You may have asked yourself what share music companies can have of the music industry in the age of digital technologies and in conditions where artists can gain direct access to music advertising channels. Today singers interact with their audiences on social networks, broadcast live performances at no cost and announce the release of their albums with a tweet. In such conditions many consider the work of music companies finished, but these companies are still standing. In fact, it is true that today, compared with the past, there are many ways to advertise and distribute music, but we should not forget that the volume of music production has increased to the same degree.
Every day more than 20000 pieces of music are released, and this is a major challenge for artists in the music field. Artists can technically be their own music-publisher label, but this work requires spending a great deal of time and energy and having a deep understanding of the complex laws of the music business. In addition, the outlook for how music generates income is constantly changing. Over past years music revenue streams have fluctuated a great deal. For a time streaming and downloads made up the largest part of income. Later, concerts became the main source of income. Today, playing music through television and films is the best way of generating income. Tomorrow, too, other options will likely exist. Stay with us in this text as we take a look at the world's best music companies.
The advantage of music companies in the world
Music companies have good relations with promoters, radio stations and other media. Also, since these companies' aim is focused solely on earning income, they know which the best income-generating channels are today and where they will probably go in the future. An important question an artist must ask himself is whether an injection of money can lead to striking progress in his work. If he needs a studio, wants to make a music video or hold a concert, these companies can pay all these costs. He should consider whether the capital he obtains is worth the piece for which he wants to sign a contract with a record label or music publisher.
What is a music publisher?
A music publisher, or record label, refers to commercial companies in the field of publishing, music marketing and discovering talent in this domain. Record labels must first discover the talented person, then give him the necessary training and then provide the facilities for making music. After the stages of making the music are finished, the company itself must evaluate the music that has been made and see whether the required standards have been applied. Finally, it is time for marketing. What is meant by marketing in music is attracting an audience for artists and earning income this way. Companies must predict in which geographic region the work that has been made will be more welcomed by audiences.
The world's best music companies
Most record labels operate under an organization called a music group. These music groups are made up of clustered companies that are run like holding companies. A holding is a company that has other subsidiaries, and control of the subsidiaries is directly under the managers and board of the parent company. Most record labels operate under the three large companies Universal, Sony and Warner. In 2014, on the basis of Independent Music Association figures, 65 to 70 percent of global market share belonged to these three companies. In what follows we introduce these three companies.
Universal Music Group (UMG)
Universal is one of the best American and world music companies. This company produces and distributes a full range of recorded music in 63 countries of the world. This work is achieved through numerous subsidiaries and joint ventures. Universal Music Group was formed in 1996 through the merger of two companies, MCA lnc and PloyGram. Two years later the Universal company, by buying the PolyGram company, became one of the largest companies in the music industry. From then on Universal achieved sustainable expansion by creating various divisions and also buying other companies in the music industry. This company now has more than 8319 employees and 890 top artists such as Lady Gaga, Justin Bieber, Elton John and the Beatles on its list. Universal's headquarters is in Santa Monica, California. Among Universal's best-known labels one can cite Def Jam Rcordings, Interscope Records, Republic Recotds, Island Records, Capitol Records.
Universal Music Group's revenue
Universal's overall revenue in 2021 passed 10 billion dollars (8.50 billion euros) for the first time. This figure reached about 11 billion dollars in 2022. Universal Music Group is the only major music company that has divided its recorded-music streaming revenues into two subsets, subscription (paid) and other streams (music-streaming platforms). On this basis, in 2022 recorded-music revenue through subscription rose 19 percent and reached more than 5.6 billion dollars, while digital revenue rose 50 percent and reached 1.05 billion dollars.
Given Universal Group's rich and long history, numerous factors have played a role in turning it into a global giant, the most important of which are: merger and cooperation with other large companies to build a large music-distribution network, buying and selling other companies, diversity in products produced including music, film, series and video games, the use of technology in order to improve methods of production, distribution and appropriate marketing of products, and cooperation with famous artists.
Sony Music (SME)
Sony Music Entertainment, which operates as a division of the Japanese company Sony, is one of the leading music companies in the world. The original company was created in 1888 under the name "American Record Corporation." In 1934 this company acquired Columbia Records and 4 years later also bought CBS ARC. Sony's and CBS's share of this company in 1968 was fifty-fifty; it chose the name CBS/Sony Records, but twenty years later Sony took ownership of the whole company. In 2004 this company chose the name by which it is still known: "Sony Music Enterainment." This company's headquarters is in New York and besides that it has other offices in more than 40 countries. Sony Music has between 1000 and 5000 employees; this figure does not take into account the number of employees who work under Sony's record labels.
Sony Music's record labels
According to this company's website, Sony has 12 main labels, the most popular of which are Columbia Records, RCA Records, Epic Records. Besides these well-known labels, it also has labels each of which is devoted to one genre. Some of these style-based labels are: Arista Nashville, RCA Records Nashville, Columbia Nashville, Legacy Recordings, Sony Music Latin, Masterworks, Vested in Culture, RCA Inspiration, Provident Label Group. These labels are devoted to styles such as classical, Latin and Christian.
