Hill Strategies Reports on Music

In this issue: Four recent reports examining various aspects of the music business, including policy options for music and economic development, the effects of music and music education on technology hubs, and two reports on the independent music industry in Canada.

The Next Big Bang: A New Direction for Music in Canada

Music Canada, 2013
http://musiccanada.com/TheNextBigBang.aspx 

This report from Music Canada, a non-profit trade organization that promotes the interests of its members and their artist partners, provides strategies for supporting the growth of Canada’s commercial music industry, which the report calls “a highly creative and dynamic field that has undergone massive changes with the shift to digital technologies and platforms”.
 
The report argues that key aspects of the state of the Canadian music industry include:

• Significant growth in digital revenues but not enough to counter the losses in physical sales.
• The continued presence of “unlicensed music sources that do not pay artists and music companies”.
• Continued investment in talent development by music companies “despite the implosion of revenues”.
• The predominance of online music discovery.
• The increased importance of live performance revenues in artists’ incomes.

For the first time in a decade, global recorded music revenues increased in 2012. However, the report highlights longer-term revenue challenges for the music industry related to online piracy and “a widespread erosion of respect for the value of music and the investments required to develop artists’ careers”.  The report goes further, contending that there has been “a material erosion in the respect accorded the creative process by society at large”.
 
The report outlines five critical areas (and 17 recommendations) to support the development of the commercial music industry:

• Music education is said to be “key to an innovative workforce and cultural and tech hubs”.
• Digital innovation, including new ways “to encourage consumers to pay willingly for music online”, is critical in driving revenue streams and exposing listeners to new artists.
• Music tourism – harnessing “the power of live music as an economic asset” – could bolster Canada’s strong live music tradition and support economic development.
• Export expansion could help foster growth in existing and new markets. “Creating more opportunities for all Canadian-based music companies to develop international relationships for the marketing, promotion and touring of Canadian talent will, therefore, benefit the industry as well as the country as a whole.”
• Interconnected tax credits, inspired by those related to film and television production, could stimulate economic activity and help attract investment in the industry. 

Music – A Catalyst for Technology Hubs and Innovative Talent

Information and Communications Technology Council, August 2013
http://www.ictc-ctic.ca/?p=17131
 
Based on interviews with 14 technology professionals as well as a literature review of evidence related to music and skills development, this report (supported by Music Canada) contends that rich music environments help attract high-technology jobs to local areas.
 
According to the study, music helps develop many skills that are critical for high-tech workers, including:

• Creativity and innovation.
• Independent and analytical thinking.
• Mathematical abilities.
• Adaptability.
• Initiative, decision-making, and leadership.
• Planning and organizational skills.
• Collaborative capabilities (teamwork and relationship-building). 

The study proposes five policy measures to support music education and urban music scenes in order to attract innovation-based companies and workers:

• Significant investment in music education by provincial governments.
• School curriculum that identifies the linkages between music education and high-tech career options.
• More resources on the benefits of music education for parents, governments, and school administrators.
• Greater focus by all levels of government “on the quality and diversity of their cultural industries as a tool for economic development”.
• “A national organization to collect and centralize information on the benefits of music education and participation to the careers of technology professionals”. 

Recognizing that its sample size was small (i.e., only 14 interviews), the report also recommends that a broader survey be undertaken to bolster the findings of this study.
 
 

Sound Analysis: An Examination of the Canadian Independent Music Industry

Canadian Independent Music Association, February 2013
Author: Nordicity
http://www.cimamusic.ca/sound-analysis-canadian-indie-music-sector-hits-the-right-economic-note/
 
Based largely on a 2011 survey of 502 music company representatives and 1,094 artists in Canada’s independent music industry, this report attempts to “determine the breadth and scope of the Canadian-owned, independent music industry as a whole and to measure its importance to both national and provincial economies”.
 
The survey results show that total revenues of independent music companies were $292 million in 2011. More than one-half of independent music companies (60%) have less than $50,000 in revenues, and almost one-half are sole proprietorships (46%).
 
