ticket sales revenue.
• Number of events, attendance figures.
• Market share of different event promoters, venues, or ticketing platforms.

Merchandising

Music merchandise KPIs

• Revenue from sales of artist merchandise.
• Number of merchandise items sold.

Non-direct music industry metrics

There are also metrics in the music industry that are applicable to music businesses but not to asset holders or controllers. However, these metrics are still relevant for music teams as they can assist in decision-making processes, such as selecting partners or services, and identifying potential collaborative commercial opportunities.

Naturally, observing how your individual performance compares to the overall company performance can provide insights on where to implement new strategies and campaigns.

Music streaming company metrics

• Monthly active users (MAUs) and subscriber counts.
• Revenue from subscriptions and advertising.
• Market share of different streaming platforms like Spotify, Apple Music, etc.

Knowing which DSPs are performing best for you and your genres shows you where to invest your efforts when it comes to increased marketing, advertising and design asset investment.

Music equipment and instruments sales metrics

• Sales revenue from musical instruments and equipment.
• Market share of different manufacturers or retailers.

High-performing equipment and instrument companies can offer brand activation opportunities, ambassadorships, or simply provide insights on which equipment musicians should purchase to ensure reliable and high-quality sound.

Music education sector metrics

• Revenue from tuition fees, educational materials, online courses, etc.
• Enrolment figures, number of courses offered.

The growth or decline of the music education sector provides an indication of the overall cultural value and demand for music. A thriving music education sector also offers opportunities for experienced musicians to generate revenue by offering educational products, services, and lectures.

Music technology metrics

• Revenue from sales of music software, apps, or technology platforms.
• Market share of different technology providers.

The growth of music technology improves productivity and increases output for both artists and executives.

Digital and physical distribution metrics

• Revenue from distribution services, both digital and physical.
• Market share of different distribution companies.

Monitoring the performance of distribution revenue is an important indicator of how well music consumers are engaging with purchasing and streaming music. It also highlights the distributors that excel in collaborating with successful artists and cultivating strong relationships with DSPs and stores to ensure that the music they distribute reaches the appropriate audience and is either played or purchased.

Brand and music partnerships and sponsorships metrics

• Revenue from brand partnerships, sponsorships, or endorsements.
• Number of partnerships, value of sponsorship deals.

Collaborating with and investing in music activations by brands demonstrates an acknowledgment of the cultural significance of music in the present moment.

Conclusion

Each of these segments has its own set of metrics and methods for evaluating market share and financial performance, and understanding the interplay between these segments is crucial for a comprehensive understanding of the music industry’s market share dynamics.

If you’re looking to work with an expert in music industry analysis, you can make an enquiry or book a consultation call immediately.