This Is Music 2023

Last year, the music industry finally returned to growth, recovering from the pandemic and benefitting from underlying growth in recorded music and music publishing revenues. That is not to say that challenges do not remain, and, as is often the case, smaller grassroots music creators and industry players suffer the most. Investment in the

As the world reopened in 2022, it is worth discussing exports because 2022 was the first full year after the UK left the European Union. On the face of it, music exports are strong, but music creators at all levels, and especially at grassroots level, face challenges. This Is Music takes a look at this in more depth. There is also a case study from Glass Animals, a global success story that was a decade in the making.

Investment in education and talent pipeline are also key factors to future growth. Recording studios have faced soaring costs, including business rates, and this is explored in the report. Violinist David Grubb talks us through his career as a musician and artist and how he has benefitted from a strong educational foundation. This year’s report also introduces an emerging trends section, discussing where the market is going in 2023, and lawyer Cliff Fluet discusses the potential of artificial intelligence (AI).

To the numbers: the music industry contributed £6.7 billion to the UK economy during 2022 in terms of gross value added (GVA). Exports topped £4 billion, and employment stood at 210,000. 

Since UK Music published its first economic report in 2013, there have been many changes across the industry, such as the shift to streaming and the growth of festivals. Through conducting this work year after year, we have developed a much deeper understanding of the business dynamics behind the music industry and what that means in terms of economic value. Consequently, the original methodology that was devised over a decade ago needed updating.

Over the past year, UK Music has worked with our economic consultants, Oxford Economics, to undertake a comprehensive methodology review to ensure the processes behind this report reflect the evolution of the music industry, and the latest thinking and best practice.

This year’s report does not offer direct comparisons with previous years for GVA, exports and employment figures owing to the methodology review, which affects these three key metrics. However, in 2022 the UK music industry outperformed 2019 by a significant margin to produce its best year ever. We know this from assessing various contributing metrics, including revenue figures. Some revenue figures are included in this with report with year on-year comparisons as these were unaffected by our methodology review.

Live music and international touring returned during 2022, boosting GVA and exports. A combination of rescheduled shows from 2020 and 2021 and newly scheduled shows for 2022 made for a packed calendar. More live music fuelled music merchandise sales, and public performance revenues also rebounded.

Recorded and publishing-related revenues grew during the COVID-19 pandemic and continued to grow in 2022. These sectors also contributed to the GVA and exports figures for 2022.

Employment has also rebounded and now sits at 210,000. The employment number is tempered by the fact there have been consolidations and redundancies in some areas, and some music creators and self-employed workers stepped away from the music industry during the pandemic.

While the headline figures for the UK music industry are good, there are a number of serious challenges across the industry. Small venues, independent festivals, recording studios, and music creators all face financial pressures at home in the UK and from the consequences of Brexit, particularly for touring artists and musicians.

Moreover, even where the industry has shown growth, such as in live performance and recorded music, questions remain about whether this growth can be sustained, and not everyone is experiencing the same level of growth.

This report highlights these issues and how they might be addressed, while celebrating the music industry’s economic successes. Thoughtful and targeted support in areas where help is needed will ensure that music continues to be a great British success story in the years to come.

Click here to read the report.

This Is Music 2022

This Is Music was a difficult report to write this year because 2021 was a year of transition and mixed messages. The music industry began its recovery. Sort of. Live music reopened, then shut again, and this had a ripple effect on ancillary income that further disrupted the music industry, especially the music creators who lie at its heart.

For this year’s case study, I looked at Wolf Alice and the team around them. The band is well established in their career and better placed than most to weather the storm brought about by the pandemic. But even for a band at that level, it was not all plain sailing, and they had to adapt to changing circumstances. Please take a look.

