16 Jan 2013 / Al Newstead
Study Reveals Musicians Only Derive 6% Of Their Income From Music Sales
With the end of 2012 bringing news that digital sales are on track to overtake physical sales in Australia, while major music retailers enter into their death throes, signified by HMV yesterday announcing it’s going into administration; the general picture for musicians looking to gain revenue from recorded music is a bleak one.
A new survey in the United States focussing on the sources of income of individual musicians provides an interesting snapshot that reinforces the idea that recording artists need to find additional sources of revenue looking towards the future.
As TorrentFreak reports, the new study found that among 5,000 American musicians of varying genres, an average of only 6% of revenue comes from recorded music, concluding that touring, performing, and surprisingly teaching, provide the lion’s share of financial support.
Conducted by Professor Peter DiCola of the Northwestern University School of Law, the survey questioned musicians and recording artists on an number of different topics about their income, including music piracy and illegal downloading.
Of the 5,000 involved, only a quarter say that they are hurt financially by online file-sharing, with just as many believing that it helped them through exposure and discovery – echoing a similar study from Germany last year, showing that file-sharers purchase 30% more music than other users.
Additionally, the survey demonstrated that even if music piracy results in a decrease in sales, it only impacts a small fraction of musicians’ total revenue, of which sales of recorded music is only a middling 6%.
The generally accepted view that most bands and artists make their ends meet through live performance rings true from the survey, with revenue from live shows making up 28% of total revenue, while teaching came in at second place with 22% of total share. Meanwhile the traditional sources of revenue, such as sales of merch, and money earned from royalties, sat at just a tiny portion of total revenue, as demonstrated by the pie chart below (courtesy of TorrentFreak)
Professor DiCola, who headed the study, draws the conclusion that copyright law mostly benefits high-earning artists, and the labels they’re tied to.
“Rather than providing marginal incentives to create to all musicians at all times, copyright law mostly affects the revenue of the highest-income musicians in a direct fashion,” writes Pr DiCola. “This is not a surprise, given the prevalence of winner-take-all markets in the entertainment industry.”
DiCola noted that this was not a failure of the function of copyright law, as the broad study should not “obscure the reliance on copyright for many musicians in particular subgroups,” – such as composers, writers, and music publishers.[do action=”pullquote”]“Rather than providing marginal incentives to create to all musicians at all times, copyright law mostly affects the revenue of the highest-income musicians in a direct fashion.” Professor Peter DiCola[/do]
Though DiCola’s investigation represents a smaller portion of American artists, the findings certainly reflect the interesting changes that are ongoing throughout the music industry.
Here in Australia, recent studies show that music is cheaper to purchase now than it’s ever been, with APRA | AMCOS revealing late last year that the more cost-effective digital download has become the primary revenue for Australian artists, seeing a 14% growth in royalties to $237 million.
While these figures might show that Australian musicians are benefiting comfortably from the sales of recorded music, it’s not unlikely to see those fortunes shift, especially given an American study indicating that Australians download music illegally more by population than any other country.
Just as Australia is set to follow in the path laid by the US and the UK with digital sales overtaking physical sales, it’s perhaps a matter of time before the issue of where artists source their revenue becomes a heated topic. As it has abroad, where the issue of the increased success of popular music streaming services – like Spotify, Deezer, and Pandora – now accounting for a $1 billion industry, taking a bite out of music piracy by providing convenient, legal alternatives; while artists scratch their heads wondering why its not helping to better line their wallets.
Indie darlings Grizzly Bear making an excellent case study for the way that even the most popular artists are missing out on the financial successes of those making use of their music, while the friction between artist, label, and music providers reached bloody new heights in America, where musicians have rallied against internet radio streaming service Pandora for their war on songwriters in their lawsuit against US royalties body ASCAP.