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Economic Contribution of the New Zealand Music Industry in 2018

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Economic Contribution of the New Zealand Music Industry in 2018 Economic contribution of the New Zealand music industry in 2018 A report for Recorded Music New Zealand December 2019 Damian Vaughan Chief Executive Recorded Music New Zealand Private Bag 78 850 Grey Lynn Auckland 1245 19 December 2019 Economic contribution of the New Zealand music industry in 2018 Dear Damian, We are pleased to provide our report on the economic contribution of the New Zealand music industry in 2018. This report is provided in accordance with the terms of our engagement dated 23 July 2019, and is subject to the Restrictions set out in Appendix C. If you have any queries please do not hesitate to contact us. Yours sincerely Mark Robinson Craig Rice Director Partner [email protected] [email protected] 021 665 786 021 624 462 PricewaterhouseCoopers Consulting (New Zealand) LP, 188 Quay Street, Private Bag 92162, Auckland 1142, New Zealand, +64 9 355 8000, pwc.co.nz Contents Executive Summary ................................................................................................................ i 1. Introduction ................................................................................................................... 1 2. Approach ...................................................................................................................... 2 3. Economic contribution of the music industry in New Zealand ...................................... 6 4. Music retail .................................................................................................................. 12 5. Public performance (non-radio) .................................................................................. 17 6. Radio broadcasting ..................................................................................................... 20 7. Live performance ........................................................................................................ 22 8. Synchronisation .......................................................................................................... 25 9. Overseas earnings ...................................................................................................... 27 Appendix A: Glossary ........................................................................................................... 28 Appendix B: Approach and methodology ............................................................................. 29 Appendix C: Restrictions ...................................................................................................... 36 December 2019 | Economic contribution of NZ music industry 2018 Executive Summary 2018 was another successful year for the New Zealand music industry, building on 2017’s strong results. The significant increase in annual economic contribution was primarily driven by a good year for live music, as well as continued growth in streaming revenues. 2018 economic growth contribution estimate We estimate that the New Zealand music industry directly contributed $336m to the national gross domestic product (GDP), and $731m in total (after accounting for multiplier effects). We also estimate the industry directly contributed around 3,000 full-time equivalent (FTE) jobs, and over 6,300 FTEs in total. Table 1. Estimate of overall economic contribution of the music industry in New Zealand, 2018 Total sales ($m) Value added (GDP, $m) Employment (FTEs) Industry sector Direct impact Total impact Direct impact Total impact Retail 135 87 115 282 502 Physical music 18 13 20 82 139 Downloads 9 6 8 16 29 Online Streaming 108 67 87 185 334 Public performance (non-radio) 52 17 42 207 374 Radio broadcasting 228 91 265 831 2,314 Live performance 188 101 251 1,653 2,992 Synchronisation 4 2 5 28 50 Overseas earnings 37 37 53 - 137 Total 644 336 731 3,001 6,370 Source: Industry-provided data, PwC analysis Note: Overseas earnings are an average over 2016-18. Radio broadcasting is the largest subsector by GDP impact, with 36% of the total. But live performance had the highest employment contribution in 2018, with 47% of the total, and was a close second in terms of GDP impact. Retail is the third largest sub-sector, making a significant GDP contribution but a lower employment impact. Figure 1. Estimate of overall economic contribution of the music industry in New Zealand, 2018 Employment effects of the NZ music industry Value added by the NZ music industry Live performance Radio broadcasting Radio broadcasting Live performance Retail Retail Public performance (non- Public performance (non- radio) radio) Overseas earnings Overseas earnings Synchronisation Synchronisation 0 1000 2000 3000 4000 $- $100 $200 $300 Direct Indirect + Induced FTEs Direct