Music Industry Market Review 2006
Key Note Publications Ltd, April 2006
Music may be defined romantically as `the food of love' (Shakespeare) or more prosaically as `sound with particular characteristics' (Wikipedia), but it is undeniably a `vibrant artform' (Arts Council England) and one which touches more people, in more ways, than any other art form.
In commercial terms, music certainly generates a higher market value than the other arts, although a comprehensive market size for music in all its manifestations is impossible to calculate. We have put a value of £3.03bn on consumer spending on music in 2005, derived from three sectors: recorded music (which accounts for the bulk of the market), live music and musical instruments. However, data for other related markets are included, such as equipment for home listening and viewing.
Recorded music dominates, but this large market is on the cusp of a technological revolution that will eventually transform the way the majority of people buy music. In 2005, most music was bought as compact disc (CD) albums — the `single', vinyl and cassette having already become minor sectors — but `legal downloading', although still in its infancy, is accelerating rapidly. We forecast that, by 2010, legal downloading will account for more than a third of consumer spending on recorded music, although the time-lag while older consumers get used to the new technology will mean that CDs will remain the main format for years to come.
Recent growth in recorded products has also come from music on digital versatile disc (DVD), which are rapidly replacing videocassettes, and this marks a shift towards a more `visual' appreciation of music and its performers. Young consumers are spending more time accessing music through their computers or televisions, having been brought up on MTV and other music channels in the new digital media environment of multi-channel television and radio. Although radio is now peripheral to television in terms of media consumption, the fact remains that music dominates radio output, and the two are self-reliant.
In television, music plays a lesser role, but the popularity of talent shows such as Pop Idol and The X Factor has served to raise the profile of music, if only at the level of `karaoke culture'. According to original research conducted for this Market Review, nearly half the population say they enjoy singing and one in four are able to play a musical instrument (with a musical instrument available to be played in 44% of UK homes).
Amateur participation in music is on the increase generally and one in five adults describe music as their `main hobby'. However, despite the interest in music, only 18% of adults go to concerts regularly, and we believe there is great potential for the live music market. Encouragement for live events comes from public funders, such as the Art Councils, although funding is biased towards the more intellectual or minority types of music (classical, jazz and world music).
In mainstream music, recording and marketing are now dominated by just four `majors' worldwide, one of which is the UK's own giant record company, EMI Group PLC. The other majors are Universal Music Group and Warner Music Group, based in the US, and Sony BMG, a Japanese/German joint venture only created in 2004.
One of EMI's major strengths is its historic catalogue of recordings — and copyrights — which includes The Beatles and many other enduring acts of the last century. Although the music headlines tend to be dominated by new artists — for example, the Arctic Monkeys, whose first album shot to number one in 2006 — the fact is that most people's music tastes are fairly conservative and are rooted in the music they grew up with. Our survey of artists that the public would take to a `desert island' was topped by Abba, The Beatles, Frank Sinatra and Madonna, although Beethoven came fifth.
