Claims that the music industry could actually be recession proof come from historical precedents that show the entertainment sector stays strong during economic slowdowns. You can make a strong case for the value of escapism when reality is falling short. The question we’re trying to answer is whether or not the entertainment sector, and music in particular is immune to economic downturns, and if this trend has remained true in modern times. To look at the issue in depth, a special focus will be made on the viability of concert revenue in this climate, as well as drawing comparisons between the music and film industries.
Worries persisted about the impact the recession would have on mainstream musical talent. Overall, it seems that concert-goers are still willing to shell out the money to see performers in person; however we need to look closer at who was actually able to draw the most fans. The top five North American music tours consisted of (in order); Britney Spears, Fleetwood Mac, Elton John & Billy Joel, The Eagles, and Celine Dion. Their profit ranged from $42 to $61 million dollars for the fiscal year of 2009. Other acts such as AC/DC (who made $150 million dollars last year) were able to attract fans worldwide with a similar consistency. (Pollstar) The clear amongst top acts is that fans are flocking more towards well established acts than relative newcomers. This claim is further supported by additional data that shows that U2 and Madonna are the big winners as concert numbers from later in the year and early 2010 are taken into considerations (Reuters) A possible explanation could be the simple fact that many of these veteran performers have die-hard fan bases that will come out and support them even in troubling financial times.
Looking at the music industry as a whole, we can see that the economic downturn does not affect everyone equally. Working performance artists were perhaps some of the hardest hit segments of the music world. Most of the time, the only people willing to shell out the amount of money required to see a live non-star act perform are tourists. An example can be seen in the jazz clubs of New York like Blue Note. (Jazz.com) as tourism declines with a failing economy, these performers find themselves with empty venues and emptier bank accounts.
Despite the apparent ability of the music industry to stay afloat in tough times, another perspective on the issue paints a much different picture. The case can be made that the music industry is actually in a recession that far predates the economic downturn of present. Music sales have been steadily declining since the year 2000, and sales have stayed in the same pattern despite the recent recession. This suggests that the music industry is having problems that are completely unassociated with the recession.
When people look at the numbers and see no significant break from the recent pattern, they shouldn’t be applauding the industry’s ability in staying consistent; they should ask why the pattern exists in the first place. Worldwide, music sales were down 8.3% in 2008 compared to that of the previous year. The number is even worse when we only look at physical sales. (International Federation of Phonographic Industry) These numbers take the entire year into account. As the effects of the recent recession were not completely felt until early 2009, we can see that the sector was already exhibiting poor economic performance.
Executives in the music industry are mixed in their views on how the recession will affect sales. However, the more optimistic people interviewed suggest that music will continue selling due to its relatively lower cost in comparison to other forms of entertainment. Rich Bengloff surprisingly thinks that customers would be willing to ‘stay home and listen to a music CD’ rather than go out for a night at the movies due to the marginally higher cost. Ingrid Chung believes that the lower cost of CD’s would make is easier for consumers to continue buying music, but doesn’t touch on the even cheaper cost of downloading music. (Billboard)
While the music industry presented a mixed bag of economic news with strong digital and concert sales, and simultaneously dwindling physical sales, the film industry presents us with a much more profitable entertainment medium. A common argument with regards to the supposed strength of the entertainment industry is that an escape from harsh reality is something people are still willing to pay for under the direst of circumstances. As of late, many have pointed to the success of The Dark Knight coupled with the fact that James Cameron’s Avatar has become the highest grossing film of all time as evidence that the movie business is still thriving. There is definite truth to this as movie ticket sales reached an all time high in 2009. A large part of this success is being attributed to movies like Avatar, Alice in Wonderland, and Toy Story 3, which incorporated 3D screenings to both enhance the experience of film and have an excuse to charge much more for theatre seats. 3D ticket sales accounted for $1.1 billion in revenue last year, an astonishing 375% rise from the year before. (Michael Hickerson) The film industry was able to pre-emptively adjust to their prediction that audiences would begin to ask for more from an average night at the theatre.
Upon closer investigation, we can see that the facade regarding the music industry’s ability to stay unaltered by the recent recession is only a distraction from the larger trend of declining sales that dates back much farther. However, while the overall picture can be looked at as grim, perhaps the mixed financial news is merely a sign of a changing industry. As digital sales become the norm, and more artists turn to concert over album sales as the backbone of their financial success, can we really look at physical CD sales as all that relevant anymore? Perhaps not too long in the future counting an artist’s CD sales will be laughed at as much as counting an performers vinyl sales today. While it may not come to that point completely, it is clear that the industry is morphing with new revenue streams opening up as fast as many others are becoming irrelevant. The more successful artists may be those that can grapple with changes in industry norms just as well as they can with periodic economic downturns.
Jazz.com’s Look at the Recession’s Impact on the Genre:
Billboard’s Discussion with Financial Executives on What to Expect during the Past Recession:
An Article Making the Case the Music Industry is actually in a Longer Recession Pattern:
The Results of Pollstar’s Concert Income Analysis:
An Additional Source for 2009 Music Sales Stats:
Reuter’s Article on 2009 Concert Sales:
Michael Hickerson’s Articles on the Record Year that 2009 was for Movies: