METHODOLOGY Contents
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METHODOLOGY contents. methodology. 3 definition. 8 applying methodology to the core definition. 14 music tourism. 26 acknowledgements. 37 This analysis is based on the most recent data that is available. The data sources used are a combination of industry surveys conducted by the UK Music members, Annual Business Survey (ABS) and other music industry bodies. The Music Tourism analysis and methodology was conducted by Oxford Economics. With this report, we have repeated the same methodology as 2019, which has been adapted from the original methodology first used in 2013 and subsequently adapted for the Measuring Music reports 2014 – 2018. methodology. contents. 1 This chapter sets out the methodology that has been followed to quantify the economic contribution of the methodology. 3 UK music industry. It begins by setting out some points of terminology and the methodological steps in the order definition. 8 in which they have been implemented. It then discusses applying methodology to the core definition. 14 some methodological challenges. It concludes by music tourism. 26 providing more detail on how the key indicators – Gross acknowledgements. 37 Value Added (GVA), exports and employment – have been determined. methodological steps Fifth, having quantified the revenues The methodological steps are as follows: generated by the economic activities of the core music industry, it was necessary First, define the industry. This task to transition from these to an estimate provides the industry’s answer to the of GVA contribution. There are various question: What economic activities make methods for making this transition, which up the core music industry? we discuss below. More detail on the process followed to Finally, we present our results by industry generate the industry’s answer to this segments. This is to say that the GVA, question is provided in the next chapter employment and export contribution of on definition. UK music is presented in terms of the Second, identify and quantify sources different elements of our definition of of revenues. Having established the this industry. This analysis is based on the most recent economic activities that define the music data that is available. The data sources industry, this task involved working with used are a combination of industry the industry to identify and quantify surveys conducted by the UK Music the revenue streams relevant to these members, Annual Business Survey (ABS) economic activities. and other music industry bodies. Third, the export contribution of The Music Tourism analysis and the music industry was measured by methodology was conducted by Oxford identifying and quantifying those Economics. revenue streams that involved transactions between UK businesses With this report, we have repeated or artists and businesses or customers the same methodology as 2019, which outside the UK. has been adapted from the original methodology first used in 2013 and Fourth, the employment contribution subsequently adapted for the Measuring of the music industry was measured Music reports 2014 – 2018. by identifying and quantifying the employment concerned with the economic activities that form the music core industry. 3 terminology report on the GVA contribution of the We define Gross Output, Gross Value creative sectors but not their Gross Added (GVA) and exports in the same Outputs. way as the Office for National Statistics In the UK, three theoretical approaches (ONS) and current accepted economic are used to estimate GDP: ‘production’, convention. This means that the ‘ income’ and ‘expenditure’. The following definitions are used: ‘production’ approach to estimating Gross Output corresponds to the total GDP looks at the contribution of each value of final sales by the company or economic unit by estimating the value industry in the relevant accounting of an output (goods or services) less the period. value of inputs used in that output’s production process. The income GVA1 is the contribution an institution, approach to estimating GDP measures company or industry makes to Gross the incomes earned by individuals (e.g. Domestic Product (GDP). GVA is most wages) and corporations (for example, simply understood as the value of profits) in the production of outputs sales minus the cost of bought in (goods or services). 2 goods and services used up in the production process. For a company, this In Measuring Music, a production is equivalent to the sum of compensation approach is used for all categories of employees (including both salaries of activity except the category and payments in-kind), earnings before encompassing musicians themselves, interest, tax and depreciation (EBITDA), as these are individuals and therefore, and taxes less subsidies on production. their revenues are treated in the same way as wages would be under an income Exports are the value of final sales to approach. purchasers resident overseas. This is consistent with the Annual Trade in Services Survey run by the ONS. GVA measures the contribution to the economy of each individual producer, industry or sector and is used in the estimation of Gross Domestic Product (GDP). GDP is a key indicator of the state of the whole economy. When assessing the economic contribution of sectors or the economic impact of a policy change, it is conventional to refer to the GVA impact. This is, therefore, a more widely recognised and used measure of economic contribution than Gross Output. Department for Digital, Culture, Media & Sport (DCMS), for example, 1 https://www.ons.gov.uk/economy/nationalaccounts/uksectoraccounts/methodologies/glossaryofeconomicterms 2 http://www.ons.gov.uk/ons/guide-method/method-quality/specific/economy/national-accounts/gva/relationship-gva-and-gdp-gross-value-added-and- 4 gross-domestic-product.html terminology report on the GVA contribution of the methodological data has grown. This includes surveys We define Gross Output, Gross Value creative sectors but not their Gross of individual Music Creators, but also Added (GVA) and exports in the same Outputs. challenges music accountants acting on behalf This project has identified and overcome way as the Office for National Statistics of their clients and all conducted on a In the UK, three theoretical approaches a number of methodological challenges. (ONS) and current accepted economic confidential basis. The MMF continue to are used to estimate GDP: ‘production’, Our research partners, Oxford convention. This means that the provide data of music managers from ‘ income’ and ‘expenditure’. The Economics, have a strong track record of following definitions are used: across the country. ‘production’ approach to estimating studies on broadly comparable sectors Gross Output corresponds to the total GDP looks at the contribution of each – for example, film – and assisted this Our analysis of the live music industry value of final sales by the company or economic unit by estimating the value study by drawing upon the intellectual crucially depends upon accessing industry in the relevant accounting of an output (goods or services) less the capital of these past studies. ticketing data. We are grateful to all period. value of inputs used in that output’s those who have shared their data with us production process. The income Three kinds of challenge have been to enable this analysis. GVA1 is the contribution an institution, approach to estimating GDP measures confronted: The biggest challenge in putting company or industry makes to Gross the incomes earned by individuals (e.g. • Definitional challenges: Have we together the 2020 report, has Domestic Product (GDP). GVA is most wages) and corporations (for example, defined the music industry correctly? been gathering data in the midst simply understood as the value of profits) in the production of outputs • Data challenges: Have we gathered of the COVID-19 pandemic, with all sales minus the cost of bought in 2 (goods or services). the most accurate data possible on goods and services used up in the stakeholders and partners impacted this definition? production process. For a company, this In Measuring Music, a production by locked to varying degrees and many is equivalent to the sum of compensation approach is used for all categories • Technical challenges: Have we used staff furloughed. This was especially of employees (including both salaries of activity except the category the data appropriately to assess challenging in terms of generating and payments in-kind), earnings before encompassing musicians themselves, economic contribution? responses from small and medium sized as these are individuals and therefore, businesses, but also individuals and interest, tax and depreciation (EBITDA), We provide more detail on the process their revenues are treated in the same the self-employed. A significant effort and taxes less subsidies on production. that has been followed to arrive at our way as wages would be under an income was made by everyone involved with definition in the next chapter. Exports are the value of final sales to approach. this project to gather as much reliable purchasers resident overseas. This is This process arrives at core and wider data as possible in these exceptional consistent with the Annual Trade in definitions of the music industry, which circumstances. This meant that we had Services Survey run by the ONS. in providing core and wider elements is to be realistic and flexible with timelines, GVA measures the contribution to the consistent with the approach used by but we also paid