Why does the entertainment industry make so much money

why does the entertainment industry make so much money

The report found that California remains the center of film production in the U. Wall Street treated Hollywood movies the same way it treated mortgage assets during the real estate boom. This is important — don’t get winner-takes-all jobs confused with ownership. Meanwhile, new digital players that have already inched into film production will pose a threat to major studios unlike any other they have experienced since the premiere of the talkie. Over the past 80 years or so, its basic model — in which financiers in New York lend money to creative people in Los Angeles — has been largely unaltered. The celebrities we’re talking about — TV hosts, sportspeople and actors are mostly still just employees of big industries.

Why they make so much

Stratence Partners works with organisations of all sizes to help them increase their profit margins, market share why does the entertainment industry make so much money the value they can deliver to their respective industries. If the showpiece event is to command the attention it craves, though, it will need to start finding some solutions to long-standing problems. The music industry has shifted towards a subscription model, where listeners no longer own the music they love. Such had been the rise in the use of recorded music, which was subsequently played on the radio, that musicians who had previously made their money through performing live were now finding work hard to come by. It seems strange now to think of musicians being against recorded music, but back then it was a relatively new concept and many artists were paid minuscule amounts of money in comparison to what they earned performing live. The idea that people could own recordings of music, which they could then play as and when they liked, meant live musicians were reduced to getting their income from all-too-rare performances, or the meagre royalties that sales and radio plays generated.

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why does the entertainment industry make so much money
For a job that even elite business school graduates can have difficulty explaining, top-tier management consultants can make ridiculously high salaries — even when just starting out. It’s actually pretty simple. A lot of it is about prestige and convincing corporate executives to trust their business strategy and private data with people decades their junior. So consulting firms, especially, want to hire the best and brightest, since the pedigree of their employees is a top selling point. Companies such as McKinsey, Bain, and BCG are pretty explicit about only hiring top performers from highly prestigious and competitive schools. In a way, the consulting firms created this cycle. Now, sparked by the consulting industry’s demand, the MBA is among the most popular and lucrative degrees out there.

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Stratence Partners works with organisations of all sizes to help them increase their profit margins, market share and the value they can deliver to their respective industries. If the showpiece event is to command the attention it craves, though, it will need to start finding some solutions to long-standing problems.

The music industry has shifted towards a subscription model, where listeners no longer own the music they love. Such had been the rise in the use of recorded music, which was subsequently played on the radio, that musicians who had previously made their money through performing live were now finding work hard to come by. It seems strange now to think of musicians being against recorded music, but back then it was a relatively new concept and many artists were paid minuscule amounts of money in comparison to what they earned performing live.

The idea that people could own recordings of music, which they could then play as and when they liked, meant live musicians were reduced to getting their income from all-too-rare performances, or the meagre royalties that sales and radio plays generated. It did little to stop the rapid growth of record companies and the demand from the public for recorded music.

Such was the appetite that it soon became the norm for people to have large collections of music, while record companies became all-powerful industry bodies that decided who became successful.

Ownership vs rental The idea of ownership of music by consumers is one that has only emerged why does the entertainment industry make so much money recorded music became popular.

Consumers have come to assume they own the content they have purchased — and this also includes films and books. However, the rights holders of such content tend to be a combination of record labels that distribute it or pay for it to be made, and the artists who created it in the first place. The user is, in legal terms, merely licensing it. Policing the use of licensed material became much harder, however, when the internet created an easy way of sharing content quickly, freely and in a manner difficult to detect.

Content rights holders found it hard to keep up with the many ways that were emerging to share their work. The dominance of record labels began to wane when the internet opened up alternative possibilities for musicians and fans who felt they had been short-changed by a bloated and cynical industry. In their efforts to address the decline in sales caused by piracy, large and powerful rights holders scored a number of public relations own goals by going after individuals — including young children — who had traded their work.

The record industry was slow and confused in its reaction to these changes, struggling to find a meaningful and steady form of income with which to replace dwindling sales. It was hoped the music-buying public would be content with downloadable files from the likes of the iTunes Store; sustaining the content model of the labels that owned and distributed music, but turning it digital.

However, while the number of music files being legally downloaded has risen sharply over the last decade, a range of alternative services have emerged to challenge the way in which consumers access such content. Why does the entertainment industry make so much money services such as Spotify and Rdio have attempted to turn people away from music ownership and towards a rental system based around advertising and subscriptions.

In the world of film and television, Netflix has begun to make serious strides in cutting the number of pirated films downloaded, while presenting a challenge to the physical market.

Recent research has shown these services are both growing rapidly and curbing piracy. In Norway, research by Ipsos MMI found the number of songs pirated in was million — a mere Piracy of film and television had also halved in that period. These figures could reflect a trend for the rest of the world, one in which streaming is killing off piracy and bringing in revenue for rights holders. But many argue the amounts paid to the holders — particularly by Spotify — are neither enough nor fair to newer musicians with fewer fans.

