Peter Tschmuck, Philip L. Pearce and Steven Campbell (eds.), 2013, Music Business and the Experience Economy. The Australasian Case. Heidelberg & New York: Springer, ISBN: 978-3-642-27897-6.

For a more detailed book review please click here for further reading.

Book Review: Music Business and the Experience Economy. The Australasian Case

In the introductory chapter Philip Pearce of the School of Business at the James Cook University Townsville lays the foundation of the book by bearing an analogy between music and food. Both are experienced goods and “(…) music, as food, is influenced by similar sophisticated processes in its creation, commercialisation and delivery” (p. 2). The analogy might be inspired by a delicious dinner at Gianna Moscardo’s and Philip Pearce’s home in Townsville, Queensland, where the gathered academic scholars developed the idea of a volume on the Australasian music business.

In contrast to food compositions, music is protected by copyright law. Therefore, Phil Graham of the Creative Industry Faculty at the Queensland University of Technology in Brisbane focuses in his contribution on the role of copyright in the political economy of music in Australia. He reviews the history of Australian copyright legislation through the High Court ruling made in 2012, in which the 1% cap on the broadcast of recorded performances was handed down in favour of the Phonographic Performance Company (PPCA). The author highlights the paradoxes and ironies of the High Court decision and concludes: “The future of Australian recorded music professionals is unclear and there seems no clear or easy path to creating a legislative environment in which that class of professionals can thrive in any great numbers” (p. 25).

David Salisbury of the School of Creative Arts at the James Cook University Townsville highlights in his contribution the new production possibilities for indigenous music in North Queensland and the Torres Strait. He shows that the production modes have dramatically changed from an industry based and controlled system to a more independent and Internet based one in the digital age. In several case studies the author demonstrates that Aboriginal and Torrent Strait artists benefit by digitization in taking “(…) control over their own careers and to promote themselves more directly to the consumer” (p. 39).

Steven Campbell of the School of Creative Arts at the James Cook University Townsville underpins the current change to a digitized music industry by analysing the new opportunities for independent music production in Australia. In his article he explores the impact of the digital revolution on the independent music scene within four dimensions: musical, sociological, sensorial and digital. The author highlights the shift from a commodity-based business model to an experienced-based one, in which the Australian independent music scene benefits more from the advantages than suffering from the disadvantages of the digital revolution.

In the following article Peter Tschmuck of the Institute for Cultural Management and Cultural Studies at the University of Music and Performing Arts Vienna, who was a visiting professor at the James Cook University Townsville in 2010, analyses the recorded music and licencing market in Australia from 2000-2011. He highlights that the recorded music market in Australia has lost 55% of its volume since 2001. Despite the booming market for digital music, the increase could not compensate for the losses in the physical segment. Nevertheless the market of music licencing has profited from digitization. Thus, the collecting societies for performance rights and neighbouring rights profit from increasing revenues, whereas the mechanical rights society suffered from the digital paradigm shift.

Music file sharing is often blamed for the sales decline of recorded music in Australia too. Jordi McKenzie of the School of Economics at the University of Sydney presents results from a study on the impact of music file sharing on sales rankings in Australia. Analysing the results of the study, the author comes to the conclusion that “(…) there is no clear evidence that piracy impacts sales rankings (…)” (p. 96). Instead, the changing environment should be taking into consideration by looking for a more elaborated explanation for the sales decline of recorded music in Australia.

Philipp Peltz of Macquarie University in Sydney reviews the digital distribution models for music that prosper in Australia despite or even because of the presence of file sharing services. He investigates four different business models – free, ad-funded, pay-per-use and subscription-based – models from the content providers’ perspective. The content providers can choose between two different strategies: (1) to lower the barriers to access music to create a strong promotional effect or (2) to heighten the barriers to provide exclusivity. Therefore, the author concludes that in digital music distribution there will be no “killer application” but a mix of different services that can be combined in an overall marketing strategy.

Whereas musician benefit to a lesser extend from digital und physical music sales in the digital age, they more heavily rely now on the revenues from the live music business. Breda McCarthy of the School of Business at the James Cook University Townsville, therefore, highlights the booming music festival market in Australia. In her contribution, she explores the concept of festivals in the digital era and presents the results of several studies on the Australian festival scene to come to the conclusion that “[t]here is growing recognition that festivals have a wider ramification for destinations and benefit musicians, attendees, the community and the wider society” (p. 131).

Guy Morrow of the Department of Media, Music and Cultural Studies at the Macquarie University in Sydney deepens the analysis of Australia’s live music market by a case study on the Australian tour of the independent rock-folk band Boy & Bear. He highlights that the bands in Australia has to take higher risks in concert promotion than in is usual the US and the UK. It is common for a mid-level Australian artist to manage and promote their live shows themselves, without the assistance of a promoter. “Therefore (…), the Australian live music industry more readily lends itself to the potential of start-ups (…)” (p. 152) that support artists in their efforts to manage and promote concerts.

The challenges of digitization for the recorded and live music business forced musicians to search for additional revenue sources beyond the traditional business models. Laurie Murphy, Andrea Schurmann and Gianna Moscardo of the School of Business at the James Cook University Townsville highlight the potential of music branding. In their chapter they examine the links between music and brands using three cases studies in Australia: Wolf Blass, Qantas and the TV-show Offspring. The case studies, therefore, illustrate “(…) the role that music can play in fostering brand knowledge transfer at all levels, at developing ties between the brand and the consumer and between consumers in the brand community , in defining and differentiating brand personality, and in weaving the brand into thoughts, feeling, emotions and daily experiences of consumers” (p. 172).

In a similar way music plays an essential role in Australian team sports such as rugby, Australian football and cricket. Philip Pearce shows in his contribution the synergies music and sports have in Australia. The Australian Rugby League for example mainly uses Australian music as promotional songs and Australian artists regularly appear at the Australian Football League Grand Finals. Thus, sport events are a perfect promotional tool for musicians on the one hand, but music is vice versa an important emotional element in the dramaturgy of sport events. Thus, “there is a happy marriage of music and the sport” (p. 188).

However, the main indicator for the popularity of Australian music are the sales charts of the Australian Recording Industry Association (ARIA). In his contribution, Peter Tschmuck analysed the ARIA charts in the period of 1988 to 2011. He identifies a cycle of popularity of Australian popular music. In the years from 1988 to 1995 Australian superstars such as INXS, AC/DC, John Farnham and Kylie Minogue charted high despite the dominance of international repertory. A generation shift to younger acts such as Powderfinger, Silverchair, Grinspoon, Savage Garden and The John Butler Trio shaped the period from 1995 to 2002 with less chart successes for Australian music. However, in 2002 the Australian music market entered the “Golden Age of Australian music” with great chart successes by Australian acts, which was fuelled by casting shows on the one hand and the emergence of innovative indie labels on the other. Since 2008 Australian music is less successful in the charts which indicates a new transition period in the popular music market.

In the concluding article in this book volume on the Australasian music biz, Ryan Daniel of the School of Creative Arts at the James Cook University Townsville analyses the role of music business and industry knowledge transfer in current undergraduate music programs in Australia. The author highlights that 55% of all undergraduate music practising programs do not offer compulsory courses in music business, industry and entrepreneurship. Of the 25 courses that include these courses, 17 did on a limited level. Thus, only 14% of the degree courses involve a substantial component of enterprise learning. Therefore, the author identifies an urgent need to expand the offer of substantial business and entrepreneurial courses for music students to enhance their ability to accomplish with the challenges in their professional field.

To sum up, “Music Business and the Experience Economy. The Australasian Case” provides for the first time a cross-disciplinary contributions on the Australasian music business. The articles cover legal, economic, entrepreneurial, marketing, sociological, musicological and music educational topics. The book is, therefore, a good choice for anyone who wants to know more about on the production, distribution, consumption and education of music in Australia and the neighbouring countries.

Peter Tschmuck, Philip L. Pearce and Steven Campbell (eds.), 2013, Music Business and the Experience Economy. The Australasian Case. Heidelberg & New York: Springer, ISBN: 978-3-642-27897-6.

