Recording Industry

The recording industry is in a continual state of flux. New technology, new music, new markets, and new ways of doing business are constantly redefining the way the industry functions. Computer technology is simplifying the recording and mixing process while opening new outlets for creativity and distribution of music. For example, a growing number of recording industry professionals are starting to use artificial intelligence tools in their work. Musicians, producers, and engineers are finding opportunities in the creation of music for Web sites and other multimedia.

Changing trends in music always keep record companies on their toes as they try to stay one step ahead of their competitors by signing the musicians and bands with the newest sound. Though rock continues to be the top-selling genre, sales dropped for rock music in the last 15 years and are only now increasing slowly. By contrast, sales for rap and country music have doubled in the same time period. Women artists are continuing to be powerful forces in the music industry, and the opening of Chinese and Latin American markets has given record companies a big boost in sales. These markets have accounted for a large percent of the growth of music sales. Yet, problems with piracy in these countries need to be controlled to avoid significant profit losses.

Piracy issues also involve the Internet; the industry is concerned with digital copies of music being freely transferred over the Web, in violation of copyright laws. Internet technology has made it possible to download quality recordings quickly and easily, resulting in Web sites with whole archives of pirated recordings. According to the International Federation of the Phonographic Industry (IFPI), an estimated 40 billion music files were shared illegally in 2008 for a piracy rate of about 95 percent. These numbers have since dropped. Low-cost or free subscription and streaming services such as Spotify and Pandora have reduced the incentive for pirating. The research firm, MusicWatch, reports that piracy does in fact continue globally, but the "pirate ships" are sinking: "Music piracy continues to dampen, with fewer overall users getting files from mobile apps, streamripping [taking a permanent copy of music or video from a streaming service without permission from the service], file transers, and P2P [peer-to-peer] networks. Sharing of streaming accounts is also in decline." The Recording Industry Association of America (RIAA) reports, however, that music piracy leads to the the loss off $2.7 billion in earnings annually in the sound recording industry and in downstream retail industries.

The coronavirus pandemic had a significant impact on the music industry in 2020. Business lockdowns and stay-at-home orders inspired many people to turn to streaming services. In 2020, there was about a 9 percent increase in recorded music sales compared to sales the previous year, and streaming services subscriptions account for 83 percent of total recorded music revenue. Subscriptions to on-demand streaming services via Spotify, Apple, and others grew from 60.4 million in 2019 to 75.5 million in 2020, the largest increase in a single year. While sales of physical music products were flat at $1.1 billion in 2020, vinyl sales revenue was up by 29 percent (to $626 million) in 2020 compared to 2019. And digital downloads had fallen by 18 percent in 2020 compared to 2019. The economy has rebounded post pandemic, and the recording industry continues to recover, with some sectors showing stronger growth than others.

A report by the International Federation of the Phonographic Industry stated that global recorded music sales grew to $28.6 billion in revenue in 2023, a 10.2 percent jump compared to the previous year. The IFPI also reported that it was the ninth consecutive year of global growth, with revenue increased in every region. Globally, streaming revenues now make up more than 67.3 percent of sales, with 667 million paid streaming service subscribers around the world by year-end 2023.

In the United States, music industry revenue grew by 8 percent in 2023, to a record high of $17.1 billion, compared to $15.89 billion in revenue in 2022, according to an RIAA report. Physical media sales increased slightly (by 2.4 percent) in 2023, after years of decline. In 2023, a total of 81.7 million physical media units were shipped, compared to 79.8 million units in 2022. Physical media units included CDs, LPs and EPs, music videos, and other physical media. Also of note, vinyl albums outsold CDs in units (43 million vs. 37 million) in 2023; this hasn't happened since 1987. Paid subscriptions, ad-supported services, digital and customized radio, social media platforms, digital fitness apps, and others grew by 8 percent from 2022 to 2023, to reach $14.4 billion in revenue in 2023. According to the RIAA report, these services comprised 84 percent of the total revenue for the U.S. recorded music industry.

In the last 15 years the music and recording industry has undergone dramatic consolidation. Three corporations—Universal Music Group, Warner Music Group, and Sony Music—control over 80 percent of the industry. While this consolidation may be beneficial for artists under contract with these companies, it has also made it more difficult for unknown acts to break into the business.

As of February 2024, the U.S. music publishing industry consisted of 753 businesses with total employment of 6,109 people, according to a report by the research group IBISWorld. The losses in revenue that occurred during the pandemic in 2020 and 2021 will continue to be offset by the increasing popularity of streaming services. In addition, "concerts canceled by COVID-19 led to a temporary slump in performance revenue for publishers, but the strong return to concert venues as pent-up demand was released more than offset any losses." The report notes also that vinyl and cassette sales of albums are starting to grow after decades of decline.