As for the numbers, the music industry contributed £4 billion to the UK economy in terms of Gross Value Added (GVA) in 2021 – an increase of 26% on 2020. However, this was still 31% down on the £5.8 billion the industry contributed in 2019 pre-pandemic. That year, recording studios stayed open, however, they operated under strict COVID-19 protocols, and the continued enforcement of global travel restrictions meant that many international clients stayed away. 

Live music eventually returned, but not until mid-summer of 2021 and was disrupted again due to the Omicron variant. There were still many challenges, such as COVID-19 outbreaks

among artists and their road crews, which led to cancellations, and lower attendance at some live events, but the industry managed to make the most of the relatively short window to herald the return of live music. Even in the first quarter of 2022, many shows rescheduled, owing to the lingering impact of the Omicron variant.

Recorded and publishing-related income remained strong, with substantial increases in both streaming and vinyl revenues and a recovery in synchronisation (sync) income. Exports grew 10% to £2.5 billion but were still down 15% from 2019’s £2.9 billion. A lack of international touring, Brexit-related barriers, and a lack of music tourists visiting the UK have restricted export recovery. Nevertheless, recording and publishing export income continued to grow during 2021, even in the face of increased global competition. In a post-Brexit world, ensuring that trade agreements protect and support recording and publishing income for music creators and rights owners alike will be crucial to sustaining future growth.

Employment improved year-on-year, up 14% to 145,000 in 2021, but was still 26% lower than 197,000 in 2019. Music creators and live music workers experienced the greatest decline in employment and while both sectors are recovering, there is a long way to go. Those who could access government schemes, such as the Self-Employment Income Support Scheme (SEISS), were well placed to return to work once live music resumed at the end of July. Many industry organisations provided hardship funds to support those most vulnerable, but those who fell through the cracks either retired, retrained, or sought alternative employment in other sectors.

I believe that employment will recover further during 2023, but some individuals may have left the industry for good. There are skills shortages in some areas, for example, freelance crew and musicians, and a lack of access to a European workforce to plug the gaps for UK based events.

The recovery has begun, but there is still a long way to go. The British music industry cannot take anything for granted in rebuilding and ensuring that it retains its place as a leader in the global music market.

Click here to read the report.

This Is Music 2021

The UK Music economic report is rebranded This Is Music for 2021. I have made a few changes to the format to better describe the story behind the numbers. This Is Music shows how economic value is created around the four commercial assets that form the foundation of the music industry. They are: musical composition, recording, live performance and the artist as brand and image.

By showing how all the sectors of the industry come together to build economic value around the four commercial assets, we can demonstrate a rich and realistic picture of how the industry functions in practice. These are the foundations on which GVA, exports and employment are built. This report focuses on the macro level picture, but digging a bit deeper, there are a range of back stories of vastly differing experiences and circumstances. 

For instance, a consistent pattern emerged whereby those least advantaged financially felt the greatest decline in incomes. This was true of creators, music managers and recording studios. In each case, the lowest earners experienced the greatest percentage income decline.

This was because some higher earning creators and their managers can look to royalty-based income to offset the decline in live income. Emerging artists, niche artists and musicians are far more reliant on live performance. In the case of recording studios, the bigger facilities were better able to adapt and accommodate social distancing, whereas smaller studios had less flexibility and some remained closed during 2020.

In 2020, the music industry contributed £3.1 billion to the UK economy – a 46% decrease from £5.8 billion in 2019. The impact of COVID-19 hit the live industry and recording studios especially hard, disrupting the lives of music creators including artists, musicians, songwriters, producers and engineers, many of whom were unable to work. The industry’s £3.1 billion Gross Value Added (GVA) contribution in 2020 is well below the £3.5 billion contribution it made in 2012, the first year UK Music collected such data. For an industry that had recorded double-digit growth since then, this represents a huge loss.

The music industry is interconnected and the consequences of COVID-19 extend well beyond the live sector. The shutdown of live activity hit venues and promoters, resulted in fewer performing opportunities for artists and fewer commissions for composers and songwriters. Collecting societies PPL and PRS for Music saw a sharp decline in public performance income and broadcast income also fell as advertising spend declined, impacting labels, publishers, artists and songwriters.

