The Most Important Findings of the 2015 Music Industry Report Commissioning Organizations and Objectives of the Study The study contained in the present Music Industry Report was commissioned by a group of Germany's most important music-industry associations. The goal of the study was to close gaps in existing information with regard to the economic situation of self-employed individuals and companies active in the German music industry. An additional aim was to calculate for the first time ever for the entire market the contribution to income creation and employment made by the music industry in comparison to other media sectors. The report was cofunded by the Hamburg Senate and the Federal Ministry of Economics and Energy. The study itself was conducted under the auspices of Prof. Dr. Seufert, Chair of the Institute for Communication Studies focusing on Media Economics and Organization at the Friedrich- Schiller-Universität Jena. The data collected as part of the study was taken from a survey of 1,300 companies currently active in the music industry. Together with the data already held at the Federal Office of Statistics, this new information provides a comprehensive overview of the economic situation of the overall German music industry as well as its most important sub-sectors. Data was collected with regard to the spectrum of activities performed by companies, their total income and individual types of income, as well as their overall costs and individual types of costs in 2014. Furthermore, data was also collected with regard to the number of employees as well as the precise nature of their employment status at the end of 2014. Roughly 1,300 companies with a total turnover of over 5 billion were involved in the survey, which was carried out between mid-march and the end of June. Only private companies took part in the survey; in other words, much like in conventional reporting on the cultural and creative industries in Germany, publically funded music schools, theaters and orchestras were not included in the data. In economic parlance, the term gross value added (Bruttowertschöpfung) refers to the total sum of business income plus the income received by self-employed workers and salaried employees in a particular economic sector. In Germany, this number is calculated on a regular basis for many individual economic sectors. However, until now, this calculation has been undertaken only partially and sporadically in the music industry due to a number of reasons; for example, until now, the entire realm of live concerts and music instruction was deemed as belonging to the 'cultural sector' rather than the 'media sector.' In other words, the number of employees and level of gross value added as calculated and presented in this study repre-
sents a more accurate depiction of the industry's contribution to income creation a depiction that will no doubt contribute to a more favorable comparison of the music industry to other media sectors. Furthermore, the production activities of the music industry lead to the creation of demand for goods and services from other sectors outside the music industry. Music-industry activities thus contribute indirectly to the creation of additional income and employment opportunities. The present study sought to determine and quantify precisely these indirect effects on income and employment generated by music-industry activities. Indeed, in assessing the overall economic importance of the music industry, it is important to bear in mind that music provides the essential basis for the economic activities of other economic sectors (Fig. 1). This applies, for example, to the radio industry, but also to tour operators, restaurants and companies that profit from the growing world of music tourism. The study thus also sought to compile data that helped to elucidate the extent of these spillover effects to other sectors. For example, among the bases of the study's findings with regard to music tourism were special analyses of current data with regard to travel activities in Germany; these data were commissioned as part of the present study at two institutes specializing in tourism research. Fig. 1
The study's most important findings The most important data provided by the study can be summarized as follows: 1. The greatest demand for the goods and services produced by the music industry comes from private consumers. In 2014, they spent a total of roughly 6.7 billion on music-related events, music recordings, digital music, music supplies, music instruments and music lessons. This is more than was spent on audiovisual media products (films, videos, Pay-TV and computer games) put together (Fig. 2). At the same time, music is increasingly becoming a universal, everyday companion. For example, the findings of the 2014 Media Analysis (MA) the largest survey of media consumer behavior in Germany showed that every individual in Germany population aged 10 and up listens to their own music for an average of 26 minutes a day and a further 181 minutes per day by means of of radio programs that have more than 80 percent musical content. In addition, the largest portion of TV programs watched for 187 minutes per day on average consists of broadcasts that contain musical elements. The same goes for feature films, videos and all forms of computer games. Fig. 2
2. In 2014, the gross value added of companies active in the music industry (the sum of business and employee incomes) was roughly 3.9 billion (Fig. 3). Fig. 3 This is more than the gross value added of companies in the film, radio, book publishing and newspaper publishing industries (Fig. 4). Fig. 4
3. At roughly 127,500 individuals, the number of employees active in the music industry also proved itself to be higher than in all other media sectors. This stems in particular from the large number of self-employed composers, songwriters, performing artists and music educators in the industry. At the end of 2014, a total of 50,000 selfemployed workers whose main income was generated in the field of music were members of Germany's social security fund for artists, known as the Künstlersozialkasse or KSK. A further 9,750 self-employed workers were active as owners of their own music companies. The number was rounded off by almost 68,000 salaried, nonself-employed workers in the industry (Fig. 5). Fig. 5 4. In 2014, companies active in the music industry purchased goods and services worth some 2.3 billion from other sectors of the economy. In turn, this led to the employment of roughly 18,000 persons. The income thus generated indirectly by the activities of the music industry reached roughly 1.1 billion. 5. Music content represents a key input factor for many other sectors. In fact, roughly 15 billion is generated annually in sales solely by means of electric audio devices for listening to entertainment content, in nightclubs and in media products that integrate music. 6. Music-related events such as concerts often inspire consumers to undertake day trips; if the concert location is more than 100 km away, consumers often organize a longer trip including an overnight stay. According to an evaluation of current data on Germans' travel behavior, almost 16 million music-related events are attended each
