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A Brief Overview of the US Music Market

A market report by Nordic Travel Pass (NOMEX)

usa-flag-map

1. Introduction to the Market

Population: 317,098,309
GDP per capita: $49,965

In terms of consumption and production, North America remains the world’s largest music market. However, with the shift to digital media and online communications, the opportunities for international artists and industry professionals to take export-ready entertainment to US audiences have greatly increased.

The US recorded market remains in a period of transition. According to IFPI figures, overall recorded sales grew by 2.1% in 2014 – with a decline in physical and digital track/album units being partially offset by consumer uptake for streaming services. Around 50% of North Americans are using paid and unpaid streaming services, while digital accounts for 71% of the recorded music market.

Along with the introduction of Spotify in 2011 and the rise of other subscription and advertiser supported services – such as Pandora, Rhapsody, iTunes Radio, YouTube, Beats Music, Google Play, Rdio, Muve Music and Slacker – international artists are finding new audiences in the US without necessarily leaving their home territories. In 2014, subscription income grew by 33.5% and ad-supported streaming by 21.4%. However, download revenue dropped by 7.2% /but still accounts for 55% of the US digital market.

2. Record Labels, Licensing & Distribution

Befitting its status as market leader, the US is home to headquarters of the three major record labels – based around the East Coast/West Coast axis of New York and Los Angeles, with all acting as umbrella to a host of individual and iconic imprints.

Universal Music and Sony Music dominate the market share of the domestic market (accounting for more than 50% of sales), however the independent sector remains healthy and responsible collectively for 34.6% of all recorded sales. The trade body for the independent sector is A2IM.

Key US independent record labels include:

ANTI
ATO Records
Century Media Records
DFA RECORDS
Drag City
Dualtone
Epitaph
Fat Possum
Glassnote Records
Jagjaguwar
Merge Records
Nettwerk Music Group
Nuclear Blast
Polyvinyl Records
Saddle Creek
Secretly Canadian
Stones Throw
Sub Pop Records

Concord Jazz (Jazz)
Heads Up International (Jazz)
Mack Avenue Records (Jazz)
Knitting Factory Records (Jazz/Contemporary/World)
Rounder Records (Roots/Folk)
Ultra Music (EDM)

Distribution in the US is dominated by the major record labels, who own or have part-ownership in the biggest players. For instance, RED is controlled by Sony (who also part-control The Orchard/IODA), ADA is part of Warner Music Group and Universal Music owns Caroline and has part-ownership of INgrooves.

Other independently-owned distributors and digital aggregators include:

CD Baby
BFM Digital
ONErpm
Redeye Distribution
ReverbNation
TuneCore
Virtual Label 

3. Publishing

The US publishing industry dominates the world- with New York and Los Angeles (alongside Nashville) as its epicentre and the collecting societies ASCAP and BMI each reporting revenues of over $900 million in 2012.

The sector is represented by two main trade bodies:

National Music Publishers’ Association

Music Publishers Association of the United States

3.1 Major Music Publishers
Universal Music Publishing
Sony/ATV Music Publishing
Warner/Chappell Music

3.2 Independent Publishers
There is a diverse and growing independent publishing sector, including:

Downtown Music Publishing
Kobalt
Peer Music
Primary Wave Music
Songs Music Publishing
Spirit Music Group

4. Performance Rights

The US sustains three collecting societies for the performance royalties of composers, authors and publishers. The largest of these are the performer-owned ASCAP – which represents more than 460,000 rights holders – and the broadcaster-owned  BMI. The third and smallest society – SESAC – was initially established to support underrepresented European stage authors and composers.

All mechanical rights are issued by The Harry Fox Agency.

The other key collective rights management organisation is SoundExchange – founded in 2003 to collect royalties on behalf of record labels and artists for non-interactive digital transmissions (including satellite and internet radio).

5. Management

The US is home to a significant number of music managers who are represented by their trade organisation the MMF-US.

