Research

Valuing Live Music

Economic Value

Several attempts have been made to place a dollar value on Australian and international live music industries. These studies typically focus on statements of economic impact, such as the increases in spending and employment associated with participation and patronage (CNV, 2014; Deloitte Access Economics, 2011; Ernst & Young, 2011, 2014; Meyhoff, Krohn, & Sjøvold, 2014; Newton, 2012; Page, 2010; Portnoff, Nielsén, & Sternö, 2013; Pricewaterhouse Coopers, 2014; Rogers, 2013; SGS Economics, 2011; Spahr, 2013; Worden, 2010).

The headline figures reported by many of these studies describe the volume of live music transactions such as ticket sales and, in some cases, related consumer spending on food and beverages. The figures for each country in Figure 1 show transaction volume figures for Australia and other live music markets as reported in a number of recent studies.

figure1

Problematically, such valuations inevitably overstate the fiscal benefits of the sector by failing to account for the substitutability of profit. For example, when an internationally touring artist who brings their own production visits a region, the volume of ticket transactions is a poor proxy for community benefit, when the vast majority of profits are enjoyed off-shore.

The more robust of these analyses apply the widely accepted economic input / output method to estimate the economic contribution of the live music making industries. For example, in Australia, the gross value added (GVA) to the economy by live music was estimated to be 652 million dollars (Ernst & Young, 2011). More recently in the United Kingdom it was estimated to be £789 million (UK Music, 2014), or AU1,466 million dollars. Related approaches to valuing live music (or, more broadly, the creative industries) include the works of (Ansell & Barnard, 2013; Bakhshi, Freeman, & Higgs, 2013; Higgs, Cunningham, & Bakhshi, 2008; Higgs, Cunningham, & Pagan, 2007; Sigurðardóttir, 2011; Williamson, Cloonan, & Frith, 2003).

All of these findings need to be treated with similar caution, as they rarely account for the fact that if consumers didn’t spend their money on live music, they would spend it on something else. Counter-methods that might mitigate this such as opportunity costing and/or equilibrium modelling are not evident in the studies cited. Consequently input / output analysis on its own is largely discredited as a basis for decision making in policy (Australian Bureau of Statistics (ABS), 2010b; Gretton, 2013).

More importantly, nearly all of the economic modelling of live music carried out to date is limited by a reliance on producer estimates of expenditure. In most industrial settings—such as in the recorded music industry where a finite number of producers operate via a limited, densely clustered number of sales channels—this is an acceptable method of data collection. Live music, on the other hand, is not a well-defined (or easy to define) industry.

By asking a sub-set of producers for the motivating data, analysts are de facto limiting the scope of their work to live music activities that fit within their own conception of what constitutes live music and/or convenience sample. For example, the French study cited in Figure 1 was limited to the pop and jazz sectors; the North America research covers only the top 200 grossing tours, excluding festival and club events; and the Australian, UK and Italian figures only reference peak body or specifically licensed or registered venues (Laing, 2012).

Many of the recent Australian studies on the economic impact of live music are affected by similar limitations. Newton (2012), for example, argues that lists of live music venues used by Ernst and Young (2011) and Deloitte Access Economics (2011) did not align with those identified in NMIT’s annual ‘State of Play’ reports; and that the modelling conducted by Ernst and Young and Deloitte likely understated the scale of live music activity. This was attributed primarily to differences in sampling methods, which may have been compounded by the 2011 reports relying on static venue lists generated from the Australian Performing Rights Association’s (APRA AMCOS) dynamic database. To address his concerns over sampling accuracy, Newton and 100 volunteers undertook a census of Melbourne venues that, combined with data from Live Performance Australia, produced a much more accurate estimate of the scope of live music activity in the city. A key limitation of Newton’s research however is that it is only descriptive of volume and does not attempt to value the economic impact.

Another significant issue is one of scope, in that the sum of live music consumption in the economy is invariably under-reported, not reported or not available to producers. Licensed venues and ticketing agencies are often the only source of data available to economists working in this space, and these have been shown to provide an incomplete picture of live music motivated transactions (Newton, 2012). Additionally producers are unlikely to be able to reliably account for the secondary markets that exist within their venues, such as ticket scalping and merchandise sales.

