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Building Bridges: Music, Methods and Madness

First, a list of handy-dandy resources for the do-it-yourself kinda researcher that Jen Laengert from TMKO — a music and entertainment law firm in Toronto — nicely compiled for me and which I have augmented with a few other sources. So, without further adieu, here’s a list of some useful resources for doing research and analysis of the Music and Concert Business in Canada1, although you’ll need plenty of judgement and more than just this useful list to be successful.  I wish you well.

The second thing I want to stress is just how damn difficult it is to cobble together meaningful and accurate data that covers a reasonably long period of time, say since 1998 or so. Time is of the essence, because you want to capture durable trends, rather than exceptional years, which by definition are anomolies. That is, they stand out because they are atypical. And by durable trends, I mean nothing less than ten years, and the more the merrier is a great principle to lean on.

The music industry is and has always been notorious for picking and choosing years according to whatever suits their interest. So, for instance, in our own time, the world’s two leading music industry lobby groups — the Recording Industry Association of America (RIAA) and the International Federation of Phonographic Industries (IFPI) — like to choose 2004.

Click on the two links that I just gave you for the RIAA and IFPI, and you’ll see what I mean. You can also go to your local branch of these international operations, like the Canadian Record Industry Association (CRIA) here in Canada, and see pretty much the same thing.

So why is 2004 so important? Because it was a historical all time high, and the slope down afterwards for ‘recorded music’ sales is tremendously steep by any measure.

And that’s only part of it, too. The other part is figuring out just what you want to measure, and how you’re going to do it. The industry likes to focus on record sales: I think we should cast the net wider.

But casting the net wider is hard to do. Now why’s that you’re no doubt asking? Well, that’s because some data is more available than others. Remember those 14,600,000 GH (Google Hits) for “the death of music industry” phrase? Go ahead, try it yourself and take a look at how many have good, accurate data to back them up. Lots. No problem finding that.

But it’s not all that easy either. For example, take what Stats Canada calls Integrated Record Production/Distribution. Before 2005, it was a massive category containing cd and other format sales by Canadian and foreign musicians, the sales of masters, some licensing fees and royalties, and a few other things. After 2005 it was made tidier, but still not consistent with what, in the biz, is referred to as the ‘recorded music sales’.

So, you have to extract the items you need to build just that, and you’ve got to build a bridge between the years on either side of the ‘break’ in Stats Canada’s data set (i.e. before and after 2005 when Stats Canada changed its method). You can do it, but you have to use judgement, translation, and extrapolation — and you better be willing to tell people how you did it.

I know, I’ve been talking with Stats Can people over the past few days. I love Stats Canada people, really I do. Mostly because I’m not a stats kinda guy but I do believe that they are very, very useful from time to time. Sometimes I even like to dabble in this stuff myself. Like now.

I just received an incredible letter, an email actually, from the director of some division or another at Stats Canada that has just reiterated to me the importance of ‘The Break’ in years and concepts, noting as forcefully as he probably good whilst still remaining civil that Stats Canada does not condone the use of data ‘across the break’. The Break, you see, is inviolable.

But if I follow Stat Canada’s ‘break’, I demolish my 10 year rule, remember? Sheesh, talk about a cascade of conundrums.

Well, I’m not the national statistician and I have a bit more leeway than they do when it comes to making these kinds of choices and judgements. And I understand full well why they do what they do. They’re NAICS based, which stands for the North American Industrial Classification System — a special set of codes used to pigeon hole every measurable segment of the economy in North America that allows you to compare what’s going on in Tijuana, Toledo and Toronto. It works for them, but not always for me.

Cuz I wanna know, for instance, about concert and live music entertainment. I know that Live Nation is huge in this field, but as the owner of TicketMaster it sells tickets, and thus dervives revenue and income from sporting events, dinner theater, dance troupes at the NAC, the Blues Fest, and concerts at the SensPlex. The NAICs category for it is 71112 and here’s the signature publication from Stats Canada for it.

