This article describes one of 12 areas listed in Overview of Music Statistics: Other Sources, outlining the potential and actual contribution of sources other than the Australian Bureau of Statistics to knowledge of the music sector.
Common to the industries or activities headlined below, music is an integral component but its share in the final product is not well defined. The best way of identifying the economic role of music would probably be to estimate its contribution to total production costs, but other methods may be possible — an issue where we seek advice and contributions. Other statistical issues include the Australian content of films, documentaries and broadcast material, which is of prime importance for the music sector.
Before the music content can be estimated, the first step is to establish the total production value, value-added, employment, income and expenditure patterns as far as possible from available sources. Other important indicators include the effect of regulatory measures such Australian content requirements.
The broadcasting section of the ABS overview includes references to average length of television viewing and similar survey-derived data. The most extensive and up-to-date audience statistics, however, relate to television audience measurement (TAM) compiled weekly for the five mainland metropolitan areas through OzTAM, which is owned by the major commercial free-to-air (FTA) television networks (Seven Network, Nine Network and Network Ten). It covers 100 or more FTA and subscription television (STV) channels, and its ratings are the accepted statistic for measuring Australian television audiences. The observations include the two national public FTA organisations — the Australian Broadcasting Corporation (ABC) and Special Broadcasting Service (SBS). At the end of 2011, the total FTA share of all viewing was about 79% and STV 21%. ABC and SBS totalled 20%, of which ABC accounted for over 70%.
The ABS overview also refers to the 2006-07 television, film and video survey of all 24 commercial FTA and 13 STV businesses then operating in Australia (ABS Cat 8679.0).
Table 1 shows that five of six Australian adults listen to radio, with commercial stations attracting the largest audiences (63% of the population) compared with less than half listening to ABC and/or SBS, and about a quarter listening to community radio. The source below the table provides detailed survey data focused on community radio, which is discussed at the end of the section. This includes listeners to commercial, public or community radio exclusively, and those who listen to two or all three main broadcasting branches.
Commercial radio is regulated by the Australian Communications and Media Authority (ACMA), whose comprehensive annual Communications Report is a major source which has gone increasingly beyond broadcasting as it converges with other technologies: “The historically distinct radiocommunications, telecommunications, broadcasting and internet sectors are blurred, with innovations across a wide range of digital technologies and devices.” (p 16) This is essential for the understanding of trends in broadcasting as well as films and other creations destined for the big screen. Apart from dealing at length with the convergence and the digital economy1, the report covers the broadcasting industry’s performance in meeting regulatory standards such as Australian Content, including advertising.2
Starting with the current 2010-11 report and working back through the statistical and verbal descriptions, ACMA is a key source of understanding these developments and potentially what it implies for the music sector.
The ABC and SBS are described in their respective annual reports, again providing the opportunity of understanding the role of digitisation and technological change by working backwards through time.
Screen Australia is the Federal Government’s direct funding body for the Australian screen production industry. Its stated functions are to support and promote the development of a highly creative, innovative and commercially sustainable Australian screen production industry. The organisation deals with all screen productions including feature films, documentaries, television and multimedia releases; its statistics show, however, that in the age of convergence even flagship motion pictures depend primarily on viewings other than cinemas. Its April 2011 publication, Beyond the Box Office], describes audiences in a multi-screen world. In the twelve months ended September 2010, participation rates for screen media were: cinema 29%, FTA television 94%, STV 19%, DVD/Blu-ray 52%, online video 22% including 2% mobile, social media 35% including 6% mobile, and console games 37% including 7% online. Compared with 2005-06, FTA TV has kept its high share and cinema recorded an increase from 27% to 29%. While more than half still use DVD and/or Blu-ray, its share declined by five points from 57% in 2005-06. In contrast, online video and social media were not even recorded in 2005-06. Console games, mainly favoured by the young, increased from 29% to 37% with the main relative increase in online use (3% to 7%).
