«COUNTING THE NOTES The economic contribution of the UK music business A report by the National Music Council – November 2002 Preface This is the ...»
– page 12 Counting the notes – the National Music Council report on the economic contribution of the music business Another cause of concern for composers and publishers is the levels of royalties receivable from other countries. Factors such as inadequate collection and distribution systems and the existence of cultural levels and deductions in some territories are considered to have reduced UK composers’ and publishers’ potential income from overseas. This has been an issue, alongside the downward pressure on commissioning fees for TV/film work and the increased use of library music which has made it difficult for composers to develop viable long-term careers.
In common with other sections of the music industry, there has been increasing recognition of the problem of access to finance for small and medium-sized enterprises. Here the industry is working to improve understanding of the sector by financial institutions, improving knowledge of sources of funding available and looking imaginatively at how to encourage investment in music publishing businesses.
The manufacture and supply of musical instruments and related equipment to amateur and professional musicians is essential to the music industry. The sector is represented by the Music Industries Association (MIA) which collects data from its members on retail sales of new musical instruments.
In 2000, total sales (including VAT) were £608.9 million. From 1988-2000 the value of the UK music instrument retail market more than doubled, despite a 3% weakening in 2000. Adjusted for inflation, the total increase over 13 years was 35%.
These sales and growth represent a wide variety of music-making equipment, including but not limited to traditional musical instruments. The table below looks at musical instruments only in more detail. Overall, the market for these traditional instruments dropped by 6% in real terms when 2000 is compared with 1988.
Table 3:1 Sales of traditional musical instruments, 1990, 1995 & 2000 Units (000s) Value (£m) (a)
a) Includes VAT
b) Includes guitar amps, electronic tuners, effects & pedals, sound reinforcement, home recording equipment, strings & metronomes.
The above table gives both numbers of units sold and their value. The more traditional instruments, excluding accessories, had total sales of £248.7 million in 2000. Sales of electric guitars have increased over the period, while acoustic guitars, after a decline in 1995, recovered to sell over a quarter of a million in 2000. The MIA notes that acoustic pianos have recorded fairly steady sales of 6-7,000 since 1993, while electric organs have sharply declined in popularity. Sales of other instruments such as woodwind and violins are strongly affected by instrumental lessons available via schools, and their sales showed an increase in 2000. The increasingly important category of “accessories and miscellaneous” is made up by a variety of products, some of which have been sold for many years, such as strings for instruments, guitar amps and metronomes. The strongest area of growth within accessories and miscellaneous is in electronics. For instance, sales of sound reinforcement equipment, not included until 1998, amounted to £50 million in 2000. Home recording equipment accounted for another £27 million.
The pace of technological change is fast in this area, as additional types of equipment are developed and identified.
– page 14 Counting the notes – the National Music Council report on the economic contribution of the music business Table 3.2 contrasts the totals of instruments sales (as in Table 3.1) with sales of sheet music, music software, electronic hardware and, a new category in 1999, equipment for the DJ market. These DJ ‘artists’ use a mix of vinyl records, CDs, keyboards and other electronic music equipment to create music live at clubs or for recording through ‘manipulation’ of other artists’ music, sometimes adding their own.
DJs use products such as mixers that enable fading between the two recordings and turntables that allow for physical manipulation by scratching or stopping records and restarting them. Melody and harmony can also be added on portable keyboards. As sales are given in current and constant prices, the table shows that instrument sales have increased only by 6.5% in real terms whilst sheet music sales have remained remarkably stable over the period. However, these figures do not account for sales of sheet music that is downloaded over the Internet, so are possibly not representative of the true volume. As expected, sales of music software have almost doubled, while sales of electronic hardware have more than tripled. In 2000, however, despite growth in unit sales, the value of electronic hardware sales declined slightly, due to discounting.
Table 3:2 Musical instrument & related sales, 1990-2000, current and constant prices (a)
(a) figures include VAT (b) instruments included listed in table above (c) see text for definition 3.2 Consumer spending on musical instruments As stated above, the MIA estimates consumer spending on musical instruments was £609 million in 2000.
Using a far more restrictive definition, the Family Expenditure Survey estimated total UK expenditure on ‘purchase and hire of musical instruments’ at £156 million in 2001 (data from Family Spending: a report on the 2000/2001 Family Expenditure Survey, Office for National Statistics, 2002). These FES figures do not take account of the second-hand market, nor do figures include sales of peripherals, sales of equipment for the DJ market, or sales of music software and electronic hardware other than electric guitars. In 1998, the MIA estimated this market for second-hand sales of musical instruments to be c.£300million but no further analysis of the second-hand market has taken place.
3.3 Production and employment
According to data from the Office for National Statistics (contained in Product Sales and Trade: PRA 36300: Musical Instruments 2000) total sales of businesses classified as manufacturers of musical instruments were £88.3 million in 2000. On the basis of the ratio of value added to turnover for previous surveys on musical instrument production (AGB/Taylor Nelson, 1996), we have estimated the value added of the manufacturing sector to be approximately £44 million.
Captured in Table 4.1 and not included in the figures for DJ specific equipment.
This shows that most instrument manufacture is carried out by small businesses. It is possible to estimate from the above that about 1,575 people in all are employed. This does not include those working in businesses too small to be registered for VAT, or self-employed craftsmen. A Sound Performance estimated the numbers of self-employed in musical instrument making at 1,600 (this figure was based on the 1991 Census). There is no evidence on which to revise this estimate. The number of individuals employed in manufacture is estimated at 3,175. The MIA does not collect data on employment by its members, but believes that the figure has probably remained static.
