Ezine Feature Stories Caught Up In The Maze

Over the last decade, the recording industry has seen consistent growth in digital revenue. The industry’s digital revenue in 2010 was $4.6 billion, compared to $420 million in 2004. In 2010, 29% of the record industry’s revenue came from digital channels, up from 2% in 2004. Despite the 10 times increase in the digital music market’s value, the overall value of the global record industry has decreased 31% since 2004 (IFPI Digital Music Report, 2011). Since 1999, the Big Five record labels have now become the Big Three.


In 2006, Sony and BMG merged forming Sony Music Entertainment and in 2011, EMI was bought by Universal Music Group. The Big Three are Sony Music Entertainment, Universal Music Group, and Warner Music Group. Major record labels have had to substantially cut costs due to the continuing decline in overall music sales. These cuts have greatly affected record labels’ artist and repertoire (A&R) and marketing departments, which are funded by about a third of the company’s revenue (IFPI Digital Music Report, 2011). These labels have, therefore, had to narrow their strategy and try to eliminate risk when it comes to investing in artists. Experts believe that record labels will “pursue a risk-adverse strategy by focusing only on marketing clones of artists with mass appeal and large sales potential” (Vaccaro & Cohn, 2004).


By directing their focus to artists with proven success and popularity, major label A&R and marketing departments will have an increased responsibility in managing each artist’s star image. In their book, On Record (1990), Simon Frith and Andrew Goodwin said, “[the] most important commodities produced by the music industry . . . may not be songs or records but stars.” This is the philosophy major record labels are operating with to remain successful in today’s music marketplace.