Box office admissions now account for less than 10% of all viewings of feature films. Television, on the other hand, makes it possible for Australian feature films to be seen by more people in more areas across the country. Beyond the Box Office shows that the 100 Australian feature films released in cinemas during 2007-2009 achieved 101 million audience viewings: 65% on video, 26% on television, and 6% in cinemas.
The ABS overview notes that Screen Australia has used ABS data (Cat 5302.0) and other sources to record separate annual royalty imports and exports for cinema, television, video (Blu-ray, DVD and VHS), and multimedia releases. These statistics show a great trade deficit against Australia (credits $141 million, debits $1.1 billion in 2009-10). The figures are available annually for individual countries of origin and destination.
Screen Australia is a major statistical source with a very active strategy and research unit which will be explored in greater detail in another article.
Community radio and television is the third branch of broadcasting in Australia, in addition to the public (ABC, SBS) and commercial organisations. The peak body is the Community Broadcasting Association of Australia (CBAA), which describes the sector as follows: “Community broadcast stations are operated as independent not-for-profit organisations which actively encourage access and participation by members of their communities in all aspects of broadcast operations; emphasise the provision of access to groups that are inadequately served by mainstream media; enhance the diversity of programming choices and viewpoints available to their audiences; and support and develop local and Australian arts, music and culture.”
Community radio started in the early 1970s and were legislated under the 1992 Broadcasting Services Act. ACMA assesses applications for available long-term community radio and community television broadcasting licences on a merit basis. Before undertaking any merit-based allocation of a long-term licence, ACMA may allocate non-renewable temporary community radio licences to eligible broadcasters for up to 12 months. In 2011, there were 50 aspirant groups holding temporary radio licences.
Community broadcasting has experienced rapid growth since its inception, as shown for long-term community radio licensees in Chart 3. Indigenous communities form an important part. In October 2009, ACMA issued a discussion paper setting out proposed arrangements to simplify licensing procedures for Remote Indigenous Broadcasting Service (RIBS) radio providers. At the time, 78 radio stations operated under RIBS, representing 22% of 350 community broadcasting licences then existing. There were an additional 42 temporary licences representing 45% of all temporary community radio licences.3
Community television is also predominantly geared towards Indigenous communities: in 2011, there were 78 RIBS television licensees, out of a total 83 community television stations. The remaining five stations cover the mainland state capital cities.
The majority of the stations are general in nature, serving niche rather than mass audience markets, catering to the diverse needs and specialist interest groups present in local communities. The ACMA report classifies the 356 community radio stations by community interest: general geographic area 170 (47.8%), Indigenous 99 (27.8%), religious 30 (9.6%), education/special interest 22 (6.2%), senior citizens 9 (2.5%), youth 8 (2.2%), music 8 (2.2%), and ethnic 6 (1.7%). The music community radio category includes four fine music (“MBS”) stations in Sydney, Melbourne, Brisbane and Adelaide.
The geographic distribution of community radio stations is tilted towards regional, rural and remote areas ‐ regional 41%, rural 25%, metropolitan 18%, and suburban 16%.
The CBAA has produced a comprehensive database report since 2002-03 (every second financial year between 2003-04 and 2009-10). It covers a wide range of topics including employment, income and expenditure, and program content which will be reported in detail in a future article. The following observations provide a preview:
- Community broadcasting naturally depends on volunteer workers. In 2009-10, 288 non-RIBS community radio stations employed 19,323 volunteers (compared with 19,858 in 2007-08). The number of support staff totalled 936, including 462 full-time and 476 part-time (total full-time equivalent staff 676). This represented a significant increase in the number of full-time-equivalent staff (up from 534 in 2007-08), while the number of part-time staff was unchanged.
