music-industry | Digital Music Observatory

An Empirical Analysis of Music Streaming Revenues and Their Distribution

Thu, 23 Sep 2021 10:00:00 +0200

The research questions asked in this report are related to the Music Creator Earnings' Project (MCE), exploring issues concerning equitable remuneration and earnings distributions. We were tasked with providing a longitudinal analysis of earnings development and relating our findings to equitable remuneration. The starting point of our work was centred around a very broadly defined problem: how much money music creators (rightsholders) earn from streaming, how these earnings are distributed, and how the earnings and their distribution have developed during the last decade.

The highly globalized music industry generates two important international reports, as well as several national reports, but these are not suitable for the analysis of the typical or average rightsholder, nor for small labels and publishers who do not represent a large and internationally diversified portfolio of music works or recordings. Copyright and neighboring right revenues are collected in national jurisdictions. Because British artists are almost never constrained by their use of language, and the UK Music Industry is highly competitive in the global music markets, even relatively less known rightsholders earn revenues from dozens of national markets. The lack of market information on music sales volumes, prices for each jurisdiction, and the unaccounted for national, domestic, and foreign revenues makes the analysis of the rightholder’s earnings, or the economics of a certain distribution channel like music streaming or media platforms, impossible.

While total earnings are reported by international and national organizations, they hide five important economic variables: changes in sales volumes, changes in prices, market share on various national jurisdictions (which have their own volume and price movements), the exchange rates applied, and the share of the repertoire exploited. Even worse, the global music industry has no comprehensive database of rightsholders, music works, and recordings. Many rights are represented by heirs or passive investors. And because of the enormous number of works and recordings, in any given royalty payment period, most works/recordings are not used and not compensated. The lack of a known population and distribution makes usual indicators as average or median earnings arithmetically impossible to compute, and the large number of disused works and recordings makes even the estimation of the typical (median) value useless for economic analysis. The estimation of the arithmetic mean is equally problematic, because it is distorted by the earnings of very few global stars. To understand the streaming economy from the perspective of a typical or average rightsholder, or from the perspective of a small independent label or music publisher, requires very challenging sampling techniques either in surveying or in empirically observing and aggregating data from royalty accounts. National and international music organizations are not equipped with the data processing and statistical capacity to do so.

This is the problem that the Digital Music Observatory, a working demo of the European Music Observatory is solving. It grew out of the Central & Eastern European Music Industry Databases (CEEMID) initiative in 2014, in which righthsolders from three countries attempted to solve this problem. By 2019, CEEMID had collected information on 20 European markets, including the United Kingdom, and processed data on far more markets. The state51 music group, through its distribution arm, has been supporting the creation of the largest ever European market report, the Central European Market Report, and supported the creation of the CEEMID-CI indexes, which, for the first time provided a stock-index type of view from an individual rightsholder’s perspective on volume and price movements in the UK and in other countries. The state51 music group drew attention to the observatory approach and this work in the Digital, Culture, Media and Sport Committee (DCMS) Select Committee of the British House of Commons. The MCE project first individually contacted the Digital Music Observatory (successor of CEEMID) and state51, and eventually with the permission of state51, the project commissioned this report, which re-uses the CEEMID-CI indexes. The MCE project also committed to share data in the Digital Music Observatory.

The first chapter is divided into three subchapters: 1.1 the theoretical problems imposed by copyright law and intellectual property valuation methods; 1.2 policy issues related to the copyright management problems that lead to large amounts of unpaid royalties and value transfer, as well as potential problems with AI distribution systems and royalty distribution rules; and 1.3 identifying and offering solutions for empirical problems in estimating the relevant earnings indicators for individual rightsholders.

The second chapter presents the CEEMID-CI indexes, and gives an explanation to the seemingly paradoxical situation of total market growth, and the feeling of individual righthsolders that their earnings remain flat or decreasing. We show in 2.1 that revenues that are flat or slightly growing are caused by growing volumes and falling prices (See 2.2 https://mce.dataobservatory.eu/empirical.html#streaming-volume; 2.3 CEEMID-CI Streaming Price Index.)

The third chapter, using computer simulations, gives a fuller picture. It shows that in the UK and many other markets, in the period of 2016-2019, the growth of streaming use hardly offset the diminishing price (value) of the streams. In many markets, rightsholders, expressed in British pounds, experienced flat earnings, which was by a large extent due to the benevolent USD/GBP, EUR/GBP, and CHF/GBP exchange rates. It is likely that the majority of individual rightsholders experienced flat or diminishing revenues, and later releases brought less and less revenue per a thousand streams. A less benevolent exchange rate environment could have brought very large losses of revenue (See 3.4 for more details.)

Our computer simulations show that British rightsholders are experiencing a rather varied picture of music streaming. Because of the generally falling value of streams, short-lived hits are more impacted by value decline than perennial hits (See subchapters 3.1 and 3.2.) Rightsholders with a diversified international audience are partly shielded by these effects (See 3.3.) Younger stars and new genres generally experience a windfall from the pro-rata distribution system and older artists with more conventional genres such as rock or blues are experiencing headwinds. The publicly available market totals are hiding completely different market experiences.

The MCE project and its stakeholders did not provide us with any data. Our detailed data from other jurisdictions, however, shows that music streaming has been successfully competing with other sales/distribution formats of music partly because it was much cheaper, and generally devalued music-related rights. This is particularly the case with media platforms like YouTube. For the UK, which is not planning to adopt new EU regulations, closing the value gap is an important policy task. We also show on the example of other countries that current policy debate in the UK around the re-definition of equitable remuneration rigths, or on the pro-rata or user-centrique distribution schemes, are gaining excessive focus, and changes in these aspects of the streaming ecosystem will solve the problems of few, if any, rightsholders. We believe that the music industry must look beyond the current practices of streaming pricing and distribution, for example, to telecommunication services, and investigate the adoption of a more just system.

