Report finds musicians only receive 12% of the $43 billion the music industry makes
A new report has found that musicians in the United States only received 12% of the $43 billion revenue the music industry made in 2017.
The discovery was made in a new report called Putting The Band Back Together by Citigroup, where they found that out of the $43 billion revenue the music industry made last year, just over $5 billion actually went to the people who are responsible for it (a.k.a. the musicians.)
There are two reasons that this could be: the rise of people "renting" music rather than buying and the fact that musicians are touring now more than ever before.
“The music industry is in the midst of two profound changes. First, consumers are increasingly opting to rent — rather than buy — music. Second, the demise of physical music has prompted artists to tour more often, driving significant growth in concerts and festivals.”
Despite the reasons for the major differences in who is earning what, that still leaves the question of where does the rest of the money go?
According to the report, it appears that a decent amount of the revenue is actually going to the middlemen, or, the people who are distributing music (AM/FM radio stations, record labels and online platforms.)
While it might not seem like things are looking up for the musicians in the scene, it appears that the report sees revenue for artists to be on the "upswing."
The report says: "The rise of the Internet and the decline in physical music sales caused artist revenue — in absolute terms — to almost stagnate between 2000 and 2009. But, with the rise of subscription services and the growth in concert popularity, artist revenue is now on the upswing."
While musicians' earning seem to be on the upswing since the 2000s, the study finds that there are other ways for the industry to fix the revenue gap.
According to the report, there are three ways that the industry could evolve to help further close the gap: vertical integration, horizontal integration or organic vertical integration.
The first is vertical integration, where we would see concert promoters like Ticketmaster partner with a distribution platform like Apple Music.
The next is horizontal integration, where we would see distribution platforms like Spotify and Apple Music merge together into one giant streaming service.
The last, what Citigroup calls its organic form of vertical integration, would see existing web-based streaming places merge with record companies.
It is unclear whether or not these strategies could help actually help the evolution of the music industry to look out for the people who need it most, the artists, but it could be a step in the right direction.
What do you think of the report? Let us know in the comments below!
You can read Citigroup’s 88-page report here!