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«COUNTING THE NOTES The economic contribution of the UK music business A report by the National Music Council – November 2002 Preface This is the ...»

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5.11.1 Opera income

In 1998/99, just seven companies had incomes of over £1 million (the ‘big 6’ mentioned above and the English Touring Opera). After these, four companies had an income of between £301,000 and £500,000, seven between £101,000 and £300,000 and the rest less than £100,000. For the largest companies, Arts Council grants were the most important form of income, while for those with less than £300,000 per year, ticket sales and fees were the most significant, followed by aid from charitable trusts.

Detailed income figures are available for the five largest companies (Royal Opera, English National Opera, Opera North, Glyndebourne Touring Opera and Welsh National Opera) from the Arts Council of England’s Performance Indicators statistical series. They show that subsidy from Arts Councils and Regional Arts Boards formed just over a half of all income, with earned income from box office and other sales forming 37% of the total. Ticket sales for the 5 companies totalled 1.14 million in 2000/1.

Table 5:7 – Income of five major opera companies 2000/1 £m %

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The Opera for Now report included a survey on education projects undertaken by the opera companies.

72% of respondents ran an education or community programme and one-third of companies had a member of staff (salaried or freelance) to undertake education work. The most common forms of education work were projects in or with schools and pre- or post-performance talks (both undertaken by 71% of those respondents who did education projects). Also popular were introductions to opera for a school audience (57%), projects with higher or further education students (51%), community projects (40%) and masterclasses for students (38%).

5.11.3 Employment, added value, consumer spending and overseas activities

Few opera companies provide significant employment, with the majority of companies running on minimal or no administrative staff and freelance employees being engaged as required. Detailed employment figures are available for the five major opera companies from the Arts Council of England’s Performance Indicators statistical series, and are shown in the table below. These five companies employed just over 3,000 staff either on contract or in permanent positions. Most of the contracted staff are employed in an artistic or creative capacity. Total full-time equivalent employment in opera, including both artistic and administrative personnel, is estimated at 3,500.

2000/1, as yet unpublished.

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Companies are Royal Opera House (adjusted to exclude staff Apportioned to Royal Ballet); English National Opera; Opera North;

Glyndebourne Touring Opera; Welsh National Opera In terms of value added, there is a lack of information in the accounts of the major companies about the fees paid to artists and, in the absence of this data, it has not proved possible to estimate the value added of the opera sector as a whole. An allowance has been made for this in the concluding chapter.

Consumer expenditure on opera is included in the table below which gives box office figures for musical theatre.

The Opera and Musical Theatre Forum, which maintains close contact with member companies, states that overseas touring can be a valuable source of income for some smaller companies since foreign engagements may offer higher fees and better facilities than can be obtained in the UK. However, the high cost of overseas touring for larger companies renders this source less significant for them.

5.12 Musical theatre

Musicals are usually associated with the West End, although they are performed throughout the UK, either in commercial tours or as part of the repertoire of the subsidised theatres. The difficulty in describing this sector is in distinguishing between musicals and other dramatic performances in statistical terms.

The Wyndham Report: The Economic Impact of London’s West End Theatre makes large claims for the economic importance of the West End theatre in general, estimating its value to the UK economy as £1,075 million in 1997. (This includes ancillary spending on such items as meals and transport.) It states that 27,000 people are directly employed by the West End theatre, with additional employment dependent on its existence. It also identifies the West End as a key attraction to overseas tourists; indeed the appeal of British theatres has been noted in various surveys of foreign visitors. The report estimates expenditure by overseas tourists on tickets and ancillary items relating to West End theatre visits to be £226 million in 1997.

Musicals are one of the identifying features of the West End theatre, and since they are usually the biggest productions, playing in larger theatres with more personnel required than for straight drama, it follows that they must contribute significantly to the economics of the West End. Musicals are sometimes thought to be particularly attractive to overseas tourists, especially non-English speakers. However, Wyndham Report, 1998: The Economic Impact of London’s West End Theatre. Author Tony Travers of the LSE, with data compiled by MORI.

Travers cites Survey of Overseas Visitors to London 1996, MEW Research for London Tourist Board, 1996.

– page 33 Counting the notes – the National Music Council report on the economic contribution of the music business research on the West End audience did not seem to bear out this perception, although any audience survey must inevitably represent only a “snapshot” of the situation at a particular time. During the period of the survey (November 1996 – November 1997) the study found that the ‘typical audience member’ at a West End musical was likely to be under 55 (this differs from opera), from the ‘rest of UK’ or Europe, rather than from London, in a group of 5 to 10 people, and to visit the theatre on average only once a year.

Musicals are also one of Britain’s most successful performing arts exports – shows originating in the West End have gone on to be produced successfully all over the world. For example, Phantom of the Opera had (to 1998) earned a worldwide box office of £1.7 billion and Cats £1.1 billion. Earnings and payments relating to these activities are covered by Grand Right fees, which are discussed in the chapter on composition and music publishing.

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The table above shows that in 2001 there were over 10,000 performances of musicals and opera in SOLT and TMA theatres. Audiences totalled nearly 9 million and box office income was over £200 million.

While the box office statistics collected by SOLT and TMA give annual figures for consumer expenditure, no information is collected on employment or value-added in this sector. According to the Wyndham Report for all of London’s West End companies, expenditure on salaries was £106.6 million in 1997, representing 37% of total expenditure. In 2001, SOLT’s annual box office survey indicated that musicals accounted for 41% of performances and 58% of box office revenue. Assuming that musicals have higher average employment costs than other productions (due to larger cast sizes and greater employment of musicians) we have estimated that about 50% of West End salaries are incurred by musicals. Based on the 1997 salary bill for West End theatre, this would produce a value-added for musicals of £53 million, although this of course takes no account of wage inflation since 1997.

