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UNIVERSITY OF AGDER

Developments in live
music market and the
challenges concerning
these developments
ME-400 Music Business I
Muhammad Zabiullah Khan
11/13/2013

Contents
Abstract ................................................................................................................................................... 2
Music industry ......................................................................................................................................... 2
Introduction to the live music ................................................................................................................. 2
Developments in the live music industry ................................................................................................ 2
Challenges to the live music industry ...................................................................................................... 5
Technological effect on music business .................................................................................................. 5
Effect on ticketing................................................................................................................................ 5
Effect on consumers ............................................................................................................................ 6
Effect on artists ................................................................................................................................... 7
Revenue stream....................................................................................................................................... 7
Live music economy ................................................................................................................................ 8
Live music and digital media ................................................................................................................... 8
Conclusion ............................................................................................................................................... 9
References ............................................................................................................................................. 10

Abstract
Music as a business has been changed with the passage of time especially in last decades
when the digitalization occurs. The digitalization in the industry changed the whole business
model of the music business. In this paper music industry as a live performance discussed.
And the significant developments in the live music concerts and some challenges to these
developments are described. In the end the economy of the music industry and contribution of
the live music performance in the music industry has been discussed along with digital media
in a live performance. Data were collected from different articles and from the internet also
what I learned In the Music business lectures.

Music industry
Music industry consists of different parties which work together to earn money by selling
music by different means. These parties can be artist and composers, managers, lawyers,
record companies, publishing companies, distributors, retail, collection society, media and
live performances1. There have been dramatic changes in the music industry in last few years
since the digitalization of the music and digital file sharing. All the parties involved in the
music business were affected by this change (class lectures on Music business).

Introduction to the live music


Live music means that performing music art in the front of live audience. And for this,
performing artist and a venue owner come to an agreement and make a contract.
Performances are booked by a booking agency and people buy tickets either from the venue
or from a ticket distribution service

Developments in the live music industry


Live music industry has changed considerably since 1999 when Napster start digital file
sharing2.

According to the Mortimer, Nosko and Sorenson (2010) the number live

performances has changed over time especially in years 2000-2002 and fell down in 20032004. In their article they came to the conclusion that in year 2003-2004 many new artists
enter into the music industry so there was less live concerts perform by fewer artists
1

http://www.generator.org.uk/node/58
http://afinetheorem.wordpress.com/2010/11/19/supply-responses-to-digital-distribution-recorded-musicand-live-performances-j-mortimer-c-nosko-a-sorenson/
2

Mortimer, Nosko and Sorenson (2010). The tickets sold in each concert rises in 1995-2000
and fell down afterword. It also concluded that the number of tickets per concert is smaller
than the rise in the number of concerts performed. Thus, total ticket sales increased over the
period Mortimer, Nosko and Sorenson (2010). According to Krueger (2005) the average
ticket price for concerts rose 82% in the years 1996-2003. Following table shows the changes
in the live concerts over time in the US and cities covered by the artists Mortimer, Nosko and
Sorenson (2010).

Source : Mortimer, Nosko and Sorenson (2010)

After the Napster period there were growth in concert performances for both high- and lowbroadband markets, and the acceleration growth was significantly more pronounced in the
high-broadband markets Mortimer, Nosko and Sorenson (2010). Following tables shows the
compression between sales in live concerts and album sales in post-Napster period.

Source : Mortimer, Nosko and Sorenson (2010)

Following figure shows that in the year 2001-2002 the sales in live concerts out pass the
album sales. In 2003 there were a decline in the concerts but later on it gained the

Source : Mortimer, Nosko and Sorenson (2010)

acceleration Mortimer, Nosko and Sorenson (2010).


Over the last decade, there has been a shift in artists revenues. While recorded music sales
have dropped substantially, artists are now making more money in live concerts Music
Business Journal (2011).

Challenges to the live music industry


In the last decade there were lots of changes happened in the music industry and also these
changes affect the numbers of stakeholders in the industry. Some get benefit and some are
still struggling to survive in the industry. This section of the paper explains the major changes
in the music industry and the challenges faced by different stakeholders within the industry.
According to Simon et all (2010), live music industry is the least regulated part within the
whole music industry. One of the striking think in the live music industry is that how much
cash is floating, in the local level specially. It also explains that the key task of the concert
tour manager to check on how much ticket sold and how much money spent on posters and
other promotional activities Simon et all (2010).
In the early days there were four possible income sources. Thered be touring. And part of
touring would be merchandizing. People would want to buy t-shirts or something, or posters.
And then records and publishing. And now, those four things exist, but there are all these
other possibilities, too. And all these things are kind of shifting around in terms of importance
and possibilities.

