While there’s plenty of reasons to be optimistic about the future of Australian live music, especially considering the great crop of artists we’ve seen pop up in just the past 12 months, it seems most of those reasons aren’t financial.
According to a recent audit of the local entertainment industry by professional services network PricewaterhouseCoopers, the live music market is readying a $13 million growth spurt in the next five years.
As The Music Network reports, PwC detailed their findings in their 14th Australian Entertainment and Media Outlook, which offers a five-year forecast for ad revenues across 11 industry sectors. While on the surface a growth spurt looks positive, it’s less so when we crunch the numbers.
First up, let’s take a look at the data. PwC project that despite the fact that the Australian music festival bubble has well and truly burst, the live music market will grow from $807m, where it sits presently, to $820m in five years.
They’re also predicting an increase in the growth of streaming, which they predict will account for almost a third of digital music revenues by 2019. Physical sales, however, will predictably decline, falling from $245m today to $131m by 2019.
Digital sales will do little to offset the decline in physical sales. According to PwC, digital sales have largely plateaued, and as Tone Deaf previously covered, they’re becoming increasingly cannibalised by streaming.
However, the digital frontier will come out the big winner of the Australian advertising market in the next five years. Internet advertising is set to account for more than half of the total market by 2019.
In fact, the sector as a whole is moving closer towards digital domination. PwC predict local ad spending on media will be $16bn by 2019, with internet advertising set to represent $8.2bn, or 51 percent, of paid marketing spend.
Megan Brownlow, Editor of PwC’s Australian Entertainment & Media Outlook, told The Music Network declines were due to a subdued economy and continued industry challenges. However, non-traditional, digitally-supported strategies are becoming vital to keeping business going.
“Look at what the traditional television and radio companies are doing with streaming services, or the agencies with brand-funded content – all of these are digitally supported but they represent much more fundamental shifts in business model,” she said.
The print sector has one of the most worrying outlooks. Advertising revenue from newspapers is projected to fall from $1.93bn this year to $1.47bn in five years, marking a 23.8 percent drop. Revenue from magazines is also expected to drop by 8.7 percent.
But while live music seems to be one of the sectors projected to experience growth, the future is not as rosy as it appears to be. For starters, an increase of a mere $13m over a five-year stretch is hardly reason to celebrate.
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Furthermore, if the live music sector in Australia does indeed see a growth of $13m over the next five years, it means the industry is actually going backwards when we account for the rate and impact of inflation.
For example, an Australian live music market valued at $807m five years ago would be worth just over $916.5m today, accounting for the average annual inflation rate of 2.6 percent during that period.
If an increase of $13m is all that’s expected of our live music market over the next five years, we may actually be going backwards and not forwards. It seems the cooling festival market will impact the industry more than we thought.
However, PwC’s entertainment and media industry leader, David Wiadrowski, is optimistic about the entertainment sector’s future overall. He says now is the time for traditional players to adopt a ‘start-up mindset’ and innovate their way into growth.
“Our own research shows the Australian start-up sector has the potential to contribute $109 billion, or four percent of GDP, to the economy by 2033 – so we know the opportunity is there, the question is how you apply that start-up thinking across the sector,” he said.
