Global music recording and distribution businesses (Edexcel A Level Business) : Revision Note

Major companies

• The global music industry is dominated by three very large companies

• Together, they make more than 65% of global recorded music sales

Universal Music Group	Sony Music Entertainment	Warner Music Group
Universal is the biggest music company in the world In 2023, it made about 32% of all music sales globally Head office is in Amsterdam Owns famous labels like Interscope, Capitol, Republic and Def Jam Artists include Taylor Swift, Drake, BTS, and Billie Eilish	It 2023, Sony Music Engtertainment made up about 21% of global music sales Based in New York Owns Columbia, RCA and Epic Artists include Beyoncé, Adele, and Harry Styles	It 2023, Warner Music Group made around 13% of global music sales Based in New York Owns Atlantic, Warner Records and Parlophone Artists include Ed Sheeran, Dua Lipa, and Cardi B

• These three companies work with most of the world’s biggest artists and control many of the rights to their music

• This gives them significant power when it comes to selling, promoting and licensing songs

Standardisation versus localisation

• Globalisation means music can now be shared and enjoyed all over the world more easily

Standardisation

• Lots of hit songs sound similar around the world, especially in pop music

• English is still the main language used in global hits

• Many companies use the same type of marketing and promotion in every country

Localisation

• Local music styles like K-pop (Korean pop), Afrobeats (West Africa) and Latin reggaeton have become popular around the world

• Music companies are now signing local artists and making content that fits different cultures

  • For example, Universal has started Def Jam Africa and Virgin Music Latin America to support local talent

  • In India, Sony Music produces music in different local languages and styles

Digital distribution networks and partnerships

• Most music is now shared and sold online using digital platforms.

Streaming services

• Spotify is the biggest music streaming app, with over 515 million users in 2023

• Other popular ones include Apple Music, Amazon Music, and Deezer

• Music companies let these platforms use their music and then get a share of the money (around 50–55% of what the platform earns)

• Artists are paid about $0.003 to $0.005 per stream

YouTube

• Over 2 billion people use YouTube every month

• Many fans discover new songs through YouTube videos

• Music companies earn money from ads and YouTube Music subscriptions

TikTok

• Increasingly important for making songs go viral

• Songs that become popular in short videos can become global hits

• Music companies work with TikTok to promote new artists and trends

New platforms

• Games like Roblox and Fortnite are used for virtual concerts

• Companies like UMG and WMG create interactive events, where fans can join in online

• This helps connect with young fans in new ways

Revenue streams

• Music companies now make money in many different ways, not just by selling CDs or downloads

Streaming royalties

• This is the biggest source of income—about 67% of all recorded music revenue in 2023 (around $18.8 billion)

• It comes from paid subscriptions and adverts on services like Spotify

Licensing agreements

• Music is used in TV, films, video games, adverts and social media

• Music companies sell the rights to use their songs (this is called sync licensing)

  • These deals can be worth thousands or even millions of dollars, depending on the artist and where the song is used

  • They can launch the careers of new artists as well as revive the careers of established artists

  • Kate Bush’s “Running Up That Hill”, originally released in 1985, prominently featured in the fourth season of the popular Netflix sci-fi series Stranger Things. It entered the US Billboard Hot 100 at No. 8 in 2022

Merchandise

• This includes T-shirts, posters and special items with the artist’s name or image

• Universal and Warner both have their own merchandise businesses

  • Beyoncé’s 2023 Renaissance tour merchandise made over $30 million alone

Other income sources

• Vinyl records and CDs remain popular in some countries like the UK, Japan and Germany

  • In 2023, vinyl sales reached $1.2 billion, the highest in 40 years

• Some companies are also trying new ideas like NFTs, which are digital collectables, and virtual concerts in the 'metaverse'

  • These new tools help companies earn money in the future and connect with younger fans