Technological effect on music business


Music technology might be defined as any form of technology, which helps a musician to
make music. The impact of technology on music is overwhelming. Technological
advancements in the last century have revolutionized the way we listen to music. To be
specific, the invention computer technology has changed the way music is now produced.
Technology is the key element to change the whole music business model. It is the technology
that brings lots of challenges to the record companies and distribution companies to promote
the music legally. Due to technology copy right issues raised dramatically in the music
industry.

Effect on ticketing
When the digitization era came, it brings lots of changes along. Everything is on internet, now
the ticketing for the live concerts are available online Simon et all (2010). In Germany, online

ticket sales accounted for 11 percent of total sales in 2003 and 23 percent in 2007 Holt (2010).
Promoters can achieve new levels of scalability with online ticketing. Today, even small club
venues are using online ticketing because it is much convenient for them to handle ticket
sales, and audiences now have more search options and can choose a seat or area via a map of
the floor plan Holt (2010).
One of the problems among many in the live music industry is outrageous guarantees given to
artists by promoters to gain their concert tours. Promoters really find themselves in a very
difficult position because artists are always going to be looking for the highest payments for
their services; promoters must meet the artists demands and beat competitive offers in order
to book a live date. If they are unable to do so, then the show can be given to the promoter
with most promising offers. Therefore, these guarantees have had a direct impact on the price
of tickets, which have increased substantially during the course of the last few years.
According to Pollstar, in 2008 the average ticket price reached a record high of $67 Music
Business Journal (2011).
Secondary market is another factor that has had a significant impact on the rising prices of
concert tickets. No one wants to share their revenue with scalper. For example, if the ticket
price was set at a low price by promoters for a concert in high demand, scalper could easily
earn 100 or 200 percent profits from each ticket. For the promoter, it is clear that if people are
willing to buy tickets at the high prices from traders, then they will not be losing any business
if they increase original prices of the ticket Music Business Journal (2011). And there have
been several attempts to shut the secondary ticketing system down but so far not a very good
progress have been made, Music Business Journal (2011).

Effect on consumers
Technology brings lots of changes in the music consumers thinking as well. Now the days
gone when someone needs to pay for the whole album just to listen one song. The utmost
challenge to the industry was the invention of the MP3 file or audio compression technology.
The invention of the MP3 file only came to life between 1996 and 1999. After this time its
consumer were fully utilized and it as a medium sky rocketed. The MP3 file allowed users to
search the internet for any song they desired, it allowed them to save any music file to their
own computer, and it provided them with a method to share their own music with anyone in
the world. It also led to the invention of music sharing facilities online both legal and illegal

such as iTunes. People could now listen to any type of music in their own home without going
to any store physically to buy the CD they desired. It made music more instant, more readily
available, and more accessible to people all over the globe, all that it required was a computer
and an internet connection except those fans who really want to have a CD cover as a record
at their home.
But in the good end it also makes people to reach greater number of music and that might
bring them physically to the live concert to see the artist they have been listing on the digital
file.

Effect on artists
Technology on the other hand also affects the artists in the industry. If we talk about the live
music concert then there are many different instruments which were not used before these
instruments are used electronically. Now artists can put their music online and reach the
number of audience in the world. But the downside of effect is the consumer has lots of
option to choose because there are many artists who just play and record at home it might be
good music or a bad music and upload it on internet. So it is hard for consumer to select good
quality music from wide range of music files available on internet.
Emerging technologies have had a significant impact on the way they organize their careers,
and how they make money.

