Hill Strategies Research on Music

The latest issue of Hill Strategies' Arts Research Monitor includes a focus on recent music research, including the impacts of live music in Ontario, international music development strategies, an Australian report on the economic impact of live music, and an analysis of orchestra subscription strategies in the U.S.

Live Music Measures Up: An economic impact analysis of live music in Ontario

Music Canada, 2015
Author: Nordicity

Based largely on a survey of 372 companies in Ontario’s live music sector, this report attempts to identify the impacts of live music on Ontario’s economy, employment, and communities. The report also endeavours to serve as a benchmark for the measurement of changes in the live music sector.

The 372 responding companies represent 30% of all 1,240 companies operating as artist managers, promoters, agents, music venues, and festivals in Ontario. Artists are not directly accounted for in the study, unless they are also managers (i.e., self-managed performers). The appendix to the report provides details of the methodology used for the study, which included an online survey and interviews.

Based on the survey results, the researchers estimate that “live music companies in Ontario generated $628 million in revenue from live music activities in 2013”, with the largest portion of revenues coming from ticket sales (40%). Of these ticket sales, approximately 32% was generated by Canadian artists. Live music companies made profits of $144 million in 2013, or 23% of total revenues.

The survey results provide audience or capacity statistics for music festivals, promoters, and venues. The 558 music festivals in Ontario had 13.7 million unique visitors and sold (or provided for free) a total of 15.7 million tickets. The province’s 775 promoters sold 5.4 million tickets to nearly 82,000 shows in 2013. (Some of the tickets sold by promoters were for festival events, so the total tickets for each type of provider should not be added together.) In the “616 venues offering live music performances”, there is a collective capacity of 3.6 million people.

Nearly three-quarters of audience members at music events (72%) are local, with 17% coming from other parts of Ontario, 6% from other provinces or territories, and 5% from international locations.

The expenditures of live music companies were $484 million in 2013, and their economic impact was $583 million. (The methodology used in the report includes direct impacts of companies’ spending as well as indirect impacts associated with the re-spending by suppliers of the expenditures of live music companies and induced impacts associated with the re-spending of the earnings of workers in live music companies and suppliers.) A separate estimate of the economic impact of live music related tourism is provided in the report: $609 million in 2013. The report also identifies $432 million in taxes associated with live music in 2013 (via both companies and tourism activities).

Regarding the future growth of live music companies, key opportunities include access to tax credits and other government funding as well as “the availability of local Canadian talent”. Key challenges to future growth include “the legal and regulatory environment in Canada” as well as the value of the Canadian dollar and high local operating costs.

The Mastering of a Music City
Key elements, effective strategies & why it's worth pursuing

IFPI and Music Canada, 2015

This report, based on a literature review, over 40 expert interviews, and two international focus group sessions, aims to provide a “roadmap” for the development of music, especially the commercial music sector, in municipalities of any size, anywhere in the world. The report outlines five essential elements of “music cities”:

  • The presence of “artists and musicians;
  • A thriving music scene;
  • Access to spaces and places;
  • A receptive and engaged audience; and
  • Record labels and other music-related businesses”.

Regarding the benefits of being a music city, the report outlines “job creation, economic growth, tourism development, city brand building and artistic growth”. Recognition as a music city can also contribute to attracting businesses in other industries as well as talented professionals.

Seven key strategies are recommended to enhance a city’s music sector:

1. “Music-friendly and musician-friendly policies”, including “business licensing, liquor licensing, transportation planning and parking, as well as land-use planning”. Also important are “a supporting environment for artists” including training, education, mentorship, hubs or incubators, and affordable housing.
2. “A single point of contact for the music community, in the form of a music office or officer”.
3. “A music advisory board”, which can “provide an invaluable link between the music community and City Hall”.
4. “Engaging the broader music community to get their buy-in and support”.
5. “Access to spaces and places”, because music “needs many homes. From education to rehearsal to recording to performance, Music Cities require a variety of quality spaces and places to succeed.”
6. “Audience development”, via “proximity to other music markets, transportation links, and promotion of live music events”. A key challenge in this area is “building an audience for local performers”, not just international stars.
7. “Music tourism”, building on assets such as “a city’s year-round live music scene, music festivals and historical music landmarks”. A comprehensive music tourism strategy would be the most in-depth development of this idea.

