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AIR Share Australian Independent Music Market Report 2017

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AIR Share Australian Independent Music Market Report 2017 AIR Share Australian independent music market report 2017 Australian independent music market report Contents Executive summary 2 1. The Australian recording industry 5 1.1 Structure of the industry 6 1.2 Importance of music 9 2. Market share analysis 12 2.1 The independent recording market 12 2.2 Market share 12 3. Industry insights 15 3.1 Independent labels support Australian artists 15 3.2 Digital and physical dominate 15 3.3 Music releases 17 3.4 Labels in Australia 17 4. Change in the sector 21 References 25 Appendix 26 A.1. Survey methodology 26 A.2. Aggregation 27 Contacts 28 AIR Share 30% of the $400 million in the total recording industry comes from the independent sector 44% 57% 95% of the revenue of the revenue of the independent comes from is attributable to sector releases digital channels Australian artists are new 1 Australian independent music market report Executive summary Music is important to Australians. One in We estimate that in 2014-15, the five of us play or create our own music independent sector had revenue The independent recording market (ACA, 2014), and 40% nominate music as of $154.8 million, and released our number one passion (Everbrite, 2016). over 6,000 singles and albums. • The Australian recording industry as a whole had revenue of just This passion supports a vibrant industry, Comparing this to the overall Australian under $400 million in 2014-15 making Australia the sixth largest music recording industry, we found that the market in the world in revenue terms independent sector had 30% market • The independent recording sector (IFPI, 2014). But beyond the bands and share in revenue terms.2 makes up 30% of total recording the music fans, many parts of the music revenue in Australia The independent recording sector in industry are not well understood. • 44% of independent sector revenue Australian is locally focused. More than comes from digital channels Behind the music is a complex network of two thirds of the artists in contract businesses that produce and distribute with independent record labels are • More than half (57%) of the work of artists, and a significant Australian, and 57% of revenue is independent sector revenue is component of this network is the attributable to Australian artists. attributable to Australian artists independent sector. The sector also plays an important role • 95% of independent sector music in promoting Australian music overseas, releases are new content. The independent sector of the recording with 31% of total revenue coming in industry is made up of hundreds of from international sources. businesses, from artist managers to labels and distributers. This fragmentation means In line with global trends, the independent that data collection is difficult. As a result, recording sector is increasingly digital, 1 This work commenced in 2016, but given it is an inaugural study data collection and analysis the importance of the independent sector with digital revenue higher than took time. While the data is from 2014-15, it is an is often overlooked. physical revenue. The sector earned important benchmark for future analysis, and 44% of total revenue through digital while trends in the industry have progressed This report aims to quantify the market channels, though physical remains an beyond what is reported here, the data’s value as a benchmark is significant. share of the independent sector of the important channel, accounting for 33% of recording industry and highlight the roles total revenue in 2014-15. 2 The market share is calculated based on a that it plays in society. subset of independent sector revenue (excluding More than half (61%) of digital revenue international sales and revenue from performance, Deloitte Access Economics conducted a came from music downloads (for ancillary and synchronisation channels) in order to survey of independent record labels and example iTunes), while 29% came from be comparable with ARIA data. distributors in Australia, asking them about music streaming services such as Spotify. 1 their operations in 2014-15. But this balance is shifting quickly, in 2017 almost two-thirds of independent We found that the recording industry as a labels globally earned more revenue from whole is larger than previously estimated. streaming than downloads (Merlin, 2017). By aggregating Australian Recording Industry Association (ARIA) data with Chart i shows how the make-up is additional recording revenue registered changing. The most widespread change with the Phonographic Performance has been an increase in digital revenue Company of Australia (PPCA) and the and a decrease in physical revenue, results of the survey of independent labels, though synchronisation and performance we estimate that the Australian recording rights income are also increasing. industry had revenue of $399.4 million in 2014-15. 2 AIR Share Chart i. Change in revenue channels, independent recording sector Physical 64% 4% Ancillary 12% 16% Distribution 4% 24% Performance 8% 32% rights Synchronisation 4% 32% Digital 8% 68% Decrease Increase Overall, the independent recording • It is instrumental in helping new artists sector has been responsible for thousands kick start their careers. The large number of music releases. Even just among survey of small, niche labels that exist in the respondents, over 88,000 music releases sector mean that artists are more able to were recorded. Of these, 95% were find a label that suits their musical taste. original content and just 5% re-releases. • It competes with the major labels There were almost 24 million units sold (IBISWorld, 2017), ensuring in 2014-15, and more than 80% were market efficiency and lower prices distributed by independently. for consumers. The independent sector plays a number of It is important that the independent key roles in the recording industry beyond sector is recognised for these roles, and its financial contribution: the significant market share it holds. • It broadens the variety of music produced Businesses and governments should in Australia, so that there is diversity in consider this when looking to invest in the the music available for consumers to recording industry. enjoy (WIN, 2015). Deloitte Access Economics 3 Australian independent music market report 40% of Australians nominate music as their number one passion Australia is the 6th largest music market in the world by revenue 4 AIR Share 1. The Australian recording industry Music is important to Australians. Nearly The independent sector – defined as all half (40%) of Australians nominate music music recording businesses other than About this study as their number one passion (Eventbrite, the three major labels – of the recording 2016), and in 2016 we collectively spent industry is made up of hundreds of Data in this study is from 2014-15 close to $400 million on recorded music businesses. For instance, there are and was collected in 2016 and 2017. (ARIA, 2017 and DAE estimates). A survey approximately 1,100 artists registered Because it is the first year of this by the Australian Council for the Arts (2014) to receive revenue through the study, it took time to collect and found that 57% of Australians attended a Phonographic Performance Company analyse the data, and it is not as live music event in the past year, and one in of Australia (PPCA). Some of these are recent as it could be. five play or create their own music. small record labels focused on producing a particular genre of music, but some Given that Australian independent By international standards, Australia is are also large industry players. record label market share has not engaged with music. We are the sixth been investigated in detail before, largest music market in the world in The fragmented nature of the industry, this report provides an important revenue terms (IFPI, 2014) ahead of much made up of record labels, music baseline to monitor the sector more populous nations like Canada, South distributors, artist managers, and against in the future. Korea, and Brazil. artists themselves, makes data collection difficult. However, it is important to note that When talking about the music industry, the recording industry moves fast, people usually think about the bands The Australian Independent Record and some of the trends in this report making the music, and the people who Labels Association engaged Deloitte may have accelerated. For instance, listen to it. However, there is a lot more Access Economics to conduct a survey since 2014-15, digital music streaming to the music recording industry, which of the independent sector of the recording has significantly increased, and for is made up of businesses built to create, industry. This report details the findings of many labels the revenue split has produce, and distribute music. Some of that study, and aims to clarify the structure flipped from being primarily driven these businesses are well known – for of the industry and estimate the market by physical sales to being sourced example large record labels and music share of independent record labels in the from digital sales. distributors – but there is more to the wider recording market. industry than is widely understood. The 2017 global music survey by the Merlin Network found that more than two-thirds of independent record labels earned more than half their revenue through digital channels in 2017, compared with just 55% of labels in 2015 (Merlin, 2017). Similarly, overall recording industry revenue has increased since the 2014-15 period. While this report uses the 2014-15 ARIA figure of $325.8 million as a base, in 2016 recording sales reported by ARIA were $352.2 million (an increase of 8%). 5 Australian independent music market report 1.1 Structure of the industry Record labels The recording industry is multi-layered, Record labels are responsible for producing a number of different players interact with and marketing the music made by artists.
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