3.4 Retailing & distribution
MIA estimated in 1999 (A Sound Performance) that employment in the 1,300 retailing outlets for musical instruments is around 4000 full time equivalents (FTEs) with a further 2,000 involved in distribution. It has not been possible to update the figures for the value added of the retailing and distribution sectors given in The Value of Music (1996). These were estimated at £184 million and £100 million respectively and it is likely that fewer musical instruments and related peripherals will now be sold in retailing outlets, and more will be sold through the Internet, mail order and other channels. Additionally, these figures do not capture the second-hand sale of musical instruments.
3.5 Imports and exports
In 1997, the MIA estimated that overseas earnings from new musical instruments totalled £87.5 million while imports totalled £148.6 million. The MIA states that UK exports of musical instruments have declined since the last data were sourced. Many UK musical instrument manufacturers have suffered from shrinking market demand due to the strength of the pound and ever-increasing use of cheaper Far Eastern sources by manufacturers worldwide. Although the import/export figures given in Product Sales & Trade are incomplete, for countries outside the European Union, imports in 2000 totalled £126.6 million while exports were £31 million.
Manufacturing Retailing & distribution Total value added
All new equipment Second-hand instruments Total consumer spending
Manufacturing Retailing & distribution Total employment Office for National Statistics, 2001
4.1 Festivals and other major music events The most significant single events are the summer outdoor festivals. Ticket prices for these typically vary from £25 to £50 for a one day pass to £97 for a three-day ticket for Glastonbury 2002. Attendance at major outdoor festivals can reach as many as 100,000 people per event.
Many of these festivals are well-established generally annual events. Major, internationally known, festivals include Glastonbury, Mean Fiddler’s rock-based Reading and Leeds festivals, dance-biased Homelands Festival, Virgin Group’s V events, the Scottish T in the Park Festival, the world music WOMAD festival, and folk festivals such as Cambridge and Cropredy. In 2002 such festivals were supplemented by a wide range of other major outdoor concerts, including the heavy metal Ozzfest at Donington, the punk Deconstruction 2002 at Finsbury Park, the dance-based Gatecrasher Summer Soundsystem and others festivals focused on Indie pop music including the Canterbury Sound Festival and the Isle of Wight Festival. Not a festival, but certainly of a large enough scale, were the 2002 Golden Jubilee celebratory concerts - the classical concert on June 1st, and the pop concert June 3rd, seen at Buckingham Palace by 12,000 individuals, and on large screens outside the Palace and in Green Park.
Festivals are often devoted to a specific musical form, or, if not, usually include a substantial musical element. The UK’s larger and specialist festivals are certainly attractive to tourists. A recent report, Festivals Mean Business surveyed 137 festivals in Britain, and estimates that at least 4.2 million people attended festival events or took part in activities, and nearly 2 million tickets were sold. Extrapolating this to all arts festivals, the authors estimate a total of 6.9 million tickets are sold annually. If approximately 5% of these are overseas visitors, then this would represent 350,000 foreign attendees at festival events.
Further research is to be carried out in 2002 by the Arts Council of England in association with the Association of Festival Organisers. The research will include a study of several major music festivals in UK during the summer season and focus on the role of festivals in attracting tourism and the economic benefits arising from them.
Smaller, but also economically significant, live music concerts are shows at indoor arenas such as the Cardiff Arena, Birmingham NEC and the Wembley Arena. The National Arenas Association (NAA) has eighteen member venues and has published statistical research on the sector since 1993. The construction of arenas, which typically have audience capacity in the 5,000 to 20,000 range, has been one of the most significant developments in the live music sector in recent years. In the 1970’s the UK had only two arenas with a combined capacity of around 20,000 but capacity has risen steadily to over 150,000 by 1993 and 200,000 by 1997. Since 1997 the sector has been enlarged by the construction of the National Ice Centre in Nottingham and the Odyssey Arena in Belfast.
The table below summaries attendance at music events in the period from 1993 to 2001 along with the
number of event days and in the latter years average ticket prices within NAA member arenas:
P Shaw & K Allen, British Arts Festivals Association, 2001
The increase in dates and revenues in 2001 compared to 2000 was achieved despite the cancellation of eight proposed tours after the events of September 11th 2001.
One key feature of the arena market in recent years has been the dominance of pop and teen acts. In 2000, the acts generating the biggest total attendances were Steps, Five, and Robbie Williams followed by Tom Jones, Simply Red and Britney Spears. Similarly in 2001, Westlife and Hear’Say captured significant audiences. The teen pop bias has continued into 2002 with such artists as Pop Idols, Ronan Keating and Blue. Acts with more mature audiences who have also been significant in the arena market include U2, Madonna, Roger Waters and David Gray.
In addition to these “pure“ music concerts the arenas have also staged a number of significant family shows with a substantial musical content in recent years. 360 such shows, with a total attendance of some 900,000, including performances of the Tweenies, Bob the Builder and Disney on Ice, helped bring total arena attendances in 2001 to 4.9million.
Moving downwards in scale from the arenas, there follows a number of different tiers of concert venues that provide the locations for live music concerts. At the top end of these venues are mainstream theatres and concert halls with capacity for around 2500 people, along with some even larger venues such as the Royal Albert Hall. Such venues as Manchester Apollo and London’s Brixton Academy hosted concerts by Pet Shop Boys, Ocean Colour Scene, Macy Gray and Nelly Furtado in 2002. There are also substantial concert circuits based in smaller civic halls, theatres and universities for acts with sales potential for audiences in the range from 250 to 2,000 per show. Venues in this segment are important for both the diversity of their musical offerings including both amateur and local interest shows as well as national tours and the large number of concerts they typically host.