The consumption of recorded music remained strong, with streaming income increasing and vinyl sales up on 2019, according to the BPI. While the transition from CD to streaming continued, vinyl continued to grow, up 31% on 2019.1 This success has been enhanced by impassioned and innovative marketing around Record Store Day, National Album Day and other initiatives across the year.

Exports fell to £2.3 billion, a 23% drop from £2.9 billion in 2019. The inability for artists to tour internationally was the greatest contributing factor to this decline. Studios were also heavily impacted by the loss of international artists coming to the UK to record. Publishing and recording exports performed well as the appetite for British music around the world remains strong, although it is possible there may be a knock-on impact in future years if some international markets experience a COVID-19 related decline. The impact of the new regulations, as a result of Brexit, is also an ongoing threat to future export performance.

The employment numbers, which have dropped dramatically, make for particularly stark reading. It is hard to say how many people will return to the industry and continued uncertainty will not help their prospects.

Employment fell to 128,000, a 35% drop from 197,000 in 2019. The Music Creators and Live Music sectors experienced the greatest decline – the majority of those working in the industry are self-employed, and they have been hit especially hard by COVID-19. While some were able to access government schemes, like the Self- Employment Income Support Scheme (SEISS), many were not eligible. This has resulted in thousands of music creators, crew and others leaving the industry for other sectors. Many are still committed to a career in music, but necessity has meant finding alternative sources of income.

For music creators, especially, the side hustle or day job, which is often an essential ingredient when starting out, has become a necessity again to support themselves while they continue to create music.

The industry that is built on and supports music creators is full of proudly entrepreneurial free marketeers, most of whom are unaccustomed to asking for government help. The industry is famously competitive, but it is also collaborative and that is often overlooked.

As Festival Republic’s Melvin Benn makes clear in his commentary, he and his fellow promoters have eased their competitiveness to work together and find solutions. We see this more broadly across the industry including various support schemes initiated by the likes of AIM, BPI, MMF, Help Musicians UK, the Musicians’ Union, PPL, PRS for Music and its charitable bodies, the PRS Members’ Fund and PRS Foundation, to help those most in need.

The music industry is down, but it is certainly not out. It is a people business fundamentally and its people are creative, resilient and determined. We shall rise again.

Click here to read the report.

Music By Numbers 2020

Writing this report has not been easy. The world has been gripped by a global pandemic, the like of which has not been experienced for over a century. Music By Numbers 2020 considers the music industry in 2019, which for the UK was the best year on record. 2020, in contrast, is probably the worst. Let’s start with the numbers. 

In 2019, the UK music industry contributed £5.8 billion to the UK economy, an 11% increase from £5.2 billion in 2018, marking a new high following a decade of sustained growth that has outperformed the UK economy. It generated £2.9 billion in exports, an 9% increase from £2.7 billion in 2018. Employment rose by 3% to 197,168 in 2019 from 190,935 in 2018. Live music was particularly strong, but all sectors contributed significantly to the music industry’s growth in gross value added (GVA) in 2019.

The UK has successfully exported music for decades and exports contributed very significantly in 2019. This success, however, is not a given. Streaming platforms make access to the global music market more accessible and therefore more competitive.

In 2020, the industry has been dealt a hammer blow by COVID-19. The music industry is interconnected and this has produced a domino effect as COVID-19 and the restrictions connected to the pandemic have taken hold. The absence of live music and touring deprives performers (and their representatives), venues and promoters of income. Songwriters and music publishers also lose live performance income. The closure of shops, bars and nightclubs deprives performers, writers, labels and publishers of public performance income. Record label release schedules are impacted by an inability to move around to create and promote new material, which is especially challenging for new artists launching their careers. Recording studios carry a heavy burden of costly overheads combined with a devastating drop in income, with many facing an uncertain future. It is not yet clear how long the impact of COVID-19 will last.

