III. Industry Analysis
[Company Name] directly competes within the music industry, and particularly within the independent record label market.
Market Statistics & Trends
The following industry size facts and statistics bode well for [Company Name].
The music industry is clearly vast. According to IFPI, which represents the recording industry worldwide, global music sales were $33.5 billion, with the U.S. accounting for $12.3 billion of that amount.
Within this industry, consider the following key statistics:
- 30% of the global music market belongs to independent labels
- Independent labels sell 900 million units annually
- Artist signed by a major record label earn approximately $1 per copy sold
- Artist signed by an independent record label earn approximately $5 per copy sold
Because independent record label artists earn 5 times the revenue per unit sold, [Company Name] is at an advantage in signing many up-and-coming alternative music bands versus major labels.
Other key information from IFPI includes the following:
- The digital music business internationally saw a sixth year of expansion in 2008, growing by an estimated 25 per cent to $3.7 billion in trade value. Digital platforms now account for around 20 per cent of recorded music sales, up from 15 per cent in 2007. Recorded music is at the forefront of the online and mobile revolution, generating more revenue in percentage terms through digital platforms than the newspaper (4%), magazine (1%) and film industries (4%) combined.
- Single track downloads, up 24 per cent in 2008 to 1.4 billion units globally, continue to drive the online market, but digital albums are also growing healthily (up 36%). The top-selling digital single of 2008 was Lil Wayne’s Lollipop with sales of 9.1 million units – 1.8 million more than the 2007 best selling digital single.
- A-la-carte music downloads continue to grow, with Amazon MP3 joining the European market, broadening consumer choice. An increasing number of stores are licensed to sell DRM-free music tracks. In January 2009, iTunes, the leading download store, announced it was making eight million DRM-free tracks available at flexible pricing points.
- Music companies are also increasingly licensing music to third parties. One notable success is the games sector, where music games were responsible for 15 per cent of overall game sales in the US in the first half of 2008 (NPD Group). Guitar Hero and its sequels have sold more than 23 million copies in three years, generating more than US$1 billion in North America alone (PWC).