Monthly Archives: October 2010

Record companies lose, artists gain

In early September, two of my M.Sc. students handed in their thesis, which has created quite a stir in the Norwegian music industry. I think this has applicability outside Norway, so here is a translation (and light edit) of the Norwegian-language press release and a link to the full report (PDF, 3,4Mb):

After 10 years of digitalization of music, the average (Norwegian) musician’s income has increased by 66%. As a group, the only losers in digital music seems to be the record companies. This is the conclusion of a M.Sc. study done by students Richard Bjerkøe and Anders Sørbo at the Norwegian School of Management BI in Oslo.

The thesis “The Norwegian Music Industry in the Age of Digitalization” shows that the musicians’ income increase is due to increased income from concerts, various collection agencies and stipends from the government in the period from 1999 to 2009. During the same period, record sales have decreased by about 50%. The fall in income from record sales is less important for the musicians, however, since, on average, they only receive 15% of record sales, whereas they receive on average 50% from concerts and 80% from collection agencies (who collects provisions from radio play and other uses of the artists’ productions.)

– In the interviews we have done with a number of musicians and music producers, the musicians say they are losing money on digitalization, but the numers show that it is the record companies, not the artists, who are losing, says Bjerkøe og Sørbo.

– The fall in record sales also means that record companies are becoming less important as launchpads for new artists, and that records to a larger degree become “business cards” – i.e., a marketing tool – to attract audiences to concerts.

Espen Andersen, associate professor at the Norwegian School of Management, has been the faculty advisor for the thesis. He thinks the results show that artists in the future will have more of their income from concerts and by being played on the radio, TV or Internet streaming services. Musicians will also, to a larger extent, have to take responsibility for their own marketing. The future of the record companies is uncertain and they will need to redefine their role in the music industry.

Facts:

  • Income from concerts has increased, on average, 136% from 1999 to 2009
  • Income from collection organizations such as TONO, Gramo and others has increased 108% from 1999 to 2009
  • stipends and other supports from the government has increased 154% from 1999 to 2009
  • The number of registered active musicians has increased by about 28% during this period
  • All figures have been adjusted for inflation.

For questions, please contact

  • Richard Bjerkøe, +47 9181 8686, rbjerkoe@gmail.com
  • Anders Sørbo, +47 9284 0098, anders.sorbo@no.experian.com
  • Espen Andersen, +47 4641 0452, self@espen.com
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