Alongside gathering data on 2019, I tried to monitor where possible the impact of COVID-19 during 2020. I concluded that up to 85% of Live revenue will be lost, revenues have been close to zero since March. Moreover, according to a UK Music survey 65% of music creators’ income will be lost this year, rising to over 80% for those most dependent on live performance and recording studio work. For these performers, many have seen their income reduce to zero since March.

Most music creators are self-employed. The industry relies very heavily on freelancers and the self-employed, many of whom have fallen through the cracks during 2020, not qualifying for the support that has been made available. 

The UK music industry is a commercially successful sector that was growing before the pandemic, and can grow again. Music has always been a British success story and a national asset, that delivers at home and abroad. There is no reason why that cannot continue, but that future depends on us saving the music ecosystem that we have and supporting individual music creators and freelancers especially during this critical period.

Click here to read the report.

Arts Council England v the Music Business

Andy Edwards explores the facts and figures behind the Arts Council v Music Business debate.  This article first appeared in Record of the Day.

The role of the Arts Council is once again in the headlines. This week, leading figures representing the music industry locked horns with senior opera figures over Arts Council funding.

UK Music CEO Michael Dugher branded Arts Council England (ACE) “too posh for pop”, pointing out that 62% of ACE’s National Portfolio goes to opera and a further 23% goes to classical music. In contrast, only 8% goes to popular music and 7% to other genres (including jazz, folk, etc).

Hitting back in The Daily Telegraph, Michael Volpe General Director of Holland Park Opera, responded “I’ve been hearing the word ‘posh’ in relation to opera for 30 years. Very few people in opera are posh – certainly not the performers”, although Volpe conceded in the same piece “Opera companies get a lot of money, perhaps more than they ought to, and that’s an ongoing argument.”

ACE has £1.45 billion of public funds and £860 million National Lottery funds to distribute over the next four years. Of the £368 million allocated to music, opera will receive £229 million, classical £85 million and pop £27 million.

The debate is especially timely because ACE has initiated a public conversation to help inform its strategy for the next 10 years. Given the music industry is only just returning to growth having suffered 15 years of decline, a lot is at stake. A barrier to that discussion is a fundamental misunderstanding between both sides.

Some might argue the opera world, and the arts establishment as a whole, seem to look down on the music industry or, perhaps, hold the view that it is less deserving. Many in the music industry consider opera an irrelevance and an extravagance.

The reality is the music industry is vastly more complex, diverse and challenging than is often understood. It is also a reality that opera is accessible through multi-tiered ticket pricing and many opera companies are addressing their own diversity issues.

What are the key issues? How can both sides better understand one another and what does a satisfactory outcome look like?

THE FUNDING IMBALANCE

Not only is there a huge imbalance towards opera, but there is also a disproportionate amount awarded to the Royal Opera House in London specifically. During 2016 alone, the ROH received £28 million in Arts Council funding, which represents 20% of the ROH’s total income for that year. The remainder is made up of box office receipts, commercial income and other fundraising. This includes various charitable trusts and corporate backers such as Goldman Sachs.

By way of comparison, UK Sport fulfils a similar function to the Arts Council and also relies on a combination of public money and lottery funding. It is worth noting the spread of investment across the Olympic disciplines is much more even. Of the £265 million earmarked for the Tokyo Olympic cycle, rowing receives the most with £32 million, followed by athletics (£27m), sailing (£26m), cycling (£26) and swimming (£22m). Although medals success and underlying costs are a factor, the distribution of funds is far more even when compared to arts funding for music. Equestrian was further down the list with £15m, but imagine the uproar if Equestrian took 60% of available funding at the expense of other medal winning sports.

It is hard to see how the imbalance between opera, classical and other forms of music can be justified. Moreover, if funding were to be taken away from opera and distributed more broadly, how detrimental would that be? Supposing ACE funding for the Royal Opera House is cut in half, that would represent a 10% cut in its overall income. Can the ROH be challenged to go without or make up that funding elsewhere?

