Making money out of music: how can regional music economies remain successful

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Tim Wall is Professor of Radio and Popular Music Studies at Birmingham City Centre. In 2007 he was commissioned by Digital Central to conduct some research into Regional Music Economies. Here Tim’s overview of his work, plus a link to a copy of the report.

Music makes money when people pay for it, and creates jobs for those who supply it. In the music industry you have a job because you add something to a stage of music production. Joining the music-makers who account for 17 per cent of employment in the music industry are retail jobs accounting for nearly one third of employees, record companies employees at about 15 per cent, and the remaining third or so in equal numbers from composition, venues, recording studios, equipment manufacture, music broadcasting, video production, and journalism. The process of getting music to people who will pay for it and then making sure they pay for it – and maybe even encouraging them a bit – involves a lot of people. And it involves a lot of technology. Estimates of how much money is actually made from music, and how many people are employed, differ considerably.

There tends to be an emphasis on recorded music and sales of records as the core source of revenue. The UK Department for Culture Media and Sport values annual revenue from music making at £5bn annually, £1.3bn of which they estimate comes in exports earnings, and suggests 130,000 are employed in the sector as artists, composers, publishers, producers, managers, agents, promoters and record company and online music entrepreneurs. By including retail, music broadcasting and journalism, recording and equipment, and entertainment venues the employment and value figure can quadruple.

There is an important line that connects small-scale local businesses to the operations of the major entertainment corporations. From the point of view of the A&R departments in the major companies, and to many of the long-term local survivors, that line is a simple one: the local gigs are where the new talent first becomes apparent; the local music managers and record companies are where they get their first big breaks; and the experience of the ‘old hands’ takes them through to the wider sales of national recognition and the major record company contract. From the point of view of the sales and marketing teams of the major companies, and the local venue and retail entrepreneurs, there is another line: the locality is where the big name stars sell their records, play a night of a national tour, or merely act as the sound track to a good night out. This isn’t a regional music economy, but one corner of a global one.

There is another regional music economy though. Most major European cities have a thriving entertainment quarter where a formerly forgotten land of warehouses and rundown commercial properties has been transformed. A few minutes watching the money pass over the till tells you music is business. And back from the bars, clubs and live venues there are small recording studios, music managers, graphic designers, and equipment hire. These clusters of small businesses have become the focus of attention for departments of state, economic development agencies and city councils. They are now officially part of the ‘Cultural Industries’, and it’s argued that it’s these businesses that can make the city more attractive to live in, that can expand in the declining, low rent areas, of the city and bring them back to life, and more fundamentally that they can make money and create jobs. They are seen as part of our post industrial future.

In the full report you can download below I explore the basics of how music can make money and create jobs in a regional economy; how global music economies work and what their implications are for regions outside a capital city; and how regional policies and strategies could both expand and sustain such a regional music economy.

At the heart of the matter are some fundamental issues about the relationship between the city, the wider region in which it sits, and the capitals of commercial culture where the major companies are based; between music culture and music commerce; and between entrepreneurial spirit and planning. Is there an economic benefit to the locality when it is the source for a new generation of international music stars? How can a local music scene be sustained if it’s simply a transit camp for the talent, and an outpost of consumption for a global entertainment industry? How can we encourage people who make a successful living out of music to make that living in our locality? How can we convert at least some of those pounds spent locally on music and entertainment into local jobs? What’s the difference between subsidising local culture and investing in its economic future? In turn I look at how music makes money and creates jobs; what constitutes a regional music economy; and music’s place in the knowledge-driven cluster economy and in urban culture. I give particular attention to how music economies have developed, and to the challenges of the new digital online music economy. The final section offers some basic conclusions for a regional music development strategy.

Download the full report Making money out of music

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