It’s great, as far as it goes, but because it contains horse racing and hockey games, I can’t use it to get a ‘pure’ number for concerts. I gotta dig, and so will you if you wanna do this stuff. You’re gonna have to go further, though. You might look at the Annual Reports of the two biggest concert promoters in North America, Live Nation and AEG, as I indicated earlier. There’s other sources on the ‘handy-dandy list’ introduced above, too.

Now, what if you want data for, say, online digital sales, ringtones and publishing rights besides just ‘recorded music’ and ‘concerts/live entertainment’? Good luck.

You’ll increasingly find material available for ‘online digital sales’ covering ringtones, internet downloading stores, and other streaming music services. Socan’s Financial Report in Canada is on my handy-dandy list introduced above, and is a good source to consult for these.

The annual reports of the telephone companies are good on this as well. Apple’s annual reports are excellent. The fact that it dominates one-quarter of online music sales also gives you a good handle on the total size of the ‘online digital music sales’ market as well. I recommend it highly.

Mapping the upward swing of its iTunes store since it first started in 2001 into the nearly $5 billion line of business in 2010 (see p. 81), and looking at how much the sale of music, movies, apps and tv episodes now contributes to its bottom-line, is also an interesting and revelatory experience. Indeed, iTunes alone now accounts for just under 8 percent of Apple’s business. By my calculations, Apple actually accounts for somewhere around 7% of ‘total music industry’ revenues worldwide. That’s why it’s such a playa.

Ultimately, this stuff is incredibly fascinating; it’s also incredibly important. Lives actually hang in the balance, particularly for musicians. I shared my Globe & Mail piece for next with with a big shot music and entertainment lawyer, an old friend of mine. He was livid. Did I want them to eat crow?

Musicians, like the ones I grew up on the fringes of watching and deeply admiring, like the friend I’m referring to now, have always had a really hard go at it when doing anything more than just trying to have fun. For those who try to make a living out of it, its a hard-scrabble gig and few make it. Even excellent ones, like Canada’s Ron Sexsmith, who are world renown for the quality of their music, lyrics, sensitivities and sensibilities often have to scramble just to survive, let alone thrive.

No, I don’t want musicians to eat crow, but cavier. Well, seriously, I have to hold back on the evidentiary details for the time being, but I’m convinced basically that the pie’s getting bigger and there’s more than enough to go around.

Pandering to the ‘sky is falling’ crowd will not only sell out on the basis of a faulty picture of reality, but sacrifice too much else to in order to shore up a floundering set of industrial arrangements set up a century or more ago and which may need to be completely refashioned. One of the first things to have already taken a hit in many countries around the world that have adopted new copyright laws on the basis of the ‘death of music scenario’ has been our freedom to play with the music. A second has been the open Internet, as ISPs and search engines are turned into gatekeepers and ‘content surveillance cops’ (also see my earlier Rogues, Pirates and Bandwith Bandits post).

Also see this excellent report by London School of Economics Professors Bart Cammaerts and Bingchun Meng to get a sense of how badly things have gone in the UK after new copyright legislation, the Digital Economy Act, was rammed through Parliament after only two hours of debate.

I also think that too many in the biz have had their eye on punishing litigation and the dictates of Wall St. or Bay St. and have been all too willing to sell out the craft while cashing in; now some of those ‘guys’ — EMI, Warner, Universal, etc. — gotta pay. Don’t shed a tear, I say, but also keep an open mind and after digging and digging, make sure you got it right.

Otherwise, the guys from Stats Can will be sending you and email warning you to ‘mind the Break’. And this time it won’t be about the break in the data set, but in your integrity on account of the fact that you may have marshaled all the evidence in the world but still be morally stupid because you’ve thrown the artists and musicians amongst us under the bus. Wow, how’s that for a lesson in ‘academic ethics’?

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