Key US management businesses include:

Crush Music
Deckstar
Foundations Artist Management
MCT Management
Primary Wave Management
Q Prime
Red Light Management

6. Live

By virtue of its sheer size the US live music market is notoriously difficult (and expensive) for international performers to crack. However, it remains the world’s most important destination for gigs and festivals and, beyond the main centres of New York and Los Angeles, practically every State is host to a number of key arenas and venues destinations. To paraphrase Frank Sinatra: “…if you can make it here, you can make it anywhere.”

As with the rest of the world, the decade-long downturn in US recorded music was matched by an upturn in live ticket sales, which tripled from $1.5bn in 1999 to $4.6bn in 2009. It remains a turbulent sector, but according to Boxscore data US attendances were up 23% in 2012[1].

As with the UK, the US live sector is dominated by the behemoths of Live Nation and AEG, although ultimately it remains a hugely diverse market that supports thousands of individual venues and promotors.

6.1 Booking Agents
US booking agents booking agents focusing on the domestic market:

The Agency Group
A.M. Only
Bond Music Group
High Road Touring
Inland Empire Touring, Inc.
Flower Booking
Panache Booking
Paradigm Talent Agency
William Morris Agency
The Windish Agency

6.2 Festivals
From April to October countless music festivals can be attended throughout the country. Below is a selection of the most popular.

Pop and rock:
ACL Music Festival
Bonnaroo
Bumbershoot
CMJ Music Marathon
Coachella
Culture Collide Festival
Electric Zoo
The Governors Ball
Lollapalooza
Outside Lands
Pitchfork Music Festival
Sasquatch! Festival
SXSW
Treasure Island Music Festival
Ultra Music Festival
Voodoo Experience

Jazz:
Berks Jazz Fest
Blue Note Jazz Festival
Capital Jazz Fest
Fillmore Jazz Festival 2014
Monterey Jazz Festival 
New Orleans Jazz & Heritage Festival
Newport Jazz Festival 
New York City Jazz Festival

Contemporary and classical:
Big Ears Festival
Lincoln Center Festival 
New York Chamber Music Festival
Ojai Music Festival
Performa
Spoleto Festival

6.3 Orchestras and Opera
All US cities host symphony orchestras of varying sizes and degrees of popularity, as well as opera houses (most notably the San Francisco Operaand Metropolitan Opera).

A more detailed list of orchestras can be found at League of American Orchestras.

7. Industry Networking Arenas

Indie-week – A2IM (New York)
Held annually in June and organised by trade body A2IM, Indie-Week features panels and talks from senior independent music business executives from around the globe.

CMJ Music Marathon (New York)
Part conference, part showcase – CMJ’s incorporates a range of daytime panels and talks headquartered at New York University’s Greenwich Village campus, at the Helen and Martin Kimmel Center on Washington Square Park. Held in mid-October the event involves a broad array of delegates, including brand and digital specialists. In the evening, more than 1,400 artists are given the opportunity to perform at over 80 venues throughout the city.

Culture Collide Festival (Los Angeles)
Hosted by FILTER magazine, Culture Collide takes place in early October and involves a two-day festival of left-field music combined with a Creative Summit that brings together influential speakers from the global music, entertainment and lifestyle industries.

MUSEXPO (Los Angeles)
Taking place in late April, MUSEXPO is an annual and intimate conference with a strong reputation for bringing together key decision makers from the international music, media and technology industries.

SXSW (Austin)
The South by Southwest (SXSW) Music and Media Conference is now a globally recognised event – acting as the world’s biggest showcase for music, as well as offering six days of conference panels, talks, speeches and networking.

8. Media, PR & Promo 

As with the rest of the world, the American mass media remains in a state of flux as viewers and listeners migrate online. TV broadcasting is dominated by three commercial networks (ABC, CBS and NBC) although cable (such as HBO) and new online services (such as Netflix) are competing for viewers’ attention in addition to the likes of YouTube.

8.1 Radio
There are three main types of radio stations in the US that new artists can look to for airplay: commercial, college/community, and online/digital. Commercial radio stations have been consolidating over the years and are the most difficult for unknown artists to receive airplay from.