International Journal of Music Business Research, April 2013, vol. 2, no. 1

Data

Aguiar and Martens use Nielsen NetView data which were collected from representative panels of 25,000 Internet users in the five largest European countries – France, Germany, Italy, Spain and UK – for 2011. They classified three types of music consumptions sites on the web: file sharing networks (such as Torrents), music streaming portals (such as Spotify, Simfy, Deezer) and music download shops (such iTunes, Amazon Music). In total, the authors identified 2,759 music consumption related websites, which amounted to 5 million clicks during 2011. However, they restricted their sample to sites with more than 300 clicks per year. This results in a total number of 779 websites which were analysed in detail.

However, the method applied did not allow to observe precise consumer behaviour, but the number of clicks by the Internet users on music consumption sites. This also prevents to detect the music content of a download and stream. Thus, if the purchasing and non-purchasing clicks do not correlate, this would bias the statistical results. The authors realized this measurement problem and therefore states (FN 10, p. 7): „Since we do not expect the error component of our measure to be correlated with our measures of illegal downloading and legal streaming, the consistency of our estimates will not be affected“. Aguiar and Martens counter critical comments by the International Federation of the Phonographic Industry (IFPI) and journalists that they used the number of clicks on legal download platforms as dependent variables instead of the real purchase behaviour. The final measure of legal purchases would be larger, if they could include the clicks corresponding to legal downloads. In the words of the authors: “[O]ur current measure of legal digital music purchases is lower than the true one”. This also means that the real substitution effect of filesharing and streaming on legal download is weaker and the complementary effect is stronger than measured in the applied statistical model.

In contrast, the authors do not clearly address the problem to measure clicks on peer-to-peer file sharing services without differentiating between music, books and movies, whereas the later dominates the file sharing traffic. Nevertheless the authors believe that the number of clicks on file sharing sites is a useful proxy variable for downloading music for free.

Descriptive Statistics

Decriptive statistics show remarkable differences across the five investigated countries. Spain has the largest number of clicks on file sharing sites and the second lowest number of clicks on legal music websites – after Italy. Italy and the UK show also a larger number of clicks on file sharing networks compared to France and Germany.

Males are more active in purchasing, streaming and filesharing music than females, whereas the difference is largest in file sharing. It is less surprising that the under 30 years’ olds are the most intensive users of file sharing and streaming services. The most important age group in purchasing music are the 26-30 years’ olds, followed by the 41-50 years’ olds and the 31-40 years’ olds. The young generation (under 26) and the older generation (over 50) are less interested in purchasing music. Education, however, does not play any significant role whether music is consumed by file sharing, streaming and downloading. Households with a small and high annual income tend to stream music more often than households with an average income. As expected, the lower income groups prefer file sharing. It is remarkable, however, that low income households more often purchase music by downloading than middle and high income households.

Another remarkable difference exists between regular file sharers music purchasers. The later are less active on the Internet (2.5 months per year) than file sharers, who are online 5.8 month per year on average. Thus, file sharers more often click on purchase sites (10% more often) and on streaming sites (40% more often) than non-file sharers. The difference between music streamers and non-streamers is very similar. Music streamers click twice as often on purchase sites than Internet users that do not stream music. This is again an evidence that file sharers use more often legal music download platforms and streaming services than non-file sharers. The cross correlation of the number of clicks on different music consumption channels can be seen in fig. 1:

Figure 1: Cross correlation of the number of clicks on legal download, file sharing and streaming websites

Source: digitalmusicnews.com, March 18, 2013.

Statistical Model and Empirical Results

There is need of a statistical model that partially controls for unobserved heterogeneity to measure the impact of file sharing and streaming on legal downloads. All three ways of music consumption are affected by an unobservable variable – musical taste. Thus, a direct measurement of the impact of filesharing and streaming on legal downloads is biased towards a positive correlation. To control for unobserved heterogeneity, the authors used clicks on music-related websites such as radio and music-video sites, but also music related sites without direct music consumption such as websites for songs’ lyrics, musical instruments, music news and music blogs. The statistical test shows that the vector composed of these variables significantly correlate with the independent variables – file sharing and streaming.

In controlling for unobserved heterogeneity more explanatory variables were added step by step. At the end the estimated coefficients show a small but positive impact of file sharing and streaming on digital music purchases. Both models, OLS and Tobit, came to similar results. In addition, a longitudinal approach is operated to overcome the obstacle that file sharing and streaming are endogenous. The results, thus, did not change fundamentally.

After all statistical methods applied, the model shows “(…) that illegal downloading and legal streaming have both a positive and significant effect on legal purchases of digital music” (p. 14). The calculated elasticities are 0.02 between file sharing and legal downloading and 0.07 between streaming and digital music purchases. This means that a 10% increase in clicks on file sharing sites leads to a 0.2% increase in clicks on legal music download sites. In the case of streaming a 10% increase results in a 0.7% increase in clicks on digital purchase websites (p. 1). In the absence of file sharing the clicks on legal download sites would be 2% lower.

The results show remarkable differences across countries, but the impact is always positive or at least not negative – such as in Spain and Italy. In France and UK the elasticity between file sharing and legal downloads is close to 0.04. Therefore, the authors conclude: “All of these results suggest that the vast majority of the music that is consumed illegally by the individuals in our sample would not have been legally purchased if illegal downloading websites were not available to them” (p.16). The results are valid ceteris paribus if no external influences such a changes in relative prices occur. The impact of streaming on digital music purchased also differ across the countries with elasticities of 0.6% in France and UK and 0.35% in Spain and Italy.

Finally the study comes to the conclusion: “[O]ur findings indicate that digital music piracy does not displace legal music purchases in digital format. This means that although there is trespassing of private property rights (copyrights), there is unlikely to be much harm done on digital music revenue.” The authors explicitly state that their findings cannot be generalized for the entire recorded music market (physical sound carriers included) and that the results contradict earlier research that found sales displacements of physical music sales by file sharing. The authors, however, conclude that “(…) music piracy should not be viewed as a growing concern for copyright holders in the digital era. In addition, or results indicate that new music consumption channels such as online streaming positively affect copyrights owners” (p. 17).

Critical Remarks

How reliable are the results of the study? It is problem that the number of clicks on music consumption websites were counted instead of measuring real digital music sales. Further it is questionable if the number of clicks is a good proxy for music consumption without considering the content. In the case of file sharing also other content than music was included in the sample. The authors try to circumvent the problems by using clicks on other music related websites as a proxy for music consumption. They argue that this also solves the problem of unobserved heterogeneity. As a statistical method this approach is legitimate. However, valuable qualitative information on music genres and musicians is lost. Therefore, it is for example impossible to differentiate between single and album sales. Maybe file sharing and streaming have a different impact on single track downloads and album download. It would also be possible that newcomers and less established artists are affected in a different way by file sharing and streaming than superstars. Although the authors could solve the problem of unobserved heterogeneity with the applied graduated statistical model, no qualitative conclusion could be drawn. The overall results, however, are valid a reliable.

Nevertheless an approach that tests the impact of file sharing by using log files and real streaming data on sale figures for digital music downloads would provide more insights into the relationship of different ways of music consumption. It is striking, however, that studies using this kind of method – Blackburn, Oberholzer-Gee/Strumpf and Tanaka – all came to the same conclusion that file sharing does not hurt music sales, which is more or less in line with findings of the JCR study.

Despite legitimate critique on the methodical approach of the JCR-study, the results show a weak but significant positive impact of file sharing and streaming on digital music sales. This should be seriously reflected by the artists and rights holders. A positive impact should be used for one’s own account instead of denying and refusing the results, since they do not fit in the usual thought patterns.

References

Aguiar, Luis und Bertin Martens, 2013, Digital Music Consumption on the Internet: Evidence from Clickstream Data. JRC Technical Reports. Institute for Prospective Technological Studies Digital Economy Working Paper 2013/4.

Blackburn, David, 2004, On-line Piracy and Recorded Music Sales. Working Paper an der Harvard University.

International Federation of the Phonographic Industry (IFPI), “IFPI says Digital Music JRC study is flawed, misleading and disconnected from commercial reality”, Presseaussendung, 20. März 2013.

Oberholzer-Gee, Felix und Koleman Strumpf, 2007, “The Effect of File Sharing on Record Sales. An Empirical Analysis”. Journal of Political Economy, Vol. 115, No. 1 (2007).

Peoples, Glenn, “European Study on Piracy Conflicts With Conventional Wisdom”, Billboard.biz, 18. März 2013.

