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(Last updated: 6 Jan 2011)
Trends and opportunities
The market
The United States is the world's largest market for music. In 2009, total music revenue was over US$12 billion, accounting for nearly one-third of all worldwide sales. The majority of popular contemporary music is signed to record labels, recorded, and generated in the US. All major record companies, Sony/BMG, EMI, Universal and Warner, are headquarted in the US and dictate much of the activity of international affiliates including Australia.
The US (and worldwide) music landscape has changed dramatically over the last 10 years and it continues to constantly evolve and reshape itself. The business shifted from a focus on the sale of physical products (CDs, cassettes, vinyl) to digitally delivered products (downloads, singles, iTunes). As a result, the long-standing music industry model has shattered and has suffered massive losses in revenue and in a rapid contraction in the number of labels.
Industry sources now predict a brighter outlook, with greater control of online file exchange and CD copying, although the experience has had an effect on the industry, with traditional business models and market channels reassessed in light of the digital revolution.
The roles of the labels are changing – historically, the majors have coordinated most of the above processes for their artists. Independent labels, on the other hand, have had few of the administrative capabilities of the major labels. Their strong point has been signing and producing new or special interest music, but they often have to contract out other elements, hiring independent public relations firms, distributors, studios, and disk factories.
Whether due to burdensome cost structures that could not sustain the digital challenge or other reasons, by 2003 the majors were all struggling amid the bleak industry conditions and the less structured independent labels have proven more resilient.
Australia has a well-established music industry that develops and produces high level talent through its independent music scene and network of labels. Australia has history of successful artists in the US and has developed a reputation in the US for competitive sounding, English-speaking music and hardworking artists and business representatives.
Opportunities
Consumer purchasing habits have changed and there has been a dramatic shift in the channels for promotion of music. Channels have moved from a tightly controlled network of radio, press, video, and retail to a much looser and more open online-focused world of ‘new media’. Artists now have more control and access to these new and cost effective avenues such as social media (YouTube, facebook, twitter, MySpace) file sharing, sponsor-driven advertising, film, TV, and video games, which has created more opportunity and less reliance on major labels.
The newer avenues for music sales and promotion have opened up new opportunities for independent record companies and artists and have allowed them to become more competitive. As the CD sales have shrunken drastically, newer revenue streams have emerged including music downloading, music licensing through film/TV/advertising/video games, corporate sponsorships, and tour packaging.
Australian artists are well positioned to market into the US. There is a growing interest in Australian music, fuelled by a reported rock revival and following recent high profile successes such as the Vines, Wolfmother, The Temper Trap, John Butler Trio, Jet, The Veronicas, Sick Puppies, and other recent major label signings.
US music industry observers report renewed attention on bands from Australia, drawn by the high talent level cultivated from an strong Australian music industry and a rawness of the Australian live music product, born and bred in pubs and clubs throughout the country.
Competitive environment
Independent artists are no longer as reliant on major labels to record, market, and sell their music. Newer digital sales and online promotion channels, and inexpensive recording techniques have offered independent artists wider access and opportunities, but they have also bred a much more crowded field of artists competing for consumer attention and dollars.
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