Premiere Radio Networks
Westwood One Radio Networks
KUSC (classical/contemporary)
WETA (classical/contemporary)
WGBH (classical/jazz)
WQXR (classical/contemporary)
KJazz (jazz)
WBGO (jazz)
WWOZ (jazz)

College/community stations including NPR (National Public Radio) are the most open to playing new, unsigned, international types of music.

KCRW
KEXP
NPR : National Public Radio
Radio K
WFMU
WSOU(Metal)
WFUV

Online/digital radio stations such as SiriusXM Radio remain as challenging for new artists as commercial operators. However they do host a larger number of speciality programmes, for instance:

Aaron Axelsen / Soundcheck « Live 105
All Songs Considered : NPR 
American Top 40 With Ryan Seacrest
Morning Becomes Eclectic
Rick Dees Weekly Top 40
Virgin Mobile Feed
Jazz After Hours (jazz)

8.2 Online
Over the past ten years there has been a flowering of influential blogs and sites dedicated to all forms of music. Below are examples of top level music-specific sites that focus on album reviews, festival reports, artist interviews and live reviews:

Pitchfork
SpinMedia (Idolator, Stereogum, PureVolume, XLR8R)
FILTER Magazine
The FADER 
Rolling Stone
VICE

8.3 Print
Most major weekly & daily newspapers encompass album reviews, festival reports and, to some extent, artist features. While a few newspapers – like the New York Times – will be read nationally, most are regionally or locally based.

Chicago Sun-Times
Los Angeles Times
Metro (daily paper published in NYC, Boston, Philadelphia)
New York Post
The New York Times
USA TODAY
Voice Media Group (Village Voice, LA Weekly and more)
Washington Post

The number of US-based print music magazines has been in decline over recent years. Today there are a handful of genre specific outlets available weekly, monthly & quarterly – although most are also available online.

Alternative Press (punk/emo)
DownBeat Magazine (jazz)
The FADER (Alt, urban)
Fanfare Magazine (classical/contemporary)
FILTER Magazine (Alt, indie)
Jazziz (jazz)
Jazz Times (jazz)
Opera News (classical)
Revolver (metal, hardcore)
Rolling Stone (most genres)
Vibe (Urban)
XLR8R (Electronic)

8.4 Music Business Media
Most major newspapers will cover the machinations of the music business, but Billboard remains the US industry’s trade bible. The title has undergone several rebrandings over recent years, but remains the most influential title. It is also available as an online subscription.

www.billboard.com

www.billboard.com/biz

Other specialist trade media covering music and technology include:

Digital Music News 

Hypebot

8.5 PR-Agencies
Although it is reasonably straightforward to target specific journalists or titles, given the scale and diversity of US media it can often make sense to hire a PR or marketing expertise. Agencies that have worked with Nordic artists include:

Big Hassle
FILTER Creative Group
Girlie Action
The MuseBox
Sneak Attack Media
Solid PR
The Syndicate 
Tell All Your Friends PR
Terrorbird
Press Here! 
Cornerstone Agency 

9. Visa and Work Permissions

9.1 The Visa Waiver Program (VWP)
The Visa Waiver Program gives you permission to stay in the US for 90 days without a visa. All Nordic countries are included in the VWP and, as a rule, citizens from these countries are almost always accepted after application. The VWP is the most common way for travellers to enter the US.

9.2 Electronic System for Travel Authorization (ESTA)
ESTA is the online application process you go through when applying for the VWP. An approved ESTA is valid for two years or until the applicant’s passport expires, which ever comes first. If the applicant undergoes any significant change of personal details (eg change of citizenship, change of gender, etc) then they have to re-apply. Otherwise, as long as the ESTA is valid it can be used for multiple visits.

The processing fee for filling out the ESTA form is $4.00, and if the the application is approved you will also be charged an additional $10.00 service fee.

9.3 B-1 and B-2 Visa
These visas are non-immigrant visas for individuals who want to enter the US for business (B-1) or pleasure (B-2). B-1 or B-2 visas are a practical alternatives if an ESTA application is denied. The application form is filled out online via the US Embassy website, and is followed up by an interview. If your application is approved, you will receive a visa within a week.

