Companies like Kickstarter help independent musicians produce their albums through fans funding bands they want to listen to. Inexpensive recording-hardware and -software make it possible to record reasonable-quality music on a laptop in a bedroom and to distribute it over the Internet to a worldwide audience. The music industry is a complex system of many different organizations, firms and individuals.
It has undergone dramatic changes in the first decades of the 21st century. However, the majority of the participants in the music industry still fulfill their traditional roles, which are described below. There may be many recordings of a single composition and a single recording will typically be distributed via many media. Songs , 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 are created by recording artists , which includes singers , musicians including session musicians and musical ensembles e.
They were traditionally made in recording studios which are rented for a daily or hourly rate 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.
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 e. 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 record music that will be owned by the company. 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 known as " indies " 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 such as free goods, recoupable expenses, bonuses, etc.
Session musicians and orchestra members as well as a few recording artists in special markets 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. 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.
In the case of digital downloads or online streaming of music, 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. 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. This royalty is typically much smaller than publishing or mechanical royalties. Within the past decade, more than "15 to 30 percent" of tracks on streaming services are unidentified with a specific artist.
Jeff Price says "Audiam, an online music streaming service, has made over several hundred thousand dollars in the past year from collecting royalties from online streaming. Because of the overuse of YouTube and offline streaming, album sales have fallen by 60 percent in the past few years. In the s, online subscription services such as Rhapsody also provide an income stream directly to record companies, and through them, to artists, contracts permitting.
A promoter brings together a performing artist and a venue owner and arranges contracts. A booking agency represents the artist to promoters, makes deals and books performances. Consumers usually buy tickets either from the venue or from a ticket distribution service such as Ticketmaster. In the US, Live Nation is the dominant company in all of these roles: they own most of the large venues in the US, they are the largest promoter, and they own Ticketmaster. Choices about where and when to tour are decided by the artist's management and the artist, sometimes in consultation with the record company.
Record companies may finance a tour in the hopes that it will help promote the sale of recordings.
However, in the 21st century, it has become more common to release recordings to promote ticket sales for live shows, rather than book tours to promote the sales of recordings. Major, successful artists will usually employ a road crew : a semi-permanent touring organization that travels with the artist during concert series.
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The road crew is headed by a tour manager. Crew members provides stage lighting , live sound reinforcement , musical instrument tuning and maintenance , bodyguard for the artist and transportation of the equipment and music ensemble members.
On large tours, the road crew may also include an accountant, stage manager, hairdressers, makeup artists and catering staff. Local crews are typically hired to help move equipment on and off stage. On a small tour with less financial backing, all of these jobs may be handled by just a few roadies or by the musicians themselves. Bands signed with small "indie" labels and bands in genres such as hardcore punk are more likely to do tours without a road crew, or with minimal support.
Artists such as singers and musicians may hire a number of people from other fields to assist them with their career. The artist manager oversees all aspects of an artist's career in exchange for a percentage of the artist's income. An entertainment lawyer assists them with the details of their contracts with record companies and other deals. A business manager handles financial transactions, taxes and bookkeeping. A successful artist functions in the market as a brand and, as such, they may derive income from many other streams, such as merchandise , personal endorsements, appearances without performing at events or Internet-based services.
Singers may also hire a vocal coach , dance instructor , acting coach , personal trainer or life coach to help them. In the s, traditional lines that once divided singers, instrumentalists, publishers, record companies, distributors, retail and consumer electronics have become blurred or erased.
Artists may record in a home studio using a high-end laptop and a digital recording program such as Pro Tools or use Kickstarter to raise money for an expensive studio recording session without involving a record company. Artists may choose to exclusively promote and market themselves using only free online video sharing services such as YouTube or using social media websites, bypassing traditional promotion and marketing by a record company.
In the s, consumer electronics and computer companies such as Apple Computer have become digital music retailers. New digital music distribution technologies and the trends towards using sampling of older songs in new songs or blending different songs to create "mashup" recordings have also forced both governments and the music industry to re-examine the definitions of intellectual property and the rights of all the parties involved. Also compounding the issue of defining copyright boundaries is the fact that the definition of "royalty" and "copyright" varies from country to country and region to region, which changes the terms of some of these business relationships.
According to IFPI,  the global digital album sales grew by 6. Additionally, according to an IFPI report published in August ,  the big four accounted for Note: the IFPI and Nielsen Soundscan use different methodologies, which makes their figures difficult to compare casually, and impossible to compare scientifically. Current Markets shares as of September are as follows: . The largest players in this industry own more than subsidiary record labels or sublabels, each specializing in a certain market niche. Only the industry's most popular artists are signed directly to the major label.
These companies account for more than half of US market share. However, this has fallen somewhat in recent years, as the new digital environment allows smaller labels to compete more effectively. Total album sales have declined in the early decades of the 21st century, leading some music critics to declare the death of the album. For instance, the only albums that went platinum in the US in were the soundtrack to the Disney animated film Frozen and Taylor Swift's , whereas several artists did in Source: IFPI annual report.