The music industry has taken its time in finding a suitable model, but the ease of use and extensive catalogue that the leading streaming services offer mean there is now a viable alternative to piracy. However, there needs to be regulations on copyright that are enforced, says Julian Hewitt, a music specialist and partner at Australia-based Media Arts Lawyers.

Subscribers are still licensing the songs, but they have less control over what they can do with them — such as copying them and distributing them among their friends. This has implications for artists and rights holders that have grown dependent on these sales. Does Spotify pay artists enough? The debate over what Spotify pays artists has raged since the company was launched in The rate has been criticised by many for being too low, particularly as those without a large fan base are seeing their work hosted on a service that allows people an unlimited number of plays.

The debate had begun to simmer down in recent months, following a number of high-profile signings, including Pink Floyd and Metallica. However, others, such as Coldplay and The Beatles, have remained off the service, and more are becoming disgruntled with the low royalty fees.

Nigel Godrich — the acclaimed producer of artists including Radiohead, Beck and Paul McCartney — reignited the debate over what Spotify pays artists in July when he announced on Twitter that he was removing his music from the streaming site. Godrich said the recently released album by Atoms for Peace — a project with Thom Yorke from Radiohead and Flea from the Red Hot Chilli Peppers — was taken down from Spotify in protest at the low royalty fees the service pays new artists.

Mark Kelly, keyboardist for English band Marillion, disagrees. Furthermore, they pay through 70 percent of their revenue, as do Apple. Much of this money is being invested in nurturing new talent and producing some great new music.

There is a stark difference between the lifetime fees Spotify generates for artists and the one-off payment received for a single purchase or download. Also, as Spotify is a relatively new service with fewer paid-up members than iTunes, it is likely that, as it increases in popularity, it will be paying out much more to rights holders.

They are happy to negotiate low-rates of royalties safe in the knowledge their extensive back catalogues will earn them money for years to come. Struggling artists, on the other hand, might not be able to last quite so long with such a paltry — if steady — stream of income. One label that has a different stance to many is the Beggars Groupwhich pays its artists 50 percent of streaming revenue.

All labels should follow the lead of Beggars Group and pay artists 50 percent of all streaming income. That, coupled with a 10 or fold increase in paying customers, would mean that streaming would become a valuable source of income for artists and labels alike.

Embracing technology Clearly, new technology is not going away, and the industry — both artist and label — needs to embrace it. The bottom line is technology is here to stay and evolution of technology is always going to go on. One service that is not paying enough to artists, according to Kelly, is YouTube.

Solving the problem of online music piracy has troubled the industry for well over a decade. The place to apply the pressure is the delivery system: the ISPs. They have been profiting from delivering creative content at ever-faster speeds while not paying us, the creators, a bean. Alternatives for artists Finding an alternative method has troubled both artists and executives.

From the perspective of an artist, some have looked to give away their songs, hoping their income will come from increased touring and merchandise sales. Others have used crowd-funding services such as Kickstarter and Bandcamp to raise money.

Having spent their career at industry giant EMI, Radiohead decided not to sign a new contract, instead choosing, into offer their album In Rainbows to fans for whatever they felt like paying. Inthe band released a new album in the traditional manner, through independent label XL Recordings. The consequence of this shift in how people see their media content — emphasising the license over actual ownership — might, in fact, have a profound effect on the control an artist can have over that music.

It might make consumers realise the entertainment they enjoy is not really theirs to distribute and share, bringing to an end over a decade of rampant piracy. Notice: JavaScript is required for this content. Sign up Subscribe.

Business More in Business. Fall of the Norwegian pirates 1. The Beatles resisted iTunes for a long time, but eventually succumbed in late Illegal downloads: One of the biggest challenges currently facing the music industry.

Related topics: AppleSpotify. Sex, drugs and your new job role.


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This is important — don’t get winner-takes-all jobs confused with ownership. The report found that seven major studios control more than four-fifths of total film industry revenue, led by Disney NOTE: eSports earnings data are currently available for about ten key markets worldwide. Subscribe to our newsletter Email address. For example, a best-selling author can reach millions and has copyright over their work. It represents what percentage of sales has turned into profits. Dr Ferracioli says, whether we realise it or not, we’re able to do why does the entertainment industry make so much money jobs because of the «army of people» who clean the streets, make the train run, care for our children and perform other «less valued» tasks. The report projected that throughindustry revenue will increase at an annualized rate of 2. But even that huge number doesn’t mean that all movies are money makers. Alternative Investments. Lots of people can make money doing that kind of work. Powered by WordPress. Because it was released around spring break? You only need a few people to cater to millions of customers. New economic realities may help make expensive flops like Will Ferrell’s «Land of the Lost» a thing of the past. When an expected blockbuster flops, the repercussions are even more devastating for the studio, as these films have usually been backed by massive production and promotional budgets. Bydigital publishing will account for nearly 60 percent of all U.

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