- While the total number of non-RIBS stations increased by 11 from 277 in 2007-08, total income fell from $69.8 million to $66 million in 2009-10. Regional and rural stations lost the most and enjoyed less resources than metropolitan stations in terms of technology and equipment — despite the number of regional stations increasing from 113 to 119 and the number of rural stations from 69 to 74 (metropolitan stations increased by one to 52 and suburban stations remained constant at 43).
- The largest source of income is sponsorships (39% of the total despite a $2.5 million decline in 2009-10). Subscriptions totalled 7% of total income after a decline of $0.5 million. This was offset by an increase in donations, which accounted for 12% of total income in 2009-10. Income from grants accounted for 29% of total income and various other sources for 13%.
- The report contains important information on music content, including genres in some years (dominated by rock/pop, easy listening, and country in 2007-08). The code of practice for community radio sets a minimum of 25% for Australian content (10% for fine music and ethnic stations), but the actual Australian content was 37% in 2007-08 (up from 32% in 2002-03). In 2007-08, the stations broadcast a weekly average of 123 hours of music per week, 73% of total broadcasting time (the rest was spoken word — general, news, and current affairs). Nationally, between 2002 and 2008 the average hours of Australian music broadcast by community radio stations increased by 12.8% from 39 to 44 hours a week.
Another important information source is the Community Radio National Listener Survey, conducted for CBAA by McNair Ingenuity Research (now in its fourth biennial edition). Again, only a sample of findings from the 2010 survey can be included in this overview, in anticipation of a future article:
- The most commonly cited reason for listening to community radio was for “specialist music programs” (61% of all community radio listeners). Almost half listened because the stations play Australian music and support local artists (48%). Other prevalent reasons for listening were local information and news (53%), that the programs are not available elsewhere (48%), because the announcers sound like ordinary people (46%), and because local personalities are featured (45%).
- For male and female listeners, listeners of all ages and metropolitan listeners, the most frequent reason for listening to community radio is that it has “specialist music programs”. For non-metropolitan listeners, “local information / local news” is the most common reason for listening. Listeners aged 15-39 specially value the “Australian music / local artists” on community radio. (p 29)
Film and Video
There is a rich source of material to explore thanks to the continuing research activities of Screen Australia, the Australian Government’s agency providing support to Australian film, television, documentary and digital media makers. Like the broadcasting sector described in the previous section, the importance of the film, video and related activities is undoubtedly great though there is a large knowledge gap in relation to music until data and methods are refined to estimate the economic value of Australian and other media productions for the music sector. Needless to say, if we cannot yet measure the economic importance, it is even more difficult to measure the economic and social value associated with promulgating a wide range of musical genres. It is a subject that is close to the heart of what we would like to do with this knowledge base, with the help of other people who are once again invited to contribute their thoughts and suggestions.
- Australian content of feature films, documentaries, shorts, TV dramas, and wholesale videos
- The production industry (production businesses, drama production, and documentaries)
- Audiovisual markets (audiences, cinema, video, television, interactive)
- Employment (in conjunction with the ABS)
- Australia and the world (imports and exports of audiovisual royalties; international comparisons and world rankings for a range of indicators).
Through its Research Partnerships Program, Screen Australia undertakes projects in cooperation with a range of organisations and individuals.
One of the key issues in 2011 and 2012 is convergence, which Screen Australia describes as follows: “Convergence is reshaping the Australian media landscape, with new technologies growing in influence and providing audiences with more choice than ever before. But what’s happening to Australian content?” Its response is a major report, Convergence 2011: Australian Content State of Play, which “reveals a significant dilution of Australian content in the media diet. Since 2008, the hours of foreign content on free-to-air (FTA) television have increased 154 per cent greatly outstripping the growth in Australian content at 59 per cent.” As these lines are being written, the final report of the Australian Government’s Convergence Review is due for release. The Music Council of Australia is an active participant in the debate around the major technological changes which are transforming this part of the music sector.