For TMA productions, we have applied the same ratio of employment costs to box office income to arrive at a notional figure of £4.8 million for value-added for musical theatre outside London.

Latest available research suggested that a typical West End cast size was 18 (for all productions) and the average cast size for musicals in repertory theatres outside the West End was 13 (Arts Council of England, 1996). Applying these ratios to performances of musicals in West End and TMA venues, the table above suggests that the total number of ‘actor performances’ in musicals is 153,564, equating to 19,196 ‘actor weeks’, giving 400 full-time equivalents. However, anecdotal evidence from TMA suggests that cast sizes in musicals outside the West End have diminished in recent years and so these figures may represent an over-estimate. Full time equivalents in ancillary employment at venues staging musicals have been estimated at 1250.

For A Sound Performance, the Musicians Union provided detailed data on the employment of pit musicians in musical theatre. In the absence of any updated information on this topic, the previous The West End Theatre Audience, MORI for Society of London Theatre, 1998

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Taking all these figures into account, total employment in musical theatre is estimated at 2,075.

5.13 Amateur opera & musical theatre The National Operatic and Dramatic Association (NODA) estimates that about 60% of its 2,300 affiliated societies (ie about 1,380) are ‘operatic’, that is, producing light and grand opera and music theatre. In 2002, NODA engaged in a first comprehensive survey of amateur theatre. Until those data are complete, NODA estimates that box office revenue of its operatic members totals about £13.5 million. Anecdotal evidence suggests that a significant number of societies use paid professional input, ranging from paid musical directors to orchestras paid MU rates. This has not been included in the consumer spending summary, as some of these performances take place in theatres covered by TMA figures.

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– page 35 Counting the notes – the National Music Council report on the economic contribution of the music business 6 The recording industry In the UK the recording of music and the sale of recordings on compact disc (CD) and other physical formats such as music cassettes and vinyl albums is performed by approximately 1,000 active record companies. The industry has traditionally drawn a distinction between the five major companies, notable for their size and dominant position in the market and at one point for their degree of vertical integration encompassing manufacturing and distribution activities, and the independent sector. Whilst the majors do have a significant market share, close to 80% of the albums market by value in 2001, (source - The Official UK Chart Yearly Audit Report –Year 2001-The Official UK Charts Company Ltd) their core label activities are not essentially different to the wide variety of independent record companies. Thus over time artists have moved from one sector to another and many significant independent labels have passed into the major sector by acquisition such as Island, Virgin, Chrysalis, Creation, and more recently Mute.

The sector is represented by two trade associations whose members generate the great majority of recordings in the UK. These are the BPI (British Phonographic Industry) with over 300 member companies (including all majors as well as independent labels), and AIM (The Association of Independent Music) with over 650 company members, of which approximately 65 have dual membership with the BPI.

The recording sector is one where sales data are good, partly as a result of the sophisticated research which is used in the production of the sales charts, and the existence of long-established surveys conducted by the BPI research department.

The most significant source of revenue for UK record companies is the sale of soundcarriers such as CDs, cassettes and vinyl records to the UK market. In the four years to 2001 an average of over 5,100 commercial singles and 19,000 albums per annum were released in the UK market (this figure does not include most re-released albums). (Source - Millward Brown – BPI Statistical Handbook 2002).

Table 6:1 - UK trade deliveries (£ms)

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Expressed as an index with a base of 100 for 1992 total deliveries have been as follows:

In 2001 UK trade deliveries of albums rose in unit terms by 4.4% and by 7.0% in value compared to a decline in world retail sales of 5.0% in value and 6.5% by units – (Source - IFPI-2001-The Recording Industry World Sales (April 2002).) This was attributed to factors which included a strongly performing retail sector, strong release schedules particularly of UK repertoire, falling retail prices, increased TVadvertising and relatively high consumer confidence. This upward trend in the UK was in distinction to many other major world music markets such as the USA, Germany and Japan, which showed significant declines, which were attributed principally to increase CD burning and unauthorised downloading. Sales in the UK as a share of the world market thus rose to 8.3%, from 7.7% in 2000 and 1999 (Source - 2001 – The Recording Industry in Numbers – IFPI].

BPI analysis, based on Gallup and Official UK Chart Company data, showed that within the UK market 47% of album units sold in 2001 were by artists of UK origin, the same as in 2000, but significantly less than the annual average of 52% for the years between 1992 and 1999. This reduction was in part due to – page 36 Counting the notes – the National Music Council report on the economic contribution of the music business the increasing popularity of musical genres such as nu-metal and rap in which US repertoire dominates.

Analysis of album sales by other indicators showed that just over a quarter of sales were of compilation albums as opposed to single artist albums and over 81% were full-price titles, as opposed to mid and budget-priced releases. Pop and rock titles accounted for 59% of the market, with classical repertoire forming just over 4% and minority genres such as folk, jazz and reggae representing around 1% each.

UK record companies also derive substantial revenues from overseas markets both from physical exports and licensing income. These stem from the country’s historic role as the world’s second largest creator of musical repertoire.

Data from Customs & Excise indicates the following:

Table 6:2 - Exports and imports of music products from 1996 to 2001 (£000s)

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