Our report highlights some important lessons. First, we show that in the era of global music sales platforms it is impossible to understand the economics of music streaming without international data harmonization and advanced surveying and sampling. Paradoxically, without careful adjustments for accruals, market shares in jurisdictions, and disaggregation of price and volume changes, the British industry cannot analyze its own economics because of its high level of integration to the global music economy. Furthermore, the replacement of former public performances, mechanical licensing, and private copying remunerations (which has been available for British rightsholders in their European markets for decades) with less valuable streaming licenses has left many rightsholders poorer. Making adjustments on the distribution system without modifying the definition of equitable remuneration rights or the pro-rata distribution scheme of streaming platforms opens up many conflicts while solving not enough fundamental problems. Therefore, we suggest participation in international data harmonization and policy coordination to help regain the historical value of music.

Feasibility Study On Promoting Slovak Music In Slovakia & Abroad: Why are the total market shares of Slovak music relatively low both on the domestic and the foreign markets? How can we measure the market share of the Slovak music in the domestic and foreign markets? We offer some answers and solution based on empirical research and with the creation of a database and an AI application.
Music Streaming: Is It a Level Playing Field?: Our paper argues that fair competition in music streaming is restricted by the nature of the remuneration arrangements between creators and the streaming platforms, the role of playlists, and the strong negotiating power of the major labels. It concludes that urgent consideration should be given to a user-centric payment system, as well as greater transparency of the factors underpinning playlist creation and of negotiated agreements.
Ensuring the Visibility and Accessibility of European Creative Content on the World Market: The Need for Copyright Data Improvement in the Light of New Technologies: While the US have already taken steps to provide an integrated data space for music as of 1 January 2021, the EU is facing major obstacles not only in the field of music but also in other creative industry sectors. Weighing costs and benefits, there can be little doubt that new data improvement initiatives and sufficient investment in a better copyright data infrastructure should play a central role in EU copyright policy. A trade-off between data harmonisation and interoperability on the one hand, and transparency and accountability of content recommender systems on the other, could pave the way for successful new initiatives.
Central & Eastern European Music Industry Report 2020: The results of the first Hungarian, Slovak, Croatian and Czech music industry reports are compared with Armenian, Austrian, Bulgarian, Lithuanian, Serbian and Slovenian data and findings.

Call for Open Collaboration

Do you need high-quality data for your music business or institution? Are you a music researcher? Join our open collaboration Digital Music Observatory team as a data curator, developer or business developer.

Music Reports

Thu, 12 Nov 2020 08:00:00 +0100

Our Demo Music Observatory is powering policy, business reports and scientific publication with high quality, internationally comparable data on

The observatory grew out of the Central and Eastern European Music Industry Databases out of necessity following a CISAC Good Governance Seminar for European Societies in 2013. The adoption of European single market and copyright rules, and the increased activity of competition authority and regulators required a more structured approach to set collective royalty and compensations tariffs in a region that was regarded traditionally as data-poor. We needed to collect and integrate data that is often collected in more advanced markets by government entities, and we needed to present them as evidence in the policy making and in courts.

Public Reports

The first Hungarian Music Industry Report, a 144-pages business strategy and policy advocacy report, which became the basis of annual reports in the Hungarian music industry.
The first Slovak Music Industy Report, a 227-pages advocacy report with business strategy and evidence-based policy recommendations. Several royalty pricing and other fact-based industry work was commissioned by Slovak stakeholders which are not publicly available. This report is based on reproducible research standards - i.e. most of the report can be automatically updated as new data comes in.
Private Copying in Croatia is an advocacy report for re-setting the remuneration of private copying, and measuring the value transfer to media platforms such as YouTube. In Hungary, more technical and detailed reports were made for Artisjus, Mahasz, EJI, Hungart and Filmjus, which are not available to the public. This is also a reproducible report.
Central & Eastern European Music Industry Report 2020 is the first Hungarian, Slovak, Croatian and Czech music industry reports are compared with Armenian, Austrian, Bulgarian, Lithuanian, Serbian and Slovenian data and findings. It put on stage on as a good example of evidence-based policy making on a two-day high-level stakeholder event jointly organized by Geothe-Institute and the DG Education, Youth, Sport and Culture of the European Commission with the Creative FLIP project. (See a brief summary of the presentation and our use case.) This is our first reproducible report that covert primary information flowing in in 12 languages.
The Welsh Music Industries In a Post-Covid World is first of a planned series of post-pandemic recovery reports created by Dr Paul Carr. While the UK Music Industry is generally seen among the world leader, it’s power is mainly concentrated in London and England. Wales appears to share more problems with emerging national music scenes like the Slovakian or Croatian — small, recently independent nations that are seeking their best way to place their national repertoire in an increasingly competitive regional and global music market.
Metropolitan Area, Regional, or Sub-National Reports: Because music and culture are often managed at the level of cities, regions and communities, we want to give you all the data on sub-national levels, whether for regions, metropolitan areas or smaller divisions.

Non-Public Reports

Our observatories do not only collect, but also integrate data. We own many data assets, we make many open data assets available, but we also can integrate highly proprietary data with our assets. Our novel approach compared to other observatories is that we can connect members of the observatory, join their data, create a new insight, and then close the data connection. This way data synergies can be exploited without the conflict of interest troubles related by change of data ownership.

Valuation Reports: for price reviews, copyright tribunals, competition cases, regulatory oversight. We want your evidence to stand a fighting chance against large teams of professional legal and economics teams on the other side with proper valuations and damage claims.
Advocacy Reports: We want you to be able to prove to your fans, the press, your economy minister that music in many countries has not been at the mercy of the taxpayer, but has been carrying far heavier tax burdens than manufacturers. We want to make your case that the music industry plays a vital role in the European economic recovery and job creation, because we can create economic impact assessments on GDP, employment, tax, import and export effects automatically.
Grant Reports: Ex ante grant design in a comprehensive, logical framework, supported by empirical evidence, artist and ecosystem data and needs, direct and indirect (effect) indicators for program controls. We would like to persuade grant managers that ex ante evaluation must be followed by ex post valuation. Original expectations must be contrasted with the effects of the grant and fed back to design better grants in the following year. (See more in Smart Grants)

The Welsh Music Industries In a Post-Covid World

Wed, 11 Nov 2020 10:00:00 +0100

In July 2020, Professor Paul Carr was commissioned by Senedd Research to document a report examining the ‘state of play’ in the post Covid-19 music industries in Wales. This resultant document outlines the contextual backstory of the emergence of private and public sector support for the music industries in Wales since the pandemic commenced; examines the advice given to the music industries by the UK and Welsh Governments concerning roadmaps out of the pandemic; reviews the industry and academic research that has emerged since the pandemic started and finally, compares Welsh Government support packages tonations in other parts of the world.

