Download Invisible Exports - the creative industries

Invisible exports
and the creative industries
Invisible exports
• Visibles: tangible goods sold overseas
• Invisibles: anything else that brings money
into the country
• services
• earnings on overseas investments
• transfers of funds between governments
• Export of goods £188bn services £67bn (2000)
• UK has second highest value of invisibles after
USA
Export earnings from services
29%
32%
Travel and tourism
Financial services
Royalties
Consultancies
Film/TV/advertising
Education
Other
4%
3%
7%
6%
DTI (1992)
19%
The Creative Industries
• The creative industries in the UK
generate revenues of around Ł112.5
billion (more than farming or mining)
• employ some 1.3 million people.
• Exports Ł10.3 billion over 5% of GDP.
• In 1997-98, output grew by 16%,
compared to under 6% for the economy
as a whole. http://www.culture.gov.uk/creative/mapp_overview.htm#
• Strong intellectual component
• earnings from royalties and rights
• Factors needed for success (DCMS)
• Education for creative and business skills
• intellectual property rights protected against
piracy
• removing trade barriers
• private and public investment
– role of state subsidies in export success eg Les
Miserables
The Music Industry
• Market Attractiveness
• Size
• UK revenues £4.6bn pa inc £1.3bn export earnings
• UK has 7.6% of world retail sales - 3rd after US & Japan
• biggest growth in E Europe, L America, Asia
• Growth
• 10%pa 1987-1996 but now stagnating
Demand Factors
• In 1998 UK made 22% of top 100 European hit singles
and of 31% of hit albums. (US had 21% and 28%)
• Performance in the US market has been relatively poor
recently due to the strength of local musical product eg
country music or rap-influenced metal
• Increased success of domestic repetoire in many markets
• Average 66% sales are home-produced artists
• CDs now 92% of all sales
- era of format-change fuelled growth is over
• 50% of UK sales are to under 30s but older market spend
is growing.
THE SUPPLY CHAIN STRUCTURE
OF THE RECORDING INDUSTRY 1
THE SUPPLY CHAIN STRUCTURE
OF THE RECORDING INDUSTRY 2
Competitive forces (‘Porter’s 5’)
Piracy
Parallel imports
High cost/risk of
developing new
talent
Domination
of 5 majors
DADs, Mini-Disc
MP3 post-Napster
Multiples
Supermarkets
mail-order/on-line
Factors needed for success
• Investment in A&R (13% of revenue)
– major pop album costs £1m inc promotion
– a few hits subsidise losses on most releases
– too many safe ‘format bands’?
• Product portfolio/Back catalogue
– over-reliance on ageing cash cows?
• Control of channels
– e for emancipation? Napster
– Or another oligopolistic stitch-up? Pressplay, MusicNet
•
Observer 28/10/01 ‘Net music strikes a bum note’
• Technology
– reduced barriers to entry?
– DJs the new rock gods
• Market appeal
– very short PLC
– lifestyle or fashion statements
– niches to mainstream
• MoS v EMI
http://www.emirecords.co.uk/
http://www.ministryofsound.co.uk/