Executive Summary
1. Industry Overview
REPORT COVERAGE
Report Background
ECONOMIC TRENDS
Population
Table 1.1: UK Resident Population Estimates by Sex (000), Mid-Years 2001-2005
Gross Domestic Product
Table 1.2: UK Gross Domestic Product at Current and Annual Prices (£m), 2001-2005
Inflation
Table 1.3: UK Rate of Inflation (%), 2001-2005
Unemployment
Table 1.4: Actual Number of Unemployed Persons in the UK (million), 2001-2005
Household Disposable Income
Table 1.5: UK Household Disposable Income Per Capita (£), 2001-2005
Consumer Confidence
Table 1.6: Trends in Consumer Willingness to Borrow, (000, £ and £bn) February 2005, May 2005, August 2005, November 2005 and February 2006
MARKET SIZE AND SEGMENTATION
Table 1.7: The UK Music Market by Value (£m at rsp), 2001-2005
INDUSTRY STRUCTURE
MARKET POSITION
KEY TRENDS
LEGISLATION
KEY TRADE ASSOCIATIONS
British Phonographic Industry
International Federation of the Phonographic Industry
Recording Industry Association of America
2. PEST Analysis
INTRODUCTION
POLITICAL FACTORS
ECONOMIC FACTORS
SOCIAL FACTORS
TECHNOLOGICAL FACTORS
3. Key Note Primary Research
INTRODUCTION
ATTITUDES TOWARDS MUSIC
Table 3.1: Consumer Attitudes Towards Music and its Role in Consumer Lifestyles (% of adults), 2006
EVERYDAY LISTENERS TO MUSIC
Table 3.2: Daily Listening to Music at Home or in the Car (% of adults), 2006
MUSIC AS A MAIN HOBBY
Table 3.3: Music as a Main Hobby (% of adults), 2006
FAVOURITE ARTISTS
Table 3.4: Favourite Artists or Composers for a Desert Island (% of adults), 2006
Recording Artists
Table 3.5: The Top Four Most Popular Recording Artists for a Desert Island (% of adults), 2006
Table 3.6: The Next Most Popular Recording Artists for a Desert Island (% of adults), 2006
Table 3.7: Favourite Artists for Men and Women (% of adults), 2006
Table 3.8: Other Recording Artists for a Desert Island (% of adults), 2006
Classical Composers
Table 3.9: Classical Composers for a Desert Island (% of adults), 2006
ARTIST PREFERENCE BY MUSIC COMMITMENT
Table 3.10: Favourite Artists/Composers for `Everyday' and `Hobby' Music Consumers (% of adults), 2006
4. Competitive Structure
THE MARKETPLACE
RECORDED-MUSIC GROUPS
Universal Music Group
Company History and Current Structure
Subsidiaries, Labels and Artists
Financial Results
Sony BMG Music Entertainment
Sony Corporation
Bertelsmann AG
Company History and Current Structure
Subsidiaries, Labels and Artists
Financial Results
Warner Music Group
Company History and Current Structure
Subsidiaries, Labels and Artists
Financial Results
EMI Group PLC
Company History and Current Structure
Subsidiaries, Labels and Artists
Financial Results
OTHER MAJOR MUSIC SECTOR COMPANIES
BBC (British Broadcasting Corporation)
Company Structure
Financial Results
Chrysalis Group PLC
Company Structure
Financial Results
Clear Channel Communications Inc/Live Nation
Company Structure
Financial Results
Emap PLC
Company Structure
Financial Results
GCap Media PLC
Company Structure
Financial Results
HMV Group PLC
Company Structure
Financial Results
Viacom Inc
Company Structure
Financial Results
Virgin Group
Company Structure
Financial Results
Yamaha Corporation
Company Structure
Financial Results
OUTSIDE SUPPLIERS
Media
Venues
Promoters and Agents
Manufacturers and Distributors
Recording Studios
MARKETING ACTIVITY
5. Recorded Music Market
INTRODUCTION
KEY TRENDS
Technological Development
Lower Prices
Table 5.1: Volume and Average Price of CD Albums Sold in the UK (million and £), 2001-2005
Music Trends
British Recording Artists
Record Industry Consolidation
Number of Albums Released