Revenue stream
In UK the overall value of the live music industry comprises three elements: the primary
market, where event tickets are sold to attendees by ticketing agents on behalf of promoters,
the secondary market, where previously exchanged tickets can be re-sold, which counts
additional spend on items like merchandise, food, beverages, parking and public transport that
can be attributed to music. Live revenues reached 1.6bn pounds in 2011, which was a
substantial increase from 2010's total of 1.4bn pounds in UK. Festivals and arena concerts are
the most significant areas in the live music industry, each accounting for around 25% of the
market. A dramatic increase in stadium concerts helped shoot on growth in 2011. Stadium
concerts generated over 221m pounds with box office receipts and the associated spend
responsible for two-thirds of 2011's live revenue growth, PRS for Music (2011). According to

Kreuger (2005), in US concert revenues increased in the 1980s and 1990s and the top 1% of
artists took in 26% of concert revenue in 2003 that figure more than doubled to 56% in 2003.
There was a decrees of 18% in musical shows performed by superstar while revenue per show
increased by 60%. The increase in revenue was driven by both an increase in price and an
increase in tickets per show Kreuger (2005). The main source of income for artists is
generally concerts rather than recordings Kreuger (2005)

Live music economy


Simon frith (2007) suggest two main strategies to the promoters of the music business, first
according to him live music has a direct relation with the audience so promoters have to
determine the audience size and try to expand the audience size by increasing the capacity of
the concert venues by extending the scope of the tours. Secondly, by growing the new musical
event, like festivals. As discussed earlier the British promoters focus mostly on festivals to
expand their live audiences.
Live music has become a major domain and structuring force in the economy of music Holt
(2010). Live music events contains strong commercial potentials because of status and
attraction to the public of the star performing the live musical show Holt (2010). According to
Holt (2010) live concerts, festivals and DJ parties are driving force in the economy because
through this other things can also be sold out. In 2004, international music industry
conferences added live music to their agendas, and in 2007 everyone wanted to get into this
sector Holt (2010). The live music industry has expanded the boundaries via technologies of
magnification and festival events with large audiences Simon Frith (2007). The most
commercially successful touring artists are heavyweights such as the Rolling Stones, Police,
U2 and Madonna, who have a relatively stable and large international market Holt (2010).

Live music and digital media


Media technologies have changed tremendously and affected many kinds of communication.
But the recordings have not replaced concert that much Holt (2010). It is easier to attract a
larger audience if the stage show is entertaining and the artists are frequently broadcast in the
media Holt (2010). Live performances are bound to physical means of communication
because Stage performance involves a face-to-face encounter between artist and audience

whereas communication through digital media is more flexible and can be reproduced, shared
and stored by number of people in many places Holt (2010). According to Holt (2010) live
performance experiences involves social and musical experiences where people meet with the
strangers and share their musical interests and experiences. By experiencing lives
performances one can experiences music as an art form. Whereas, on the other hand media
practices are simultaneously moving closer and further away from live performance Holt
(2010).

Conclusion
In the last 15 years there have had been lots of changes in the music industry. Technology
changed the way things works in the industry it also changed the thinking pattern of the
people worked within the industry. Now more information is available on the internet about
music, people use internet to download the music legally or illegally and that is the most
prominent challenge in the industry to face with. Other than that the graph of live
performances in recent years had increased but the sale of music as an entity decreased due to
the fact that people now can access the music online. Within the live music performances
technology affect many different things such as distribution of ticketing. Right now live
performances are driving force and contributing pretty much in the music industry.

References

Frith, S. (2007), Live Music Matters, Scottish Music Review Volume 1No. 1 2007:
Indeterminacy and Technology.
Holt, F., 2010: The economy of live music in the digital age, European Journal of
Cultural StudiesMay 2010 vol. 13 no. 2 243-261
Kreuger, 2005: A. Kreuger, The Economics of Real Superstars: the Market for Rock
Concerts in the Material World, Journal of Labor Economics, 23(1), pp.1-30
Mortimer, Julie Holland & Nosko, Chris & Sorensen, Alan, 2012. "Supply responses
to digital distribution: Recorded music and live performances," Information
Economics and Policy, Elsevier, vol. 24(1), pages 3-14
PRS for Music 2011, Adding up the UK music industry.
.Simon Frith, Matt Brennan, Martin Cloonan, Emma Webster 2010, Live music and
music policy: Some initial thoughts. University of Glasgow vol.1, no.1 (2010)

http://www.thembj.org/2010/07/friction-in-live-music/

http://music.taliferro.com/how-has-technology-affected-the-music-industry/
http://money.futureofmusic.org/are-musicians-benefiting-from-music-tech-sfmusictech-presentation/