Photo Courtesy of Midia Research
The record label sector is currently facing a period of significant disruption, driven by shifting consumer habits, the rise of generative AI, and a rebalancing of power between labels and Digital Service Providers (DSPs). A new report from MIDiA Research, The Future of Labels: Shifting Sands, details how the traditional label model is being challenged as global music revenues reach a critical transition point.
The Case for Structural Change
While record labels still hold a primary advantage in license negotiations and playlisting, the report identifies several high-impact challenges currently affecting the sector:
- Audience Fragmentation: Consumers are spending more time on social video platforms than on music streaming services, making it harder for labels to retain listener attention.
- The Decline of Superstar Dominance: BPI data indicates that the top 100 tracks’ share of total UK streams fell from 10.3% in 2016 to 3.8% in 2024, suggesting a more diluted market.
- The AI Threat: Generative AI is accelerating the volume of content, adding pressure to an already crowded marketplace.
- Diminishing Negotiating Power: Streaming services are seeing higher revenue growth rates than labels, shifting the supplier-retailer relationship in favor of the retailers.
The Catalyst for Evolution
Financial data from the first half of 2025 shows three successive years of slowing revenue growth for leading music companies. Despite global recorded music revenues doubling between 2015 and 2024, the current strategy of “optimization” may no longer be sufficient. With 10% of consumers indicating they would cancel subscriptions if prices continue to rise, labels must look beyond price hikes to drive future monetization.
The S.I.N.G. Innovation Framework
To address these disruptions, the report introduces the S.I.N.G. innovation framework. The core tenet of this framework is specialization, moving away from a “one-size-fits-all” approach toward defined business models. The report identifies four core label types that will define the future landscape:
- Market Makers: Focusing on massive scale and high-impact launches.
- Distribution Powerhouses: Prioritizing logistics and global reach.
- Culture Makers: Focusing on artist development and niche community building.
- Rights Powerhouses: Focusing on the long-term value of catalog and IP.
Looking Ahead
The ability to guide artists through an increasingly complex digital landscape is becoming a primary differentiator for labels. Success in the coming years will depend on a label’s willingness to rethink its core purpose rather than simply optimizing existing playbooks.
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