Sony and its subsidiaries have contracts with some of the world's most famous artists, such as Daft Punk, Springsteen and the late David Bowie. Artists such as Adele, Beyonce and Pink Floyd work under Colombia Records. RCA Records also has big names on its list, including Britney Spears, Dave Matthews Band, Kings of Leon, Shakira and Miley Cyrus. Epic Records is Sony's third-largest label, with which stars such as the late Michael Jackson, Mariah Carey and Meghan Trainor have signed contracts.
Sony Music's revenue model
Sony, both as a recording company and as the owner of recording companies, mainly profits through the sale of the tracks it produces. Besides selling physical records, this company earns income by buying royalties whenever an artist's album is played on radio, television or a film. Today the Sony company often receives the royalty because the artist's songs are streamed online on music-streaming websites such as Pandora or Spotify. Overall, about 10 percent of the royalty is for the artist and 30 percent for composers and publishers.
60 percent of the royalty also remains with the production company. This royalty, besides music, includes everything the artist does, such as product advertising and posters. In 2022 the Sony company earned 9.12 billion dollars in revenue from its music division, which had grown a great deal relative to the previous year. In 2021 this figure was 7.33 billion dollars.
Warner Music (WMG)
Warner was founded in 1923 with the collaboration of the Warner brothers in Pennsylvania. The Warner company, which was initially a film-production company, became popular in 1927 by releasing the silent film "The Jazz Singer" as the first silent film with sound. In the 1950s Warner became Hollywood's largest film producer. In the 1960s it began producing music. Signing contracts with artists such as Frank Sinatra, Ray Carol and John Denver gave it greater fame. Today the Warner company has become one of the world's largest music companies. Besides producing music, Warner is known as an independent platform in the music industry by releasing artists' latest works. Some of Warner's best-known labels are: Atlantic Records, Electra Records, Reprise Records, Sire Records.
Warner Music's revenue
In 2022 Warner Music reported 5.9 billion dollars in revenue. This company has in the past few years seen continuous growth in its revenues after a slight decline in 2015. Also, although it faced a slight decline in revenue in 2020, in 2022 it reached the highest revenue in its history. The most important factors in Warner's success as a music company are: having a strong distribution network with a large number of stores, enjoying a low-cost structure relative to other rivals, hiring a large number of skilled, innovative and diverse staff with different racial, cultural, geographic and educational backgrounds, an active presence on the three platforms Twitter, Instagram and Facebook while having high interaction with audiences, the use of digital platforms such as Spotify and Apple Music, and entering new markets through producing fresh products.
Iran's music companies
The situation of Iranian music companies is overall unfavorable. Although the music industry in Iran has had good growth in recent years, music companies face many financial and legal problems. For example, in Iran the legal sale of musical works is not profitable. Also, copyright law, author's rights and revision, the government's failure to respond to this industry's needs, and inattention to companies' legal and financial issues are among the legal problems that have caused Iranian music companies to be weak against foreign rivals. Despite this, music companies in Iran still continue their activity. According to a Ministry of Culture and Islamic Guidance report in 1399 (2020/21), the companies IranMojavez, Nashr-e Musiqi-ye Kudak, Faryad-e Net-e Hashtom and Hasht Behesht-e Sabz are among the best music companies based on the number of permits. No transparent report has been published on these companies' revenue.
IranMojavez music company, a leading company in Iran
Over the past few years, Iran Mojavez, as the first company providing services to independent artists in the music field, has had a notable presence. From holding dozens of festivals, concerts, stand-up comedy shows and more, to activity in music publishing. The company has so far been responsible for publishing the works of many well-known artists, such as Sina Sarlak, Garsha Rezaei, Shahram Shokoohi and Sina Derakhshandeh. In 1399 (2020/21), following the COVID-19 outbreak that bankrupted many companies, good things happened for Iran Mojavez. The company was able to begin its global activities under a contract with Sony Music, through which it can release artists' works worldwide while respecting their material and moral rights.
Conclusion
Music companies around the world are responsible for producing and distributing music across the globe. At the beginning of this report we discussed the advantages of these companies for artists. Then, while introducing the world's largest music companies, we briefly reviewed their history, labels and revenue. The three companies Universal, Sony and Warner dominate a large share of the global consumer market. They control almost every aspect of the music industry, such as owning record labels or providing services as a music distributor. With the rise in global music industry revenue after years of stagnation, music companies appear to be recovering their position in the music industry. Even so, the situation of Iranian music companies is not particularly favorable, and they need reforms to laws and government policies as well as finding new ways to secure resources and generate profit.
Sources
Machine-translated from Persian by Namafar; the Persian original is authoritative. Read the original in Persian