Although the report considers the Welsh music industries more broadly, its primary focus is on live music, as it is this which has been the recent concern of the Culture, Welsh Language and Communications Committee. It is also this subsector that has been widely reported as being impacted the most by the pandemic. The report concludes by documenting a series of recommendations for the Culture, Welsh Language and Communications Committee to consider presenting to Welsh Government.

In order to give the reader a concise snapshot of details contained in the report the Executive Summery outlines the context of the Welsh industries pre and post Covid-19, prior to contextualising its recommendations, which are sub divided into the following six categories: Reopening and Recovery Strategies; Research; Strategic Opportunities and Promotion; Policy; Education; Funding.

Inquiry Into The Live Music Industry In Wales

Fri, 06 Nov 2020 08:10:00 +0200

In July 2020, Professor Paul Carr of University of South Wales was commissioned by Senedd Cymru – the Welsh Parliament to create a report examining the ‘state of play’ in the post Covid-19 music industries in Wales.

WATCH: @pcarr came to give evidence to @SeneddCWLC
for our inquiry into Live Music Industry in Wales 🎵 pic.twitter.com/GtrYPOg8iW
— Senedd CWLC (@SeneddCWLC) October 18, 2019

Click through to see a short interview with Prof. Paul Carr

The music industries in Wales consist of both part-time and full-time stakeholders and although dominated by live and recording sectors, also comprise of other sub-sectors, and like in other countries that we surveyed in Central and Eastern Europe, many stakeholders in the music industries are freelancers, following multi-track careers.

Prof. Carr’s report is particularly interesting for our Music Observatory project because the Welsh nation is a part of a larger entity, the United Kingdom, and many important statistical products may need to be recreated for this sub-national level — something we have been doing with our survey retroharmonization and regional statistical tools for some time.

The Welsh Music Industries in a Post-Covid World will be presented to the Culture, Welsh Language and Communications Committee later this month, and we will publish the entire report in English and start a discussion around it, too.

Our Approach To A European Music Observatory

Wed, 26 Aug 2020 08:00:00 +0200

We are developing our Demo Music Observatory in the world’s 2nd ranked university-backed incubator program, the Yes!Delft AI Validation Lab. Our aim is to show a better organizational model, examples of research automation and other data integration innovation that can reduce the budgetary needs of the European Music Observatory by 80-90% and provide far more timely, accurate, and relevant service than most data observatories in Europe.

Background

Data is power, and big data creates injustice. Organizations that control large amounts of data, for example, the entire listening history of hundreds of millions of people in all major countries of the world, can train algorithms and robots that drive most of the music in the world. They can make your investment into a sound recording successful or doomed. They can circumvent or help a local content regulation, reinforce, or disable a national cultural policy goal. A country may introduce national artist quotas on radio, if all the youth will be personally recommended foreign songs in their music discovery age in the very same country.

We believe that answer of the EU and UNESCO with the creation of permanent data collection points, so-called data observatories is correct. However, after reviewing 62 data observatories, we are convinced that many data observatories are doomed to fail.

Our private observatory, CEEMID was consulted in the creation of the Feasibility study for the establishment of a European Music Observatory, and some of our recommendations found way into the consultant’s document. We created a Demo Music Observatory to provide a practical guidance on the decisions facing the European stakeholders, and to answer the questions that were left open in the Feasibility Study — particularly on data integration and the institutional model, where a wrong choice can lead to very long delivery time, quality control and budgeting.

Data Gaps

According to the feasibility study, 11% of the stakeholders consulted found that sufficient data was available for their work, 30% said that there could be more data but that does not affect their work, and 59% found that the lack of data affects their work.

We have shown in the Central & Eastern European Music Industry Report 2020, featured in the CCS Ecosystems: FLIPPING THE ODDS Conference – a two-day high-level stakeholder event jointly organized by Geothe-Institute and the DG Education and Culture of the European Commission with the Creative FLIP project.that much of the data gap is illusory: the fragmented nature of the music industry, the lack of in-house data expertise create bottlenecks in the use of the data. However, the data is present, and as it is stated in 148-149, we are willing to transfer thousands of indicators in all pillars to the future European Music Observatory.

Our Demo Music Observatory is based on the accepted music industry concept in the US and the EU (the three-income stream model) and its data maps that we could apply to emerging markets – for example, in the case of Croatia. A clear map of the industry and a clear map of the data reveals that much of the perceived gap is illusory. We would like to challenge the European music stakeholders to test us, request seemingly missing data that we will try to publish.

Illustration: our map to find to locate data in the Croatian music industry. Our Demo Music Observatory is based on the accepted music industry concept in the US and the EU (the three-income stream model) and its data maps.

This remains a problem with the Summary of Data Gaps on pages 128-131 that enumerate the perceived lack of data for the three pillars. We believe that these data gaps are in most cases illusory, and the remedies offered in the study are often misplaced.

Circulation of Repertoire & Cultural Diversity

Streaming activity: the Feasibility Study offers Nielsen’s Global Charts as a potential solution, even though we have shown that this is not the right approach.

The problem with Nielsen’s charts, or any chart provider’s chart, is that it covers less than 0.01% of the European repertoire, and it depicts a completely irrelevant picture for the 99.99% of the European stakeholders.

We believe that the right approach, followed by our Demo Music Observatory, is a reconciliation with the work on Big Data the European Statistical System (i.e. the partnership of Eurostat and the national statistical authorities.) (See our analysis of 20 advanced, emerging and future markets in Europe.)

Challenge Our Demo Observatory: Check out the Music Diversity & Circulation Pillar of our Demo Music Observatory. If you do not find what you are looking for, contact us — we will try to put the data there from our repositories.

People & Diversity

The Feasibility Study claims that “there is no real EU wide data on diversity in the music sector. Diversity should include the study of ethnic minorities, gender and vulnerable groups…”

Illusory data gap: active and music participation is available on EU level both for gender groups or four ethnic minorities – this is regularly featured in various European CAP surveys and in our national CAP surveys, too.

However, active and music participation is available on EU level both for gender groups (see our chart) or four ethnic minorities – this is regularly featured in various European CAP surveys and in our national CAP surveys, too. Our peer-reviewed, open-source retroharmonize statistical software was developed exactly to create these data products.

Challenge Our Demo Observatory: Check out the Music, Society and Citizenship Pillar of our Demo Music Observatory. If you do not find what you are looking for, contact us — we will try to put the data there from our repositories.

Music Economy

Because music is mainly a market activity, apart from the mainly publicly funded classical (arts) music sector, and a part of the music (stage) infrastructure, a wide variety of data is available on the music economy in a consistent manner.

We are calling on all partners to challenge us, either on Music Economy or the other pillars of the music observatory. We will try to provide the requested data on a weekly, monthly, quarterly or annually refreshing basis in the highest possible quality – for the first 50 request for free. We would like to demonstrate that most of the data gap is illusory, and a collaborative, bottom-up approach can deliver a European Music Observatory faster, cheaper in a much higher quality.

Challenge Our Demo Observatory: Check out the Music Economy Pillar of our Demo Music Observatory. If you do not find what you are looking for, contact us — we will try to put the data there from our repositories.

Organization and institutional model

We believe that the biggest shortcoming of the Feasibility Study is a systematic overview of a wide range of organizational possibilities. The Feasibility Study is illustrated by examples from European Audiovisual Observatory as a good practice, investigates the possibility of integrating the music observatory into the EUIPO Observatory, and as an alternative, it considers the six product observatories of DG Agriculture & Rural Development. This approach provides a too narrow range of potential organizational alternatives.

We have reviewed a further 59 observatories, including ones that were not successful and ceased to exist, to understand why some observatories can increase their service level and why others fail. It is unclear what criteria make the European Audiovisual Observatory a good example, so it is impossible to say from this Feasibility Study if there are better examples – and we believe that there are. The EAO is one of the oldest, if not the oldest observatories. It was created before the EU was founded before the commercial internet launched, when far different legal, governance and data collection needs had to be addressed. We believe that this may be the costliest and most time-consuming model to replicate.

Bottom-up versus top-down

The Feasibility Study only considers hierarchical and centralized observatories, that operate on a top-down data integration, or rather, simple data collection strategy. We have created a large observatory with a very limited budget (which has a public layer, the Demo Music Observatory, and privately funded, much larger version, CEEMID) when we realized that the centralized, hierarchical, top-down approach is not suitable for a fragmented industry like the music industry. The example of CEEMID shows that a bottom-up and collaborative approach requires far less time, budget than a hierarchical approach, and can yield superior data quality. It is not surprising that most of the 62 observatories that we have studied are not hierarchical, and not operated by a centralized body but by a Consortium of various scientific, policy and industry stakeholders.

The European Music Observatory should fully exploit the EU’s open data regime. (See our examples: our first open data release) Our proposal about this were quoted in the Feasibility Study.
It should not re-collect data that already exists. Instead it should create policies, synergies and incentives that bring that data to light. The Feasibility Study partly embraces this idea.

Hierarchical versus decentralized observatory

We want big data to work for small venues, independent labels, startups, great and undiscovered artists. We believe that you cannot make a successful album launch, a market entry or introduce a successful cultural policy without large amounts of well processed and correctly analysed data. We want to create a Music Observatory that integrates the small data of many small bands, small labels, small venues, small countries, and mount correct the injustice. Make algorithms transparent and the competition fair.

It should not re-collect data that already exists. Instead it should create policies, synergies and incentives that bring that data to light. The Feasibility Study partly embraces this idea.
The observatory must allow a seamless data integration between open data, and highly confidential proprietary data. The Feasiblity Study wants to own and buy data, instead getting access to industry data.
The open collaboration principle must allow an easy opt-in and opt-out for small and larger, public and private organizations, and offer for full transparency for all users. The Feasibility Study offers a closed observatory without opt-in.

Value For Money, Budget

We believe that a bottom-up, collaborative approach of the industry stakeholders offers a much faster approach to growth, because it can mange conflicts of interests, build upon existing and trusted data assets. The annual budget of the European Audiovisual Observatory is about 3.7 million euros. Most of the European data observatories that we surveyed have an annual budget of 20,000-200,000 euros. In our view, a very comprehensive data observatory can be built from 1-3 million euros and maintained with a collaborative use of existing data assets and a subsidy of up to 200,000 euros a year.

Quality Control

It should be transparent, the indicator design should be based on open-source statistical software. Our proposal about this were quoted in the Feasibility Study.
The European Music Observatory must embrace evidence-based open Policy Analysis. This topic is not considered in the Feasibility Study.

Use Cases

We want to support the European music industry and our friends in North America, Australia, and all over the world to turn the tables with @ref(innovation) innovation coming from the open source community.

We want to help you to create alternative recommendation engines that actually recommend songs from your country, and we want to give you very clear export market targets with the help of AI. Our Listen Local Initiative is aiming to create recommendation engines for cities and regions, and make sure that local bands are recommended to local audiences and audiences in the regions where they will be touring after the Covid-19 pandemic.
We want your evidence to stand a fighting chance against large teams of professional legal and economics teams on the other side with proper valuations and damage claims. And we want to present all those hundreds and thousands of pages automatically, going through dozens and dozens of automated “unit-tests” until nobody can find errors.
We want you to be able to prove to your fans, the press, your economy minister that music in many countries has not been at the mercy of the taxpayer, but has been carrying far heavier tax burdens than manufacturers. We want to make your case that the music industry plays a vital role in the European economic recovery and job creation, because we can create economic impact assessments on GDP, employment, tax, import and export effects automatically.
Because music and culture are often managed at the level of cities, regions and communities, we want to give you all the data on sub-national levels, whether for regions, metropolitan areas or smaller divisions.

