Investing In Music: New Stats On The Constantly Evolving Relationship Between Artists And Labels

Posted on
November 26, 2014
Tagged as
a&r, CIMA News, data, ifpi, indie labels, investing in music, investment, labels, marketing, r&d, research, WIN

IFPI investing in music

On November 24, the International Federation of the Phonographic Industry (IFPI) and the Worldwide Independent Network (WIN) jointly released the 2014 version of the Investing In Music report. The report contains data from record companies across the globe, in addition to several case studies on international artists like Ed Sheeran, Lorde and Pharrell Williams - and it outlines the constantly evolving relationship between artists and record labels. The report provides additional evidence of the importance of record companies in developing the career of an artist and getting their music to the public.

Frances Moore, chief executive of IFPI, says: "Investing in Music highlights the multi-billion dollar investment in artists made every year by major and independent record labels. It is estimated that the investment in A&R and marketing over the last five years has totalled more than US$20 billion. That is an impressive measure of the qualities that define the music industry, and which give it its unique value." IFPI Website

The release also quotes Allison Wenham (WIN) as saying: "Most artists who want to make a career from their music still seek a recording deal. They want to be introduced to the best producers, sound engineers and session musicians in the business. They need financial support and professional help to develop marketing and promotional campaigns." IFPI Website

You can download a PDF version of Investing In Music here, but here are the highlights:

A general look at record company investment trends:

  • Record companies remain the largest upfront investors in artists' careers. In 2013, the global music industry invested US $4.3 billion in A&R, marketing, and promotion.
  • This figure represents 27% of the total record music industry revenues in 2013.
  • IFPI estimates that between 2009-2013, the global recorded music industry has invested over US $20 billion in A&R and marketing.
  • The report also suggests that it takes between US $500,000 - $2,000,000 to "break a newly signed artist in a major market."

A look at A&R: The R&D of the music industry

  • In 2013 alone, it is expected that US $2.5billion was invested into A&R alone.
  • This estimate, provided by IFPI, suggests that the music industry invested approximately 15.6% of their revenues back into A&R.
  • How does this compare with the R&D investments made by other sectors? Very, very, favourably.
  • The Investing In Music Report compared the R&D intensity of the global music industry (the ratio between R&D investment and the net sales of a company/group of company) with other sectors' R&D investment (via the results of the 2013 European Union Industrial R&D Investment Scorecard). The music industry's 15.6% investment was higher than a number of sectors, even some who are notably research-intensive: pharmaceuticals and biology (14.4%), software and computer services (9.9%), etc.

As the largest upfront investors in the careers of artists, the numbers contained in the Investing In Music report aren't that surprising, though they are indeed impressive. It serves to further illustrate the importance of record labels and music companies to the broader music ecosystem - further insofar as they act as the major investors into the careers of artists, in addition to providing necessary support and expertise during the lifespan of the careers of artists and musicians.

See the full-text Investing In Music report here:

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