The role of the record company is to nurture, promote, and distribute music around the world, and with global music industry revenues rebounding to 23.1 billion U.S. dollars in 2020 after years of stagnation, record labels seem to be reestablishing their place in the music industry. Streaming has quickly become the dominant form of music consumption, with sales of physical music decreasing simultaneously (502908). Around 62.1 percent of all recorded music industry revenues come from streaming as of 2020, a percentage that is only expected to increase in the coming years. Among record companies, digital music consumption has also become the main source of revenue, while many independent labels still focus on physical sales. This means that record companies are faced with the challenge of promoting their artists and finding ways to ensure that they are getting paid for their work in an increasingly digital industry.

The Big 3 are dominating the market

The music industry’s ‘Big 3’ of Universal Music Group , Sony Music , and Warner Music Group , and UMG make up the majority of the music publishing market . These three companies exert control over nearly every aspect of the music industry by serving as music distributors, owning record labels, and coordinating artists’ performance rights. The most successful record labels in the U.S., Interscope, RCA, and Atlantic are owned by Universal Music Group, Sony Music, and Warner Music Group respectively. In fact, each of the top 10 most successful record labels is owned by one of the Big 3. As a result of easy-to-access recording technology, combined with the global reach of the internet, independent music publishers , referring to labels with a market share below five percent, have become more popular as an alternative to the larger corporations, catering to individual needs of emerging artists while still emphasizing physical sales rather than digital music formats.

Record labels are facing change

Music publishers generate their revenue through the accumulation of different kinds of royalties and with the changes that music consumption has undergone in the past decades such as the move towards streaming and away from physical sales as well as the complete elimination of revenue earned through live performances during the lockdowns and restrictions that came with the COVID-19 pandemic, record companies have to invent new strategies as to how to generate revenue. In terms of music publishing, the U.S. and Canada present the largest market , making up 39.3 percent of the publishing revenue worldwide, followed by Europe and Asia. This also means that there is still growing potential for record companies in other regions such as Latin America or the Middle East. While record labels used to be the most powerful players in the music recording market, they are now facing a lot of challenges, including the increasingly important move to digital music publishing as well as the heightened competition for talented artists, who now have the choice to self-publish and promote online or to join an independent label providing more individualized support. It will be interesting to see in how far record labels will be able to adapt to the ever-changing music market in order to survive and thrive in the reality of a digital music world as well as a live music world, that is yet to survive the consequences of the coronavirus pandemic.

Interesting statistics

In the following 4 chapters, you will quickly find the 29 most important statistics relating to "Record labels".


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