Home > economics, music > No Need to Fear the ‘Decline’ of the Music Industry

No Need to Fear the ‘Decline’ of the Music Industry

Timothy B. Lee explains over at Forbes:

While the “big four” record labels have seen their revenues plummet during the last decade, the music industry more broadly—encompassing independent labels, live performances, merchandise, music lessons, and the like—did extremely well. Statistics from the International Federation of the Phonographic Industry indicates that the “broader music industry,” which included “revenues from music in radio advertising, recorded music sales, musical instrument sales, live performance revenues and portable digital music player sales (among a few other income categories)” grew from $132 billion to $168 billion. Live music saw particularly dramatic growth. From 1999 to 2009, concert ticket sales in the US tripled from $1.5 billion to $4.6 billion, vastly exceeding the growth of inflation and population growth.

The number of albums has also been growing rapidly. Nielson SoundScan estimates that 38,000 new albums were released in 2003, a figure that swelled to 106,000 by 2008, then fell during the recession to 75,000 in 2010.

So in an era of unprecedented musical abundance, when more music is being produced than ever and consumers are spending more money on music than ever, why are so many people convinced that the music industry is on the ropes? The problem is that we’ve grown accustomed to treating “the music industry” as synonymous with a handful of large recording companies. These firms still publish our most famous musicians, and they’re well-connected to major media outlets and to Congress. And so for people who aren’t paying attention to the industry’s change of structure, it might seem like these firmsare the music industry.

When the industry was dominated by large, bureaucratic companies that all did business in basically the same way, it was straightforward to define and measure the industry as a whole—you just made a list of all the record labels and add up their revenues and profits. Today, a growing share of musical output is being produced by small firms or individuals with a much greater diversity in styles, quality, and business models. The lack of standardization makes it hard to summarize and measure how the industry as a whole is doing, which leads people to underestimate how much music is being produced and how much money is being earned.

Read the entire article here.

Image via Google Images

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