Eight cogs in the music industry

When you’re listening to music, going to a show, or putting on your favorite band’s products, do you sometimes stop and think about what’s going on behind the scenes? The music industry is built on a foundation of companies working together. If one of these “cogs” breaks down, the industry will suffer badly. With that in mind, we’ve broken down the music industry machine into eight different parts. Read on to find out more.

Live and on tour

Live music has always been a big part of the musical machine, but even that has changed recently. In particular, we are seeing an increase in streaming performance including VR streams. This change has been accelerated by the global pandemic. However, the majority of live performances are still physical, with artists starting to fill venues again.

The differences between digital live shows and physical shows lie in how to plan a visit. When planning a tour for the physical stage, the work involved in reaching international fans is enormous and involves locations, a stage crew, and a lot of travel. One thing that stays the same are the rehearsals, which can be booked through Pirate.com. They have over 50 locations spread across the globe and are accessible 24/7, meaning no matter what time zone you’re from, you can always count on them.

Registration

Record companies have lived through a turbulent two decades in which they suffered the wrath of piracy and had to adapt. They had to turn their dominant CD work into streaming, which still leaves them with problems. Today, more and more artists are bypassing record companies entirely by working with separate entities, including Soundcloud.

Despite the change in operations, record companies are still largely associated with artists. For example, if you like a certain genre of music, you will have heard of Hopeless records and Fearless Records (if you know, you know).

Digital distribution

The role of distribution is traditionally easy to explain: it is the delivery of records to stores that maintains cash flow and diverts it to the necessary artist / record company. However, with the rise of digital service providers (DSPs) including Spotify and Apple Music, these services have become the hotbed for monetization, discovery and consumption of music. Artists generally rely more on the promotional impact of streaming services than on revenue. However, the role of distribution implies collaboration between DSPs.

Artist management

Managing artists is an important role in the industry. They are the only link with the artist who invests in them financially. Artist managers working hard behind the scenes to formulate long-term global goals. Their knowledge base should encompass the entire music industry. After all, they’re responsible for bonding with other players. While this knowledge takes a lot of work, it also means that it can replace other players. For example, in a pinch, the manager can double as a publisher or group marketer. Typically, the relationship between an artist and a manager will be built on contracts. This avoids brutal disputes down the line regarding commissions.

Legal

The music industry is governed by contracts and laws, which vary depending on the country you are in. These laws get even more obscure when you step into the digital side of music. For example, with the introduction of article 13, online entities are required to remove any copyrighted content from a website. To include a song on your website, the rights must be purchased. Although the music industry is interconnected around the world, it appears to be governed by a broken system. If you are entering the music industry at any level, you need to make sure you have a basic understanding.

Diffusion

Streaming has become one of the biggest changes in the music industry over the past decade. While streaming services are already here, the shift to streaming continues as they look for ways to increase their user base and improve their product. We already know that streaming has revolutionized the way we consume music and altered the shift in distribution, but what else will change down the line?

Musical edition

Artists make money from many different streams, which is why being successful takes a lot of work. However, publishing is one of the more complex sources of income. Most of the time, the role of the publisher is confused with that of the recording industry. Simply put, the publisher is responsible for the royalties collected from the music and allocating them to the right place.

Regarding the payment of royalties, they must go through the rights organizations (BMI SACEM, ASCAP), sub-publishers, mechanical collection organizations (MCPS and HFA depending on the country), then the publisher. Royalty payments have to go through all of these channels before they reach the artists. You might think it’s straightforward, but the whole process might take a few years. Next time you think a month is a long time to get paid, think about it.

Once the funding has gone through the machine, the amount the artist receives can be greatly reduced. This is why so many artists fight with record companies to appropriate their catalog. Some of the most significant cases can be observed in Paul McCartney’s fight with Sony on the rights of the Beatles.

Licensing sector

Artists’ relationships with industries such as film, advertising, and sponsorship have always been important. Any connection between the artist and external actors is handled through the licensing area. Not only does relationships generate a healthy source of income, they can also be a huge promotional tool for artists. Chances are you’ve stumbled upon a song at the movies and then found the artist – just grab the american pie franchise as an example.

The music industry is a complex machine with many different parts that must work together. Although the digital world has opened up new possibilities and brought new laws, the sections within the industry remain the same – only the processes have changed to cope.


Alice P. Darby