The activities of Screen Australia and the Australian film and audiovisual industries will be taken up in more detail in a forthcoming knowledge base article. The organisation meanwhile is very active in its communications and produces a quarterly “infographic snapshot” called Did You Know?. The January 2012 issue is the main source of the brief view shown in the following table and graphics.
Chart 2 shows box office earnings from Australian films over eight years. After converting to constant 2011 prices, there is still a significant jump over the last three years, starting with a maximum for the period in 2009, the second-highest level in 2010, and dipping slightly below the previous high (2006) in 2011. Box office is crucially dependent on the success of individual movies: 2009 on the release the previous year of Australia which grossed $38 million or more, and 2010 on 2009’s Mao’s Last Dancer ($15 million plus). Highly successful films in 2010 included the Indigenous musical Bran Nue Dae (more than $7 million), and Red Dog ($21 million).
Box office income, however, remains dominated by the United States, as ever (Table 2). It 2011, US films accounted for almost 82% of the total Australian box office, with the United Kingdom in second position (11.5%), and Australia a distant third (3.9%). Moreover, the US achieved its high box office total from only 44% of the total film titles, whereas Australia accounted for 10%. Films from a country like India provide a large number of titles (almost 13% in 2011) but their audience is tiny (0.6% of the total box office income). These differences would be associated with target audiences, and reflected in release strategies (number of prints). These strategies range from limited (0-19 prints), specialty (20-99), mainstream (100-199) and wide (200-399), to blockbuster (400+ prints).
The final observation in this preliminary statistical presentation is that box office constituted only 10% of total viewings for 24 Australian films in 2011 (Table 3). DVD/Blu-Ray accounted for a full two-thirds, subscription and free-to-air television for 19%, and online for 4%. The vast bulk of viewings (94%) was of the top 12 films. The distribution of viewings for the bottom 12 was quite different from the top 12 — 80% was television viewings compared with 16% for the top 12.
The source publication noted that the full cycle from cinema to television viewing takes an average of 2½ years.
Trends in total advertising expenditure are reasonably well known, from sources such as the Nielsen Company. Its 2010 survey showed total expenditure of $10 billion, of which 39% was through metro/regional television, 31% through metro/regional press, 10% magazines, 7% radio, 5% online, and the remaining 8% cinema, out-of-home, and direct mail. The problem is, as for broadcasting, film and audiovisual media, to identify what should be a reasonable measure of the contribution of music (possibly expressed in terms of share of expenditure, or copyright-related measures).
Potential resources also include organisations such as the Australian Association of National Advertisers (AANA), the Australian Interactive Media Industry Association (AIMIA), and the Media Federation of Australia (MFA). Some of these have links to other organisations on their web pages.
The role of advertising for the music sector has not been properly researched. We need to fill this gap and ask potential contributors to assist.
Innovative Music Products
Many new music sector goods and services are intimately associated with the ongoing digitization process, and with the associated convergence which is the subject of widespread policy debate in 2011-12, including the impact on intellectual property issues and consumer and producer surpluses.5 Smartphone ring tones are sometimes trotted out as a current prime example of new products, but the issues need to be reviewed in light of all the economic impacts of digitization, not just the impact on new product development.
Joel Waldfogel is Professor of Applied Economics at the University of Minnesota and has since 2002 been a Research Associate at the prestigious National Bureau of Economic Research in Cambridge, Massachusetts. He has for many years been a leader in the research into digitization issues. At the annual meeting of the American Economic Association in January 2012 he chaired and addressed the section on “Digitization and New Research Directions: Copyright, Privacy, and User-Generated Content”. 6 He outlined three main impacts of digitization, associated with demand, marginal costs, and fixed costs, respectively:
- Digitization has affected demand, in particular by facilitating unpaid consumption which has, in effect, reduced sellers’ ability to generate revenue from selling recorded music. This makes it harder to generate revenue for any given product.
- It has reduced the marginal cost of digital products to essentially zero. Once produced, books, music, and movies can now be reproduced and distributed at negligible cost. This, by itself, should be good news for all parties. With lower marginal costs, some combination of producer and consumer surplus can increase.