MOMENTUM MUSIC FUND – A CASE FOR GRANT FUNDING

In 2013, Arts Council England supported the launch of the Momentum Music Fund, administered by the PRS Foundation. Momentum was aimed at artists existing outside the major label system, unsigned or signed to an independent, and who could demonstrable a case for £5-15,000 worth of funding to give their careers tangible momentum at a crucial point.

The scheme has been a great success. Over 270 artists have been supported by Momentum and for every £1 invested £7.46 has been generated. Recipients are truly diverse covering a broad spread of genres with a strong BAME representation, making up 49% of grantees.

Over 3,800 artists have applied for Momentum funding since its inception. Five years after its launch demand and impact has never been greater. The recently published outline of Government’s creative industries sector deal, which encourages partnerships between government and industry, mentions the Momentum Fund as an example of good practice.

The frustration is that despite this clear proof of concept, including the quality and diversity of the artists supported and the match funding & income it has leveraged there appears to be little appetite from the Arts Council to continue its involvement in such schemes.

ATTITUDES TO INVESTMENT NEED TO CHANGE

A key challenge is how the music industry is perceived and how it perceives itself.

Culturally, a disproportionate level of attention is afforded to a tiny minority of major artists earning vast sums at the expense of the majority who do not. This contributes to long held assumptions within the arts establishment, government and the wider public that all paths through the music industry are paved with gold. They are not.

Within the industry itself, there has been a tradition of self-reliance. Labels and publishers, especially, pride themselves on their investment in new music. This is very true, but that investment only comes at a certain stage. Leading up to that point, artists and their managers typically funded themselves. Prior to the launch of Momentum, grant type funding for artists was very rarely considered as an option.

Attitudes are very different when it comes to sport. Even world-class athletes such as Mo Farah continue to receive grant funding from Sport UK. In Farah’s case, this is despite considerable endorsement income and a personal net worth rumoured to be £4 million. Grant type funding in sport began in the late 90s. Twenty years later, Great Britain can look back on Olympic glory over the past three Olympic cycles in Beijing, London and Rio across a range of sports. This was no coincidence.

THE ROAD AHEAD

Leading up to the publication of the government’s Industrial Strategy (Creative Industries Sector Deal) earlier this year, there was much debate about funding. Early funding gaps were evident across the creative sector and especially so in music.

For a new artist, releasing music has never been easier: the major streaming platforms are readily accessible to any artist. The principle sources of investment remain labels and publishers although other self-release options such as Seed EIS are available. What has changed is the time it takes to reach that level. A new artist may take several years funding their own releases and live shows during that time. Few new artists have the means to do this, especially those from less affluent backgrounds. This has created very real roadblocks in the talent pipeline as the industry has shifted from CD to download to streaming.

There is a clear deficiency in investment at the seed/ angel level. Unlike the tech world, there are very few mechanisms providing a return to the early stage investor while safeguarding the artist. An artist’s business structure, especially at an early stage, can be fluid and may not have all IP and activities sitting in one entity. Very few new artists could be considered “investment ready” in a traditional sense.

This is why grant funding is so important. It does not require equity stakes or convertible loans. It is simple and when targeted correctly, as Momentum has proven, can be highly effective. Grant funding can play a central role in growing a sustainable talent pipeline that fits the streaming age that is now upon us and ensure the industry picks more winners.

The disproportionate level of Arts Council funds devoted to opera does not seem fair or sustainable and it would seem this is recognized even within the world of opera. Meanwhile, the music industry has proven that grant funding can provide a significant boost to more popular genres and sustain a diverse pipeline of creative talent that works in tandem with existing commercial models. Making the numbers work is a bigger question, but there would seem to be a clear imperative to develop a fairer and more balanced approach to Arts Council funding for music.