What do Adele, Radiohead, and Tobacco have in common? They all have signed with independent record labels sometime in their careers.

According to the Association of Independent Music, an independent record label is one in which 50% or less of the company is owned by a major record company, its affiliates, or its subsidiaries. The three major record companies are Universal Music Group, Sony Music Group, and Warner Music Group. Even if an independent record label is not owned by one of the majors, in some cases it may not be totally independent of them. Some independents partner with major record labels to boost promising artists and distribute the music they produce. In 2017, 22.4%¹ of the music produced by independent record labels were distributed by major record labels.

In the United States, independents’ share of music sales, licensing and other revenues totaled 32.2% in 2017. Independent publishers’ market share was higher, 41.2%. Globally, independents’ share of the music recording industry reached 39.9%, with some countries’ shares outpacing major labels. Independent record labels in South Korea garnered 83% of the market in 2017 and in Japan, 63%.

The industry is fragmented. There are more than 500 independent record labels in the United States alone, representing every genre of music. Well-known artists, as well as lesser-known musicians, have signed with independent labels throughout the years. Many artists generally get their start at independent labels and a majority stay. Globally, 77% of artists renewed with their label in 2017. In the United States, 84% did.

Today’s market size shows the total independent record label revenues for 2017 worldwide. This represented 11.3% year-over-year growth, higher than for the major record labels (+9.7%) and the industry overall (+10.2%). Fans tend to be loyal to independent artists and are more likely to buy album LPs, CDs, and cassettes, which generate higher revenue than streaming. Independent labels comprised slightly more than 39% of physical album sales. Independents’ share of streaming was 28.3%.

Wait, cassettes? Yes, cassettes. “People still want to hold something, look at images, see it move,” said Stephen Bishop, founder of cassette label Opal Tapes. In recent years, cassettes have made a comeback. Although still a minuscule amount of overall revenue, sales doubled from 2016 to 2017² in the United Kingdom alone, with a 90% increase in the first half of 2018. According to Nielsen Music, in the United States, cassette album sales increased from 178,000 units in 2017 to 219,000 in 2018.³ Releasing an album on cassette gives an emerging artist a way to release a limited-edition album with a creative presentation for less cost than releasing it on vinyl. But, it’s not just lesser-known artists doing this. The top-selling album on cassette in the first half of 2018 in the U.K. was Kylie Minogue’s Golden.

¹ Based on revenue.
² From 10,912 units sold in 2016 to 22,011 in 2017.
³ In 2018, this was less than two-tenths of a percent of overall album sales.

Have you listened to music today? If you have you probably streamed it. In 2017, total U.S. music industry revenue was $8.7 billion, 65% of which came from streaming music services. Revenues from streaming services increased 217% from 2014 to 2017. The number of subscribers to paid streaming music services increased 358% during this time period, topping out at 35.3 million in 2017. Despite revenue and number of subscribers increasing, streaming music services are losing between $27 million and $426 million per year. How are musicians faring? On average, the top streaming services pay between $0.019 and $0.0007 per play in 2018. As a result, musicians need their songs streamed between 77,500 and 2.1 million times per month, depending on platform, in order to make a minimum wage.¹

Today’s market size shows the amount of revenue earned in 2014 and 2017 from streaming music services in the United States. As of March 2018, the top streaming services in terms of the number of users worldwide were YouTube (1 billion users), Spotify (159 million), Pandora (81 million), Apple Music (36 million) and Amazon (20 million).

¹ Minimum wage according to the source is $1,472 per month.

Geographic reference: United States
Year: 2014 and 2017
Market size: $1.8 billion and $5.7 billion respectively
Sources: Joshua P. Friedlander, “News and Notes on 2017 RIAA Revenue Statistics,” The Recording Industry Association of America, March 22, 2018 available online here; “Money Too Tight to Mention?” Information is Beautiful, March 3, 2018 available online here; Chris Cooke, “US Record Industry Revenues Up to $8.72 Billion Thanks to All Your (Mainly Premium) Streams,” CMU, March 23, 2018 available online here.
Image source: FirmBee, “mobile-phone-iphone-music-616012,” Pixabay, January 30, 2015 available online here.