Sound recording sales represent 25% of music company revenues, while live performances account for 15%. Almost three-quarters of all revenues (73%) are generated from the Canadian market. The survey found that digital formats represent 90% of all singles sold and 49% of albums sold. Despite the predominance of digital formats, revenues from digital sales account for only 47% of sound recording revenues. On the other hand, physical albums and singles represent a much larger share of revenues than sales count.
 
Regarding music company expenditures, “employee wages (and associated costs) account for the largest segment of company expenditures (25%)”. Music company employees earned, on average, $22,250 in 2011. Non-employee labour costs represent another 12% of expenditures, while royalties represent 13%.
 
A breakdown of music company activities shows that:

• About one-half of all companies (47%) maintain a stable of artists, with representation of artists within the same province being most common. The number of new artist signings has grown from 273 in 2009 to 448 in 2011. About 80% of all signings are Canadian artists.
•  “38% of independent music industry companies in Canada perform some music label activities”. These companies had between 1,300 and 1,400 releases each year between 2009 and 2011, of which about one-half were Canadian releases.
• Almost one-third of independent music companies (29%) perform some type of publishing activities. In 2009, these companies signed almost 52,000 “musical works or songs to publishing deals”, including about 4,000 Canadian signings (8% of the total). By 2011, the number of signings decreased substantially (to 36,100), but the number of Canadian ones increased significantly (to almost 11,000, or 29% of the total). 

The survey found that, in addition to playing music, most artists (60%) also produce it. Overall, “artists generated $79.4 million in music-related revenue in 2011”, representing an average of was just over $7,200 for each artist. Artists spent an average of 29 hours per week on music-related activities.
 
In terms of economic impact, the report finds that “the total GDP impact of the independent music industry was $303 million in 2011”, with the largest contributions coming from record companies (28% of the total) and artists (24%). The report also finds that the independent music industry had an employment impact of about 13,500 full-time equivalent jobs in 2011, two-thirds of which are artists.
 
Regarding federal and provincial tax revenue, the report estimates that $93 million in government revenues were generated by the independent music industry in 2011. Examined differently, this means that the independent music industry generated $1.22 in tax revenue for every $1 of government support.

 
Networks and place in Montreal’s independent music industry

The Canadian Geographer, Volume 56, Issue 1, 2012
Authors: Thomas A. Cummins-Russell (Gulu University, Uganda) and Norma M. Rantisi (Concordia University)
http://onlinelibrary.wiley.com/doi/10.1111/j.1541-0064.2011.00399.x/full

 
This academic article examines how Montreal’s historical and cultural attributes influence the development of networks among musicians and other workers in the city’s independent music industry. The study is based on 46 interviews with musicians and industry workers not affiliated with major labels.
 
The interviewees indicated that “knowing the right people” and having a wide range of contacts were “vital” to their career development. For independent musicians, networking can help them “mitigate the risks of low-paying and unstable employment” by diversifying their sources of revenue between different music opportunities (i.e., playing in a variety of bands as well as opportunities outside of performing and recording). Furthermore, interviewees indicated that “aesthetic experimentation is facilitated by frequent face-to-face exchange”.
 
According to the study, one of the key place-based factors shaping Montreal’s music industry is bilingualism. The French nature of Montreal helps limit the penetration of major labels in the Quebec market. Tight English-language and French-language communities in Montreal foster feelings of commonality, which in turn “encourage the formation of a supportive infrastructure – both informal and formal – that brings together local industry actors and provides them with space, networking prospects, funding, and other benefits”.
 
The authors cite a study that found that, contrary to the wide and fairly open networks in Montreal’s music community, Toronto musicians collaborate within tighter, more closed networks, due to strong competition for paid work and the relative lack of supporting organizations.
 
The study concludes that “a convergence of place-specific attributes can be critical in enabling the emergence of networks that sustain a local, independent cultural scene”. Linguistic and ethnic specificities help define local cultural scenes. As such, distinct sub-cultures and support networks should be maintained, but efforts should also be made to “build bridges across potential divides”.
 
The authors argue that all levels of government should integrate place-based analysis and network dynamics into their cultural policies.