Record Labels Invest Us$4.5 Billion In New Music
Record companies have defied the global economic downturn to invest US$4.5 billion annually in artists and repertoire (A&R) and marketing, according to a comprehensive new report from IFPI on the changing economics of the music business.
Record companies remain the primary investors in artists, maintaining A&R spend despite declining overall revenues in recent years. Labels spent US$2.7 billion in 2011, only marginally down on 2008 (US$2.8 billion), despite an overall decline of 16 per cent in the trade value of the industry globally over the same period. Revenues invested in A&R increased from 15 to 16 per cent of industry turnover between 2008 and 2011.
Music companies invest a greater proportion of their global revenues in A&R than most other sectors do in research and development (R&D). Comparisons show music industry investment exceeding that of industries including software and computing (9.6%) and the pharmaceutical and biotech sector (15.3%). The comparisons are based on the European Commission’s 2011 EU Industrial R&D Investment Scoreboard.
Two new surveys, conducted in the UK and Germany in 2012, show more than 70 per cent of unsigned acts want a record deal, with marketing leading the perceived benefits of record company support.
Investing in Music is published by IFPI, representing the recording industry worldwide, in association with WIN, representing independent labels internationally. With fresh data and scores of case studies, the report outlines the evolving and enduring partnership between labels and artists in the digital world.
Frances Moore, chief executive of IFPI, says: “Investing in Music highlights a simple truth – that behind the highly visible world of artists who touch people’s lives there is a less visible industry of enormous diversity, creativity and economic value. This report shows the role record companies, major and independent, play around the world in discovering, nurturing and promoting artistic talent.”
There are more than 5,000 artists signed to major labels’ rosters, with tens of thousands more signed by independent labels. One in four artists on labels’ rosters is a new signing, highlighting the role of fresh talent as the lifeblood of the industry.
Alison Wenham, chair of WIN, says: “Today, the relationship between the artists performing music and the investors supporting them has subtly changed and is continuing to evolve. The traditional model of significant advances and marketing support from larger record companies to artists remains widely in place, but there is now a greater emphasis on partnership, shared skills and shared revenues.”
Source: IFPI
