A 21 st Century Industrial Strategy Franco-Canadian Summit November 16, 2012
• Record companies’ total investment in A&R and marketing tops $4.5 billion annually • Labels have maintained A&R spending at $2.7 billion – 16% of global recorded music revenues, despite the economic recession • More than 70 % of unsigned artists would like a recording contract
Music companies invest a greater proportion of their global revenues in A&R than most other sectors do in research and development (R&D). Music Companies Pharmaceutical & Computer & Software 16% Biotech 9.6% 15.3%
Typical Investment by a Major Music Company in a Newly-Signed Artist $ Advance $200,000 Recording $200,000 - $300,000 Two or Three Videos $50,000 - $300,000 Tour Support $100,000 Marketing and Promotion $200,000 - $500,000
A majority of artists want to sign with a label 75% unsigned artists think a record deal is important in developing a career 76% value the promotional support 46% value the tour support 35% value the advance
“I've have one record left that I owe a major label, then I will never be seen in a situation like this again. If I could do what I want right now, I would put out my next album, you could download it from my site at as high a bit-rate as you want, pay $4 through PayPal. Come see the show and buy a T-shirt if you like it. I would put out a nicely packaged merchandise piece, if you want to own a physical thing. And it would come out the day that it's done in the studio, not this "Let's 2007 wait three months" bulls---.” - Trent Reznor , Nine Inch Nails
“The thing that I learned from Radiohead is, I don’t want to ask you what you think it’s worth. “Hey, I just worked a year on this thing.” “Well, that’s worth 10 cents.” “Hey, fuck you!” The Saul thing was a lesson. I naively thought at that time that if you gave the public the choice of do the right thing or not, I thought people would actually do it. Five bucks for an album? And I found that most people, no, they really don’t want to do that. “ 2009 - Trent Reznor , Nine Inch Nails
“It was...to have a team of people that are better at that [marketing and distribution] than I am worldwide...that felt like it was worth slicing the pie up monetarily. Our main agenda at the moment was to make people aware of it in the right context versus a little bit more money we might or might not make. And so far it's been pleasantly pleasant. Having people that actually kind of know what they're talking about. Having a 2012 team, it's been nice.” - Trent Reznor , Nine Inch Nails
“Artists and cultural workers tend to cluster. They create scenes that become destinations and economic engines.” - Martin Prosperity Institute Economic Activity of the $400 Million Canadian recording industry - PwC
2605 jobs in recording industry High average salaries: $60,100 7420 jobs in live music
“ It's never been easier to distribute creative work. At the same time, it's never been harder to get paid for it .” - Rob Levine , Author, Free Ride @RobertBLevine_ “Music is not free in the digital age. It’s just that artists are too often not getting any of the revenue that their music generates.” - David Lowery , Artist , Camper Van Beethoven, Cracker @davidclowery @thetrichordist
We're well over a decade into this utopia of demonetized sharing and almost everyone who does the kind of work that has been collectivized online is getting poorer. There are only a tiny handful of writers or musicians who actually make a living in the new utopia, for instance. Almost everyone else is becoming more like a peasant every day. Jaron Lanier , Author, You Are Not a Gadget: A Manifesto www.jaronlanier.com
Much like the Fair Trade Coffee movement, consumers need to know who fairly includes music creators in the enormous value chain that is based on our collective work. It is a real shame that Pandora seems determined to be on the wrong side of that simple, ethical equation. Eddie Schwartz , Songwriter Association of Canada
says it will push down search rankings for pirate sites …. What does Carly Rae Jepsen say?
Putting Google to the test …. On what page can you find a legal download?
Original Single first legitimate download link found on Page 6 ….
We looked at every single link on the first page of search results for “Call Me Maybe Download”. Google has no incentive to push these infringing links down. Every link except one apparently generates revenue for Google!!
How do fans discover music?
The year is 1971 …. Photo by: Ian Muttoo
The year is 2012 ….
What is the future of Canadian content?
What is our new industrial strategy? Music Canada’s guide to digital service providers considering entering Canada http://musiccanada.com/Service ProvidersGuide.aspx Providing Access
13 services have launched or expanded to Canada in 2011-12
Reaching the Tipping Point in Recorded Music Sales 90% 80% 70% 60% 50% Physical 40% Digital 30% 20% 10% 0% 2008 2009 2010 2011 2012* *As at June 30, 2012 – note the majority of physical product is sold in the 4 th quarter so year end market split is estimated to be evenly split between sectors SOURCE: IFPI Recording Industry in Numbers
Innovative Partnerships Providing developers with access to content from some of the most successful artists in the world … thousands of tracks, video, artwork, photos and more!
Recorded Music Sales Trend Canadian Recorded Music Sales Trend (US$ million, trade value) Physical Digital Performance Rights Synch Revenues 21 22 57 21 16 6 92 19 104 20 126 164 458 388 349 272 235 2007 [-14%] 2008 [-6.5%] 2009 [-5.6%] 2010 [-11.8%] 2011 [+2.6%] Source: International Federation of the Phonographic Industry
What is our new industrial strategy? Kids who can play music make a society that can think critically. Dan Mangan , Artist Music Education
What is our new industrial strategy? " I think it is very unlikely that I would have ever become president had I not been in school music from the time I was nine until the time I was 17. It taught me discipline and creativity. It made me see the world in different ways. It made me understand things in different ways. " Bill Clinton Music Education
http://takelessons.com/blog/
What is our new industrial strategy? Ontario is the 3 rd largest centre for film and tv production in North America $1Billion contributed to Toronto economy by film and tv TIFF Bell Lightbox expected to generate $200Million economic activity in 5 years TIFF generates $67Million/year Tax Credits
What is our new industrial strategy? RBC President and CEO, Gord Nixon, says, exporting is key to our recovery but … only 7% of small and medium sized firms export. 2010-2011 36 export initiatives in 18 countries Export Marketing
“Gangnam Style” has become South Korea’s biggest musical export …. As foreigners pay more attention to the singers, slowly they develop a liking for Korea … and if they like Korea, they will buy more Korean things. This is what we’re trying to promote. - Ma Young-sam , Ambassador for public diplomacy at the Korean foreign ministry
What is our new industrial strategy? The economic spin-off of live events is invaluable to Durham Region, especially in downtown areas. Kerry King, Region of Durham’s Tourism Manager Music Tourism
Case Study: Austin Texas 2000: $616 Million 2005: $1.31 Billion 160% 2010: $1.6 Billion
Have we really returned to house parties? Back to the future?
MY WISH
http://www.youtube.com/watch?v=DqUnsKMsRxM https://www.youtube.com/watch?v=txTdiofEJwQ
musiccanada.com @Music_Canada @GFHenderson Music Canada
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