The State of the Australian Music Industry
Data on the state of the music industry – in Australia and elsewhere – is remarkably rubbery. Lack of consistency in how the industry is measured – here and elsewhere – makes analysis difficult. Continual changes in how the industry is measured compound the problem. In Australia, irregular mapping does not assist.
Doom, gloom and piracy have been the catch cry of many sectors in the music industry for a decade or more. Some of the available data suggest that the industry is in crisis. Some do not. Some suggest both and some suggest evolution. Nonetheless the picture is not an altogether rosy one, especially in respect to incomes.
An interesting snapshot of the music industry globally is contained in the RIAJ Yearbook for 2011, pages 23-24.1 Drawing on data from the International Federation of the Phonographic Industry, it tracks the global share of sales of recorded music in millions of U.S. dollars (page 23) from 2004 to 2009 inclusive. The bad news is that total sales plummeted from $33,613.6 in 2004 to 18,606.2 in 2009. However, while America’s share of this pie fell from 36.2% in 2004 to 24.5% in 2009, and Japan’s share rose from 15.4% to 22.8%. Australia’s rose from 2.1% to 2.5%.
David Throsby has been surveying the arts sector for more than 20 years. His most recent report, Do You Really Expect to Get Paid?, compares mean and median incomes of artists between 2000-01 and 2007-08. It paints a sombre picture.
If things are tough for Australian musicians generally, they are tougher for Indigenous musicians. Song Cycles is a joint research project of the Australia Council and the Australasian Performing Right Association (APRA). It finds that “[f]or many Indigenous music artists, basic rights issues that non-Indigenous people assume daily, present untold challenges. The fundamental issue of social disadvantage which the vast majority of Indigenous Australians face is, regrettably, ever present in the lives of Indigenous music artists.3Despite the talent and audience interest, attitudes, physical distance, training and education are significant barriers that prevent Indigenous artists from reaching wider audiences.
The past decade has been particularly volatile for those in the music sector. New business models are emerging. Some have failed. Some are working. Piracy has been an issue across the globe.
Long term trends are not yet clear and research and data collection typically lag behind industry developments. So looking to the digital future, in 2011 the Music Council commissioned Dr Hugh Brown to research, develop, and deliver an annotated set of links and, where appropriate, an annotated bibliography, identifying best practice in digital marketing, promotion, and distribution of music in digital environments. The resultant report, Digital Marketing, Promotion and Distribution, provides links to related business services that are arguably best practice. 46 articles are presented in six sections: Social Media Strategy, Marketing, Promotion, Distribution, Other (covering topics such as fundraising, radio airplay and licensing) and Research.
Just a Few Possibilities for Change that Might Assist Australian Musicians
Music quotas on radio
While the media landscape is dynamic and evolving, radio remains strong. Its value to the listening public can be demonstrated by the fact that “total advertising expenditure on radio increased by seven per cent in 2010 to exceed $1 billion for the first time”.4 Airplay drives music sales.
- Assuming continuation of music quotas, research is needed to establish whether the quotas for genres that currently do not attract a 25% quota could or should be increased.
- Consideration of quotas being applied to new digital only radio services has been deferred until 2013. Research could be undertaken to establish whether there are new services for which quotas are not appropriate.
Film, television and television commercials quotas
While there are no quotas for feature films – such as apply in countries like South Korea and France – they are captured within the drama subquota for television when they are broadcast.
As noted above, the definitions of “Australian” vary depending on whether the prime consideration is the requirements of funding agencies, or the Australian content quota for television. However, nowhere is Australian music a precondition as is the case, for example, with producer/director/writer/cast.