The report identifies key research elements to underpin these strategies, including:

  • “Economic impact studies;
  • Music tourism impact studies;
  • Business inventories;
  • Needs assessments; and
  • Resource guides.”

The Economic & Cultural Value of Live Music in Australia in 2014

University of Tasmania, City of Sydney, City of Melbourne, The Government of South Australia, and the (Australia) Live Music Office, 2015

Employing a cost-benefit analysis (based on a national consumer survey, venue owner and operator interviews, and secondary data on the sector), this report attempts to provide “a valuation of the economic, social and cultural contribution” of live music in Australia.

The headline finding of the report is that, “for every dollar spent on live music in Australia, $3.00 worth of benefits are returned to the wider Australian community”. The costs of live music were estimated at $5.0 billion in 2014, while live music’s benefits were “conservatively” valued at $15.7 billion, including:

  • Individual benefits of $10.4 billion, including direct expenditures on live music (i.e., the $5.0 billion that Australians spent on tickets, food, and beverages at live music events) as well as an estimate of live music consumers’ willingness to pay (a measure of their satisfaction). For individuals, important social benefits of live music include “greater social capital and improved health and wellbeing”.
  • Civic benefits valued at $3.2 billion, including “an estimated 65,000 full and part-time jobs enabled by spending on live music and taxation revenue to all tiers of government”. Given that the survey results showed that about one-half of respondents travel to attend music events, live music could also confer competitive advantages to jurisdictions with strong music scenes.
  • Commercial benefits of $2.1 billion, including “profits generated by live music producers and a net positive impact on productivity at work reported by live music attendees”.

The report concludes by recommending further research into live music volunteerism, potential benefits that “non-users of live music might receive from live music activity in their community”, potential impacts of live music on worker productivity, and a national “satellite account for live music, that comprehensively details how live music making directly impacts on the Australian economy”.

Reimagining the Orchestra Subscription Model

League of American Orchestras, 2015
Author: Oliver Wyman

Based on a survey of over 4,000 orchestra attendees and “the largest ever orchestra sales dataset” from 44 American orchestras and one Canadian one (the National Arts Centre Orchestra), this report examines “why people subscribe, why they lapse, and what they might want that is not currently being offered” in current orchestra subscription packages.

The report indicates that orchestra ticket sales have decreased at a compound annual rate of 2.8% over the past decade. In response to declining sales, many orchestras have increased ticket prices, a trend that the report suggests cannot continue without the risk of losing many attendees.

Over the past 10 years, “total subscription revenues for the average orchestra have fallen by 15%”, with a 24% decrease in the number of subscription packages sold and a 13% decrease in the number of subscription tickets sold. There have been substantial differences in subscription sales by size of orchestra:

  • A compound annual decrease of 2.4% for orchestras with budgets over $16 million.
  • A compound annual decrease of 1.7% for those with budgets between $7 and $16 million.
  • A compound annual increase of 2.2% for those with budgets under $7 million.

The report examines a number of potential reasons for the decrease in subscriptions, with an assessment based on the research findings (which are detailed in the report):

1. “People are just losing interest in classical music. Somewhat true.
2. Other arts and entertainment options are taking audience share from orchestras. False.
3. Orchestra-goers are unhappy with their orchestra experience. Overwhelmingly false.
4. Subscribers are discontent with programming or the quality of performances. Somewhat true.
5. Subscribers are dissatisfied with the subscription product itself. Largely true.”

The survey found that “the top reasons for subscribers lapsing include price, scheduling issues, a desire to chose one’s own programming, and dissatisfaction with the programming being offered”. To counter this and “revitalize the subscription model”, the report recommends that orchestras build “closer, ‘stickier’ relationships with customers”, as has been done in other sectors of the economy, by:

  • “Expanding their use of social media, apps, and ‘bring a friend’ programs”, all of which could help attract millennials.
  • “Decoupling curation from package size”, i.e., offering “small curated subscription packages” as well as “large customized options”.
  • “Improving the value proposition” by allowing “subscribers to pay in monthly installments” (including automatic renewals) and offering a “buy now, choose later” option.
  • Considering offering “a membership completely divorced from attendance frequency” that would “confer belonging, exclusivity, and certain benefits – such as access to a VIP lounge in the orchestra hall and preferred access to single tickets”.

The report concludes that orchestras should “think carefully about [their] unique circumstances” and “customize new offers for [their] local market”.

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