The recent explosion in the live music sector has been well publicised. Add to that the growth in secondary ticketing, and the market looks even more healthy.
Touring might once have been a means to drive revenues of physical product. Now, physical and digital product are often used as a means to drive tour revenues.
So, is there a changing of the guard on the horizon? Can the growth of the live music sector overtake that of the recorded music industry, in terms of capturing consumer disposable income?
By ‘grossing up’ the value generated by the PRS Popular Concert and Classical Concerts Tariffs, we can posit the live sector to be worth somewhere in the region of £546m (of which PRS collects a small percentage). But this omits pubs and club performances, so the actual number is much higher than that.
A new and growing market driven by new technology and consumer behaviour is the increasingly important secondary ticket market which artists and creators are yet to reap fair reward from. TixDaq, a consultancy which specialises in secondary ticketing, views this sector as being worth between £200m and £250m in 2007, based on evidential data on ticket sales across a range of secondary exchange platforms.
Online secondary trading has grown exponentially since the launch of Viagogo, Seatwave and numerous other trading sites in the first half of 2006.
Charlie Marshall of TixDaq offers an insightful interpretation about the economics of this sector: ‘The growth in the secondary ticket market will flatten as the market becomes more transparent - ie the prices at which secondary trades take place will be naturally regulated by the economic effects of competition. However, the big question in the future will be where the primary market ends and the secondary market begins. Rights holders need to think carefully about how their inventory is priced and sold in order to maximise their own returns, rather than creating a market for others to exploit.’
The likely live music sector value is therefore approaching £1 billion - and growing. How does that compare with the recorded sector?
Between 2004 and 2006, the retail value of recorded has seen almost £300m shaved off, and now sits at £1.7 billion. At the wholesale level, (ie what goes back to the record labels, not what is spent at the till), the value just edges above the £1 billion threshold - and is falling.
In 2006, recorded music got a lot more of consumers’ disposable income than live music, but what’s interesting is that if these current trends were to continue, then the tipping point is set to take place within the next three years.
There are some notes of caution for this prediction. Digital revenues will undoubtedly improve over time and the current pace of growth in the live sector may, of course, be a ‘blip’ driven by a temporary resurgence of heritage acts.
What’s clear is that economic factors driving value within the music business are constantly changing. Ultimately, though, live and recorded music have a symbiotic rather than competitive relationship. This should ensure they are able to continue to derive value from one another rather than take value away. Rightsholders just need to ensure they get a fair share of the total pie.
Will Page is Chief Economist at the MCPS-PRS Alliance