- Consideration could be given to arguing for more robust definitions that better serve the Australian music sector. Anecdotal evidence suggests that television programs are increasingly using library music and that music budgets have been falling over the past decade, both suggesting Australian music is not being well served. There is no data available to demonstrate this and efforts made by the Music Council over the past four years have proved to be in vain. The commercial sector treats the information as commercial in confidence. Whilst Screen Australia has a repository of information dating back to 1992, all remains in paper form and is accessible only with the utilization of considerable human and financial resources. The issue has been made more difficult with the introduction of the Producer Offset. As it is administered by the Australian Taxation Office (ATO), all financial information is subject to the privacy provisions of the Income Tax Assessment Act (ITAA).
- Under the provisions of the AUSFTA, it is possible to impose content quotas applying to primary commercial free to air television stations to one secondary channel per network (multichannel) and to impose the current 80% quota for television commercials to two secondary channels per network. The Government considered doing so but decided to defer consideration until the findings of the Convergence Review could be taken into account.
New funding models
- Since the mid-1990s, spasmodic attempts have been made to introduce a scheme for musical live theatre similar to the 10BA financing model that formerly applied in respect of feature films and certain television programs. Administered through the ITAA, 10BA was introduced as a very generous scheme, wound back through the course of the 1980s and finally effectively supplanted by the establishment of the Film Finance Corporation, the predecessor of Screen Australia. Governments of both persuasions were not interested in extending it to eligible Australian musical live theatre productions. The issue could be revisited but it is unlikely that the Government would agree to anything more than the levels of deductibility available under s 7 of the ITAA.
- Since the establishment of the Producer Offset for eligible Australian film and television programs, there have been calls for a similar offset to be introduced for music. Currently, the Producer Offset is being considered in the Convergence Review where there have been calls for the Offset for eligible television programs to be increased to 40% in line with the Offset for feature films. Problems experienced with the Producer Offset relate to the need to cashflow the Offset as it is a tax measure and is not available until after the company’s final tax return has been lodged. Consequently, most film and television programs utilize Special Purpose Vehicles – establishing a new company for each production. The costs of cashflowing the Offset have proved both expensive (the costs of the funds secured for cashflowing the Offset) and difficult to obtain, especially since the latter half of 2008 when a number of the banks offering such facilities in Ireland and Scotland collapsed or were taken over by their respective governments. Some Australian film agencies offer small ‘revolving film funds’ for the purpose and some superannuation funds have considered doing the same.
- At the other end of the range are proposals set out in Building Support: Review of Private Sector Support for the Arts in Australia. The review, chaired by Harold Mitchell, made a number of suggestions that might well have utility for the music sector, in particular for individual artists, namely that:
- The Australian Government develops a crowd funding initiative with a matched funding from government component [sic]. (p 35)
- The Australian Government provides funding to support a micro–loans scheme for the arts sector. (p 36)
- The full text in respect of these recommendations can be found at Appendix A following this article.
- The Building Support Report also made comment on the possibility of better utilization of vacant buildings for the benefit of the arts, noting the Renew Newcastle initiative, but did not make any recommendations in this regard.
The 2011 Office for the Arts publication Creative Industries, a Strategy for 21st Century Australia notes (p. 17):
- The Cultural Ministers Council is instrumental in encouraging Indigenous creative industries through:
- the Indigenous Contemporary Music Action Plan which encourages all levels of government to support Indigenous musicians and producers across urban, regional and remote areas of Australia;
- Breakthrough, a pilot initiative providing $25,000 per successful applicant to take Indigenous contemporary music to a wider listening audience; and
- implementation of the Solid Arts project, which raises greater awareness in Indigenous communities, and with consumers and commercial operators, of intellectual property issues and promote best practice in this area.
- The Australian Government, according to Creative Industries, is also considering the development of a Strategic Contemporary Music Industry Plan to enhance cooperation with industry; boost music industry exports; increase the exposure of Australian music and foster live performance; and improve training, business capability and innovation. The Australian Government is considering possible options to support Australian contemporary musicians through opportunities to access to micro-finance to develop and market their product.