CCS Ecosystems: Evidence-Driven CCI Policy & The Central & Eastern European Music Industry Report

Wed, 29 Jan 2020 16:00:00 +0100

CEEMID & Consolidated Independent presented and discussed with stakeholders the Central & Eastern European Music Industry Report 2020 as a case-study on national and comparative evidence-based policymaking in the cultural and creative sector on the CCS Ecosystems: FLIPPING THE ODDS Conference – a two-day high-level stakeholder event jointly organized by Geothe-Institute and the DG Education and Culture of the European Commission with the Creative FLIP project.

Daniel’s presentation was focused around the question on invisibility of the CCI sector in the economic, education and labour policymaking, and the low level of data use in fact-based cultural policy design, and the following policy design problems. Our CEE Music Industry Report 2020 created with the help and support of Consolidated Independent was used as a use case for the problems.

This blog post is an edited version of Daniel’s presentation and the subsequent panel discussion with the stakeholders and organizers.

The CEE Report builds on the results of the first Hungarian, Slovak, Croatian and Czech music industry reports are compared with Armenian, Austrian, Bulgarian, Lithuanian, Serbian and Slovenian data and findings.

Invisibility

The measurement problems and the ‘invisibility’ of creative and cultural industries is a consequence of the fact that these industries are predominantly comprised of microenterprises and individual, freelancing entrepreneurs. Even larger entities, such as collective management organizations can be classified as small enterprises. In the EU, small- and medium enterprises, and especially microenterprises usually have reduced reporting duties to the statistical authorities and tax authorities (which is the most important secondary source of government statistics in anonymized, aggregated form.) This means that the supply side is not visible for policymakers. The recommendation is to conduct sample-based surveys among these microenterprises, but very few member states do that.

Another problem is that on the demand side, not all member states create statistics. ESSNet-Culture created recommendations how to measure cultural access and participation, which is a broader term than cultural consumption, as it includes non-market forms, for example, liturgical music, amateur acting, and so on. The European Commission sometimes makes excellent, but not detailed CAP surveys, which are the most important sources of Eurostat’s relevant pan-European statistics.

CEEMID has been making such surveys, both on the supply side (in music and film) and in the audience side (in music, film, theatre, opera, and artistic activities) in several member states, and has plenty of experience with using the EU-mandated CAP surveys of 2007 and 2013. The CEE report relies on the latter date set in first part of the audience analysis. Our work was already presented in 2015 as a best use case in Creating better national cultural statistics with Eurobarometer datasets and ESSNet-Culture technical recommendations at GESIS, which maintains the Eurobarometer archives, on the Eurobarometer Symposium Four Decades of Surveying Europe – Perspectives on Academic Research with the European Commission’s Eurobarometer Surveys

For the EU the lowest hanging fruit would be to critically assess the past surveys, including the partial CAP survey made in 2017 for the cultural heritage part of culture, and the national surveys conducted by CEEMID and its partners, and to mandate an annual or biannual CAP survey within the Eurobarometer series, probably as a specially sampled “Special Eurobarometer”. This would very significantly reduce the costs compared to a country-to-country basis, and probably could be shared by other institutions, for example, with the European Audiovisual Observatory. This alone would greatly increase the demand / consumption side information on the services of creative and cultural enterprises.

In the panel discussion Consolidated Independent highlighted the problem of leaving sample-based statistics making to the industry itself, which leads to myopical incentives to create ‘policy-based evidence’ that is cherry picked by industry trade associations to fit their often not very well thought out policy agenda. In our view, the most important role of a future European Music Observatory would be to set standards to data collection and integration. The music industry is one of the most data-rich industries globally, but the publicly available, verified, trustworthy information is scarce both for policy-making and for business planning among microenterprises who have know specialized research know-how. Our already existing, representative national surveys should and could be extended to the whole Europe with the quality control and visibility offered by such an Observatory.

Industry organization

A very significant challenge with evidence-based policymaking, or, in fact, with any policy making is that the extremely fragmented nature of the industry makes national and EU-level consultations very difficult. Most of the workforce is neither a classical employer nor employee but works as a freelancer or a micro-entrepreneur. Their views are very rarely represented by trade unions or employee associations or chambers of commerce. Despite all efforts on EU level to make the social dialogue more representative for atypical and flexible work forms, the problems and the views of the creative and cultural sectors are largely unrepresented in policy debate.

A prime example of this problem is the very heavy over-taxation of the music industry that we have shown in the Hungarian and Slovak national music industry reports, and in other documents in Croatia. The problem is not only characteristic for the music industry, but generally all CCIs because they share similar economic properties: no real chance to use tax breaks, high level of labour input and high level of value added. While policy makers and granting authorities spend much time on trying to improve the financing of this sector, in fact, reducing over-taxation would make a much more imminent impact on the liquidity, profitability and growth opportunities of the sector.

However, in the making of economic and tax policies, the fragmented creative and cultural industries hardly can represent their special situation.

Policy issues

Apart from taxation issues, which significantly reduce the liquidity, profitability and growth opportunities of these sectors in many EU countries, particularly in the CEE, where corporate taxes are low but value-added taxes are high, there are other important policy problem that reduce the long-term growth capacity of the sector.

The very small enterprise size leads to missing strategic human resources (HR) and research and development (R&D) functions in almost all enterprises – including simple market research activities. Companies with 1-2 employees do not have specialized management and support functions, and thus they have a very strong handicap in HR and R&D.

A good example of this problem is the motion picture and TV industry. These industries were comprised of medium-sized enterprises in the 1980s with significant in-house education functions. The current structure of these industries, however, resembles music, with almost all enterprises staying below the 5-person threshold. In our experience, based on development needs assessments in the Hungarian motion picture and the Czech music industry, this creates an acute skills and labor shortage. Missing skills cannot be well replaced by recruitment, or with strategic HR development via life-long learning.

Similarly to very reduced opportunities to participate in, and create life-long learning schemes, there are very little chances to engage in market research and R&D. While the music industry, for example, is one of the most data-driven industries in the world, the microenterprise size does not allow that these enterprises commission market research or hire data scientists. This leads to very asymmetrical relationships with the main distributors of music and media content on platforms that are owned by global data companies.

Recommendations

Daniel made a few concrete recommendations in the panel.

