Research|

This report is about record companies’ enduring value to music. In the digital world, the nature of their work has evolved, but their core mission remains the same. It is the mission of discovering and breaking new artists, building their careers and bringing the best new music to fans. These are the defining qualities of record companies’ investment in music.

Music does not just happen. Taking a song from a concept to a recording and then distributing it around the world takes a huge amount of work, time and effort, and an array of people. There are the writers and recording artists, the creators and performers. There are those who discover and nurture artists, those who produce the recordings and the videos, and those who market and promote them. And there is the distribution, in physical and digital formats, to thousands of retail partners and digital services. All this can demand substantial up-front investment, well before a single stream plays or an album goes on sale. Success often also requires a long-term vision. The vast majority of albums do not break even financially, and those that do take time to do so. Nor is the true value of every artist or album immediately recognised and appreciated.

Record companies remain the largest investor in music, ploughing in more than US$4.5 billion in 2015, or about 27 per cent of their revenues, into A&R and marketing. They have sustained this investment through recent years, even as the industry weathered two decades of revenue decline.
The partnership between artists and labels goes far beyond the financial. Record companies nurture artists, allowing them to develop their sound, their craft and their careers. Labels’ marketing expertise and resources enable them to create and deliver cutting-edge campaigns that engage fans around the world. They help manage thousands of partners spanning the globe, requiring local expertise in each market with networks of relationships and marketing and promotional resources. They help develop local artists in diverse languages across genres from classical to hip hop.

The investment from the record industry has also been essential in driving music’s digital transition. Record companies build out the systems and infrastructure that enable the licensing of some 360 digital music services with more than 40 million tracks. As a result, today’s music industry helps connect artists and their music with fans in multiple new formats – from buying downloads to subscription streaming and more.

This report is about record companies’ enduring value to music. In the digital world, the nature of their work has evolved, but their core mission remains the same. It is the mission of discovering and breaking new artists, building their careers and bringing the best new music to fans. These are the defining qualities of record companies’ investment in music.
http://investinginmusic.ifpi.org/

[Thank you to Alex Teitz, http://www.femmusic.com, for contributing this article.]

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