- Using buildings to better advantage: The Music Council has recommended that, in accordance with the social obligations attached to the new school halls built under the Building the Education Revolution, the Government could work with schools to allow their halls to be utilised as venues for the performing arts during out of school hours. It could be possible, for example, to allow a group of musicians to use a specific school hall as their home base for rehearsals and performances and to also organise alternative touring routes in collaboration with others using school halls.
Regulating for the Future
In 2003, the Australian Film Commission identified ‘six broad policy levers available to government to achieve current and future cultural policy objectives’, namely:
- government funding;
- content obligations (eg quotas);
- content access regimes;
- promotion and positioning obligations;
- classification and prohibition.’ 5
For elucidation of these options, see Appendix B.
As has been mentioned above, consideration of how Australia will regulate online services is a key part of the current Convergence Review, which is expected to deliver its final report to Government at the end of March.
Thus far, the Music Council has argued to Government that regulation of online broadcasting-like services should be deferred but that the developments in this arena be closely monitored during a period of rapid change until clear trends and evolving businesses models become evident. A rush to regulate may well have unanticipated consequences.
The experience of an early move to regulate radio services is salutary.
In 1923, Australia introduced the so-called ‘sealed set’ regulations for radio. Spectacularly unsuccessful, the regulations had failed to predict audience preferences and audience behaviour. Less than 1,400 licences were taken out as consumers circumvented the regulations. The regulations survived less than a year. The introduction of a two tiered licence system (with A and B stations) in 1924 was hardly more successful and led to a Royal Commission in 1927.6
Around the world, regulators have approached online broadcasting-like services differently.
In 2008, Screen Australia canvassed the initiatives in other jurisdictions. Extracts can be found at Appendix C.7
Appendix A – 2011 Review of Private Sector Support for the Arts
Excerpt from Building Support , 2011, pp 35-36
3.2.2 Crowd funding
Crowd funding has developed alongside the emergence of digital technology in Australia. It involves the collective pooling of funds, usually via a website, for a particular project or initiative. Originally used for the creative industries and design sectors in the US, there are now a raft of successful international crowd funding sites for a gamut of projects ranging from music to film, to the development of biofuel cars. In Australia, crowd funding is recognised as a successful vehicle for arts fundraising, with platforms continuing to emerge in many countries around the world.
The crowd funding model provides an accessible platform for individual artists to seek and garner community support for specific projects and initiatives, outside the more traditional funding methods. This is supported by research and consultations undertaken by the Review which indicate there is a real desire by donors to support individual artists and specific projects, and that donors are also more likely to favour local and community arts.
New digital media and the National Broadband Network will further enhance opportunities for artists, particularly in regional Australia, as crowd funding becomes accessible to a greater audience. This is particularly relevant to Generation Y—those now aged between their late–teens and early–thirties with their “enthusiastic embrace of the IT revolution”, according to Hugh Mackay8
The Review was convinced of the potential for crowd funding to capture new donors who are otherwise not inclined to give to the arts in more traditional ways. Coupled with a matched funding component as an initial stimulus, it is likely that this is a model which could successfully fund, through private sector support, a range of innovative and exciting projects.
Recommendation 8: The Australian Government develops a crowd funding initiative with a matched funding from government component.
How could this look?
This program could involve the government providing a matched funding incentive over two years, where crowd funding initiatives raise 80 per cent of the funds needed for a project and the government contributes the remaining 20 per cent. The program aim is to encourage the small scale, artist–led projects, and therefore government contributions per project should be capped to reflect this.
The concept of micro–financing, also known as micro–credit or micro–loans, emerged in the 1970s as a way to assist low–income individuals in developing countries out of poverty. Micro–finance initiatives provide people with small loans, offered on an unsecured basis with low or nil interest on repayments. Micro–financing is becoming more prevalent in Australia as a means to support a range of initiatives, including those in the arts sector.
