It is no secret that there is money to be made in the music business. This is shown by the recent public offerings of companies such as Spotify, Sonos  and others. The interests of Wall Street grow greater by day as investors look into Music Streaming and Tech Companies alike, hoping to get a jump on the competition. Lucky for them Citigroup has done a lot of legwork making this gargantuan task less daunting.

The Report

A recent report from Citigroup has discovered what a lot of us already know; The music industry is yet to adapt to today’s ever-growing market. We live in a world where musicians make less than 1/5 of the total profits made off of their music. According to the report:

“U.S. listeners are spending more money on music than ever before: over $20 billion a year.”

Overall, total music revenues have risen to about $43 billion a year. This includes on-demand streams, CD sales, radio play, live events, and  advertising. Of this $43 billion, artist are only raking in about $5 billion, or approximately 12%. In light of this, there are a couple of positives to note. One of them is the fact that the current 12 percent figure has risen from 7% since 2000.

According to the report, this is all occurring because of what they call “Value Leakage”. Value leakage is said to occur during the distribution and production of music. In other words the overhead cost of running record labels, studios, streaming companies, and other middlemen that exist between artists and their listeners.

Researcher Jason Bazinet, who co-authored the report, states:

“When you end up tracing all the dollars, around 10 percent of it gets captured by the artist. That’s amazingly low,”

It is stated that:

“…the music business is still largely operating on the systems that it used to use decades ago, when songs were sold in stores and owned in homes and not licensed and leased via the Internet.”

The Future

The report goes on to claim that “Friction will decrease over time”. We have seen numerous artists such as Chance The Rapper decide to skip major label records altogether and self release his own music. We have also seen many artists create their own record labels, and host their own tours which should make for some interesting stuff moving forward.

The report predicts that the music industry as a whole will soon evolve to catch up with the digital age. There couldn’t be a better time for this to happen as streaming companies continue to grow and technology continues evolve. We can see this happening in realtime through Gareth Emery‘s own cryptocurrency backed service, Choon. With this, he hopes to disrupt the streaming industry and help put money back into the pockets of artists. Hopefully in the years to come others adopt similar, if not better, tactics to help out artists everywhere. For now, only time will tell.


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