Resnikoff, Paul, “Piracy Has Zero Impact on Legit Purchasing, European Study Concludes…”. Digital Music News, 18. März 2013.

Tanaka, Tatsuo, 2004, Does file sharing reduce music CD sales?: A case of Japan. Working Paper 05-08 des Institute of Innovation Research, Hitotsubashi University in Tokio.

The key findings of the 2011 study are:

• The computer is no longer their main entertainment hub.
• Digital music collections are still huge.
• Digital music collections still contain 50 percent “free” music.
• Ownership is still important.
• Music is no longer the most popular entertainment type.
• There remains a very clear “value gap”.
• The popularity of file sharing has changed significantly.
• The 14-25 years olds are prepared to pay for digital music.
• But there are still challenges for streaming music online.
• Digital music consumption is still complex.
• They have a clear understanding and grasp of what copyright law is.

Please read further if you want to know more about the research results.

The technological background of music consumption

85 percent of the respondents declare that they use the Internet access at home and 61 percent, therefore, rely on their parents. A small minority accesses the Internet from school and university. Mobile phones are also hardly used by the young generation (3 percent) to get online. The four most popular Internet service providers (out of 60 operating in the UK) are Virgin (26 percent), British Telecom (24 percent), Sky (12 percent) and Talk Talk (9 percent). They account for 71 percent of the young Internet users’ market. The mobile phone market for the youngsters is also dominated by four companies: o2 (23 percent), Orange (21 percent), Vodafon (11 percent) and T Mobile (9 percent).

The MP3 player (such as the iPod) is the top playing device for music. 65 percent of the respondents use it on a daily basis. The computer is still an important music hub for 56 percent, but only 36 percent use computers for music streaming. Radio is used by 47 percent and TV by 34 percent to listen to music. However, social media (such as Bebo, YouTube, Facebook) are used on a daily basis to consume music by 43 percent of the respondents. The mobile phone has become increasingly important. It is used for music listening by 34 percent, whereas the CD player has become a less important music playing device – 18 percent use it on a daily basis.

The size of music collections

MP3 players have become increasingly important as a storage device for music since 2008/2009. Whereas 1,800 music tracks were stored on MP3 players in 2009, the number of digital tracks has increased to 2,800 in 2011.

On average each respondent has a digital music collection of 3,802 tracks stored on several devices. And it’s worth mentioning that for half of the tracks it has not been paid for.

In comparison the average CD collection of 100 of a young person is relatively modest. 20 percent of the respondents have more than 100 orginal CDs on their shelfs at home and 4 percent even more than 500 CDs. However, 9 percent state that they own no orginal CDs. The collection of copied CDs is significantly smaller. Only 4 percent of the youngsters have more than 100 CDs, whereas 18 percent do not have any copied CDs at all. CD burning, therefore, is a less popular activity among the young generation and they prefer original CDs to copied ones.

Music copying

As compared to 2009, it is still very important to 87 percent of the respondents to copy music between different devices (e.g. from computer to MP3 player and mobile phone). The practice of music copying, therefore, is widespread among the youngster. 88 percent ripped music from a CD onto a computer and other devices respectively, but a smaller group of 56 percent ripped an original CD (they have paid for) to another device. 67 percent received a copied CD from friends and 56 percent received music files via email, Bluetooth or Skype. 54 percent sent music this way to friends. 44 percent downloaded someone else’s entire music collection from a computer and 38 percent copied the music collection to other computers. 34 percent used cloud based music services and music lockers to copy music and 29 percent practised stream ripping. Despite the high affinity to music copying, only 32 percent of young people agree that device manufacturers should pay a fee to compensate artists when their work is copied.

Music file sharing and the awarness of copyright law

The use of music file sharing is in decline. In 2009, 61 percent confirmed to share music on P2P networks, whereas by 2011 the share of file sharers has declined to 40 percent. However, the use of file hosting services was not separately asked. But also the frequency of file sharing use changed. Whereas in 2009 32 percent of the respondents used file sharing on a daily and weekly basis, only 13 percent are heavy file sharers in 2011. In addition 46 percent said that their file sharing activity decreased more or less dramatically.

74 percent fileshare because it is free. 61 percent wanted to get music they cannot buy. 63 percent of the respondents experimented with filesharing and 53 percent use P2P networks to find new music. A smaler group of 24 percent wanted to find new music before release.

The main reason for not filesharing is worrying about viruses. 95 percent of the non file sharers said that. 77 percent argued that file sharing is illegal and 52 percent even said that file sharing is stealing. Less than half of the respondents did not want to fileshare since artists are not paid and 47 percent critized the poor sound quality of shared music files.

There is a high awarness of copyright law. 92 percent knew that sharing music without the owner’s consent is illegal under UK law. However, 35 percent would not stop their illegal behaviour if the Internet account holder is made aware that their connection could be disrupted. Only a minority of 31 percent would clearly change their infringing behaviour and 34 percent maybe would do. However, it is striking that exactly the same percentage of respondents (31 percent) supported graduaded response measures whereas 35 percent opposed them.

The need for new business models

There is, however, a strong interest of young persons to pay for an unlimited music download service which allows the easy tranfer of music to several devices. 69 percent of the respondents are in favour of such an all-you-can-eat download flatfee model. It is worth mentioning, however, that 85 percent demanded this kind of service in 2009. 74 percent of the respondents indicated they would not use P2P networks if they had such an unlimited download service. A small minority of just 6 percent would still fileshare music despite such a service would be available. In contrast, 59 percent indicated that they would still buy orginal albums (as CDs, downloads, vinyls) in the presence of such a service. Furthermore, 60 percent prefer to buy original albums because of the high sound quality. In 2009, the main reason for purchasing albums was artwork and sleeve note. Also important was the financial support for artists (51 percent of the respondents) and the desire to own a physical product (48 percent of the respondents) in 2011.

Thus, it is a fact that the younger generation still wants to own music, also in a digital format. 79 percent, therefore, agreed to the question: “With access to so many streaming services, are you still interested in ‘owning’ music”. Nevertheless, music streaming is also popular among youngsters. 74 percent indicated they would no longer use filesharing networks if they used a streaming service. However, an overwhelming 88 percent said that they never had paid for streaming service such as Spotify. Spotify is by far the most popular streaming portal. The awarness for other service such as Play.com, Last.fm, YouTube, HMV, Napster, Grooveshark, We7, Soundcloud and 7digital is significantly lower.

Cloud-based music services are incleasingly popular among the the younger generation. 45 percent indicated that they are interested in such a service. 44 percent would even consider to switch the mobile phone operator or broadband supplier to another if it offered a music service as part of its monthly fee.

The valuation of music

Young people invest nearly a third of their disposible montly income for their mobile phones. The rest of the expenditures are evenly allocated to film (14 percent), games (13 percent) recorded music (12 percent), live music (12 percent) and books & magazines (10 percent). Live and recorded music, however, account for 74 percent of the expenditures for Top 3 things they spend money on.

Music is highly valued by the 14 to 25 years olds. 81 percent of the respondents indicated that music is an essential item for them. Actually, however, only 24 percent pay for music. The authors, thus, identify a significant value gap compared to other essential items such as mobile phones, film and sport.

The ratio of spending on live and recorded music is 50:50. There are, however, very clear differences between the two age groups with the younger group (14-17 years olds) spending more on recorded music and the older group (18-25 years old) prioritising live music

The authors also asked for the most favoured music genres and rock and pop music gained the top position. Independent music was also very popular, whereas R’n'B & Urban, HipHop & Rap, metal and dance were less popular among the young generation.

Unsurprisingly, friends are still the dominant factor to discover new music, followed by YouTube, radio (!), social networks, MTV, other music channels and TV in general. However, the low relevance of file sharing networks alongside with the national press and music press (beaten by music blogs and online music sites) for discovering new music is surprising.

Conclusion

The authors come to the final conclusion: “The continued passionate support for music amongst young people remains undiminished and provides grounds for optimism. However this support cannot be taken for granted and there is evidence of considerable antipathy to the music industry. It must embrace the new paradigm of consumer choice and the need to better meet the expectations of their future customers.”

Dennis Collopy and David Bahanovich, Music Experience and Behaviour in Young People, University of Hertfortshire, September 2012.

Dennis Collopy and David Bahanovich, Music Experience and Behaviour in Young People. University of Hertfordshire, 2008.

