Music industry

The music industry are individuals and organizations that earn money by writing songs and musical compositions, creating and selling recorded music and sheet music, presenting concerts, as well as the organizations that aid, train, represent and supply music creators. Among the many individuals and organizations that operate in the industry are: the songwriters and composers who write songs and musical compositions; the singers, musicians, conductors, and bandleaders who perform the music; the record labels, music publishers, recording studios, music producers, audio engineers, retail and digital music stores, and performance rights organizations who create and sell recorded music and sheet music; and the booking agents, promoters, music venues, road crew, and audio engineers who help organize and sell concerts.
The industry also includes a range of professionals who assist singers and musicians with their music careers. These include talent managers, artists and repertoire managers, business managers, entertainment lawyers; those who broadcast audio or video music content ; music journalists and music critics; DJs; music educators and teachers; manufacturers of musical instruments and music equipment; as well as many others. In addition to the businesses and artists there are organizations that also play an important role, including musician's unions, not-for-profit performance-rights organizations and other associations.
The modern Western music industry emerged between the 1930s and 1950s, when records replaced sheet music as the most important product in the music business. In the commercial world, "the recording industry"—a reference to recording performances of songs and pieces and selling the recordings–began to be used as a loose synonym for "the music industry". By the 2000s, a majority of the music market is controlled by three major corporate labels: the French-owned Universal Music Group, the Japanese-owned Sony Music Entertainment, and the American-owned Warner Music Group. Labels outside of these three major labels are referred to as independent labels, such as BMG, entertainment company Concord, Allied Artists Music Group, Reservoir Media, Secretly Group, Big Machine Label Group, PIAS Group, Beggars Group, Sub Pop, Domino Recording Company, Glassnote Records, Ninja Tune, Empire Distribution, & ECR Music Group. The largest portion of the live music market for concerts and tours is controlled by Live Nation, the largest promoter and music venue owner. Live Nation is a former subsidiary of iHeartMedia Inc, which is the largest owner of radio stations in the United States.
In the first decades of the 2000s, the music industry underwent drastic changes with the advent of widespread digital distribution of music via the Internet. A conspicuous indicator of these changes is total music sales: since the year 2000, sales of recorded music have dropped off substantially, while, in contrast, live music has increased in importance. In 2011, the largest recorded music retailer in the world was now a digital, Internet-based platform operated by a computer company: Apple Inc.'s online iTunes Store. Since 2011, the music industry has seen consistent sales growth with streaming now generating more revenue per year than digital downloads. Spotify, Apple Music, and Amazon Music are the largest streaming services by subscriber count.

Business structure

The main branches of the music industry are the live music industry, the recording industry, and all the companies that train, support, supply and represent musicians.
The recording industry produces three separate products: compositions, recordings and media. These are each a type of property: typically, compositions are owned by composers, recordings by record companies, and media by consumers. There may be many recordings of a single composition and a single recording will typically be distributed via many media. For example, the song "My Way" is owned by its composers, Paul Anka and Claude François, Frank Sinatra's recording of "My Way" is owned by Capitol Records, Sid Vicious's recording of "My Way" is owned by Virgin Records, and the millions of CDs and vinyl records that can play these recordings are owned by millions of individual consumers.

Compositions

s, instrumental pieces and other musical compositions are created by songwriters or composers and are originally owned by the composer, although they may be sold or the rights may be otherwise assigned. For example, in the case of work for hire, the composition is owned immediately by another party. Traditionally, the copyright owner licenses or "assigns" some of their rights to publishing companies, by means of a publishing contract. The publishing company, or a collection society operating on behalf of many such publishers, songwriters and composers, collects fees, known as "publishing royalties", when the composition is used.
A portion of the royalties are paid by the publishing company to the copyright owner, depending on the terms of the contract. Sheet music provides an income stream that is paid exclusively to the composers and their publishing company. Typically, although not universally, the publishing company will provide the owner with an advance against future earnings when the publishing contract is signed. A publishing company will also promote the compositions, such as by acquiring song "placements" on television or in films.

Recordings

Recordings are created by recording artists, which includes singers, musicians and musical ensembles usually with the assistance and guidance from record producers and audio engineers. They were traditionally made in recording studios in a recording session. In the 21st century, advances in digital recording technology have allowed many producers and artists to create "home studios" using high-end computers and digital recording programs like Pro Tools, bypassing the traditional role of the commercial recording studio.
The record producer oversees all aspects of the recording, making many of the logistic, financial and artistic decisions in cooperation with the artists. The record producer has a range of different responsibilities including choosing material and/or working with the composers, hiring session musicians, helping to arrange the songs, overseeing the musician performances, and directing the audio engineer during recording and mixing to get the best sound.
Audio engineers, including recording, mixing and mastering engineers, are responsible for ensuring good audio quality during the recording. They select and set up microphones and use effects units and mixing consoles to adjust the sound and level of the music. A recording session may also require the services of an arranger, orchestrator, studio musicians, session musicians, vocal coaches, or even a discreetly hired ghostwriter to help with the lyrics or songwriting.
Recordings are traditionally owned by record companies. Some artists own their own record companies. A recording contract specifies the business relationship between a recording artist and the record company. In a traditional contract, the company provides an advance to the artist who agrees to make a recording that will be owned by the company. The A&R department of a record company is responsible for finding new talent and overseeing the recording process. The company pays for the recording costs and the cost of promoting and marketing the record.
For physical media, such as CDs, the company also pays to manufacture and distribute the physical recordings. Smaller record companies will form business relationships with other companies to handle many of these tasks. The record company pays the recording artist a portion of the income from the sale of the recordings, also known as a "royalty", but this is distinct from the publishing royalties described above. This portion is similar to a percentage, but may be limited or expanded by a number of factors that are specified by the record contract. Session musicians and orchestra members are under contract to provide work for hire; they are typically only paid one-time fees or regular wages for their services, rather than ongoing royalties.

Media

Physical media, such as CDs or vinyl records, are sold by music retailers and are owned by the consumers after they buy them. Buyers do not typically have the right to make digital copies from CDs or other media they buy, or rent or lease the CDs, because they do not own the recording on the CD, they only own the individual physical CD. A music distributor delivers crates of the packaged physical media from the manufacturer to the retailer and maintains commercial relationships with retailers and record companies. The music retailer pays the distributor, who in turn pays the record company for the recordings. The record company pays mechanical royalties to the publisher and composer via a collection society. The record company then pays royalties, if contractually obligated, to the recording artist.
When music is digitally downloaded or streamed, there is no physical media other than the consumer's computer memory on his or her portable media player or laptop. For this reason, artists such as Taylor Swift, Paul McCartney, Kings of Leon, and others have called for legal changes that would deny social media the right to stream their music without paying them royalties. In the digital and online music market of the 2000s, the distributor becomes optional.
Large online shops may pay the labels directly, but digital distributors do exist to provide distribution services for vendors large and small. When purchasing digital downloads or listening to music streaming, the consumer may be required to agree to record company and vendor licensing terms beyond those which are inherent in copyright; for example, some services may allow consumers to freely share the recording, but others may restrict the user to storing the music on a specific number of hard drives or devices.