SWOT Analysis of Contemporary Music Industry – 2008

Strengths

• Australian Contemporary Music Industry (ACMI) substantial contributor to Australia economically, culturally and socially.
• Success stories that provoke national pride.
• Multiplicity and fusion of genres in Australia create a particular identity in the international market place.
• Contributes significant economic value generating high levels of income employment and participation.
• Musical product exists also as an input to other products and services.
• Strong and growing independent recorded music sector.
• Diversity in products and services.
• Thriving independent sector.
• Growing number of small to medium size independent businesses.
• Strong and established collection societies.
• Industry is currently acknowledging weaknesses and being proactive in driving resolutions.
• Trend towards legitimate sale of music through digital channels.
• Contemporary Music is linchpin of emerging lifestyle technologies.
• Music economies value-add in the venues sector, production and delivery of recording, mediated performances, and support activities such as education and training.
• High level of live participation in regional centers.
• English first language.
• Strongly entrepreneurial businesses and artists.
• Strong ties with UK and US.
• Existing trade links in other territories.
• Relatively low cost structures in relation to manufacturing.
• Strong sector representative bodies.
• Genuine propensity to innovative use of technology.

Weaknesses

• Political and economic environment not conducive to increasing presentation nor consumption of independent music. i.e share of radio airplay on commercial stations access to retail.
• Industry is highly fragmented with poor communication between sectors.
• Fragmentation can lead to information gaps.
• Limited identification, aggregation and analysis of industry information.
• Immature relationship with financing and investment sectors.
• Under developed relationship with government.
• ACMI (Aust Contemporary Music Industry) is small in global terms.
• Small domestic markets in comparison to Europe and US.
• Lack of access to capital and Inability to raise finance and capital.
• Intangibility of product and short term nature of music projects decreases investment opportunities..
• Shortage of relevant business and product packaging skills.
• Lack of specialist investment vehicles that could raise the industry’s profile among investors.
• Lack of access to critical industry information.
• Lack of support for industry operators.
• General lack of policy and fiscal acknowledgement of the cultural value of contemporary music.
• Opportunities for presentation hampered by restrictive legislation – live venues.
• Lack of whole nation and whole industry branding within international arena.
• Potential to be a disparate industry esp. the division between multinational majors and the independent sector.
• Lack of funds within the independent sector to support extensive export development. .
• Australian consumer trends indicate Australia being a net importer of music.
• Lack of access for the independent sector to radio and retail networks.
• Lack of framework for industry and government to monitor the effectiveness of anti piracy enforcement provisions, and discuss future legislation and policy.
• Lack of education model to prevent ongoing piracy.
• Lack of critical industry information to support its case to industry government and investors.
• Poorly developed business models for digital content and application.

Opportunities

• Contemporary Music is a final product in itself and an input into a series o other products and services.
• Potential for growth and innovation across the industry’s value chain.
• Sectors of the industry are beginning to merge into a cohesive unit.
• Large and growing number of small to medium businesses emerging.
• The independent sector is an important and growing contributor to Australia’s economy.
• The Industry is in a position where it wishes to drive solutions to its issues.
• Overseas marketing – international trade fairs, showcase opportunities within Australia and overseas.
• Evolution of self produced sound recordings (could be threat – quantity vs quality).
• Rapid growth of online distribution methods (could be threat – illegal use).
• Wholesale value of physical recorded music sales dropped significantly since 2003 opens up other consumption models (could also be a weakness – decreasing sales).
• Digital sales have grown exponentially (could be threat depending on legal or illegal use of IP).
• New technology creating new applications for music i.e ring tones.
• Emergence of new products, revenue streams and distribution channels.
• Emergence of new business models.
• Shifting nature of global competition.
• Growing Asian Export markets.
• Potential for higher market share in other OS markets.
• A shift towards increased import replacement (Australians buying more Australian music).
• Investment in music business and training.
• Increased cost efficient distribution models.
• Independent alliances with majors.
• Increasing importance of major retailers eg Kmart.
• Increases in local output has potential for increasing employment and entrepreneurial opportunities..
• Access to Asian market places, possibility to develop specialized skills to sell into this market.
• Lack of time zone differences within Asian market.
• Growing number of content hungry industries – film TV.
• Overall growth of the creative industries model.
• Global music market place is in transitional phase.
• A whole of government approach that would address policy development and planning, industry education, integrated information collection, export market development, reinvigoration of the live music scene, financing and investing.

Threats

• Process of recording and distributing music is changing rapidly (also an opportunity).
• Perceived level of risk with intellectual property assets and the capacity for the industry to demonstrate the risk return profile of proposed investments.
• Small scale of businesses operating within in the independent sector.
• Operating in an increasingly competitive global and digital market.
• Other smaller countries have established effective well integrated industry – government strategies increasing competition for ACMI within the global market place.
• Significant barriers to export growth including small size of domestic market, difference in attracting investment, high cost of international touring caused by geographic location.
• Distance to key international markets.
• The recorded sector of ACMI has been dominated by the four multinationals, potentially threatening the cultural diversity of output. .
• Per unit of primary physical music formats have fallen over time.
• Industry fragmentation can lead to decreased collaboration, long term investment in that economies of scale cannot be captured..
• Withdrawal of live music venues.
• Difficult nationwide legislative hurdles.
• High cost of insurance.
• Security.
• Growth of piracy.
• Current government policies are skewing investment opportunities to particular sectors of the creative industries eg film .
• Overall the ACMI is supported by government in a piecemeal manner.
• Lack of coordination and unified representation within state and territory governments.
• Trend of merging major multinationals threatens the creative diversity.
• Lack of access due to internet access in regional centres.

Author

Jane Powles. Submitted 17 March 2008.