MARKET SIZE
The Total Market
Table 5.2: The UK Market for Recorded Music by Type of Recording by Value (£m at rsp), 2001-2005
By Market Sector
Singles
Albums
By Sector
By Musical Genre
Table 5.3: Album Sales by Musical Genre by Volume (%), 1999-2005
SUPPLY STRUCTURE
The Majors' Subsidiaries and Labels
Table 5.4: Leading Recording Labels, 2006
Distribution
Trade Associations
MAJOR PLAYERS
Recording Companies and Labels
Table 5.5: UK Market Shares of Album Sales by Company by Volume (%), 1996, 2001 and 2004
Top-Selling Artists and Albums
Top-Selling Singles and Songs
Compilations
MARKETING ACTIVITY
Table 5.6: Main Media Advertising Expenditure on Recorded Music by Label (£000), Year Ending December 2005
Table 5.7: Main Media Advertising Expenditure on Recorded Music by Specific Albums (£000), Year Ending December 2005
BUYING BEHAVIOUR
Regular Purchasers
Table 5.8: Regular Purchasers of Music CDs (% of adults), 2006
FORECASTS
Table 5.9: The Forecast UK Market for Recorded Music by Type by Value (£m at rsp), 2006-2010
6. Recorded Music Distribution
INTRODUCTION
KEY TRENDS
Record Stores
Music Downloading
Grocery Superstores
Other Generalists
MARKET SIZE
Table 6.1: The UK Market for Recorded Music by Value (£m at rsp), 2001-2005
SUPPLY STRUCTURE
Table 6.2: Sales of Recorded Music by Type of Retailer by Volume (%), 1996, 2002 and 2004
Table 6.3: Sales of Recorded Music Albums by Distribution Channel by Value (%), 2001-2005
E-Commerce Retailing
Online Distribution (Download)
Mobile Phone Distribution
MAJOR PLAYERS
Table 6.4: Leading Retailers and Online Distributors of Recorded Music, 2006
Conventional Retailers
E-Commerce and Online (Downloading)
MARKETING ACTIVITY
Table 6.5: Main Media Advertising Expenditure on Entertainment Product Distribution (£000), Year Ending December 2005
BUYING BEHAVIOUR
Music Shop Browsers
Table 6.6: Music Shop Browsers (% of adults), 2006
Music Downloaders
Table 6.7: Consumers Who Download Music from the Internet (% of adults), 2006
FORECASTS
Table 6.8: The Forecast UK Market for Recorded Music by Distribution Channel by Value (£m at rsp and %), 2006-2010
7. Music in the Media
INTRODUCTION
KEY TRENDS
Television
DVDs and Movies
Radio
Licensing
MARKET SIZE
Table 7.1: UK Consumer Expenditure on Home Viewing and Listening (£m at rsp), 2001-2005
Viewing and Listening as Leisure Markets
Table 7.2: Penetration of Popular Evening and Weekend Leisure Activities (% of adults), 2005
Music DVD
Table 7.3: The UK Market for Music DVDs and Videos by Volume and Value (million units and £m at trade prices), 2002-2005
Table 7.4: Top-Selling Music DVDs by All-Time Sales Achieved, 2005
Movie Soundtracks
SUPPLY STRUCTURE
Radio Broadcasting
Television Broadcasting
Newspapers and Magazines
Table 7.5: Leading Music Magazines by Circulation (number of copies per issue), July to December 2004 and 2005
MAJOR PLAYERS
Table 7.6: Major Media Companies/Organisations by Area of Activity, 2006
MARKETING ACTIVITY
BUYING BEHAVIOUR
Radio Listening
Table 7.7: Regular Listeners to Music on the Radio (% of adults), 2006
Music on Home Computers
Table 7.8: Users of Computers for Listening to Music (% of adults), 2006
Pop Star Competitions on TV
Table 7.9: Viewers of Television Pop Star Competitions (% of adults), 2006
FORECASTS
Table 7.10: Forecast UK Consumer Expenditure on Home Viewing and Listening (£m at rsp), 2006-2010
8. Live Music
INTRODUCTION
KEY TRENDS
Concerts Trends
Theatre and Show Trends
Music in Nightclubs
MARKET SIZE
Table 8.1: The UK Market for Concerts, Theatres and Commercial Shows by Value (£m), 2001-2005
