The thesis conducted an economic analysis of enterprise in the music industry and was the first quantitative analysis of the industry. The research focused on the sectors of the music industry relating to the sale of audio software. This initially involved an analysis of the intermediate market for music where the output of musicians was sold as an input to the production of audio software. In the absence of data in this sector of the industry, the research entailed the collection of a comprehensive data set and used this to examine record company formation, survival rates of composers and the contracting of musicians by record companies. The analysis then progressed to look at the audio software market. It examined the similarity of music in the singles and albums markets and used these results to assess the importance of music innovation at the firm and industry level. The research then investigated the audio hardware sector and examined the strategic interdependence between audio hardware and software companies in the event of systems innovation. The final chapter of the thesis looked at the public good characteristics of music and assessed how this affected the productivity of the industry as a whole. The thesis provided a theoretical model of enterprise in the industry and compiled a history of audio technology innovation. The thesis also generated results of interest from a specific level to the general. Firstly, the quantitative methodology of the analysis demonstrated that such an approach is feasible in other cultural industries. Secondly, the application of the economics of entrepreneurship to an industry where a significant proportion of agents are primarily motivated by non-pecuniary factors was found to be feasible. However, the research indicated that in such industries a significant proportion of enterprise is likely to be unproductive, particularly new firm formation.