Musicians, the engine room, the talent, the power and all the glory of the music industry, are still near the back of the queue when it comes to earning money for their work, a new report highlights.

In 2017, the music industry in all its many constituents, from physical and digital recordings to live and public performance, generated about US$43 billion in the United States alone, though just 12% (or about US$5 billion) of that sum flowed to the artists, according to a study published by Citibank.

So what’s to blame for this “value leakage”? A good chunk of the revenue is soaked up by the costs of running distribution platforms like AM/FM radio, satellite radio, online streaming and download services and, of course, the record labels.

It’s not great news, and it’ll come as no surprise to anyone who has worked in the industry or spent any time with an emerging artist, but there is a caveat. The proportion captured by musos is actually on the up, leaping from about 7% of industry revenues at the dawn of the digital revolution, in 2000. Much of this improvement is driven by the booming concerts business, rather than the nascent music subscription sector.

guitar in the sand

Citi’s 88-page report, Putting The Band Back Together, Remastering the World of Music, “unpacks the music blob,” and offers an elegant road map for how we got here and where does it all travel to next, with a stop in for a glance at every key player in the mix.

Trickle-down economics is clearly failing many artists, but the study is far from gloomy, noting the US$43 billion headline sum represents a return to peak levels (the last peak was 2006). Also, in the U.S. at least, consumers are spending more on music than ever before, and consumer outlays for concerts is growing.

Live Nation agrees. And a handful of reports now in the public domain echo these sentiments. A report published by the IFPI in April found there are more than 176 million paid subscription accounts worldwide, and streaming is now the No. 1 source of revenue, generating 38.4% of total revenue. A separate analysis from Goldman Sachs forecasts global recorded music revenues will grow to US$41 billion in 2030 with streaming generating US$28 billion, a 16% rise on its previous estimates.

The authors of the Citi study also consider an evolving music landscape, one loaded with consolidation where promoters might merge with an existing distribution platform, online platforms could team up and where online distribution businesses could “organically morph” into music labels.

Download the report in full here.