Garnish Music Production School | Los Angeles

The Music Industry: The past, the future and NOW!

The Music Industry: The past, the future and NOW!

“Comparison is the thief of joy” –Theodore Roosevelt / Carol Bayer Sager with Oprah


The Digital Evolution


So what happened? 

-1980’s Philips and Sony collaborate and develop the CD

-1990’s Reissuing of all old catalogs (replacing collections of vinyl and tapes)

-Major cash flow and record sales during the 90’s

-At first digital was a positive for the industry, but…


-Digital distribution comes to life with Napster, Gokster, LimeWire 

-Record labels were basically digitally sleeping and stunned

-Sales dropped by half


-Irony: CD cost went from $2 per disc (1988) to $1 per disc (2000)

-CD ripping


***But what really happened: Forcing people to purchase the entire CD for 2 or 3 good songs***


Positives of Analog to Digital 

-Faster to create 

-What about studio business?

-Cheaper to create 

-Tape, outboard gear

-The rise of the “Bedroom Producer” 

-Daniel Beddingfield

“Gotta Get Thru This” is a song by British singer Daniel Bedingfield. It was released in November 2001 as the lead single from his debut studio album of the same name (2002). The track, along with some others, was recorded in Bedingfield’s bedroom with his PC 

and a microphone, using the music software Reason. 


Apple saves the day

-From 2000 to 2011 The industry collapsed

-Took Apple to save the day

Major Labels

-6, 5, 4, 3…

-The Big 6 (1988-1999)

  1. Warner Music Group
  2. EMI
  3. Sony Music (was CBS Records until 1999)
  4. BMG
  5. Universal Music Group
  6. PolyGram

-The Big 5: 1999 Polygram merged into UMG  

-The Big 4: In 2004 Sony + BMG merge = called Sony BMG

-2008: Renamed Sony Music Entertainment

-In 2007: The remaining “Major 4” controlled: 70% World Music Market / 80% US market

-2012: Major Divisions of EMI sold by Citigroup 

-EMI Recorded Music mostly absorbed into Universal 

-EMI Music Pub absorbed into Sony ATV

-EMI Parlophone (UK / Germany) absorbed into WMG 2013

-The Big 3: Sony Music Entertainment / Universal / Warner Music Group


-The global revenue of the music industry amounting to 16.1 billion U.S. dollars in 2016, a dramatic fall from the 25.1 billion U.S. dollars in 2002.


-Independent labels generated over $6 billion in sales in 2016, accounting for 38 percent of the global recorded music market, according to a new report from Worldwide Independent Network (WIN).


The Labels Fight Back

(Weak Legislation)

-1998 The Digital Millennium Copyright Act

“Secured copyrighted music online”

“Webcasters (internet radio) would now have to pay licensing feels to record companies”


-1999 (AHRA) The Audio Home Recording Act 

“Whom and what digital copies made”


-2007 Mass Litigation – RIAA sued colleges/universities/individuals, campaigns against piracy

CD sales still declined


-2012 (SOPA) Stop Online Piracy Act

“Provided rights for copyright holders against infringers, as well as strict penalties for infringers and was BLOCKED by Google, library associations feared it would lead to wholesale censorship of Internet”


-2017 Music Modernization Act 

Songwriters are egregiously underpaid because laws governing the music industry have not kept pace with technology. The Music Modernization Act of 2017 will change that. This bill is the most significant update to music copyright law in over a generation and represents an unprecedented agreement between the music and technology industries. We, as the songwriters most affected by 100-year-old policies that reduce our royalties, encourage Congress to pass this legislation as soon as possible.


The Music Modernization Act is a bipartisan effort that will greatly improve the way mechanical and performance royalties are calculated. Today, digital services like Spotify, Apple, Pandora, Amazon and Google often do not know who to pay and money is lost to lack of information and inefficiency. The Music Modernization Act will create an entity, funded by the digital music companies, that will properly pay mechanical royalties for interactive streaming. It also gives songwriters a better shot at getting higher royalty rates in the Copyright Royalty Board proceedings. Additionally, it reforms the system that determines performance royalty rates for ASCAP and BMI by allowing rate courts to review market evidence into the valuation of how songwriters are compensated as well as giving them improvements to the rate court process.


The bill contains four key elements:

A new standard for mechanical royalties, based on what a willing buyer and a willing seller would negotiate in a free market.


A new entity to administer blanket licenses for mechanical use, which has authority to grant blanket licenses for all musical works to digital media companies. The entity will collect royalties for musical works used from digital services and pay them to copyright owners. Digital media services that use this entity will be sheltered from liability for statutory damages. The entity will be paid for by the digital music companies, ensuring that all royalties will be paid to copyright owners with no commission. Digital music companies and copyright owners will still be free to enter into their own voluntary license agreements.


Removes evidence limitations for public performance royalties: The legislation repeals section 114(i) of the copyright act, allowing rate courts to consider sound recording performance royalty rates when determining musical work performance royalties.


Reforms the rate court system: Currently ASCAP and BMI are subject to the same two judges presiding over their rate courts indefinitely. The bill gives the PROs the ability to have randomly selected judges decide their royalty rates.


iTunes in a nutshell

Cost: .99 

Label: Takes 2/3 (70%)


2008 – New Agreement

-Apple used varied pricing (3 Agreements)

-128KB $.99

-256KB $1.29

-Back Catalog $.69


***What did iTunes allow: A SINGLES MARKET – No longer can FORCE people to buy album***

-Major shift in music consumption


The Dawn of Streaming

Pandora, Apple Music, Beats

-With a download copyright holder kept 20%

-Now it takes 80 to 200 streams = 1 download

-Hundredths of a cent per play


Dramatic decrease in revenue had led to: The rise of 360 deals and artist branding (Vegas Shows)

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