The music industry contributed $484 million to New Zealand’s economy over the course of 2015 and led to the employment of more than 4,500 full-time workers.
These stats come from the latest edition of Recorded Music New Zealand’s annual breakdown of the economic contribution of the music industry to the nation’s GDP, which was again compiled by research organisation PWC*.
Overall, the music industry contributed almost $60 million more to the economy in 2015 than it did in 2014, when the overall revenue generated sat at $425 million.
The two largest contributors to both revenue and employment were the ‘music broadcasting’ and ‘live music’ subsectors.
Recorded Music NZ chief executive Damian Vaughan says 2015 was a particularly good year on the live music front, with the likes of the Eagles and Fleetwood Mac taking hugely popular tours through New Zealand.
He says that the annual employment numbers really ebb and flow, depending on the number of major international acts passing through the country in a given year, and he expects these high numbers from 2015 to “level out a little bit” in coming years.
Perhaps the most interesting data point from the latest round of results is the increase the contribution of the ‘Retail’ subsector, which went from $71.2 million in 2014 to $78.9 million this year.
While this is certainly a positive result, Vaughan is careful not to be too optimistic about it.
“It’s still not close to what it once was,” he says. “We’ve been in decline for 15 years, and this has primarily been due to piracy.”
All about the vinyl
No other area has been decimated by the digital age—and the piracy that came with it—quite as severely as the ‘physical sales’ sector. But after a period of continuous decline, Vaughan says the data seems to be plateauing at the moment.
He puts this down to two reasons: firstly, gift-giving during the Christmas period always leads to an uptick in sales; and secondly, the continued popularity of vinyl is helping to stabilise the numbers.
Vaughan says vinyl now accounts for around 10 percent of the entire physical market, whereas it was close to zero in the early 2000s.
As is the case with the paperback industry, Vaughan says there will always be a category—albeit smaller—of people who like to hold onto or give away physical items, and he doesn’t see this changing any time soon.
That said, this is certainly a long way from how good the music industry once had it, when record stores were filled with teens desperate to lay down their hard-earned pocket money for the latest release.
The fight against P(iracy)
In the bid to gauge the impact of piracy on the New Zealand music industry, Recorded Music NZ commissioned Dr George Barker in 2016 to conduct a study on the revenue lost between 2001 and 2014.
Analysing total sales revenues and adjusting them for inflation and broader GDP growth, Barker found that the recorded music industry had lost up to $1.5 billion over that period.
Vaughan says the uptick in revenue in the last year is largely attributable to the emergence of legal streaming services that charge users a relatively low fee for access to massive libraries of music.
The gross output from online streaming almost doubled between 2014 ($18.6 million) and 2015 ($36.8 million), indicating consumers have moved towards an on-demand consumption preference.
The emergence of Spotify, Pandora, iTunes and iHeartRadio does not, however, mean that the problem of music piracy is coming to an end.
In the past five years alone, Recorded Music NZ has instituted 21 separate successful cases against copyright offenders.
If anything, Vaughan says piracy remains as pertinent as ever, but the way people do it has evolved.
In the early days of digital, it was largely a case of burning CDs, later it shifted to P2P sharing platforms (like Pirate Bay), and now it’s largely about illicit streaming on otherwise legal sites featuring user-generated content (YouTube and Facebook are the major concerns in this regard).
Vaughan says the team at Recorded Music NZ is working closely with international media and social media companies to ensure that Kiwi copyright holders are protected through takedown notices and banning of repetitive offenders.
Us vs them
Another interesting aspect of the report lies in role of New Zealand-originated music in the local market.
The report found that for every $100 of music purchased at retail outlets, around $13 was spent New Zealand music. And across all retail consumption channels (including digital), 10 percent was spent on New Zealand music.
According to the report, the share of New Zealand music by subsector has changed over the last four years but the percentage of New Zealand music contribution to total retail has essentially remained constant.
Furthermore, there are indications that the switch from physical to streaming has been more prevalent for overseas artists, but less so for New Zealand artists. However, this is to be expected given that local artists are competing for ear time more directly with their international counterparts when distributing their music through global streaming services.
That said, local commercial radio stations also tend to be weighted heavily in favour of international acts, with only 17.9 percent of playtime dedicated to local artists (this data does not include Radio New Zealand).
Overall, while the music industry did have a strong performance in 2015, the report concludes that there's "a long road to recovery following historical decline". And this recovery will largely depend on how effective the industry remains at monetising the opportunities offered by digital channels.
* The report commissioned by Recorded Music NZ, APRA AMCOS and The NZ Music Commission with the support of NZ On Air, Te Mangai Paho, Creative NZ, Independent Music NZ and The Music Managers Forum.