Dennis Collopy and David Bahanovich, Music Experience and Behaviour in Young People. University of Hertfordshire, 2009.

For a summary of the study, please click here

DiCola’s paper is based on the “Artists Revenue Streams” Internet survey, which was conducted from September 6, 2011 to October, 28, 2011.  5,013 respondents – of a total of 7,395 people – provided information about their income. However, the sample is not representative for the population of musicians in the U.S., since the data was not randomly collected on the Internet. Nevertheless, the large sample size allows a good insight into the revenue situation of the survey participants.

Basic demographics

In the sample musicians aged 50-59 are the largest group of respondents (25.3%), followed by those aged 30-39 (21.4%), by 40-49 years old (18.1%) and those aged 18-29 (17.8%). The age groups of 60-69 years old (13.5%) and older than 70 (3.9%) account for the rest of the sample. From a gender perspective, the sample consists of 69.6% male and 30.2% female respondents. 0.2% defined themselve as transgender. The sample is dominated by “white” musicians (87.6%), whereas members of other ethnicities (African American, Hispanic/Latino, Asian etc.) account for the rest. Taking these demographics into consideration, the composition of the sample is anything else than representative.

There is a bias towards higher income groups too. A proportion of 18.7% declared overall annual revenues of less than US$ 20,000. A further 25.1% earned US$ 20,000-39,999 annually and 19.6% from US$ 40,000-59,999.  The same proportion had an annual income of 19.5% of US$ 60,000-99,999 and the rest of 10% earned more than US$ 100,000. A small group of 99 respondents (1.8%) reported an annual income of even more than US$ 200,000. To sum up, the median annual income was US$ 50,000 and the mean was US$ 55,561.

It is striking that a high share of 42.1% earn their total income from music and music related activities. A further 10.6% assumed that 75-95% of their annual income is music related and 6.4% earned at least more than half from music. Almost a quarter (24.1%) of repsondents derived 5 to 20% of their income from music. This reflects a considerable proportion of amateurs, hobbyists and approaching musicians in the sample.

By defining a “full-time” musician as someone who derives more than 75% from music and spends more than 36 hours per week on music, 32.2% of the sample can be labeled as “full-time” professionals. 20.8% said that they even spend more than 45 hours per week on music, whereas 27.6% cannot invest more than 15 hours weekly on music related activities. 24.1% spend 31-45 hours and a further proportion of 27.3% spend 16-30 hours; most of them are multiple job-holders.

In respect of music genres, the largest group of respondents are classical musicians (34.7%), followed by jazz musicians (16.2%), rock musicians (7.2%) and pop musicians (4.5%). In the sample we can also find 229 (4.3%) self-declared songwriters/composers and 3.5% of singer-songwriters. Representatives of other music genres such as folk, country, rap/hip-hop, blues, electronic, Christian music, punk, heavy metal, soul, funk, reggae etc. do not account for more than 3% each in the sample.

These figures underline the fact that the sample is anything than representative. It comprises mainly of male, “white” classical and jazz musicians. This has to be considered by interpreting the final results.

The musicians’ revenue streams in detail

In the survey the respondents were asked to allocate their income – in percentage terms – to seven categories of musical occupations and a miscellaneous category:

(1)   Money from songwriting/composing including publisher advances, mechanical royalties, collecting societies’ royalties, commissions, composing jingles and soundtracks, synch licensing, ringtone licensing, sheet music sales

(2)   Salary as an employee of a symphony, band or ensemble

(3)   Touring/shows/live performance fees earned as solo performer or as band/ensemble member

(4)   Money from sound recordings including sales of physical or digital recordings, payments from interactive streaming services, Internet radio, SoundExchange royalties, master use licensing for synchs or ringtones

(5)   Session musician earnings, including payment for work in recording studios or for live performances, freelance work

(6)   Merchandise sales

(7)   Teaching

(8)   Other

On average, the largest revenue stream for musicians comes – unsurprisingly – from live performances, which account for 28% of the total annual income. Teaching is another important income source with a share of 22%. Salaries from orchestras, bands and other ensembles account for 19% and session work for further 10 percent. Less important are revenues from compositions (6%) and from sound recordings (6%). However, the smallest contribution to the annual musician’s income comes from merchandising sales (2%). Other revenue sources account for the remaining 7% of the musicians’ earnings.

However, the high percentage share for the salary category and the small shares for composition and sound recording reflect the relatively large proportion of classical and jazz musicians in the sample. We get, nevertheless, a good insight into the income sources of musicians in the U.S., but it is important to to break down the aggregate numbers by genre, income class and other variables.

The author, therefore, defined three types of musicians’ income that have a different relationship to copyright law. Whereas revenue from compositions and sound recording has a direct relationship to copyright, revenue from teaching, live performance, salaries and merchandising sales has an indirect or no relationship to copyright. Session work is considered by the author to have a mixed relationship to copyright, since the payment in studio sessions is indirectly based on copyright law.

On average, 78% of a musician’s income from music derives from revenue that has no or indirect relationship to copyright such as teaching, live performance, salaries and merchandising sales. In contrast, only 12% of the average income derives from copyright related sources such as sound recording and composing. And the remaining 10% of session work has mixed relationship to copyright.

However, a more detailed analysis of several income groups unveils remarkable differences. The top income group – earning more than US$ 330,000 from music – reported an annual revenue from compositions of 28%. Therefore, DiCola (p. 34) concludes: “[T]his simply tells us that composition revenue accompanies success.” In contrast, revenue from sound recordings does not exceed 5% for any of the income groups in the top half of the population. For the lowest income group sound recordings account at least for 9% of the total annual income from music. Nevertheless sound recording income does not play an important role for any of the income groups. For the lower-income groups session work is more important. However, the most important revenue stream for the lower half of the income groups comes from live performances (figure 2)

The survey also unveils considerable differences in revenue shares by four genre categories: classical, jazz, composers and rock/pop and other genres. Whereas classical musicians make only 10% from live performances, they earn 36% instead from salaries and 33% from teaching. Session work is less important for classical musicians with a share of 10% and revenue from composing and sound recording is more or less irrelevant. Jazz musicians mainly rely on income from live performances, which accounts for 37% of their average annual income. 15% derives from salaries and 24% from teaching. Similar to classical musicans, jazz musicians earn only a small proportion from composing (4%) and sound recording (3%). These two income sources are more important for rock/pop musicians (and all other genres) with a share of 8% from composing and 10% from sound recording respectively. However, they rely heavily on live performance revenue which accounts for 40% of total revenue. Teaching (13%) and session work (9%) are less important for rock/pop musicians (figure 3).

The survey also illustrates the differences in revenue mix by income group and genre. No income group of classical and jazz musicians relies much on composing and sound recording. Only the top income group (1^st percentile) of jazz musicians have some reliance on these copyright related revenue streams with a share of more than 25%. Session work is only relevant for the highest and lowest income group of classical musicians, whereas teaching is the predominant revenue source for the middle income groups. With a share of 5-10% session work is less important for all income groups of jazz musicians. Rock and pop musicians rely more on coypright related income sources than musicians of other genres. The top two income groups earn more than a quarter from composing and sound recording annually. Nevertheless the relevance of copyright related income declines with a decreasing annual income. Similarily, session work is more important for the top two income groups of rock and pop musicians with a share of 25%. The less rock and pop musicians earn annually the less important is revenue from session work.

Self defined songwriter and composers have a different mix of income streams. 40% of their annual income derives from composing and a quarter comes from teaching. At least 10% of the revenue is live performance income and 5% derives from sound recording and session work each. The top two income groups of composers more heavily rely on their main occupation – composing – than lower income groups. Nearly ¾ of their income derives from that source. With a decreasing overall income from music, composing revenue becomes less important as income souce and accounts for less than 50% of the annual income from music. Vice versa teaching becomes more important with a decreasing annual income.