Cultural and Social Value

Several researchers have argued strongly for the need to account for social and cultural benefits alongside the economic contributions of music and other art forms (Arts Council England, 2014; Behr, Brennan, & Cloonan, 2014). Although difficult to measure directly, these benefits are real and may manifest in a number of ways including improved productivity, a greater sense of wellbeing and increased social capital (Carnwath & Brown, 2014).

The link between performing arts experiences and health and wellbeing is well established (Carnwath & Brown, 2014). Music in particular has been shown through clinical research to effect immunological response, although more research is needed into how this functions (Fancourt, Ockelford, & Belai, 2014). Music is often used as a mood manipulator by advertisers and retailers (North, Hargreaves, & McKendrick, 1999), and people frequently use music for ‘emotional self-regulation’ (DeNora, 2000). Active engagement with music has been shown to increase positive perceptions of self, which in turn leads to greater motivation, manifesting in turn in enhanced self-perceptions of ability, self-efficacy and aspirations (Hallam, 2005, 2010).

It has also been demonstrated that school-age students who participate in musical activities are more socially active, and engaged in conversation with adults (parents, teachers et cetera) more readily. This suggests that the higher social functioning of musically active students is likely to result in higher self-esteem and, therefore, increased motivation and self-efficacy (Broh, 2002; Lillemyr, 1983; Sward, 1989). One implication of this is that experiencing live music may also have a positive benefit on productivity.

Screen Shot 2015-08-11 at 6.58.57 pm

The benefits of live music participation are not limited to young people and students. Live music performance has been shown to alleviate apathy and improve quality of life among dementia subjects (Holmes, Knights, Dean, Hodkinson, & Hopkins, 2006); and an experiment into the effects of the participation of seniors in an ongoing chorale group observed that positive health outcomes occur when older individuals are in situations that provide meaningful social engagement with others (G. D. Cohen et al., 2006).

Similarly, a long-term Swedish study into the correlation between attendance at cultural events (such as live music performances) and survival rates has further shown that those who frequently attend such events live longer than those who rarely attend (Bygren, Konlaan, & Johansson, 1996).

Indeed, in a follow-up report, it was stated that, “People who rarely attended such events ran a nearly 60 per cent higher mortality risk than those attending most often, after adjusting for a range of possible confounders” (Johansson, Konlaan, & Bygren, 2001).

The same study examined the impact of music-making on mortality rates, with those who rarely participated in music-making registering a slightly higher mortality rate than those who sometimes participate (Konlaan, Bygren, & Johansson, 2000).

Live music has also been recognised as contributing to a sense of community, meaning and attachment to place (S. Cohen, 1999; Gallan & Gibson, 2013; Long, 2014). Live music is a communal event that incentivises like-minded individuals to gather, and “provides a sense of community that is not present when listening to music alone” (Black, Fox, & Kochanowski, 2007). The informal nature of the industry “blurs the business-social divide,” (Watson, 2008) levelling the importance placed on social and business relationships to an equal standing. This is thought to be true of cultural and creative industry workers in general; as the long hours, socialising with other creative workers and the spill over between work and play generates a strong community (Pratt, 2000).

A societal risk of such attachments is that the reliance of music scenes on social and subcultural capital can lead to systems of exclusion, as music scenes take on aspects of tribalism, which might make participation in these scenes difficult for outsiders (Harrison, 2010). It is generally argued, however, that the negative effects of group dynamics generated by music scenes are outweighed by the positive contributions to a sense of community and belonging that live music events create (Garrett, 2010; Hoffman, 2012; Welch et al., 2014).

The cultural value of live music, and in particular the venues where live music occurs, can be observed in debates around cultural policy, licensing regulations and the residential development and gentrification of inner-city suburbs where live music occurs (Gibson & Homan, 2004; Holt, 2013; Homan, 2010; Lobato, 2006; Shaw, 2009). There is clear evidence that cities such as Austin, Manchester and New Orleans, benefit from their reputation for live music through tourism and related flowthrough to their local economies (Flew, 2008; Homan, 2008; Long, 2014). Place-based symbolic capital encourages migration of consumers and producers, as the appeal of a vibrant live music scene draws creative individuals and music lovers from other regional and urban centres.

