Music Industry in US - Essay Example

music market. Accessing the U.S. distribution channels is incredibly difficult. These channels involve four elements: the process of promotion (to break into the market), the system of licensing and distributing, the role of retailers, and the restructuring of the United States market's priorities which is currently going on. The production, innovation, sales, and distribution of music involves a complicated network. This network is controlled by large global firms, known as "the majors" that have complete control over the sourcing, creating, industrializing, distributing, and retailing of music.

There is also a very big group of "independent" music companies that work in the same way as the majors which keeps the difficulty of accessing the U.S. distribution channels very tough and expensive. The U.S. has been the leader in music industry innovation and has a huge effect on the other music markets throughout the world. Along with world domination, from the U.S. comes some of the biggest names, innovations, and record labels in the business. However, the country is the least internally-oriented market partly because of the media. . In order to "create a buzz", or the initial testing process, much money is spent on independent record companies to promote the campaign, set up performances, and pay for the airplay as being played on the radio many times over is the key to success for breaking in.

It has been suggested that $500,000.00 is required to test a record.Labels and distribution is also very difficult as there are three main categories in which these can be handled: by going through a major record company that has its own distribution network, independents that distribute under a major company, and independents that uses other independents to get the items distributed. 85% of the music that gets to retailers is distributed by the major record companies. Independents use major companies because of the high costs in building and maintaining nationwide warehouses and distribution centers.

Bigger companies can handle the legal and bridging costs as well as slow payments. U.S. laws also require that imports pay mechanical royalties although the country of origin has already charged these. This means that royalties have to be paid twice. It simply is too expensive doing business any other way in the U.S.The distribution of products to retailers is controlled by distributors and these distributors are the key to promotion. These major distributors have teams of people who have developed strong relationships with the top buyers such as Wal-Mart.

Product priority lists are created by the major distributors as fees are paid to them. The higher up's of the major distribution companies, who are considered to be all powerful, prefer this "monopoly" type of doing business.New music must go through