Organisations such as Rio Tinto have recently recognised the capacity of new funding models, such as micro loans, to kick–start initiatives in Indigenous communities.9 In 2011–12 the Australian Government is piloting a micro–finance project, supporting small creative enterprises within the Australian music industry. The pilot will provide participants with new business development knowledge and skills, expert creative industry mentoring support and access to seed investment to grow their business. Government funding of up to $10,000 will be provided towards the business development plan on the basis of interest–free matched loans being provided by the private sector. This is an excellent example of how innovative models, using government funding, can encourage the growth of a private giving base for artists and arts organisations. Based on the success of the pilot, micro–financing could be applied more broadly across the arts sector.
Recommendation 9: The Australian Government provides funding to support a micro–loans scheme for the arts sector.
Appendix B – Flexible Vision
See Regulatory Options Table (right) in two sections covering funding schemes and content obligations, and content access regimes and promotion and provisioning, respectively.
Appendix C — Regulating the future in selected overseas jurisdictions
Screen Australia, 2008, Flexible Vision v.2.0:A compendium of new and emerging audiovisual content delivery platforms and government intervention, 2nd edition.
Canada: The Canadian Radio-television and Telecommunications Commission (CRTC) was one of the first regulators in the world to clarify the position of broadband on the Internet. It announced its decision not to regulate the Internet in May 1999.
The CRTC applies the New Media Exemption Order to Internet and mobile telephony services offering content. This Order means that these services are not subject to licensing or other regulatory measures under the Broadcasting Act (Canada).
The CRTC considered the circumstances that led to the need for regulation of Canadian content in traditional broadcasting, as they do not currently exist in the Internet environment. It believed that market forces were providing a Canadian presence on the Internet that was also supported by a strong demand for Canadian new media content. If Canadian content on the Internet diminishes, is under threat, or disappears altogether, the CRTC maintains the power to intervene and regulate to support the production/creation of Canadian Internet content.
Under the Telecommunications Act, the CRTC has refrained from applying tariff filing and approval obligations to Internet Service Providers (ISPs) and mobile operators, while retaining other powers including the ability to prohibit “undue preference”. The CRTC has also exempted ISPs from the “common carrier” obligations of the Act with respect to content of a carrier’s own Internet service. The CRTC is currently undertaking a comprehensive policy review of potential regulation of new audiovisual technologies called the New Media Project Initiative. This initiative seeks to investigate the social, economic, cultural and technological issues associated with New Media, and what actions, if any, the CRTC should take to ensure that New Media Broadcasting meets the objectives of the Broadcasting and Telecommunications Acts into the future.
The purpose of this Initiative is to provide a solid basis for policy development in the new environment. It will build on the foundation of a 2006 report entitled The Future Environment Facing the Canadian Broadcasting System.
European Union: The European Union has decided to impose baseline regulation of audiovisual content covering different broadcasting and media types. In December 2007, the European Parliament agreed to a new Audiovisual Media Services Directive (AVMSD) to replace the Television Without Frontiers Directive (TVWF) first introduced in 1989 and updated in 1997. The new directive is modernised to take into account digital TV and broadband. The AVMSD introduces the concept of “audiovisual media services” with a distinction between “linear services” or traditional broadcasting, and “nonlinear” or on-demand services. “Nonlinear” audiovisual services will be subject to minimal blanket regulation. A channel will remain regulated in the country from which it operates.
The European Union chose a graduated regulatory approach:
- Non-linear services are submitted to a light touch regulation and need to comply with basic principles such as minor protection, prevention on incitement to racial hatred, restriction on tobacco and alcohol advertising, and an obligation to promote European works.
- Linear services are submitted to an additional layer of rules including local content requirements.
The amending directive was adopted on 11 December and entered into force on 19 December 2007. Member States have two years to transpose the new provisions into national law, so that the modernised legal framework for audiovisual media services will be fully applicable by the end of 2009.
France: Until 2004, the French regulatory framework did not take into account new media. In 2004, a new law “pour la confiance dans l’économie numérique” (21 June 2004) made a new distinction between:
- Private communication (“correspondance privée”) and communication to the public via electronic means. Private communication is the exchange between two identified persons – one to one – while communication to the public is one to many.