Creating the European Music Observatory, and the creation of similar industry initiatives, and commissioning collaborative (multi-stakeholder) market research, as CEEMID works in many countries, can only replace the missing market research function in the extremely fragmented industries, such as motion picture production, the music industry, but to a certain degree architecture and design.
A low-hanging fruit would be a critical assessment of the previous Pan-European CAP surveys and the comparable national CAP surveys conducted by CEEMID and its partners following the ESSNet Culture recommendations and the inclusion of the CAP surveys in an annual or bi-annual form in the Eurobarometer (Special) series. A Special Eurobarometer may be more suitable because usually a non-proportional weighting of the sample gives the best value for money in these surveys.
Critically reviewing the participation of micro-enterprises in the current forms of social dialogue and looking for formal or informal ways to increase participation in policy making can gradually lead to more creative-friendly economic regulation and tax policies. The Hungarian Music Industry Report 2015 and the Slovak Music Industry Report 2019 contains very interesting case studies for this problem that we briefly summarize in the CEE Music Industry Report 2020.
Critically reviewing the few examples from mainly Nordic member states where collective agreements and other collaborative institutions allow microenterprises and freelancers to participate in life-long learning problems can help designing policies that will gradually reduce the huge skill gap of the CCIs in management know-how, data know-how, or renew their technical skills necessary in the production of their services and content. Our work with the Hungarian National Film Fund and surveys among more than a thousand film makers can give much insight into this problem.

Further links

Our research findings were earlier presented and discussed in Vienna, Prague, Budapest and Bratislava with stakeholders.

You can follow Creative FLIP project on Twitter.

Central & Eastern European Music Industry Report 2020

Wed, 29 Jan 2020 16:00:00 +0100

The predecessor of Reprex’s Demo Music Observatory, CEEMID together with the independent music distributor Consolidated Independent presented and discussed with stakeholders the Central & Eastern European Music Industry Report 2020 as a case-study on national and comparative evidence-based policymaking in the cultural and creative sector on the CCS Ecosystems: FLIPPING THE ODDS Conference – a two-day high-level stakeholder event jointly organized by Geothe-Institute and the DG Education and Culture of the European Commission with the Creative FLIP project.

Our research findings were earlier presented and discussed in Vienna, Prague, Budapest and Bratislava with stakeholders.

You can find the earlier presentations in the blog section of the website.

Executive Summary

The first Central European Music Industry Report is the result of a co-operation that started among stakeholders in three EU countries five years ago to measure the economic value added of music – the basis of a modern royalty pricing system. This gave birth to CEEMID, originally the Central & Eastern European Music Industry Databases, a data integration programme that now in 2020, covers all of Europe. CEEMID fulfils similar roles to the planned European Music Observatory and supports all pillars of the future pan-European system.

The comparison of Western and Eastern music audiences reveals key demographic differences that make the unchanged adoption of business practices from mature markets in the region questionable. Chapter 2 of this report will show these differences and their consequences on music markets, in terms of visiting and acquisition likelihood, frequency, seasonality and purchasing capacity. This is an example of how CEEMID fulfils the role of Pillar 3 (music, society and citizenship) in the planned European Music Observatory.

Chapter 3 contrasts market demand with the supply strategies of musicians. CEEMID has been surveying music professionals, including artists, technicians and managers about their working conditions, market conditions and plans for five years across a growing number of countries. In 2019 we invited 100 national and regional stakeholders to distribute our surveys. In some countries, our surveys already have several years of historic data, making the resulting musician database probably the largest ever source of data about how music is produced and how musicians live. We are constantly looking for partners to roll out this survey to new countries in new languages.

The CEE region has comparative advantages in big music events like festivals, and it has become one of the most important hubs for cultural tourism in the world. We explain this phenomenon in Chapter 4 by showing the differences in demand composition, demography and supply of venues in the second chapter. The lack of a modern and dense network of permanent music venues gave rise to magnificent music festivals in the CEE. Open’er, Sziget and Exit are among the biggest and best festivals in the world, closely followed by several smaller festivals in all countries. The share of festivals in the live music market is many times higher than in Western Europe and they provide vital export revenues to the local music economies. However, they play a limited role in finding new audiences for local artists, as they are increasingly programming for Western audiences by providing shows of international hits. They can only very partially fill in the gaps left by the small venue problem that hit the emerging markets harder than the UK or Australia, where policy action had been already taken to reverse the decline of the availability of smaller live music venues.

On the recording side, our analysis shows that modern digital services are growing at a faster rate than in mature markets. Because of lower repertoire competition, streaming quantities are similar for a typical Austrian, Czech, Hungarian, Polish or Slovak track than in the mature markets. However, revenue growth is limited because of the interplay of several analysed factors. Our analysis of the live and recorded music markets shows that CEEMID fulfils the roles of the Pillar 1 (music economy) of the planned European Music Observatory.

Most recorded music sales revenue in the region comes from streaming platforms, just like in the mature markets. Successful sales strategies require a solid knowledge of the global marketplace and the ability to understand and train sales algorithms. Micro-enterprises, such as independent labels, have very limited ability to cope with these functions, given that they do not have market research or R&D functions. CEEMID and Consolidated Independent have started initiating open, national R&D consortia to create the necessary concentration in data assets, analytical capacity and budgets to close this gap. As a first step, CEEMID and Consolidated Independent have created a large, independent music dataset based on hundreds of millions of royalty statement entries to create our market indexes, styled after stock market and bond market indexes. Streaming opportunities are fast changing as roll-out of streaming services is happening at a different rate in various territories; subscription charges and the exchange rate to the producer’s currency vary and repertoire competition emerges in the market. Our volume and revenue indexes in Chapter 5.3 are aimed at creating sales algorithms that optimize sales volumes and expected revenues. We believe that this analysis also reveals that CEEMID partially fulfils the roles of Pillar 2 (music diversity and circulation) and feeds important data into Pillar 4 (innovation).

The region has far bigger untapped potential than most music business executives believe. Households in the region spend a significantly lower share of their recreational budget on music than their Western, Southern or Nordic peers. The region has a lot of untapped cultural purchasing power because servicing is particularly challenging in both the live and recorded sides of the business.

