$25 Billion Global Music Industry

The global music business, at least what's tied to music copyright, is worth over $25 billion. Actually, it's worth $25.3 billion, according to Will Page, the director of economics at Spotify who calculated the figure. But that's just a start.

Page's $25.3 billion is an eye-opening number for sure. Much of the figure based on publicly available information. Page's figure consists mostly of data inside reports by the IFPI, covering sound recordings, and the global International Confederation of Authors and Composers Societies (CISAC), covering musical works. Add the total revenues from those reports and you'll have a good but rough estimate.

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Page needed more research and arithmetic to arrive at his estimate. Some publishing revenues are hidden from the public eye and not included in the CISAC report. Revenue from direct licensing of $1.7 billion came from a from a MIDiA Research report. Also counted was revenue of $423 million from mechanical royalties collected outside of CISAC from organizations such as Harry Fox. Page also eliminated the double counting. IFPI sales numbers include mechanical royalties paid to record labels, which count them as revenue, and then paid to publishers, where they also count as revenue.

But there's much more -- maybe $40 billion more. Released last week, a joint study between CISAC and the United Nations Educations, Scientific and Cultural Organization (UNESCO) and published by the company formerly known as Enrst & Young, put a dollar value on different creative industries around the world. For music, the study of cultural and creative industries quantifies the impact of sound recordings, music publishing and live events in terms of both revenue and employment.

Page's $25.3 billion figure is revenue derived only from music copyright. This includes purchases and streams of recorded music -- both the recording and the embedded mechanical royalty -- streaming royalties, performance royalties and synchronization royalties. It's a compact, easy-to-understand number. If the music business is a series of concentric circles, revenues from music copyrights are at the center.

Live music, included in the CISAC study, is one circle out from the core. Global live music revenues are $25 billion, according to IBISworld. Given the known value of music copyright, CISAC must have put the live music market at roughly $40 billion. Some concert-related revenues aren't included. The concentric circles of the music industry could, in theory, expand to ticketing revenue. Live Nation, AEG and SFX has linked their promotion businesses to their ticketing businesses. Ticketing, both primary and secondary, is a profit engine that can be driven by live events.

Many other revenue streams are adjacent to music copyright and concerts. Take music sponsorships, a growing category that isn't directly tied to copyright. Sponsorship revenue doesn't come from a copyright, but still depends on the popularity of recordings. Sponsorships and recordings also share some beneficiaries. For example, a sponsorship deal can generate revenue for an artist, a manager and a label. This is real money. Just in the United States, live music sponsorship revenue was $2.04 billion in 2014, according to the latest PricewaterhouseCoopers' Entertainment & Media Outlook report. IEG put the value of music sponsorships by North America-based brands alone at $1.34 billion. Either way, sponsorships aren't included in the CISAC study.

Merchandise sales are also adjacent to music copyright. A touring artist can make good per-head money in merchandise sales at concerts. At the high end,Taylor Swift makes an estimated $17 per head in merchandise sales at her concerts. Even a lower per-head figure contributes to artists, managers and, in the case of multi-rights deals, labels, too.

Expand further and there are music instrument sales, tour bus rentals, and money spent on beer at concerts. It can practically go on forever. It's probably a good thing Page stuck with music copyright.