Trends in revenue streams and conclusion

The survey data show a high diversity in revenue streams of musicians in the U.S. especially in terms of genres and income groups. Whereas the decrease in recorded music sales does not significantly affect the average annual income of jazz and classical musicians, it would have a limited but negative impact on rock and pop musicians. A recession in the live music market on the other hand would have tremendous negative consequences for the income of rock/pop and jazz musicians, whereas classical musicians would be less affected, since they mainly rely on salaries. And it makes a difference if a musician belongs to the top, middle or low income groups. Those on the top suffer more from decreasing copyright-related revenues (composing, sound recording, session work) than the lower income groups, who rely more on teaching and performing. Thus, DiCola (p. 43) concludes: “Musicians play multiple roles in their music-related work. (…) Each musician is like his or her own small business; musicians have to be ready to adjust to different opportunities and changing consumer demand”. And “[p]olicymakers should expect musicians to adjust their allocation of time among roles in response to such changes.” This means, if the entire music business shifts away from recorded music sales towards live performance and teaching legislators should adjust to such a new situation by supporting the live music business and strenghening the financial basis of orchestras and music ensembles as well as music education institutions to improve the economic status of musicians.

This conclusion is supported by DiCola’s analysis of the responses to questions asking for the respondents’ assessment of the change of income from composing and sound recording. A majority (58%) of 1,054 repondents assumed a significant increase in royalties from online retail sales. Another 51% reported an increase in royalties from music streaming. Further 46% said that they get higher webcasting royalties from SoundExchange. In contrast, 50% of the recording artists reported a decrease in mechanical royalties. Another 41% said that financial support from record labels is also in decline. A majority blamed the decline on label-wide cutbacks. Another important explanation for the cutbacks was the decline in traditional retail. A little more than a one-third of those reported a decline in label support since they left their label to release their own music. 15% of the recording artists who reported a decrease in mechanical royalties blamed the decline to the shift from an album to a single driven music market.

Finally, the survey also asked for the attitudes toward technological change among the U.S. musicians. Rock and pop musicians, therefore, employ the widest variety of web tools to produce, promote and distribute their music. Composers, jazz musicians and classical musicians are less online affine. Moreover, lower-income musicians tend to use online tools more in rock and pop, whereas middle-income musicians in jazz and classical do so (p. 41).

In fact, a majority of respondents do not see less control over their musical work in the age of digitization, but more control and more options. The respondents also have a diverse opinion on the impact of music file sharing on their income. Slightly more than half of the respondents argued that file sharing has made it more difficult to earn an income, but the other half did not see any negative impact. Similarily the statement “My music has been devalued” received slightly more strong agreement than disagreement (p. 42). However, the lowest-income groups reported more positive attitudes about digitization, whereas high-income group are more sceptical. Rock and pop musicians were also more positive about digitization than classical and jazz musicians as well as composers in the top half of the income distribution. “These results confirm the diversity of opinions about the Internet among musicians, and show how that income bracket and genre explain some of the variation” (p. 43).

Limitations

At the end of this summary the limitations of the survey should also be considered. Since the survey was Internet-based the data collected is not representative for the population of U.S. musicians. Thus, the results and conclusions may not be generalized. The author also points at the missing cost side of the analysis. The respondents were only asked for their revenues but not for the cost of revenue. However, live performances and tours can be very expensive and therefore could create a loss. Recording expenses and promotional costs could also cancel out any revenue earned. Thus, the survey does not allow any direct conclusions on the economic and social status of musicians in the U.S. The survey’s results are nevertheless very important to understand how musicians earn their living in the age of digitization and I highly recommend to read the entire study “Money from Music: Survey Evidence on Musicians’ Revenue and Lessons About Copyright Incentives” by Peter DiCola.

Learn more about the “Berlin Music Video Awards” here: http://www.berlinmva.com/

However, from a music business research perspective, one of the highlights were the Third Vienna Music Business Research Days on “New Music Consumption Behaviour” held at University of Music and Performing Arts Vienna. Recent studies on music consumption behavior in the the UK, Austria and in the US were presented and the graduaded response scheme of the French authority for protection of copyrights on the Internet (HADOPI) was discussed. Further, the best paper of the Young Scholars’ workshop was awarded for the first time: “The ‘artepreneur’: A model for future success and personal fulfillment for artists” by Maike Engelmann, Lorenz Grünewald and Julia Heinrich of Hanover University of Music, Drama and Media. As a reward the paper was published in the October issue of the International Journal of Music Business Research (IJMBR), whose first issue was already published in April 2012:

Volume_1,_no_2,_October_2012

Editorial by Dennis Collopy, Peter Tschmuck and Carsten Winter, pp. 4-6

Jari Salo: Customer Experience Management in the Music Industry Online Communities, pp. 7-30

Maike Engelmann, Lorenz Grünewald and Julia Heinrich: The New Artrepreneur – How Artists Can Thrive on a Networked Music Business, pp. 31-45._ (awarded best paper of the Young Scholars’ Workshop of the 3rd Vienna Music Business Research Days 2012)

Carsten Winter: How Media Prosumers Contribute to Social Innovation in Today’s New Networked Music Culture and Economy, pp. 46-73

Volume_1,_no_1,_April_2012

Editorial by Peter Tschmuck and Dennis Collopy, pp. 4-6

Patrik Wikström: A Typology of Music Distribution Models, pp. 7-20

Pinie Wang: Music and Advertising. The Influence of Advertising and the Media on the Development of the Music Industry in the USA, pp. 21-43

Martin Kretschmer: Copyright Term Reversion and the “Use-It-Or-Lose-It” Principle, pp. 44-53

In the following you can find all academic theses & papers, which have been added for downloading in 2012. In addition find a list of important music business/industry studies and books published last year. You can also find a top-10-list of the most visited blog-posts and some more information.

The following academic thesis was added for downloading in 2012:

Matoušek, Daniel, 2012, Digitální distribuce hudby. Master Thesis, Masaryk University Brno.

The following music business related studies were published in 2012:

Barker, George and Tim Maloney, 2012, The Impact of Free Music Downloads on the Purchase of Music CDs in Canada. Working Paper No. 4 2012, Centre for Law and Economics, ANU College of Law.

Danaher, Brett, Michael D. Smith, Rahul Telang and Siwen Chen, 2012, The Effect of Graduated Response Anti-Piracy Laws on Music Sales: Evidence from an Event Study in France. Working Paper, Department of Economics, Wellesley College, Wellesley, MA, USA.

eMusic and AIM, 2012, Consumer Motivations: Moving from Physical to Digital.

GfK, 2012, Der Veranstaltungsmarkt in Deutschland 2011. Commissioned by Musikmarkt and Bundesverband der Veranstaltungswirtschaft e.V.

GfK, 2012, Studie zur digitalen Contentnutzung 2012. Commissioned by Bundesverband Musikindustrie e.V., Gesellschaft zur Verfolgung von Urheberrechtsverletzungen e.V. and Börsenverein des Deutschen Buchhandels e.V.

Hammond, Robert G., 2012, Profit Leak? Pre-Release File Sharing and the Music Industry. Department of Economics, North Carolina State University, USA.

House of Research, 2012, Auswirkungen digitaler Piraterie auf die Ökonomie von Medien. Untersuchung der Effekte von Urheberrechtsverletzung auf die Film-, Musik- und Games-Wirtschaft in Deutschland und der Region Berlin-Brandenburg. Commissioned by Medienboard Berlin-Brandenburg GmbH and GAME Bundesverband der Computerspielindustrie.

Institut für Höhere Studien, 2012, Ökonomische Effekte der Musikwirtschaft in Wien und Österreich. Commissioned by Wirtschaftskammer Wien.

Legrand, Emmanuel, 2012, Music Crossing Borders. Monitoring the cross-border circulation of European music repertoire within the European Union. Report commissioned by European Music Office (EMO) and Eurosonic Noordeslag.

The following music business/industry books were published in 2012:

Anzenbacher, Christoph, 2012, Audiologos. Integrative Gestaltungsmaßnahmen vor dem Hintergrund der Musikpsychologie. Baden-Baden: Nomos.

Bauer, Christine, 2012, Bands as Virtual Organisations. Improving the Process of Band and Event Management with Information and Communication Technologies. Frankfurt am Main etc.: Peter Lang Verlag.

Byrne David, 2012, How Music Works. Edinburgh and London: Canongate Books.

Davis, Richard, 2012, Complete Guide to Film Scoring: The Art and Business of Writing Music for Movies and TV. Boston: Berklee Press.

Hardy, Phil, 2012, Download! How the Internet Transformed the Record Business. London: Omnibus Press.

Jones, Michael L., 2012, The Music Industries: From Conception to Consumption. Palgrave.

