Unsigned Artists Account for Just 2.7% of Global Recording Sales

Unsigned Artists Account for Just 2.7% of Global Recording SalesRevenue for unsigned artists is growing at a great rate.  Yet, why does it only make up such a small amount of global recording sales?

According to a new study published by Midia, global recorded music revenue grew by $1.7 billion last year.  This represents an 8.5% increase over 2016’s $16 billion.  The growth puts the global recorded music revenue total at just below 2008 levels, when it stood at $17.7 billion.  According to analyst Mark Mulligan, this proves that the music business is “locked firmly in growth mode.”

Unsurprisingly, streaming once again aided global recorded music numbers.  Revenue from streaming music services grew to $7.4 billion, a 39% year-on-year increase.

At nearly $5.2 billion in 2017, Universal Music Group represented 29.7% of all revenue.  Yet, Warner Music enjoys the biggest growth rate and market share shift.  With an 18% market share, the label reached $3.1 billion last year.  Sony generated slightly over $3.6 billion, representing a 22.1% market share.  Underscoring the power of independent musicians, indie labels generated around $4.8 billion in revenue.  This represents a 27.6% market share.

Yet, Midia made a surprising discovery.  When compared to major label revenue, ‘self-releasing acts’ (unsigned artists) collected only $472 million.  The firm calculated revenues collected from Tunecore, CD Baby, and Bandcamp.

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Now, at first, the number seems impressive.  According to Mulligan, this number “reflects the fact that there is a global marketplace for artists that fall just outside of record label’s remits.”  The firm found a 27.2% growth over 2016, making revenue for ‘self-releasing acts’ “the fastest growing segment in 2017.”  Yet, take a closer look at the figures.

Compared to the rest of the major labels, $472 million only constitutes 2.7% of all global recording sales.  Revenue from major labels easily dwarves this number.  In fact, as Mark Mulligan notes, unsigned artists’ figures have historically “been left out of measures of the global recorded music market.”

Despite the major growth, there doesn’t appear to be a reason for unsigned artists to remain without a label.  At least, not economically.  After all, not everyone can be Chance the Rapper.

Yet, this bleak figure apparently shouldn’t cause any alarm.  According to Mulligan, independent musicians, along with unsigned artists, represented 30.3% of global recorded music revenues last year.  In the foreseeable future, he sees a market becoming “increasingly diversified.”  He wrote,

Add the possibility of streaming services signing artists themselves and doing direct deals with independent labels, and the picture becomes even more interesting.

But, until unsigned artists actually start earning more for their hard-earned work, continue expecting similar dismal percentages.  After all, as the analyst admits,

“This doesn’t mean that the labels are about to be usurped.”

 


Featured image by Julio Enriquez (CC by 2.0)


3 Responses

  1. Anonymous

    Umm yeah still pretty impressed by the numbers. Obviously revenue from majors dwarfs the unsigned number…it’s hardly been viable to make any money without a label, major or independent, to the point that the figure has been annually left out until now. “Just” $472M/2.7% is a huge improvement from being statistically insignificant. Sure gave a nice click-baity edge to it though!!

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  2. Lest it be overlooked...

    Well written article. Importantly, you are correct, as well as Mark Mulligan (and the Midia study), that the surge in unsigned artists’ revenue, “[does not mean] that the labels are about to be usurped.” Indeed, one need look no further than the numerous reports of declining physical sales, for example, to realize that physical media such as compact discs are “dying a natural death,” which, of course, has nothing to do with the surge in revenues of unsigned artists; its simply old media.

    In any event, a record label is by its very nature in the business of selling, reproducing and distributing physical media such as compact discs.

    Furthermore, the reproduction and distribution models of the major record labels, for example, are archaic to say the least. In that regard, the “writing is on the wall,” in that Vivendi has reportedly indicated that it “has no intentions of selling its stake in Spotify;” rather, it is contemplating dumping its UMG on the public by way of IPO (perhaps there is a spot at the Spotify boardroom table beside Spotify CEO Daniel Ek for UMG CEO Sir Lucian Grainge – this one is for you Remi).

    The take-away from the Midia study as I see it is that the surge of unsigned artists’ revenue is not based in significant part on the sale of physical media such as compact discs (why would a sane individual sell compact discs for example and thereby compete with the streaming revenue; sort of counterintuitive and self-depreciating don’t you think); instead, it is based largely upon the revenues generated from the streams per se (without a label). That said, can you imagine what Lady Gaga’s streaming revenue would be if not signed to a record label, or Cardi B?

    On a side note, what does the UMG IPO contemplated by Vivendi portend?

    I am certain that there are many experienced, competent and well-intentioned individuals employed by the major labels, for example, who might want to consider forming management groups, or touring agencies, et cetera, as those are essential services that may soon become invaluable assets, in my opinion. In view of the recent lay-offs of the distribution personnel at, well, you know, it might behoove those with an entrepreneurial spirit to act before the pink-slip. Then again, what do I know. What if the Music Modernization Act (which has been coupled with, among many other things, the Classics Act) does not come to pass? Never happen you say, neither would Brexit nor President Donald Trump, but here we are.

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  3. Ari Herstand

    Extremely important oversight: the report only looked at 2 DIY distributors and Bandcamp. What about AWAL, DistroKid, Stem, OneRPM, Horus, Symphonic, etc etc etc. There are HUGE albums out released by these distributors.

    That’s like ignoring UMG and Sony and just taking WMG’s revenue and stating that major label revenue is on the decline. See how absurd that is?

    It’s also worth noting that most self releasing artists release under a vanity label name – do they count as self releasing or indie label?

    Extremely misleading report that doesn’t actually reveal anything of substance.

    Reply

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