- Digitization can reduce the costs of bringing new products to market — it can reduce fixed, or sunk, costs. This would increase the number of products coming to market, and would tend to help consumers. Whether it helps producers is unclear. Existing producers would face more competition, but new entrants would have a previously unavailable opportunity to reach consumers.
In summary, digitization has weakened demand (item 1), but it has also reduced both fixed and marginal costs (items 2 and 3). The focus, Waldfogel argues, should not be solely on the negative impact on demand but also on how the reduced cost affects the “economic surpluses” of consumers and producers.
In this age of convergence, describing these technologies statistically would need to be across product categories. Digitization in the music sector is discussed from various perspectives elsewhere in this knowledge base, including Implications of Web 2.0, Music Industry Technology and Live Performance and Digital Distribution for Unsigned Musicians, but without significant statistical content. Contributions are invited on how it might be possible to capture better and more specific statistics in the digital arena, as well as a unified focus.
Hans Hoegh-Guldberg. Entered on knowledge base 31 January 2012 as part of a general overview of statistical sources other than the Australian Bureau of Statistics. First version of completed article 18 April 2012.
- The Australian Government in December 2010 announced a Convergence Review, which attracted more than 250 submissions. The final report on the Review was due to be delivered to the Minister for Broadband, Communications and the Digital Economy by 31 March 2012.↩︎
- The ACMA report (p 139) notes that Television Program Standard 23 — Australian Content in Advertising requires that at least 80% of total advertising time between 6 am and midnight broadcast by commercial television licensees must be used for Australian-produced advertisements. Exceptions include advertising of imported cinema films and other audio-visual material, announcing live appearances of overseas entertainers, and paid community service announcements for organisations that have a charitable, public health or educational purpose. In 2010, there were 80,284 Australian, 3,065 foreign, and 4,900 exempt advertisements on commercial television.↩︎
- RIBS would no longer need to be licensed under the more onerous rules applying to community broadcasting, but would be able to operate under the open narrowcasting class licence category. The predecessor to RIBS was the Broadcasting for Remote Aboriginal Communities Scheme (BRACS), which was established in 1984 under the Broadcasting Act 1942.↩︎
- Screen Australia also provides updated information on What is new? as well as past research and other archived records under its own name and that of its predecessor, the Australian Film Commission.↩︎
- Consumer surplus is the monetary gain obtained by consumers because they are able to purchase a product for a price that is less than the highest price that they would be willing to pay. Producer surplus is the amount that producers benefit by selling at a market price that is higher than the least that they would be willing to sell for. (Wikipedia, article on economic surplus).↩︎
- Joel Waldfogel (2012), Copyright Research in the Digital Age: Moving from Piracy to the Supply of New Products, AEA Annual Meeting Papers.↩︎
Hans founded his own consulting firm, Economic Strategies Pty Ltd, in 1984, following 25 years with larger organisations. He specialised from the outset in applied cultural economics — one of his first major projects was The Australian Music Industry for the Music Board of the Australia Council (published in 1987), which also marks his first connection with Richard Letts who was the Director of the Music Board in the mid-1980s. Hans first assisted the Music Council of Australia in 2000 and between 2006 and 2008 proposed and developed the Knowledge Base, returning in an active capacity as its editor in 2011. In November 2013 the Knowledge Base was transferred to The Music Trust, with MCA's full cooperation.
Between 2000 and 2010 Hans also authored or co-authored several major domestic and international climate change projects, using scenario planning techniques to develop alternative long-term futures. He has for several years been exploring the similarities between the economics of cultural and ecological change, and their continued lack of political clout which is to a large extent due to conventional GDP data being unable to measure the true value of our cultural and environmental capital. This was announced as a major scenario-planning project for The Music Trust in March 2014 (articles of particular relevance to the project are marked *, below).