Music Economics

How Is Music Funding Being Affected?

Under the Trump administration, massive budget cuts have been made for the arts. What does this mean for music?

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Photo: Don Emmert of Getty Images

Schools

Public schools that are centered around music and the arts like The Fine Arts Center in Greenville, SC will have a much harder time getting the funding they need.

I went to high school at The Fine Arts Center and while I was there, former South Carolina Governor Nikki Haley cut $1 million from the state’s support of the arts. So during my last couple years at FAC we had many more fundraisers than we had in the past to make up for the money we used to rely on.

The NEA

The NEA, or National Endowment of the Arts, is a federal organization that supports all genres of music through performing ensembles and music presenting institutions. Their support ranges from professional symphonies to school ensembles.

In the past ten years, they have donated almost $40 million to help facilitate live performances and tours.  Needless to say, the NEA is essential to helping people chase their passions, especially if they are at or near the poverty line.

In part of Trump’s $1 trillion budget cuts, the NEA will be dramatically changed.  In response to this, Neil Portnow from The Recording Agency wrote to Congress, pleading for Trump to continue funding the NEA.

“Love of music and the arts brings us together, and celebrates the richness of American culture and our spirit of curiosity and creativity. Music and art serve as one of America’s greatest exports, and support jobs for creators in cities, towns and rural areas across the country. The White House proposal to eliminate funding for the National Endowment for the Arts is shortsighted and alarming.

-Neil Portnow

The Music Industry’s Response

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In December, nineteen different music organizations united to express their concerns to President Trump through a letter.

Sources:

Andrew Rafferty of NBC News

Jessica Whitman of Entertainment Weekly

Klisala Harrison, The Relationship of Poverty to Music

National Endowment for the Arts

Featured image courtesy of Bryan Better from Getty Images

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Music Economics

How Do Americans Find Music?

by Sophie Harris

People may spend the most money on live music like I said in my previous post, but how do people find the musicians they want to spend money on?

Through online stores like iTunes or streaming sites like Spotify.

But how did we get here?

And what is the economic controversy surrounding these places?

Napster

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Before the 1990s, people were mostly limited to radio if they wanted to discover new music.  In 1999, however, everything changed.

Brothers John and Shawn Fanning and investor Sean Parker had a very different concept of Napster than what it turned out to be.

Napster’s purpose was peer-to-peer (P2P) MP3 file sharing. So if you were to discover a new song that you’re obsessed with, you can send the file of the song to your best friend for free instead of waiting to hear it on the radio again or buying a cassette of it and sharing it.  Napster had thousands of files you could choose from for free across every genre.

It seemed like a blessing that all the songs were free, but the problem was exactly that. It may not seem like a problem on the surface, but the fact that 80 million users were sending each other music for free was an infringement on music copyright laws. Musicians across the globe were upset because Napster caused them to lose a significant amount of profits.

“We’re elated. Sharing is such a warm, cuddly, friendly word … this is not sharing, it’s duplicating.” -Metallica drummer Lars Ulrich

Napster was sued and shut down in 2001. But its legacy made a huge impact on the music industry, thanks to Steve Jobs.

iTunes

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Jobs discovered through Napster that people liked downloading individual songs instead of waiting to hear them on the radio or buying an entire album where they didn’t like half the songs.

Two years after Napster shut down, Jobs opened iTunes as a way for people to still be able to download individual songs online, but while giving the artists the money they deserve. Customers could buy individual songs for 99 cents (nowadays for $1.29).

Streaming Sites

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Streaming sites like Spotify are different from iTunes. With streaming sites, you pay for a subscription instead of individual songs. The artists are still payed for their music through the amount of times their songs are played.

Unfortunately, artists aren’t paid as much through Spotify as they are through iTunes, but Spotify is interactive. Based on your listening habits, Spotify can generate suggestions of artists you’ve probably never heard of but will most likely fall in love with. That’s why streaming sites are so popular among small artists – it helps them build up a fanbase, with whom they can communicate through sites like Twitter.

Controversy

Some bigger artists aren’t fans of Spotify because they don’t need to be discovered – like 2016’s highest paid musician, Taylor Swift. Taylor dropped jaws when she took her music off of Spotify and has publicly shamed the site. Taylor equates Spotify to illegal sites and piracy:

“In my opinion, the value of an album is, and will continue to be, based on the amount of heart and soul an artist has bled into a body of work, and the financial value that artists (and their labels) place on their music. Piracy, file sharing and streaming have shrunk the numbers of paid album sales drastically.” -Taylor Swift

Despite the uprising against Spotify that caused a lot of negative attention, Spotify has made a point to prove that its model is beneficial to those who are just getting started who actually need the money for each time their songs are played.

Sources:

ABC News

Andrew Flowers of FiveThirtyEight

Anthony Bruno, Upfront: Digital Entertainment – Internet: Profits From Profiles

Jack Linshi of TIME

Lizzie Plaugic of The Verge

Mark Harris of Lifewire

Spotify

Steve Knopper of Rolling Stone

Cover photo courtesy of Roger Ho for Rolling Stone

Music Economics

How Do Americans Spend Money On Music?

by Sophie Harris

When you picture yourself spending money on music, what do you think of?

Ten years ago you probably would have thought of buying a CD to play in your car. Now, did you think of buying a song on iTunes? Maybe a subscription to SiriusXM, Spotify, or Apple Music? Or what about scoring good seats to see your favorite band in concert?

Making 50 Cents of Every Dollar

While you may think it’s more common to spend more money on iTunes, it turns out that in 2015, more than half of every dollar spent on music was spent on live events, which includes concerts, music festivals, performances in small venues, and DJ events – while one third of every dollar goes to concerts specifically.

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Infographic courtesy of Nielsen Music 360

It Adds Up

Since I am a concert photographer, I’ve been to my fair share of concerts in the past couple years. Something I’ve started thinking about is how much money goes toward huge concert tours.

For instance, tickets ranged from $25 lawn seats to $195 VIP packages for 5 Seconds of Summer‘s tour in 2016. They played over 100 shows on the tour and many of them sold out. Most of the venues they played held 15,000-20,000 people, and there were at least 500 VIP packages per show.

If you do the math, that’s about $100,000 per show of just VIP packages. That doesn’t include the majority of the tickets or any of the popular merchandise that was sold.

Where Does All The Money Go?

There’s a reason why half of every dollar spent on music goes to live music, and it’s not just artists being greedy. In fact, sometimes the artists have little control over their prices.

If you were to go on a road trip throughout the whole country with buses full of people, imagine everything you would need. Hotels, bus drivers, food, LOTS of gas, just to name a few.

But if you go on a road trip and you’re not a world-famous musician, you’re probably not thinking of huge booking fees or elaborate staging and lighting equipment (and the crew members who put them together – who work hard and deserve fair pay).

Is Live Music Important?

With all the recent budget cuts on the arts and other creative programs, it is important that music still plays a prominent role in our economy.

With the fall of physical albums and the rise of streaming sites and illegal downloading (which I will cover in the next post), live music is the key to keeping music alive in our economy.

Sources:

Aimee Cliff of The Fader

Paul Resnikoff of Digital Music News

Jacob Ganz of NPR Music News

MarketingCharts

John Vivian: The Media of Mass Communication

Cover photo courtesy of Sophie Harris Music Photography