AIR Highlights the Economic Value of Independent Music

September 5, 2017

INDEPENDENT MUSIC HITS 30% AUSTRALIAN MARKET SHARE:
AIR ANNOUNCES FIRST NATIONAL MARKET SHARE ANALYSIS OF THE INDEPENDENT MUSIC SECTOR AT BIGSOUND

AIR Highlights the Economic Value of Independent Music

Independent record labels represent 30% of Australian recorded music market share. It had estimated total revenue of over $154 million in the 2014/15 financial year.

Download the full report

BIGSOUND, Brisbane, September 5th 2017 – New research commissioned by The Australian Independent Record Labels Association (AIR), the organization that represents the interests of the global independent music community has provided the most accurate picture to date of the global value of the independent music sector. Australia’s independent sector represents some of our country’s biggest artists including Flume, Sia, Sheppard, Bliss n Eso, Vance Joy, Gotye, Meg Mac and many more.

AIR engaged Deloitte Access Economics to analyse the market share of the independent music sector in Australia.

The report, titled AIR Share: Australian Independent Music Market Report will be launched at BIGSOUND today in the Theatre Rehearsal Space, Level 4 of the Judith Wright Centre of Contemporary Arts.

Key findings from the research include:

  • The Australian recording industry as a whole had revenue of just under $400 million in 2014-15
  • The independent recording sector makes up 30% of total recording revenue in Australia
  • 44% of independent sector revenue comes from digital channels
  • More than half (57%) of independent sector revenue is attributable to Australian artists
  • 95% of independent sector music releases are new content

Deloitte Access Economics collected data from independent record labels and distributors in Australia, asking them about their operations in 2014-15. This project commenced in earnest in 2016, but given it is an inaugural study, data collection and analysis took time. This study represents an important benchmark for future analysis, and while trends in the industry have progressed beyond what is reported here, the data’s value as a benchmark is significant.

It is estimated that in 2014-15, the independent sector had revenue of $154.8 million, and released over 6,000 singles and albums.

Comparing the independent sector’s recorded music revenue to the overall Australian recording industry, the AIR Share Report found that the independent sector had 30% market share in revenue terms.

“Establishing an independent label has meant that we have central control around how to best spend every dollar to maximise both the touring and record business units. It also makes for global consistency of the brand. This structure has reaped enormous rewards in terms of sales numbers of both tickets and recordings, and of overall profitability” says Corenne Wilkie, Artist Manager for The Cat Empire.

The independent recording sector in Australia is locally focused. More than two thirds of the artists in contract with Australian independent record labels are Australian, and 57% of revenue is attributable to Australian artists.

The sector also plays an important role in promoting Australian music overseas. The report found that Australian independent labels are solid exporters of Australian content with over 30% of revenue earned by independent record labels coming from exports, bringing money into Australia.

In line with global trends, the independent recording sector is increasingly digital, with digital revenue higher than physical revenue. The sector earned 44% of total revenue through digital channels, though physical remains an important channel, accounting for 33% of total revenue in 2014-15.

More than half (61%) of digital revenue came from music downloads (for example iTunes), while 29% came from music streaming services such as Spotify. But this balance is shifting quickly, in 2017 almost two-thirds of independent labels globally earned more revenue from streaming than downloads (Merlin, 2017).

Chris Maund, of Mushroom Group of Companies states that “the independent sector is

important for the industry, but also for the Australian community. We sign a lot more

Australian artists then the majors, creating funding and opportunities for local talent” says

Maund. “Also indie labels can afford to take more risks, and so ensure the diversity of music.

Almost every new music genre in history, from hip-hop, grunge to trance, were launched

from indie labels – with the passion and low overheads to take such risks.”

The independent sector plays a number of key roles in the recording industry beyond its financial contribution:

  • it broadens the variety of music produced in Australia, so that there is diversity in the music available for consumers to enjoy (WIN, 2015).
  • it is instrumental in helping new artists kick start their careers. The large number of small, niche labels that exist in the sector mean that artists are more able to find a label that suits their musical taste.
  • it competes with the major labels (IBISWorld, 2017), ensuring market efficiency and lower prices for consumers.

It is important that the independent sector is recognised for these roles, and the significant market share it holds. Businesses and governments should consider this when looking to invest in the recording industry.

Based on the industry data, a ‘typical’ independent record label in Australia has been operating for around 12 years, and employs 10 people. Seven of these employees are full time workers, one is employed part time, one casually, and one is a volunteer. It holds the recording rights to 24 artists. And it uses an external, independent, distributor to distribute the music it helps its artists to produce.

Maria Amato, GM of AIR said, “This is truly a benchmark report that serves as the first indicator of the enormous cultural and fiscal value the Australian independent recording sector contributes to the Australian economy. For the 2014-2015 year, the findings indicate a 30% market share of a $400 million sector and presents a view that the cultural value and contribution of music in Australia rests with the Independent sector”

Also in Brisbane for the launch of the report is Worldwide Independent Network CEO, Alison Wenham: ‘This impressive survey, commissioned by AIR, the Australian Independent trade organisation and a member of WIN, authoritatively establishes the independent sector at the heart of new music in Australia, commanding almost a third of the total recorded music market share. I am certain the independent market share will continue to grow as artists choose to align with companies who have their long term best interests at heart.’

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