MIDiA is worked up to announce our newest report “State of the independent music economy: Fragmentation AND consolidation”. It represents essentially the most intensive piece of analysis we now have ever completed. Through a mix of our annual Independent Label and Distributor Survey and an exhaustive (and exhausting) programme of desk analysis, MIDiA collected firm degree income knowledge totalling $10.6 billion of recorded music income. When mixed with main label financials and knowledge collected from artist distribution platforms, which means MIDiA’s whole recorded music market dataset has 93% of all world revenues accounted for, at firm degree. We are assured there has by no means been such complete analysis completed of the sector, till now!
The full report is instantly obtainable to MIDiA purchasers and has additionally been despatched to all labels and distributors that took half in our survey. Here are some highlights:
Non-major labels are firmly streaming-first, with it accounting for almost all of their revenue and Spotify being greater than half of it. However, additionally they really feel streaming has its challenges – 87% of non-major labels really feel it’s turning into harder to get artists to chop by and 78% discover it troublesome to retain fan curiosity. Little marvel then that non-major labels spent $1.5 billion on advertising in 2023, with smaller labels (<1m income) producing the biggest share of the spending.
Meanwhile, most really feel that even when a launch cuts by, it’s turning into harder than ever to retain fan curiosity. Critically quick consideration spans usually are not distinctive to streaming, however its present configuration intensifies this dynamic. Little marvel then that almost all of non-major labels and distributors are spending extra on advertising than they have been two years prior. The unhappy actuality is that advertising alone is just not sufficient. In truth, if everyone seems to be doing it, then it merely exacerbates the issue. To quote Syndrome from The Incredibles “ when everyone’s super , no-one will be”.
All of which factors to why non-majors are on the lookout for a brand new lane wherein they will function. Price will increase, super-premium (and even perhaps lower-priced tiers and bundles) will assist squeeze some extra worth out of the market. But, when coupled with the laundry listing of streaming’s shortcomings (fractionalised royalties, long-tail challenges, rise of AI and fraud, royalty thresholds, the fandom void, and many others.) the case for a brand new, complementary mannequin is evident. Nearly three quarters of non-majors suppose it’s time for a brand new mannequin. They usually are not merely prepared for bifurcation, they actively need it to occur.
Despite the entire challenges they face, non-majors (labels and artists direct i.e., self-releasing artists) are rising their share of the whole market, on each an possession and a distribution foundation. Non-majors, on a distribution foundation, represented 34.2% of the whole recorded music market in 2023, however on an possession foundation this jumped to 46.7%, with revenues of $14.3 billion. Non-major income distributed by the majors was $3.8 billion in 2023. The main labels are main gamers (pun meant) within the non-major market. They have efficiently discovered how one can flip rising non-major share to their benefit.
While the worldwide figures are compelling in their very own proper, issues get actually attention-grabbing at a regional degree, with non-major share notably excessive in Asia Pacific and Rest of World (MENA, sub-Saharan Africa, and many others). In these areas, streaming has helped unlock huge new audiences and the biggest non-major labels there typically contemplate themselves native majors slightly than independents. Hence our use of the time period ‘non-majors’.
Many shall be accustomed to a few of these labels (e.g., HYBE, JYP, Avex) but there’s a lengthy listing of massive labels that not often register on Western radars however are greater than most Western indies. Examples embrace Starship Entertainment (South Korea), GMM Grammy (Thailand), EE-Media (China), and Star Music (the Philippines).
The rise of the Global South will reshape the worldwide music trade for the rest of the last decade and with their low market share in these areas, it’s no shock that greater labels are busy buying or shopping for into the largest labels they will e.g., SMG – Som Livre (Brazil), WMG – Rotana (Saudi Arabia), UMG – Mavin Global (Nigeria), and Believe Doğan Music Company (Turkey).
One of essentially the most encouraging options of the non-major label sector is the evenly distributed nature of income throughout labels of various sizes. Just as within the wider music enterprise, a famous person financial system operates within the non-label sector, with lower than half a p.c of the almost 13,000 labels representing a 3rd of revenues. But the massive distinction is the well being of the lengthy tail. In streaming, the lengthy tail of artists account for lower than 5 p.c of revenues. But non-major labels with <$1 million annual income account for the same share of income as the largest labels.
Fragmentation AND consolidation
The world recorded music market is extra various, fragmented, worldwide, and regional than it has ever been. Streaming and social media have damaged down many conventional boundaries, however arguably crucial change was entry. Access to audiences and entry to world markets particularly. Nearly 13 thousand labels and 7 million artists can now attain listeners at scale in any nation on the earth – in idea at the least. This has underpinned the expansion of thriving impartial ecosystems of labels, distributors, artists and distributors. As a lot as firm house owners and executives might fret, and rightly so, about streaming’s unintended penalties, these are higher issues to face than not with the ability to get your music to market.
It has resulted in a market that’s characterised by each fragmentation AND consolidation. These opposing forces are shaping at the moment’s market and can accomplish that within the coming years. Streaming will proceed to fragment audiences whereas greater document labels and distributors will proceed to accumulate smaller ones. The well-balanced unfold of revenues between the very greatest and really smallest labels signifies that these two forces have arrived at some type of equilibrium.