Yet the music business is surprisingly healthy, and becoming more so. Will Page of PRS for Music, which collects royalties on behalf of writers and publishers, has added up the entire British music business. He reckons it turned over £3.9 billion ($6.1 billion) in 2009, 5% more than in 2008. It was the second consecutive year of growth. Much of the money bypassed the record companies. But even they managed to pull in £1.1 billion last year, up 2% from 2008. A surprising number of things are making money for artists and music firms, and others show great promise. The music business is not dying. But it is changing profoundly.
The longest, loudest boom is in live music. Between 1999 and 2009 concert-ticket sales in America tripled in value, from $1.5 billion to $4.6 billion (see chart 1). Ticket sales wobbled in America during the summer of 2010, but that was partly because some big-selling acts took a break. One of the most reliable earners, Bono, U2’s singer, was put out of action when he injured his back in May. Next year many of the big acts will be on the road again, and a bumper year is expected.
On television, music is either supported by advertising or bundled invisibly into the cost of pay-TV subscriptions. That model is spreading from the box to the web. Free music-streaming services like We7 and Spotify have proliferated in Europe: the latter claims 10m users. America has Vevo, a music-video website linked to YouTube and owned in part by Universal Music Group and Sony Music Entertainment. Because Vevo’s content is consistently professional, it draws advertisers. Rio Caraeff, who runs the outfit, says companies pay $25-30 to reach 1,000 viewers. That is more than television networks tend to get, although Vevo reaches fewer people and runs many fewer ads (just 15 seconds every six-and-a-half minutes).
Some music executives fret that the stadium-filling acts will not be replaced. It is true that the starmaking machines run by the record companies are creaking. But this does not mean there will be no more popular acts. Musicians will build fan bases in other ways—through social networks, by recording music for TV or simply by trekking from gig to gig (which is how bands became famous for much of the 20th century). Some will rise with a speed that would have shocked their predecessors—witness Lady Gaga or Justin Bieber, a 16-year-old singer who was almost unknown a year ago. Those who doubt their staying power may wish to consider that adults have long believed the music their teenage children listen to will not endure as long as the tunes they grew up with.
Tuesday, October 19, 2010
Not so benighted music business: There's money to be made.
The economist reviews how musicians are making money in a media segment that has been derided as an internet loser. Here are several clips: