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The good news for the music industry is that the recent collapse of investment giants on Wall Street will have little to no effect on prospects for the music business. The bad news is that this is largely due in part to the industry already being in the tank. Music-related stocks did better than the resulting sell-offs, but this is because companies like Warner Music Group and Trans World Entertainment have fallen out of favor with investors. Also, AIG and Merrill Lynch are not involved in the music business to any degree that would have an effect. Lehman Brothers does manage a fund that provides equity funding for publisher EverGreen Copyrights, but the company has issued a statement saying that the bankruptcy filing will have no financial impact on them.
The market downturn will have an effect on how major players wheel and deal. Since the industry is out of favor, it is tough to make transactions to raise capital. The trickle down will reduce consumer entertainment spending dollars, affecting the music industry as well.