Reynolds, Andy, 2012, Roadie,Inc. Second Edition: How to Gain and Keep a Career in the Live Music Business. CreateSpace Independent Publishing Platform.

Riches, Nicola (ed.), 2012, The Music Management Bible. The Definitive Guide to Understanding Music Management. New edition, completely revised and updated. London: SMT.

Rose, David, 2012, Everything I Know About The Music Business I Learned From My Cousin Rick. The Musician’s Practical Guide to Success. White Plaines: Shuman & Goldstein Publishing.

Soames, Nicolas, 2012, The Story of Naxos: The Extraordinary Story of the Independent Record Label That Changed Classical Recording for Ever. London: Hachette UK.

The Official Chart Company, 2012, The Million Sellers – The UK’s Greatest Hits. London: Omnibus Press.

Tschmuck, Peter, 2012, Creativity and Innovation in the Music Industry, 2^nd edition. Heidelberg etc.: Springer.

Wetzel, Rene and Julie Cauret, 2012, Online Marketing für die Musikbranche. Toolbox zur Online-Künstlervermarktung. München: Musikmarkt Verlag.

And finally, I would like to thank you for coming to my blog of Music Business Research, which was visited by users from 140 countries. Most of them came from the U.S., U.K. Germany, Australia, Austria, Canada, the Netherlands, France, Spain and Norway, but also from all other European and South American countries, nearly all Middle American and Asian countries and from several African countries and from Pacific countries too.

The top-10 most visited article in 2012:

1.   The recession in the music industry – a cause analysis,  6,747 visits

2.   GAO report on the economic impact of “piracy”,  962 visits

3.   The US Recorded Music Market in the Light of the Billboard Hot 100 – the 1960s, 664 visits

4.   Ticket Masters – Part 5: SFX Entertainment and the Revolution in the Concert Promotion Business, 537 visits

5.   EU Copyright Term Extension in Sound Recordings to 70 Years – An Economic Assessment, 498 visits

6.   Australian Music Business – an analysis of the recorded music sales 2000-2011, 452 visits

7.   Business model “Michael Jackson”, 450 visits

8.   Ticket Masters – Part 4: Online Ticketing and the Secondary Market, 431 visits

9.   Ticket Masters – Part 3: The Ticketmaster’s Challenge: The Grateful Dead, Pearl Jam and String Cheese Incident, 423 visits

10.  Ticket Masters – Part 2: The Rise of Ticketmaster, 403 visits

All in all, the Music Business Research Blog was visited 39,100 times in 2012. This results in more than 100 blog visits a day. Since March 2010, when I have started to blog on music business/industry topics, the posts and articles were visited 73,575 times. I am sure you will help me to cross the 100,000 mark in 2013. I will try my best to provide to you interesting articles and information on the music business/industry and there will be some new features too. Stay tuned and see you soon on my blog. Best wishes, PETER.

In the fourth and final part of the series on China’s music industry, John Fangjun Li highlights the current situation in the recorded music industry in China, which is totally occupied by digital online and mobile music services.

Guest post by John Fangjun Li

This part highlights the brief history of the music industry in China in the 21^st century. Due to both the rapid spread, development and convergence of digital technologies related to computing, telecommunication and music, and the special preference and enthusiasm of Chinese people for new and popular technologies (Zhang, 2007), the progress of China’s digital music industry was almost similar to the Western countries (Sun, 2006; Chen, 2010). The digital music industry has sat center-stage in the music industry’s value chain and greatly influenced China’s music industry during the first decade of the century (ibid).

The online and mobile digital music market initially emerged in the Western countries during the mid-1980s and the early 1990s (Hayward, Orrock, 1995; Bozina, Dumancic and Knezevic, 2006; Tschmuck, 2006). However, digital technology and, in particular certain digital music business models (such as P2P file sharing), have greatly influenced China’s digital music industry in the 2000s (Li, 2006; Sun, 2006; Chen, 2011).

Telecommunication and computer companies have been engaged in China’s music industry in China since the late 1990s (Li and Morrow, 2012) by distributing and transmitting music in China on the Internet (ibid; Montgomery, 2010). Certain major digital music business firms were established and mainly developed the online music business in this period. The most representative firms were ’9sky’ (9sky.com, 1999), the ‘Wanwa’ (wangwa.com, 2000), and the ‘A8 Music Group’ (a8.com, 2000), the ’163888′ (163888.net/www.ifenbei.com/fenbei.me, 2003), ‘Top100′ (ju jing, top100.cn, 2005), the ‘Alliance of Digital Music Distribution’ (taijoy.com, 2005), ‘Baidu MP3′, ‘Kuro’s P2P’, and so on (Sun, 2006, 2007; Li, 2006).

’9Sky’ and the ‘A8 Music Group’ were the first music companies that started their online music business in 1999 and mobile music business in 2000 respectively; these two years mark the emergence of the commercial online and mobile music business in China.

The convergence of telecommunication and computing with the music industry played an essential role in the digitalization of the music industry in China, especially in the recorded music sector. This intensive convergence process increased the complexity of the structures of China’s music industry compared to the 20^th century.

Thus, China’s digital music industry is faced by the serious problem of music piracy in the first decade of the 21^st century (Sun, 2009; Montgomery, 2010). Despite the presence of digital piracy, the value of digital music sales (mainly online and mobile music) reached 3.6 billion Yuan (approximately 57 million US dollars) and exceeded those of recorded music sales (such as CDs) in 2005 (Chen (2010) and Hu (2006)). The year 2005 is, therefore, also called ‘The First Year of Digital Music’ (ibid; Sun, 2006). Thus, the digital music industry played an essential and even leading role in China’s music industry since the 2000s, particularly after the mid-2000s.

The mobile music industry emerged in the early 2000s in China (Yao, 2007) – slightly later than the online music business (Montgomery, 2010). The ‘A8 Music Group’ is one of the first music companies that have been involved in the mobile music business since 2001 (a8.com). Moreover, the ‘Taihe Rye Music Firm’ (TRMF) developed the business of polyphonic ring-tones in collaboration with the ‘China Mobile Group’ (CMG) in 2003 (Wang, 2012). The China mobile music web ‘www.10086.cn’ (formally named ‘www.12530.com’) can be regarded as the largest online music store in China; it was established in 2009 and offers mobile ring-tones (Sun, 2006).

The ‘Shanghai Synergy Culture and Entertainment Group’ (‘SSCEG’) also played an essential role for the development of China’s mobile music business. This industry group includes two of the leading record companies: the ‘Shanghai Audio-Visual Press’ and the ‘Shanghai Audio-Visual Company’. Both are involved in the digital music industry, in particular in the mobile music business (Li and Morrow, 2012). According to Sun (2009), ‘SSCEG’ signed agreements with ‘China Unicom’[1] and ‘Sina.com’[2] to cooperate on digital music market in 2009.

Another remarkable development was the establishment of copyright agencies such as ‘R2G’, which was established in 2003. This agency mainly adopted legal action against piracy and played an essential role in China’s digital music industry during the second half of the 2000s (The R2G, 2004-2009). According to Jin (2007), the three international major record companies, Sony Music Entertainment, Universal Music Group and Warner Music Group but also other international independent record companies charged ‘Baidu’ company for copyright infringing behavior of its users, but finally Baidu won this law case in 2006. However, the international majors also charged the operator of ‘Yahoo China’ – the Alibaba Information Technology Co., LTD – for copyright infringement and in this case they were successful (ibid).

More legal activities influenced China’s digital music industry during the 2000s. The ‘Chinese Music Copyright Society’, the ‘Chinese Audio-Visual Copyright Society’, and the ‘International Federation of the Phonographic Industry’ issued a joint statement in 2008 to oppose Baidu’s operations (Jin, 2010: 71). According to Li (2012) all these legal activities had positive impact on China’s digital music industry in the second half of the 2000s.

To sum up, despite a high level of file-sharing activity, the music industry in China, which has emerged in the late 1990s, took off in the mid-2000s due to a rapidly growing digital music market. A first step towards a domestic online music was the establishment of ’9Sky’ in 1999. A year later the mobile music business emerged when the ‘A8 Music Group’ started its operations. In addition, the ‘China Mobile Group’ played a leading role in launching a sustainable mobile music market. Thus, the digital music industry can be regarded not only as an integrated industry but as the most rapidly growing and most important part of China’s music industry in the first decade of the 21^st century.