9.4 Playing and Promoting Music in the US
Once you’ve travelled to the US, either with an ESTA or a B-1/B-2 visa, you are automatically travelling with a B-1/B-2 visa status. As a musician with this visa status, you’re allowed to:

• Record music

• Promote your music (but not sell it)

• Perform for no compensation in front of an audience that hasn’t paid an admittance fee

With B-1/B-2 visa status, as a musician you cannot:

• Get paid for performing or recording

• Perform in front of a paying audience

9.5 Getting Paid For Performing and the P and O visas
To perform in front of a paying audience and/or to be allowed to receive payment for performing, a P-visa or an O-visa is required. This kind of visas are specifically designed for artists and entertainers coming to perform in the US. If you’re only performing a showcase for free, there shouldn’t, in principle, be any reasons why wouldn’t be allowed access to the US. However, SXSW is the only event that usually doesn’t cause any problems.

You can apply for the P or O visa at your US embassy. In order to do that, you need an employment authorization, which your employer in the US can apply for at US Citizenship and Immigration Services (USCIS).

The employment authorization process needs to be supported by a petitioner in the US – for instance, a record label or an agent, but technically any person based in the US can do it. This puts the employment authorization process fully in the hands of your US petitioner. The agreements and sponsorship deals vary, but usually they require the sponsor to set up an employment agreement with the employer(s) in the US and put together a petition for employment authorization. The petitioner must also provide recommendations and proof that the artist is “outstanding”, according to the requirements.

Once your petition is approved – i.e. the liability of your reasons for traveling to the US is approved – and you receive the employment authorization (called I-797), you can apply for the P-1 visa at the embassy. The embassy, in turn, will check whether there could be any reason for you not to be allowed entering the US.

It’s important to remember that whether or not you’ll be allowed to enter the US is ultimately decided by the officer at the US border (e.g. at the airport). If he or she has any reason to doubt your story or intentions, you might not be allowed access. Therefore, make sure that everything is in order, and bring all extra the proof you can.

Also take into account which embassy is best for applying for a visa. You can apply for a visa at any embassy in the world, but they all have different processes.

The JFK airport in New York is known as one of the best points-of-entry for musicians, since the staff has shown to have a high understanding and knowledge of the music industry.

10. Taxation

When expanding your business to the US market you are unlikely to succeed without a local partner. Consequently, it is strongly recommended that any local collaborations include a lawyer or similar expert who can be consulted in taxation matters.

Due to the differences in practice between individual States, it is not easy to offer a brief presentation of the US tax system; and even US music businesses employ professional accountants and lawyers to keep track of their financial matters.

Similarly, instead of importing music-related goods, such as records and merchandise, it is recommended to manufacture them locally for the US market.

10.1 General Sales Tax (GST)
The US does not use value-added taxes (VAT) like the EU, but GST – general sales tax. The biggest difference between VAT and GST is that the latter is paid on a retail level only. Companies still pay the tax when purchasing from retail providers (unless the purchased goods are for reselling), but they are not entitled to deductions on the tax they pay themselves.

GST rates vary between different States. For instance, the default sales tax rate in New York is 7%, while in California it is 7.5%. The highest rates are not more than around 10% – while Alaska, Delaware, Montana, New Hampshire and Oregon do not collect GST at all.

More information on the subject can be found here.

10.2 Income tax
Artists and performers coming to perform in the US are eligible to pay tax on all income that they have earned in the country. This is processed through a withhold-and-return system. All businesses (eg promoters) who pay a fee to the performer withhold 30% of the net fee, irrespective of the tax-rate with which the performer’s income will be taxed. As a rule, this means more money is withheld for tax purposes than the artist is eligible to pay. In order for the artist to receive their full fee, he or she needs to file a tax return form to the American authorities.

The actual tax rate depends on several factors. For instance, if an artist runs a business, he/she might be taxed as an individual, depending on how the payment benefits the artist.

A thorough guide to foreign artist taxation in the US, including links to forms, can be found on here.