Indirect + Induced GDP ($m) Source: Industry-provided data, PwC analysis Note: Overseas earnings are an average over 2016-18. i December 2019 | Economic contribution of NZ music industry 2018 Overall trends over time Our estimate of the music industry’s economic contribution increased in 2018, continuing the upward trend from 2016. This was primarily driven by another strong year for live performances, and continued growth in streaming. Figure 2. Composition of direct GDP contribution, 2015-2018 $400m $350m Overseas earnings $300m Synchronisation $250m Live performance $200m Radio broadcasting $150m $100m Public performance (non-radio) $50m Retail $0m 2015 2016 2017 2018 Source: Industry-provided data, PwC analysis Note: Overseas earnings are an average over 2016-18. New Zealand generated content New Zealand generated content accounts for approximately 30% of the economic contribution of the New Zealand music industry. While this is slightly higher than previous years, overseas content continues to account for the majority of the contribution. Figure 3. Share of direct GDP and employment from New Zealand generated content, 2018 Direct GDP Direct FTE 31% 28% 69% 72% NZ Overseas NZ Overseas Source: Industry-provided data, PwC analysis ii December 2019 | Economic contribution of NZ music industry 2018 Retail consumption channels Revenues for traditional physical music retail continued the decline that has been evident for a number of years. The physical sales reduction has been offset by the growth of online streaming, which has grown rapidly over the past three years and now accounts for 78% of retail output. Streaming has largely replaced downloads as the main alternative to physical retail consumption. Figure 4. Retail direct GDP contribution, by retail channel, 2015-2018 $80m $70m $60m $50m $40m $30m $20m $10m $0m 2015 2016 2017 2018 Physical Downloads Streaming Source: Industry-provided data, PwC analysis Live performance trends Revenues from live performance fluctuate from one year to the next based on different touring schedules. 2018 has been the strongest ever recorded year for live performance revenue in New Zealand. Figure 5. Total sales from live performance, 2015-2018 $200m $180m $160m $140m $120m $100m $80m $60m $40m $20m $0m 2015 2016 2017 2018 Source: Industry-provided data, PwC analysis iii December 2019 | Economic contribution of NZ music industry 2018 Wider impacts Although this report focuses on estimating the contribution of the music industry in New Zealand to employment and GDP, we emphasise that the industry has a broader cultural and social role to play. Music contributes to New Zealand in a number of other ways that are not measured by GDP. The enjoyment, or utility, that New Zealanders derive from consuming and producing music is likely to be considerable but is not easily quantified. iv December 2019 | Economic contribution of NZ music industry 2018 1. Introduction This report presents estimates of the contribution of the music industry to the New Zealand economy. It provides a snapshot of the industry using data for the 2018 calendar year. In addition, the report provides some broad insights on the trends occurring in New Zealand’s music industry that are affecting the impact of the industry on New Zealand’s economy. This report has been commissioned by Recorded Music New Zealand (Recorded Music NZ) supported by funding from its project partners, the Australasian Performing Right Association Australasian Mechanical Copyright Owners Society (APRA AMCOS) and the New Zealand Music Commission. This report presents estimates of the industry’s overall contribution to New Zealand’s GDP and employment, as well as estimates across the five main subsectors of the industry: • retail • public performance (non-radio) • radio broadcasting • live performance • synchronisation. We also report estimated overseas earnings as a separate subsector, comprising income from overseas live performance and recordings and publishing. Our analysis of these earnings is outlined in a separate report1. 1 PwC (December 2019), Overseas earnings of the New Zealand music industry 2018. 1 December 2019 | Economic contribution of NZ music industry 2018 2. Approach Purpose and scope of report This report examines some ‘bottom-line’ measures of the music industry’s impact on the national economy. In this respect, it differs from other analyses that focus on the total revenue earned by the industry (eg sales of recorded music or royalties related to communication rights), a ‘top-line’ measure that does not account for factors such as intermediate inputs purchased from other industries or imported from overseas. By estimating bottom-line measures, this report enables comparisons between the music industry, other industries, and the economy as a whole. It is intended to provide industry participants and policymakers
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