Parliamentary Inquiry Submission Factors Contributing to the Growth and Sustainability of the Australian Music Industry. Submiss
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Parliamentary Inquiry Submission Factors contributing to the growth and sustainability of the Australian music industry. Submission: The Economic and Cultural Value of Australian Music Exports Submission from an ARC Linkage research project jointly funded by the Australia Research Council, APRA-AMCOS and The Australia Council for the Arts Project Investigators: Professor Richard Vella (University of Newcastle), Professor Stephen Chen (University of Newcastle), Associate Professor Shane Homan (Monash University), Tracy Redhead (University of Newcastle) & Millie Millgate (Sounds Australia). 1 Summary Australian music export activities are extensive including touring, streaming, digital downloads, synchronisation, distribution, publishing and broadcasting deals, licensing, physical sales and merchandising. Income streams from exports can be defined as tangible and intangible. Tangible activities leading to monetisation are relatively easy to track. Not so easy to track are activities that contribute to cultural identity and eventual monetisation. Australia’s key export competitors have significantly expanded their support for music exports. International state initiatives for increasing music activity in territories beyond their own are on the rise. It is vital for Australian music businesses and artists to develop and build their international markets in order to benefit from tangible and intangible export activities. However, this requires a music export framework and substantial investment to initiate, follow-up and grow opportunities combined with a recognition of the key role Sounds Australia plays in the promotion of the Australian music export. 1. Background This submission derives from an Australian Research Council funded Linkage project examining the economic and cultural value of Australian music exports, and the global contexts in which industry and government-funded export schemes operate. The research team is Professor Richard Vella, Professor Stephen Chen and Tracy Redhead (University of Newcastle); Associate Professor Shane Homan (Monash University); and industry Partner Investigator Millie Millgate (Sounds Australia). Funding for the project has also been provided by APRA-AMCOS and the Australia Council for the Arts. The research team has entered the final (analytical) phase of the project, with reports to be made public at the end of the 2018 and in early 2019. The project addresses the following aims: (i) To map and assess the value and efficacy of current Australian music export programs in relation to similar programs internationally; (ii) To assess trends and changes in music industry business models resulting from changes in new media technologies that influence current and future models of artists’ development; (iii) Provide insight into the growth of local markets in Australian music within globalised processes and markets; (iv) Analyse cultural and economic value creation in the global value chain of the music industry. The project is nearing completion of three stages of activity: Stage 1 - Mapping/assessing the economic and cultural contribution of the Australian music export industry (through national industry survey data, and partner organisation data on engagement and revenues); Stage 2 - Documenting the strategies and practices of Australian artists, managers and related industry workers as entrepreneurs (through artist surveys, interviews and case studies); Stage 3 - Assessment of the nation-state as entrepreneur (comparative analysis of other national export organisations through interviews, policy literature and export event observation). The case study nations are France, Brazil, South Korea, Canada, Great Britain, Sweden and Norway. 2 Findings from each of the three stages of the research will be publicly released separately towards the end of 2018 and at the beginning of 2019. 2. Introduction: Industry Contexts 2.1. We define music export as the revenue from music goods and services realized by Australian artists from a range of music activities outside Australia. This is in keeping with other national understandings. For example: UK Music broadly state that in their national context, “Exports are revenues from transactions between sellers in the UK and buyers outside the UK” (UK Music 2015). As with other cultural goods and services within global trade, Australia has historically been a net importer of music goods and services. However, contemporary artists have enjoyed substantial success in the past five years in both old and new music markets. In 2017, royalties earned overseas by Australian artists achieved a new high point of $43.5m, a 13.6% increase from 2016 (APRA-AMCOS 2017a). Australian songwriters (e.g. Flume, Vance Joy, Sia) have contributed to a 199.5% increase in overseas royalties over the past five years, with a record 18,052 members earning income from works played overseas (APRA-AMCOS 2017a). The recording industry’s global revenues for 2017 consisted of physical sales (38% and declining); digital downloads (16%); digital streaming (38%); performance rights (14%); and synchronization (2%) (The Industry Observer 2018). The Australian music industry shows a similar increase in digital revenues and decline in physical sales: digital (28.5%), television (20.3%), public performance (20.1%), radio (12.1%), recordings (3.4%)(APRA-AMCOS 2017a). Australia has significantly expanded its scale of music exports. International royalties now account for $44.7m (11.6%) of royalty income for Australian artists (APRA-AMCOS 2017b) up from $22.1m (9.1%) in 2012 (APRA- AMCOS 2012). While these figures identify tangible outputs, our research is currently estimating the total value of the music export to include intangible inputs and outputs. The substantial increase in international royalties for Australian artists is one measure of various achievements in gaining international success. Earlier, occasional music export successes in the 1990s/2000s (e.g. INXS, Silverchair, Savage Garden) have given way to a much broader base of Australian artists achieving international success. The “musical export [is] reshaping stereotypes of a sunburnt country where sweaty bands once played rock ‘n’ roll in pubs carpeted with sawdust” (Brandle 2016), with Australian acts finding overseas markets across pop, indie and mainstream rock, progressive rock, country and electronic-pop. The expansion of Australian artists succeeding in multiple genres and territories is a combination of multinational and indie label development; a digital landscape/soundscape that allows for easier access to audiences; and a greater number of acts that accord with both niche and global genres. Despite the benefits of digitization, the “tyranny of distance” (Blainey 1966) is still a major issue for those music export businesses reliant on touring and the need to have an offshore presence, despite developments in communication technologies that have been purported to lead to the “death of distance” (Cairncross 1997). While this is a very real problem for the exporting of Australian musicians, the need for a constantly engaged international presence is a priority for many countries: It’s a big investment, it may cost us $15,000 to showcase for one trip but we would need to budget for at least two follow-up trips to justify going. (Interview with Australian artist manager 2018) 2.2. A discussion on the Australian music industry necessitates an understanding of the impact of globalization and digitization. New business models as a result of globalization and digitization are changing the face of the industry as it remains in constant flux. The new challenges facing Australian music exports are inextricably linked to changes in (i) technological, (ii) economic and (iii) cultural 3 forms. In terms of production, digital recording is inexpensive and has increased the speed and access of music products, particularly among social/virtual networks. Within the music industry, music export revenues are mainly derived from live performance; merchandising; the production and sale of sound recordings; the administration of copyright in compositions and sound recordings; and exploitation of copyright across both traditional and ‘new media’ (television, film, video games, advertising, radio, mobile phones, social media sites). These are tangible examples of monetary success. Intangible factors are also important contributors to the eventual monetary value. However, for any tangible example of monetary success, intangible factors are also important contributors to the eventual monetary value. This informs the third of the above forms: cultural value. From a cultural perspective, the music export is a good example of globalized “inter-cultural partnership[s], in which products and productions are reciprocally imported from and to cultures” (Koivunen 2005). Understanding these challenges will maximise Australia's competitive advantage, lifting productivity and economic growth. The pace and extent of change wrought by technological shifts within the music (and creative) industries over the past two decades has been profound. This has seen a shift from music as product to music as a service (Tschmuck 2003) that offers consumers new contexts of consumption (Wikstrom 2009). Indeed, “mobile telephony-driven music streaming ... looks set to be the most important development, on a par with the introduction of the phonograph, vinyl records and the CD [in] producing new dynamics of personalisation and mobility” (Hesmondhalgh and Meier 2018). This has led