- Audiovisual communication – where the information is a “programme” – and online communication to the public – where the sender provides some content which the recipient chooses (for instance, a website). Under this distinction, video-on-demand (VOD) is online public communication, while pay-per-view (PPV) is audiovisual communication.
- This distinction is used as the basis for the French regulatory framework. The Conseil supérieur de l’audiovisuel’s (CSA) efforts are now focused on clarifying which rules are applicable to both audiovisual and online communication, or specific to one or the other. For example, broadcasting quotas are applied to “audiovisual communication”, regulations relating to spam are applied to online communication while defamation applies to both forms.
New Zealand: The Broadcasting Standard Authority (NZBSA) does not have jurisdiction to deal with the content of programs broadcast over the Internet through website downloads and audiovisual content published on overseas-based websites. However, in a recent report on the future of media regulation, the NZBSA reviewed the need to change media regulation. The report identifies gaps and inconsistencies in the current regulatory regime revealed by new formats.
The report suggests filtering and labelling, voluntary standards and self-regulation as the key to regulating Internet content in the future.
United Kingdom: The Communications Act 2003 (UK), which gives statutory powers to the Office of Communications (Ofcom), was deliberately kept technologically neutral in order to reflect the convergence of media to deliver services. Television and radio broadcast over cable, satellite and terrestrial platforms, or private IP (Internet protocol) networks running for example over ADSL, are regulated by Ofcom. However, Internet content is largely unregulated under the Communications Act 2003 (UK) with video streaming and audio streaming unregulated. Television in section 233 of the Communications Act 2003 (UK) is defined as “not … a two-way service”. Video streaming over the Internet would normally be seen as a part of a two-way service. Internet content was explicitly excluded from Ofcom’s regulatory remit except in the context of media literacy.
However, during a debate organised by the Internet Service Providers’ Association (ISPA), Lord Currie – chairman of the Ofcom – did not rule out the possibility of regulation. Laws relating to obscene publications, defamation and copyright continue to apply.
United States: There is no specific regulation of broadband. The government has sought to bring in two laws to censor offensive online content but both have been struck down on the grounds of the First Amendment. One was the Communications Decency Act and the other was the Child Online Protection Act. Both attempts have been struck down on the basis of the First Amendment.
Lynn Gailey. 20 March 2012.
- Recording Industry Association on Japan.↩︎
- Subsequent publications in 2010 and 2011 used another classification. ED↩︎
- Sally Howland and Ebony Williams 2010, Song Cycles: An audit of support infrastructure for Indigenous music in Australia, Australia Council for the Arts and the Australasian Performing Right Association, page 3.↩︎
- ACMA, 2011, [ http://www.acma.gov.au/webwr/_assets/main/lib410148/communications_report_2010-11.pdf Communications Report 2010-11], page 51.↩︎
- Australian Film Commission, 2003, Flexible Vision: A snapshot of emerging audiovisual technologies and services, and options for supporting Australian content, 1st edition, p. 5.↩︎
- Counihan, M.S. 1981, The construction of Australian broadcasting: aspects of radio in Australia in the 1920s, [thesis] Monash University, Melbourne.↩︎
- Screen Australia, 2008, [http://www.screenaustralia.gov.au/documents/SA_publications/FlexibleVision_08.pdf Flexible Vision v.2.0]: A compendium of new and emerging audiovisual content delivery platforms and government intervention, 2nd edition .↩︎
- Appendix C of Building Support is an essay by Hugh Mackay, “Community & Generosity: Socio–economic, cultural and generational change in Australia: implications for our attitudes to giving”.↩︎
- A Worthwhile Exchange: A Guide to Indigenous Philanthropy, The Christensen Fund, Rio Tinto and Greenstone Group, 2010, p. 57.↩︎