Live Recordings
SUPPLY STRUCTURE
Types of Indoor Venue
Outdoor Festivals and Charity Events
Classical Music and Public Funding
MAJOR PLAYERS
MARKETING ACTIVITY
Table 8.2: Main Media Advertising Expenditure on Theatres, Plays, Concerts and Other Shows (£000), Year Ending December 2005
BUYING BEHAVIOUR
Table 8.3: Regular Listeners to Live Music (% of adults), 2006
Table 8.4: Penetration of Live Entertainment (% of adults), 2004 and 2005
FORECASTS
Table 8.5: The Forecast UK Market for Concerts, Theatres and Commercial Shows by Value (£m), 2006-2010
9. Amateur Music
INTRODUCTION
KEY TRENDS
MARKET SIZE
Musical Instruments
Table 9.1: The UK Market for Musical Instruments by Value (£m at rsp), 2001-2005
Table 9.2: The UK Market for Musical Instruments by Type by Value (£m at rsp), 2005
Other Spending
SUPPLY STRUCTURE
Musical Instruments
MAJOR PLAYERS
MARKETING ACTIVITY
BUYING BEHAVIOUR
Interest in Singing
Table 9.3: Adults Who Enjoy Singing (% of adults), 2006
Musical Instruments
The Ability to Play
Table 9.4: Adults Who Can Play a Musical Instrument (% of adults), 2006
Penetration of Instruments
Table 9.5: Penetration of Musical Instruments (% of adults), 2006
FORECASTS
Table 9.6: The Forecast UK Market for Musical Instruments by Value (£m at rsp), 2006-2010
10. A Global Perspective
RECORDED MUSIC
INTERNATIONAL ARTISTS
LIVE MUSIC
MUSICAL INSTRUMENTS
11. The Future
INTRODUCTION
Population
Table 11.1: Forecast UK Resident Population by Sex (000), Mid-Years 2006-2010
Gross Domestic Product
Table 11.2: Forecast UK Growth in Gross Domestic Product in Real Terms (%), 2006-2010
Inflation
Table 11.3: Forecast UK Rate of Inflation (%), 2006-2010
Unemployment
Table 11.4: Forecast Actual Number of Unemployed Persons in the UK (million), 2006-2010
FORECASTS 2006 TO 2010
Table 11.5: Forecasts for Key Markets in the UK Music Industry by Value (£m at rsp), 2006-2010
FUTURE TRENDS
12. Consumer Confidence
METHODOLOGY
KEY FINDINGS THIS QUARTER
THE WILLINGNESS TO BORROW
A Slow Start to 2006
Table A: The Average Amount Consumers Are Willing to Borrow in Order to Purchase Expensive Items at Current and Constant November 2004 Prices (£ and £bn), February 2005, May 2005, August 2005, November 2005 and February 2006
The Desire to Borrow Stays Strong
Table B: The Number of Adults Willing to Borrow in Order to Purchase Expensive Items (000 and %), February 2005, May 2005, August 2005, November 2005 and February 2006
THE WILLINGNESS TO SPEND FROM SAVINGS
Spending From Savings Declines
Table C: The Proportion of Adults Without Any Savings (%), February 2005, May 2005, August 2005, November 2005 and February 2006
Table D: The Average Amount Consumers Are Willing to Spend from Savings in Order to Purchase Expensive Items at Current and Constant November 2004 Prices (£ and £bn), February 2005, May 2005, August 2005, November 2005 and February 2006
Consumers Increasingly Cautious
Table E: The Average Amounts Adults are Confident Spending to Purchase Expensive Items (£ and %), February 2005, May 2005, August 2005, November 2005 and February 2006
13. Further Sources
Associations
Publications
General Sources
Government Publications
Other Sources
Bisnode Sources
- Universal Music Group
- Sony BMG Music Entertainment
- Sony Corporation
- Bertelsmann AG
- Warner Music Group
- EMI Group PLC
- BBC (British Broadcasting Corporation)
- Chrysalis Group PLC
- Clear Channel Communications Inc/Live Nation
- Emap PLC
- GCap Media PLC
- HMV Group PLC
- Viacom Inc
- Virgin Group
- Yamaha Corporation
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