References:

Bozina, M.; Dumancic, K. and Knezevic, B. (2006). The Impact of Internet on IPR – A Case Study of Music Industry in Croatia. Retrieved on December 12, 2011 from http://www.dime-eu.org/files/active/0/IPR-%20WORKING-PAPER-16_Bozina-et-al.pdf

Chen, J. (2010). The Annual Revenue of the Digital Music Industry Has 30 Billion Yuan (about 4.76 billion US dollars), the Content Provider Only Gets One Percent. Beijing Business Daily, on December 22, 2010.

Hayward, P. and Orrock, G. (1995). Window of Opportunity CD-ROMs, the International Music Industry and Early Australian Initiatives. Convergence, 1 (1), pp. 61-79.

Jin, H. (2006). Music Copyright Issue Caused by New Media. Western Chinese Science and Technology, (1).

Jin, W. (2010). Elementary Study on the Developmental Approach of China’s Digital Music Industry. The Journal of JiangxiFinanceCollege, 23 (1).

Li, S. (2006). The Digital Entertainment Industries. Sichuan, China:Sichuan University Press.

Li, X. (2006). The History of China‘s Cultural Industries. Changsha, China: Hunan Art and Literature Press.

Li, F. (2012). China’s Music Industry: Evolution, Development and Convergence, PhD thesis at Macquarie University.

Li, F. and Morrow, G. (2012). Strategic Leadership in China’s Music Industry: A Case  Study of the Shanghai Audio Visual Press. In the book ‘Arts Leadership: International Case Studies’. Melbourne, Australia: Tilde University Press. August 2012.

Montgomery, L. (2010). China‘s Creative Industries: Copyright, Social Network Market and the Business of Culture in a Digital Age. Glos, UK: Edward Elgar Publishing Limited.

Tschmuck, P. (2006). Creativity and Innovation in the Music Industry. Dordrecht, The Netherlands: Springer.

Sun, L. (2006). China Leapfrogs into a ‘Digital Music Age’: International Recording Industry Giants Converge at Music Fair. Retrieved on 15 March 2011 from: http://news.xinhuanet.com/newmedia/2006-05/17/content_4555754.htm (in Chinese).

Sun, H. (2009). Shanghai Synery Group Cooperated With the Unicom and the Sina and Marched the Digital Music Industry. Chinese News Publishing Newspaper. Retrieved on December 23, 2010 from: http://www.chinaxwcb.com/xwcbpaper/html/2009-12/23/content_1782.htm.

Yao, C. (2007). A Prosperous Market of Wireless Music. Communicate Studies, 1 (28). Retrieved on October 25, 2011 from: http://www.huawei.com/publications/view.do?id=1621&cid=3162&pid=61.

Zhang, K. (2007). The Study of College Students’ Internet Users’ Conformity. Chinese Youth Research, (4).

John Fangjun Li is adjunct lecturer and PhD candidate (2008-2012) at Macquarie University, Sydney, Coordinator of the Australian-Chinese Music Industry Research Network, a member of IASPM (Aus-NZ). Previously he worked in Southern Cross University Australia (assistant researcher), Beijing Institute of Contemporary Music (head of the college of arts management), China Conservatory Music (associate professor), and Shanghai Synergy Cultural & Entertainment Group (music producer and marketing manager). He also obtained masters in arts management in Australia, masters in ethnomusicology, and a bachelor in music education in China. His main research interest areas are music industry, arts management, and creative industries. He published more than ten papers in international core journals and participated in some main international conferences in these areas. John Fangjun Li’s email: lifangjun17@gmail.com

This part on the Chinese music industry by John Fangjun Li covers the second half of the 20th century after the emergence of the Peoples Republic of China in 1949 over the period of the Great Cultural Revolution (1966-1976), China’s Economic Reform and Opening-up Policy until the current digital music industry in China.

Guest post by John Fangjun Li
The second period of China’s recorded music industry from the 1950s to the early 2000s can be subdivided into shorter periods due to different economy systems before and after 1978. The early years were shaped by the implementation of the planned economy system by establishing the state-owned China Record Corporation, turning a commercial music business into a not-for-profit industry sector, which shaped China’s music industry also during the Great Cultural Revolution (1966-1976) (Li, 2012).

Before China’s Economic Reform and Opening-up Policy (CEROP) in 1978, the China Record Corporation (CRC) was the only music recording industry body in China (Li, 2006). The CRC system consisted of the Beijing headquarter with branches in larger cities such as Shanghai, Guangzhou and Chengdu (Zhang and Wang, 2009; Fang and Wei, 2008).

After 1978 the music industry in China was freed from state restrictions. This enabled the establishment of commercial record companies during the 1980s (Li and Morrow, 2012). The Central Bureau of Broadcasting as the national governmental organization to administer the audio-visual sector loosened the restrictions for operating audio visual businesses in China to develop this sector (Zhang and Wang, 2009).

In the 1980s, most of the profit oriented record companies were successively established in Guangzhou, Shanghai and Beijing such as the ‘Guangzhou Pacific Audio Visual Company’ (‘GPAVC’), the ‘Shanghai Audio Visual Company’, the ‘Guangzhou New Times Audio Visual Company’, the ‘Shanghai Audio Visual Company’, the ‘Shanghai Audio Visual Press’ (‘SAVP’), the ‘Audio Visual Press of Chinese Musician Association’ and so on (Wang, 2004; Li and Morrow, 2012). The ‘GPAVC’ was the first local commercial record company established in 1979 (Lun, 1988; Li, 2010; Wang, 1999). These companies greatly influenced China’s recorded music industry particularly during the 1990s (Li and Morrow, 2012; Zhang and Wang, 2009).

From the regional music industry perspective, the recorded music industry in China ran through two periods until the early 2000s. In the first period from the late 1980s to the early 1990s, the ‘Guangzhou New Times Audio Visual Company’ was one of the first record companies in China that started to sign pop singers with great commercial success (Wang, 2009; Li and Morrow, 2012). In the following, other record companies in Guangzhou such as the ‘Guangzhou Pacific Audio-Visual Company’, the ‘Guangzhou Company of the China Record Corporation’, the ‘White Swan Audio Visual Press’, and the ‘Guangdong Audio Visual Press’ also signed local pop singers. Guangzhou’s recorded music industry rapidly developed due to the success of this signing policy in this period. Thus, the period from the late 1980s to the early 1990s can be called as ‘the Guangzhou Period’.

In the period from the mid-1990s to the early 2000s, the recorded music industry rapidly developed in Shanghai as well as in Beijing while Guangzhou’s recorded music industry started to decline (Li, 1995; Jin, 2002). Shanghai focused on music record publishing and distribution while Beijing focused on music recording (Li, 1995; Li and Morrow, 2012). They, in particular Shanghai recorded music industry, greatly promoted the recorded music industry in this period. The ‘Shanghai Audio Visual Press’, ‘Shanghai Company of China’s Record Corporation’ and ‘Shanghai Audio Visual Press’ were commonly regarded as the three leading record companies in China during the second half of the 1990s (Li, 1995).

There were also a handful of smaller privately owned music record companies that influenced China’s recorded music industry in the 1990s such as the ‘Taihe Rye Company’, the ‘Guangdong Meika Company’, the ‘Beijing Jindian Audio Visual Company’ and the ‘Beijing Dadi Music Production Company’. Although they played a role in linking music production/recording and distribution, they had less influence in the recorded music industry compared to those larger record companies such as the ‘GPAVC’ and the ‘SAVP’ in this period (Jin, 2002).


References:

Fang, H. and Wei, Y. (2008). China Publishing History. Beijing, China: China Ancient Publishing Press.

Jin, Z. (2002). Experiencing Chinese Popular Music. Beijing, China: People’s Music Publishing House.

Li, F. (1995). China’s Music Recorded Music Industry: Shanghai Landscape Was the Best. Wuhan Evening News.

Li, X. (2006). The History of China‘s Cultural Industries. Changsha, China: Hunan Art and Literature Press.

Li, F. (2011). The Development of China’s Music Industry During the First Half of the 20th Century. NEO, (1).

Li, F. (2012). China’s Music Industry: Evolution, Development and Convergence, PhD thesis at Macquarie University.

