Adding Up The Music Industry For 2008
20 Jul 2009
Adding up the value of any industry is one thing; knowing where all of its separate parts are and (importantly) how to piece them all together is another. Last year, we (MCPS-PRS Alliance) added up the various music industry revenues, then adjusted for double counting, and reached a total of £3.2 billion. This was an acceptable and insightful first stab, but admittedly we had only just started trying to calculate the monies generated by live music, made basic adjustments for double counting and hadn’t even considered the revenues from advertising and sponsorship. That said, the table provided a concise and simple way in which the reader can understand ‘how it all hangs together’. For the music industry’s various stakeholders who find themselves in an unprecedented state of transition – that’s important.
What that table also provided was an understanding of an eco-system or value chain, which helps counter much of the Armageddonstyle hysteria that surrounds the state of the UK music industry. The point being, value doesn’t just disappear; rather some will be lost, some will be displaced and some new revenues will enter the industry. With that in mind, some new headline numbers and underlying trends have already been announced for 2008. PRS for Music and PPL both announced record breaking gross collections, whilst the BPI reported declines in both retail and trade values, but encouragingly at a slower rate than before. Conversely, by scaling up PRS for Music tariff data, we calculated that the value of primary tickets surpassed £900m for the first time ever.
Now, maybe these headlines are telling us something about the underlying trends: a shift away from B2C and towards B2B revenue sources, perhaps? Similarly, the stellar growth of live revenues hints at a ‘changing of the guard’; which for many emerging bands leaves behind a model where you would tour at a loss to sell CDs and towards a situation where ‘live’ related revenues are the main breadwinner. In addition to these headlines and trends, we’ve also got to contemplate what was lost from the primary market and picked up elsewhere, such as secondary ticketing as well as what was lost completely via illegal P2P file sharing. Finally, we also need to consider the less conventional value streams, such as direct revenues from advertising and sponsorship – something that’s never been done before, until now.
Before downloading the report and delving into the details, there are two headline figures to consider: Firstly, the value of music was calculated to be £3.6 billion for 2008. Secondly, this represents an increase of 4.7% on the revised 2007 figure of £3.5 billion. Put more bluntly, the pie just got bigger.
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