In Australia the cultural value of live music production to governments has been signalled through the establishment of live music precincts and agent of change legislation (Homan, 2008, 2011b). Protests around the closure of iconic and long-established venues demonstrate that sites of live music performance and heritage are of some value to audiences of live music, and probably ‘non-users’ alike. For example, the SLAM rally of 2010 to protest the closure of the TOTE (a popular live music venue) remains the biggest cultural protest in Australia’s history (Walker, 2012). How this might be quantified in the context of Australia’s live music sector has not been sufficiently articulated, however, recent research is beginning to provide insight into how this can be achieved.

Six years into a longstanding investigation into the value of the live music industries in the UK, Behr, Brennan and Cloonan (2014) argue that qualitative data is essential for providing a complete and nuanced picture of the value of live music, and in particular “those areas in need of support” (p,3).

Such studies highlight, if tacitly, that the cultural, social and economic values of live music are interdependent, insofar as the cultural value of live music creates and depends on its economic value, and both are underpinned by its social function (Sedita, 2008).

They also demonstrate a maturing understanding of the complexity of the markets for aesthetic labour, and recognition that such complexity cannot always be captured or represented through traditional economic analysis. Earl’s (2001) argument that economic analysis of live music in Australia has not sufficiently engaged with the measurable and quantifiable, cultural and social benefits remains undisturbed by the passage of more than a decade. Their at best limited engagement with qualitative producer and consumer accounts of live music activity represent an incomplete picture of the live music sector.

At What Cost?

Much existing research argues convincingly that live music makes a valuable and positive contribution to the community. However there is almost no acknowledgement, let alone critical consideration, of these otherwise reasonable benefits in light of the financial and social costs of production. These include basic cost of producing live music as well as broader costs borne by society such as those associated with regulation, policing, hearing loss, excessive drinking, use of illicit substances and violence.

Acknowledgment of these costs is implicit, if mostly unquantified, in research examining the night time economy, where the discussion tends towards issues of costs, regulation and enforcement (Flew, 2008). Yet such studies rarely distinguish live music from recorded music venues, and are silent on the attribution of cause in this regard. For example, despite evidence of higher incidences of intoxication and drug use among nightclub and electronic music event patrons (B. A. Miller, Byrnes, Branner, Voas, & Johnson, 2013; P. Miller et al., 2014), similar studies of live music patrons are insufficient and inconclusive. One study in Glasgow identified the use of recorded music could both positively and negatively influence patron behaviour (Forsyth & Cloonan, 2008), but did not examine primary use live music venues. A small number of authors have also discussed the health risks associated with noise exposure, alcohol consumption and illicit drug use at music festivals from the perspective of treating doctors (Hutton, Ranse, Verdonk, Ullah, & Arbon, 2014; Zhao, Manchaiah, French, & Price, 2009); however population data describing the prevalence of these risks among live music patrons is scarce.

In Australia government and community concerns over the safety of after-dark audiences have been expressed through changes to licensing regulation aimed at curbing anti-social behaviour and alcohol-related violence. Live music venues suffer from de facto inclusion in regulatory reforms designed to address high-risk drinking behaviour such as violent assaults (Homan, 2010), even though a growing body of research suggests there is no empirical evidence that identifies live music as a cause of such behaviour (Giesbrecht, Bosma, Juras, & Quadri, 2014; Green & Plant, 2007).

Other costs identified, but again unquantified in the available literature, relate to business and labour practices (see, for example, Cloonan (2011)). The aesthetic labour of musicians is also acknowledged as precarious and dependent upon significant investments of social and cultural capital (Hracs & Leslie, 2014). Relatively few performing musicians are able to generate a living wage from their music, with the median income for practicing musicians in Australia calculated at just 7,200 dollars per year (Throsby & Zednik, 2010). This suggests that a significant proportion of the costs of live music performance may be subsidised by other industry.

A critical appraisal of the impact of live music must therefore connect the economics to the increasingly understood cultural significance of the activity, without glossing over the financial and social costs of production. This report addresses many of these limitations through robust and holistic primary data collection and the ultimate application of a cost-benefit framework to deliver a more complete picture of the economic, social and cultural value of the live music industries in Australia.