This upside potential cannot be tapped without better pricing. Royalty levels are often very low in the region. Due to many combined effects analysed in this short report, the gap between royalties earned in the CEE and Western Europe is several times bigger than the difference in GDP or national average wage. These gaps are partly caused by special interests preventing collective management from charging appropriate tariffs for restaurants, media companies or electronic appliance importers and manufacturers, and partly by unfavourable taxation of cultural products and services.

CEEMID was designed to create economic evidence on royalty pricing, private copying compensation and the creation of economic value added in the industry. In the first Hungarian Music Industry Report of ProArt and in the first Slovak Music Industry Report we have shown that economic and taxation policies of the CEE countries aimed to support car and electronics manufacturing create a distorted, unfavourable economic regime for creative industries. We want to help local stakeholders with economic evidence to correct these discriminatory policies during the overhaul of the EU VAT system. We have been helping various national organizations with economic evidence, presented in the light of latest EU jurisprudence, to improve their pricing activities. Our thousands of indicators were also used in ex ante evaluations of granting schemes.

In 2020, all EU member states will change their copyright administration legislation because of the national implementations of the 2019/790 Digital Single Market directive. CEEMID provides evidence in several countries about the size and impact mechanism of the value transfer, and generally the widespread use of the copyright exemption for private copying. We believe that the thousands of pan-European music industry indicators that we have aggregated over the five years will play a vital role in these regulatory processes.

CEEMID fulfils its roles with a very thorough exploitation of the EU’s 17-years-old Open Data regime with the re-use of public sector information, and a very careful mapping of the music industry. These maps help us conduct annual surveys among musicians and the audience, and they help us connect (always with pre-approval and with a user mandate) to industry databases. We do not only cover the EU countries, but increasingly (potential) candidate countries and neighbourhood countries.

In our vision, this data collection and integration, i.e. Pillars 1-3 should be available for all music stakeholders, should remain public and publicly funded. The last Pillar of the observatory, innovation, is where private entities should compete. The founders of CEEMID and Consolidated Independent believe that this report demonstrates the business and policy benefits of such a system with the analysis of the Central & Eastern European music markets. We believe that this way CEEMID is in a position to serve most of the planned functions of the envisioned European Music Observatory, and we are looking for ways to make either our thousands of indicators, or our data collection and integration software open source and available for all stakeholders in the EU and its neighbours. CEEMID was born out of necessity to level out the different levels of public research and statistical coverage of the EU member states. In our view, private entities in the future should focus their investments in Pillar 4 of the planned observatory, i.e. competing in innovation with creating new models, algorithms and services based on data that is available throughout the European Union without giving further advantage to the already mature markets.

Czech Music Development Program & Comparative Market Research

Sat, 09 Nov 2019 11:00:00 +0100

I was presenting some highlights from the work we started with in the organization of SoundCzech with 25 music professionals representing more than 20 stakeholders in the How We Would Like To Work in the Czech Music Industry in 2020 ex ante evaluation workshop in the context of the comparative Central European Music Industry Report.

You can find the full presentation, including slides not shown in the workshop here. The presentation is a self-contained big file of 20Mb, takes time to load.

The work is done in a collaborative manner with the open Research Consortium started by SoundCzech, CEEMID & Consolidated Independent. We would like to invite any Czech stakeholders, or even individuals to join our efforts. Because in the music sector, all organization are microenterprise or small enterprise sized, they usually have no significant market research, innovation and strategic HR management capacities. We hope to give them in each country useful tools.

A very interesting part of the discussion in the morning was around transparency and potential conflict between stronger and weaker markets. Thank you for all colleagues who came on a Saturday morning after great showcase concerts the night before, and let’s stay in touch!

Private Copying in Croatia

Thu, 31 Oct 2019 12:00:00 +0100

After much delay, the first measurement of licensed use of music, audiovisual content, home copying and value transfer to media platforms in Croatia for a practical update of the private copying remuneration in the country.

You can find the whole study in English, a Croatian language summary and a press release in the Publications section.

The models presented are simplified models of the Hungarian and Slovak models, with less detailed data. However, they show clearly that in less developed markets, compensation for unlicensed use remains a key issue. Only a very small fraction of households pay for music and film, and creators, performers, film writers are massively undercompensated in the Croatia, Bulgaria, Romania, Poland or the Baltic states of the EU.

My study, Private Copying in Croatia, argues that the cultural and welfare benefits of this private copying regime are enormous and important to create a good quality of life in Croatia for all age groups, but especially for young people, and it must be maintained. Furthermore, it is very advantageous for the tech sector, because their products are mainly used with unlicensed music and film copies, given that only a very small portion of the population pays for downloads, or subscribes to services like Spotify, Deezer or Netflix.

Even for those who are not interested in royalties, the first 3 chapters offer a very interesting introduction on how people listen to music, how musicians make music and how people copy it in the 21st century.

This project was a continuation of the mapping of the Croatian music sector. I have created more detailed valuation and use studies of private copying and YouTube in Hungary (2015, 2017, 2018, 2019) and currently preparing similar studies in other countries, including Slovakia, as a continuation of the work started with the Slovak Music Industry Report and generally my home copying work started in 2012 with Value added by music in public performance and home copying: economic theory and empirical applications for tariff setting.

Central European Music Industry Report Presentation

Mon, 30 Sep 2019 08:05:00 +0200

We had the first public and panel discussion of the forthcoming Central European Music Industry Report. After mapping and analysing in depth the music industries of several CEE countries, I put together with the help of Consolidated Independent and state51 a regional report in previously unseen detail.

You can review the whole presentation here (10Mb self-contained HTML file, takes some time to load).

After mapping and analysing (see most recently Slovakia) in depth the music industries of several CEE countries, with the help of Consolidated Independent I put together a regional report in previously unseen detail.

The live music part explains the different demography and other demand drivers of the CEE region for concerts, resulting in high seasonality, low venue profitability, an unusually high vulnerability of small venues – and as a result an unusually strong music festival scene.

For recordings, the report shows the royalty gap in comparison to Western Europe and the difficulties of labels and publishers to create value added to musicians. In the absence of a fully functional recording market, musicians are more reliant on collective management revenues than in the rest of Europe – yet in many countries collective management has profound difficulty in asking the correct price for music or collecting it.