Li, F. and Morrow, G. (2012). Strategic Leadership in China’s Music Industry: A Case  Study of the Shanghai Audio Visual Press. In the book ‘Arts Leadership: International Case Studies’. Melbourne, Australia: Tilde University Press. August 2012.

Lun, Z. (1988). Insist on Win by Quality in the Competition – The Operating Practice of Guangzhou Pacific Audio-Visual Company.Guangzhou Research, (7).

Wang, J. (1999). The Chinese Recorded Music Industry During 50 Years. China Electronic Information (Visual Audio Expo), (7).

Wang, J. (2006). The Analysis of the State of China’s Audio Visual Industry.  Publishing Research, (8).

Zhang, L. and Wang J. (2009). China and Foreign Audio Visual Publishing Industry and Related Policy Research. Beijing: China Book Company.


Part 4: The Contemporary Digital Music Industry in China


John Fangjun Li is adjunct lecturer and PhD candidate (2008-2012) at Macquarie University, Sydney, Coordinator of the Australian-Chinese Music Industry Research Network, a member of IASPM (Aus-NZ). Previously he worked in Southern Cross University Australia (assistant researcher), Beijing Institute of Contemporary Music (head of the college of arts management), China Conservatory Music (associate professor), and Shanghai Synergy Cultural & Entertainment Group (music producer and marketing manager). He also obtained masters in arts management in Australia, masters in ethnomusicology, and a bachelor in music education in China. His main research interest areas are music industry, arts management, and creative industries. He published more than ten papers in international core journals and participated in some main international conferences in these areas. John Fangjun Li’s email: lifangjun17@gmail.com

In part 2, John Fangjun Li highlights the first years of the emerging music industry in China and discusses the role of Western music industry conglomerates until the late 1940s when the Peoples Republic of China was founded.

Guest post by John Fangjun Li
The 20^th century is regarded as the modern period of China’s music industry. During this period, the recorded music industry emerged and developed. 1949 was the watershed year for China’s music industry, when the Peoples Republic of China was established. Therefore two periods can be identifies: (1) from the early 1900s to 1949 and (2) from the 1950s until the early 2000s. In the following the developments in the first of these two periods are further discussed.

The recorded music industry played an essential role in China’s modern music industry during the first half of the 20^th century. The rise of recorded music in the early 1900s was closely linked with the European and U.S. music industry (Li, 2011; Ge, 2009). In other words, the European and the the U.S. music industry greatly promoted the recorded music industry to generate and develop (ibid).

Shanghai was one of the earliest places in China, in which Western recorded music was introduced (Li, 2011; Ge, 2008; Lou, 2008). The earliest gramophone recording in China was made in Shanghai in 1903 (Ge, 2009: 48). As reported in the Chinese Journal ‘the Pictorial of Dian Shi Zhai’ in 1880, ‘American Edison’ (ai di sheng) invented a machine which is called ‘phonograph’ (ji sheng qi) (see Figure 1). (Ge, 2008).

(Figure 1: ‘Phonograph’ (ji sheng qi). Zhang Wei (2009). From: http://www.yplib.org.cn/structure/jdsh/hfms/sy_77218_1.htm)

The Victor Talking Machine Company (VTMC) in the U.S. sent Fred Gaisberg, one of the earliest recording experts to China, Japan, India, and other East-Southern Asian countries to record local music in 1902 (Ge, 2008). During the Asian trip, he made 1,700 different records of regional and local music styles (Li, 2011). In March 1903, Gaisberg came to Shanghai to make the first recordings of Chinese music, which marks the starting point of China’s recorded music industry (Ge, 2009).

Gaisberg recorded music of Peking operas such as ‘Capturing and Releasing Cao Cao’ (zhuo fang cao) and ‘Raising the Vessel to Watch the Pictures’ (ju ding guan hua) and other Chinese local operas such as the Guangdong Yue opera. After Gaisberg had finished his recording sessions in Shanghai, the UK Gramophone Company sent the masters to the Hanover record plant. In 1904, the records were re-imported by the Gramophone Company’s sales agent in China, the Moutrie Foreign Firm, to Shanghai. (Li, 2011; Ge, 2008, 2009).

The Moudeli Foreign Company and the Baide (‘Pathe’) Foreign Company were two of the first companies that developed the recorded music business during this early period in China. (Ge, 2004, 2008; Li, 2011). More specifically, they mainly influenced Shanghai’s recorded music industry before and after 1910; the Moudeli Company dominated the market before 1910 while the Shanghai Eastern Pathé played a leading role since the 1910s. The Moudeli Company was mainly engaged in the trade of phonographs, records and pianos in Shanghai and was owned by a British business man (Ge, 2009; Li, 2011).

After 1910, two main competitors shaped the Chinese music industry: ‘The Shanghai Eastern Pathé’ (shanghai bai dai), and ‘The Shanghai Victory’ (shanghai sheng li). Both companies were owned and managed by Western major music companies – ‘Pathé’ was a label of British Columbia Graphophone and ‘The Shanghai Victory’ of U.S. Victor Talking Machine (Ge, 2008; Li, 2011). In addition, some more record divisions of foreign record companies operated in Shanghai: ‘Odeon’ (gao ting) (German), ‘Beka’ (pei kai) (German), ‘U.S. Columbia’ (ge lin), and ‘Pagoda’ (bao ta) (German) (Ge, 2009; Li, 2011).

Furthermore, some local Chinese record companies were established such as ‘The Greater China’ (da zhong hua), ‘The Great Wall’ (chang cheng) and ‘The New Moon’ (xin yue) (Ge, 2008, 2009). Among those local companies, The Greater China was the largest one and played a leading role in the recorded music industry in this period (Ge, 2004, 2008; Li, 2011).

‘The Greater China’, ‘Shanghai Pathé’ (later ‘EMI’), and ‘Shanghai Victor’ were the three largest record companies and key players in Shanghai as well as in China during the first half of the 20^th century. Due to this rapid development, Shanghai and China’s recorded music industry boomed during the 1930s and 1940s despite the Great Depression (Figure 2).

(Figure 2: Shou Le Music Shop (Indoor Scene) of Russia in Xia Fei RoadShanghai. Zhang Wei (2009). From: http://www.yplib.org.cn/structure/jdsh/hfms/sy_77218_1.htm)

To sum up, the recorded music industry played an essential role in China’s modern music industry during the first half of the 20^th century. The rise of recorded music in the early 1900s was closely linked with the European and U.S. music industry that laid the foundation for the second period of the modern recorded music industry in China from the 1950s onwards.

References:

Ge, T. (2004). Social Change in the Sound Records: Shanghai Recorded Music Industry from the Early 20^th Century to 1937. The History Review, (6), pp. 53-60.

Ge, T. (2008). Shanghai EMI (bai dai) – the Development of Shanghai EMI During the Modern Period. History Review, (5), pp. 26-41.

Ge, T. (2009). Records and Modern Shanghai Social Life. Shanghai, China: Shanghai Lexicographical Publishing House.

Jin, Z. (2002). Experiencing Chinese Popular Music. Beijing, China: People’s Music Publishing House.

Li, X. (2006). The History of China‘s Cultural Industries. Changsha, China: Hunan Art and Literature Press.

Li, F. (2011). The Development of China’s Music Industry During the First Half of the 20th Century. NEO, (1).

Wang, J. (1999). The Chinese Recorded Music Industry During 50 Years. China Electronic Information (Visual Audio Expo), (7).

Wang, J. (2006). The Analysis of the State of China’s Audio Visual Industry.  Publishing Research, (8).

Part 3: The Recorded Music Industry in China from the 1950s to the early 2000s

John Fangjun Li is adjunct lecturer and PhD candidate (2008-2012) at Macquarie University, Sydney, Coordinator of the Australian-Chinese Music Industry Research Network, a member of IASPM (Aus-NZ). Previously he worked in Southern Cross University Australia (assistant researcher), Beijing Institute of Contemporary Music (head of the college of arts management), China Conservatory Music (associate professor), and Shanghai Synergy Cultural & Entertainment Group (music producer and marketing manager). He also obtained masters in arts management in Australia, masters in ethnomusicology, and a bachelor in music education in China. His main research interest areas are music industry, arts management, and creative industries. He published more than ten papers in international core journals and participated in some main international conferences in these areas. John Fangjun Li’s email: lifangjun17@gmail.com