Events | 2009.07.19
Music industry back on right track
Sponsorship and live shows helped to raise revenues by 4.7%, according to research
It has been an unhappy few years for the music industry, hit by plummeting CD sales and rampant online piracy. But there are signs that the worst may be over – research suggests the industry grew last year and is finding new ways of making money.
Music brought in £3.6bn to the British economy last year, growing by 4.7%, according to a report from PRS for Music, the payment collection body for musicians, songwriters and publishers.
The sale of CDs, which took another blow after the closure of several high street retailers such as Woolworths last year, may ultimately be sidelined as live music becomes the main breadwinner for most bands.
Sponsorship deals between big businesses and musicians – such as Take That\'s partnership with Marks & Spencer – are also becoming more important as bands and their managers look for new ways of making money from a shrinking pie, said the report.
Will Page, chief economist at PRS for Music, said the money from the licensing of services such as music streaming website Spotify to big sponsorship deals was more important to the music industry than ever, making up 25% of its revenues, up 9% on last year.
"It\'s not just about the Armageddon sales figures, the industry is becoming much more diversified," he said. "Revenues from business now make up a quarter of the overall pie, but whether this is enough to make up for the fall in CD sales remains to be seen."
The marriage of convenience between music and brands is nothing new – Michael Jackson set the trend with a $5m partnership with Pepsi in 1983 – but new deals now account for £89m of the industry\'s overall worth.
The way brands are working with artists is changing too. Advertising campaigns are more inventive and look to harness the power of the internet, with companies such as chewing gum brand Trident partnering with pop star Beyoncé, organising a "flash dance" of 100 women dancing to her recent hit, Single Ladies, in the hope that people would share the video on YouTube.
Some bands have gone even further. Last year, electronic act Groove Armada left Sony to strike a deal with drinks brand Bacardi. As well as releasing all new music through the company, they featured in its international music events throughout 2008.
Record labels may be trying to get in on the action with "360" deals that control all the artists\' revenue streams, from CD sales to sponsorship. But musicians and their managers are more open than ever to signing direct deals with brands, according to Jon Webster, chief executive of the Music Managers Forum. "It\'s not just about money, but also about creative control," he said. "Record labels are rarely known for their moral stand, but a band knows immediately the type of deals they want to do."
Live music now makes more money for the industry than CD sales and is worth £1.4bn, up 13% on last year, according to the report. But it warns that not everyone is feeling the benefit of this growth.
While this summer\'s major festivals have sold out and Madonna can fill the O2 many times over, established "heritage" acts such as Take That are taking the lion\'s share of the profits, said Page. "The live music industry is somewhere you really want to be right now, but there is a widening gap between hits and niches," he said. The rise of live could also pose questions about future investment, he added. "Yes, recorded is down and live is up — but we have to remember it\'s recorded music which does the primary investment in new talent."
In future it is possible that big companies could step up and become talent nurturers as well as sponsors of big acts, according to Dom Hodge, director of Planning at FRUKT, a music branding agency. He points to events such as the Red Bull music academy, which takes 60 aspiring DJs, producers, MCs and singers for two weeks of workshops and talks from experts. "Although big brands will want to associate themselves with big stars, we are seeing brands investing in new music and that has to be a benefit for music fans and the music world," he said.
For more information, please visit
http://www.guardian.co.uk/business/2009/[...]ic-industry-growth-live-sector