When analysing the music flows among European countries, and the export-import flows of other emerging markets in Latin America and the worlds most stable ones, like that of the United States, Brazil and Japan, we must realize that these nations face an uphill battle to get into the better paying markets and at the same time to protect their domestic market from increasing import substitution.

Music grants could be an important tool to balance the disadvantaged position of CEE musicians in this global competition. Austria and Hungary has a strong popular music support program, but usually the availability and suitability of grants is lower in those countries where musicians and their technical and managerial team would need it most.

I am very grateful for the support given by Consolidated Independent in the making of this report. CI is the market leader in managed services for the digital music industry, connecting the best independent music with the opportunities of the global market. With their data science team, we put together data from about 700,000,000 royalty statement documents about the whole region. I believe that this is the first time that a global player releases large amounts of data to help understanding the changing music landscape in the era of digital streaming. Equally thankful for Franz Hergovich (Music Austria) for inviting us to discuss these findings on Waves Music Showcase Festival and Conference on 27 September 2019 with Márton Náray (SoundCzech) and Péter Benjámin Tóth (Artisjus). And of course, the most important people to thank for are the more than 2000 musicians, managers and technicians who participated in the CEEMID Music Professional Survey, which is one of the main data sources of this report, where no other information was available. You can find out more about the data sources here. The report will be shortly released in a free downloadable ebook, and musicians, who requested it, will receive their personalized mini-reports shortly.

All feedback is, as always, welcome.

Slovak Music Industry Report

Tue, 26 Mar 2019 00:00:00 +0100

The whole report can be downloaded for free from the homepage of SOZA.

Press reports in Slovak:

SME: [SOZA predstavila prvú Správu o slovenskom hudobnom priemysle](Čítajte viac: https://domov.sme.sk/c/22084685/soza-predstavila-historicky-prvu-spravu-o-slovenskom-hudobnom-priemysle.html)

Kreatívna Europa: Historicky prvá Správa o slovenskom hudobnom priemysle prináša okrem analýz aj odporúčania pre budúcnosť

In Hungarian: Új Szó: Tudományosan a hazai zeneiparról

Slides

Spáva o hudobnom priemysle na Slovensku from Dániel Antal

Slovak Music Industry Report

Wed, 18 Apr 2018 19:00:00 +0200

You can review the slides here.

or on Slideshare.

The Slovak Music Industy Report can be downloaded from here.

The Growth of the Hungarian Popular Music Repertoire: Who Creates It And How Does It Find An Audience

Sun, 22 Jan 2017 00:00:00 +0100

Being visible in the world is always difficult in the Central and Eastern European region. Made in Hungary is the first book in the Popular Music Studies series of Routledge from the region. A description of our first datasets, the motivation of the research and the CEEMID concept is laid out as a closing, quantitative chapter in the book.

Mapping the Croatian Music Industry

Wed, 20 Apr 2016 00:00:00 +0200

Daniel Antal presented the preliminary findings of the Croatian music industry research in the International Authors’ and Creators’ Conference (Međunarodna autorska kreativna konferencija, #MAKK2015) in Zagreb on 24 November 2015. The presentation was largely based on analysis of various CEEMID databases.

The Central European music industry, as shown by processing the data of more than 2000 musicians in the region is even more reliant on live performances than the British music industry. Even though Croatia appears to be more similar to the UK than the region, a deeper analysis of the data reveals that this is not the case. The most important difference between mature markets and emerging markets is the lack of good distribution and monetization strategy for recorded music.

Collecting and analyzing industry data is very important for small, national music industries that do not have a large enough repertoire that can be easily promoted on global platforms such as Spotify, Deezer or YouTube. New digital platforms produce relatively low income for Central and Southeastern European artists and labels, but they are growing at a rate similar to mature markets with a short, 1-5 years lag. Understanding the different strategies of global service providers, forthcoming liberalization and data-driven analytics are very important to maintain the share of domestic music in the radio and television channels and further expand it in the new channels.

More insights will be published on our blog and the forthcoming Regional music industry report. To be involved in the data collection and sharing of the Croatian national industry report please contact HDS-ZAMP, ZAPRAF, HGU or Unison in Croatian or CEEMID in English.

You can view the presentation slides below.

Preliminary results of mapping the Croatian music industry from Dániel Antal

Hungarian Music Industry Report

Fri, 01 May 2015 00:00:00 +0200

A ProArt zeneipari jelentése from Dániel Antal

First National Hungarian Music Industry Report

Mon, 27 Apr 2015 00:00:00 +0200

The report was compiled with joining data and knowledge from collective management agencies for composer, producer and performer royalties, and market leading companies Sziget (organizer of Sziget festival and many more festivals), WMMD music distribution company, market-leading Schubert Music Publishing and A38, Hungary’s leading music club, together with producer and audience survey data, tax authority data and other government sources.

The report was presented in the Music Hungary Conference in 2015 and became the prototype of further Hungarian and regional reports. It was commissioned by ProArt.

music-industry | Digital Music Observatory

An Empirical Analysis of Music Streaming Revenues and Their Distribution

Related Work

Call for Open Collaboration

Music Reports

Public Reports

Non-Public Reports

The Welsh Music Industries In a Post-Covid World

Inquiry Into The Live Music Industry In Wales

Our Approach To A European Music Observatory

Background

Data Gaps

Circulation of Repertoire & Cultural Diversity

People & Diversity

Music Economy

Organization and institutional model

Bottom-up versus top-down

Hierarchical versus decentralized observatory

Value For Money, Budget

Quality Control

Use Cases

CCS Ecosystems: Evidence-Driven CCI Policy & The Central & Eastern European Music Industry Report

Invisibility

Industry organization

Policy issues

Recommendations

Further links

Central & Eastern European Music Industry Report 2020

Executive Summary

Czech Music Development Program & Comparative Market Research

Private Copying in Croatia

Central European Music Industry Report Presentation

Slovak Music Industry Report

Slides

Slovak Music Industry Report

The Growth of the Hungarian Popular Music Repertoire: Who Creates It And How Does It Find An Audience

Mapping the Croatian Music Industry

Hungarian Music Industry Report

First National Hungarian Music Industry Report