year in the context of 10 million short-term vacations or holiday trips involving overnight stays (Fig. 6). Plus, as part of the almost 60 million day trips undertaken to concerts and other events relating to music, opera and operetta, Germans spend a considerable amount of money in addition to the cost of the event tickets. In fact, the spending brought about by music-related events in the music-tourism industry adds up to roughly 5 billion per year. Over 70 percent of all short, music-related holiday trips concentrate on five major cities: Hamburg alone hosts 2.3 million trips per year, which is almost as many as the subsequent four cities in the ranking put together: Berlin (1.2 million), Munich (0.6 million), and Stuttgart and Dresden (0.3 million each). Fig. 6 7. The study distinguishes a total of 22 different music-industry activities, each of which is assigned to one of the following seven sub-sectors of the music industry: The "creative professionals" sub-sector, which comprises the authors of musical works (composers, lyricists, music editors), active artists in the music area and artists managers. The "music-related events" (live music) sub-sector, which encompasses concert promoters, event and artist agencies, tour operators, music-club operators, pri-
vate-club operators, musical theater operators, major event-venue operators and ticket sellers, which handle a large part of pre-event ticket sales. The "recorded music" sub-sector, which includes labels, pressing plants, recording studios, music producers, music distribution companies and retail sellers of recordings and other music-related data. To the "music publishing" sub-sector, which consists of all music publishers that publish sheet music but also those companies that work on behalf of composers and lyricists to safeguard copyright claims on domestic and national markets. The "music instruments" sub-sector, which consists of the manufacturers and distributors of musical instruments, equipment and accessories, but also the builders of stages and studio equipment for music recordings and music events. It also includes retail sellers of music instruments and music supplies. The "music instruction" sub-sector, which consists of private music schools as well as freelance music educators. The "collecting societies" sub-sector comprises the economic activities of Germany's state-authorized collecting societies and performance rights organizations, known as GEMA and GVL, which handle all rights and copyrights that arise in the creation of musical works and production of concerts, recordings and music data. According to their respective shares of the gross value added, the largest sub-sector was generated by the companies involved in the value added chain for "music-related events." The second largest sub-sectors were "recorded music" and "music instruments" (Fig. 7). The collecting societies involved in the music industry have over 1,000 employees and help to guarantee a regular income not only for composers, lyricists and artists; they also represent a relevant economic factor in their own right.
Fig. 7 8. Most of the music industry's sub-sectors are characterized by a large portion of selfemployed workers as well as by mostly small and middle-sized companies (Fig. 8). In other words, if we are to foster growth in this sector, these unique structures must be taken into account. Fig. 8
In general terms, it can be said that the present study shows without a doubt that the overall economic importance of the music industry in Germany has been wrongfully underestimated until now; in fact, the music industry's major role has not yet received an appropriate level of attention, especially in comparison to other media industries, in particular that of the audiovisual media. Comparing data from the Music Industry Report with figures contained in the KKW Monitoring Report on Germany's Cultural and Creative Industries For the past several years, data on the music industry has also been compiled on a regular basis as part of a monitoring report known as the KKW Monitoring Report (KKW Monitoringbericht), which is published by the Federal Ministry of Economics and covers twelve sectors of the cultural and creative industries in Germany. This data consists of information drawn from official state economic statistics regarding the number of music companies active in the industry alongside their respective turnovers and figures relating to salaried employees and self-employed professionals working at these companies. Interestingly, the figures contained in the present survey are significantly higher with regard to music-industry turnover and employee numbers in Germany than those found in the KKW Monitoring Report. The latter lists total sales of 7.7 billion for 2013 as opposed to the 11 billion contained in the present study. Instead of a workforce of 127,000, the KKW Monitoring Report lists only 47,500 individuals. These considerable differences are due to two main factors: firstly, the present study includes information from the Künstlersozialkasse (KSK) with regard to the numbers and income of music teachers and artists who are active in the music industry and insured as part of the KSK system. When music teachers and artists earn less than 17,500 annually, they are not required to charge VAT, which means they are not included in the state VAT statistics that form the main basis for the KKW Monitoring Report. This is also why the KKW Monitoring Report also designates the music industry as having only 1,900 self-employed workers. Yet another reason for the difference in findings results from a broader definition of the music industry. For example, in the KKW Monitoring Report, the sub-sectors referred to as "music instruction" and "collecting societies" are not at all taken into account. The same thing applies to some of the companies that provide important services to the music industry, such as pressing plants, but also tour service providers, event and artists agencies and club operators: the KKW Monitoring Report does not designate these as belonging to the music industry because in the official VAT and employment statistics they are allocated to economic sectors that do not consist exclusively of companies whose turnover is generated primarily from music-industry related activities (Fig. 9).
Fig. 9