Economic Contribution of the Music Industry to South Australia, 2015/16

Economic Contribution of

the Music Industry to
South Australia, 2015/16

A report to

MDO
(Music Development Office)
Prepared by

18 August 2017

EconSearch
A Division of BDO
Level 7, BDO Centre, 420 King William Street
Adelaide SA 5000
Tel: [phone]

www.econsearch.com.au

Aknowledgements

EconSearch and the Music Development Office (MDO) received key support from a range of individuals and organisations. We acknowledge that this report would not have been possible without their help. This support was integral to the robustness of the estimates as it ensured that they were well researched and bounded by accurate administrative data at an aggregate level.

We acknowledge the key survey partners and data providers for the study:

AHA South Australia

APRA AMCOS

City of Adelaide

Music SA

South Aussie with Cosi

Three D Radio

We acknowledge the following interviewees for their input:

5/4 entertainment

Adelaide Festival Centre

Adelaide Fringe

Adelaide Symphony Orchestra

Clarity Records

Dan Crannitch

Disk-Edits Pty Ltd

Elder Conservatorium of Music

Festivals Adelaide

Fresh 92.7

Grace Emily Hotel

Joe Hay Consulting

Little Acorn Music

Live Music Office

Mixmasters

Music SA

Novatech Creative Event Technology

Radio Adelaide

Roundabout Records

South Australian Tourism Commission

Sunset Rehearsals

The Magenta Group

The Porch Sessions

Three D Radio

Tsuba Records

Yewth

Finally, we acknowledge the 1,369 anonymous individuals who provided usable responses to the electronic survey and Simon Molloy for his role as an independent reviewer of this study.

Contents

1.Introduction 10

2.Method 11

2.1Economic Contribution 11

2.1.1Indicators of Economic Contribution 12

2.1.2Direct, Flow-on and Total Economic Contribution 13

2.1.3RISE Economic Models 14

2.2Survey 14

2.2.1Interviews 14

2.2.2Electronic Survey 15

2.3Data 16

2.3.1Consumers 16

2.3.2Musicians 18

2.3.3Venues 19

2.4Description of the Sample 19

2.4.1Consumers 20

2.4.2Musicians 23

2.4.3Venues 25

2.4.4Businesses 26

2.5Survey Analysis 27

2.5.1Survey Weighting 27

2.5.2Benchmarking 29

3.Results 31

3.1Overall Music Industry 31

3.2Live Music 32

Tables

Figures

Abbreviations

ABS Australian Bureau of Statistics

AMCOS Australasian Mechanical Copyright Owners Society

APRA Australasian Performing Right Association

fte full time equivalent

GSP gross state product

I-O Input-Output

MDO Music Development Office

RISE Regional Industry Structure & Employment

SA South Australia

UNESCO United Nations Educational, Scientific and Cultural Organization

Document History and Status

Doc Version	Doc Status	Issued To	Qty elec	Qty hard	Date	Reviewed	Approved
1	Draft	Karen Marsh Simon Molloy	1	-	25/7/17	JBM	JBM
2	Draft	Karen Marsh	1	-	17/8/17	JBM	JBM
2	Final	Karen Marsh	1	-	18/8/17	JBM	JBM

Printed: 18/08/2017 1:28:00 PM

Last Saved: 31/08/2017 12:30:00 PM

File Name:

Project Manager: Julian Morison

Principal Author/s: Anders Magnusson

Name of Client: Music Development Office

Name of Project: Economic Contribution of the Music Industry to South Australia

Document Version: 3

Job Number: 1718

Executive Summary

Adelaide has music at its cultural core, as recognised by its designation as a UNESCO City of Music since 2015 (UNESCO 2015). Adelaide’s population was around 1.3 million people in 2016, making up most of South Australia’s population of almost 1.7 million (Australian Bureau of Statistics 2016b).

The Music Development Office (MDO) is the office within Department of State Development, Government of South Australia that is dedicated to supporting creative and industry development for the music sector in South Australia. The MDO contracted EconSearch, an economics consultancy with a unique understanding of the South Australian economy, to establish the economic contribution of the music industry to South Australia in the 2015/16 financial year.

The estimates in this report are intended to form a baseline of the level of activity in the music industry that can be used to compare it with other industries in South Australia and with the music industry in the future as it develops. Comparing the music industry with other industries requires describing it in the same tangible terms. Therefore, this report estimates the economic contribution of the music industry terms of gross state product (GSP), employment and household income. The report does not estimate the intangible value of the music industry so should be interpreted as one component of its total value to South Australians.

The study drew upon several sources of aggregate data to determine the size of the music industry on several dimensions such as number of venues licenced for music, number of attendances, ticket revenue, number of working musicians and royalty income of musicians. It collected data on the activities and relationships within the industry and linkages to the broader economy through a survey of consumers and businesses (1,369 respondents) and 27 interviews with key industry stakeholders.

Overall Music Industry Contribution

The study found that the overall employment contribution of the music industry (all elements including live music) to South Australia in 2015/16 was around 6,300 jobs (equivalent to 4,500 full-time jobs), including almost 1,800 from flow-on effects (Table ES ). Flow-on effects are the effects of the broad economic activity that begins with the music industry and spreads out across South Australia as businesses supply one another, pay their employees and sell consumption goods to households. Gross state product contributed by the music industry was around $375 million, including $221 million from flow-on effects. Around one third of the direct contribution to GSP was due to related expenditures made when consumers attended music events. The other two thirds were contributed by the activities of musicians, venues and other music businesses.

Table ES Economic contribution of the music industry to South Australia, 2015/16

Source: EconSearch analysis

Live Music Contribution

The overall employment contribution of live music to South Australia in 2015/16 was around 4,200 jobs (or 2,900 fte jobs), including over 1,200 from flow-on effects (Table ES ). GSP contributed by live music was around $254 million, including around $148 million from flow-on effects. Almost half of the direct contribution to GSP was due to related expenditures made when consumers attended music events. The other half was contributed by live music activities of venues, musicians and other music businesses.

Table ES Economic contribution of live music to South Australia, 2015/16

Source: EconSearch analysis

1.Introduction

Adelaide has music at its cultural core, as recognised by its designation as a UNESCO City of Music since 2015 (UNESCO 2015). Adelaide’s population was around 1.3 million people in 2016, making up most of South Australia’s population of almost 1.7 million (Australian Bureau of Statistics 2016b).

The Music Development Office (MDO) is the office within Department of State Development, Government of South Australia that is dedicated to supporting creative and industry development for the music sector in South Australia. The MDO contracted EconSearch, an economics consultancy with a unique understanding of the South Australian economy, to establish the economic contribution of the music industry to South Australia in the 2015/16 financial year.

The estimates in this report are intended to form a baseline of the level of activity in the music industry that can be used to compare it with other industries in South Australia and with the music industry in the future as it develops. Comparing the music industry with other industries requires describing it in the same tangible terms. Therefore, this report estimates the economic contribution of the music industry terms of gross state product (GSP), employment and household income. The report does not estimate the intangible value of the music industry so should be interpreted as one component of its total value to South Australians.

Each stage of the music supply chain is represented in South Australia, from writing, rehearsing, recording and mastering, through to publishing and performing. These activities are supported by instrument and equipment manufacturers, educators, retailers, repair and hire shops, artist services, broadcasters and media agencies and well as those focused on events – promoters, event technology services and nationally renowned music venues. Each part of the supply chain has linkages interstate and internationally that work in both directions (imports and exports). Venues, for example, import the services of musicians from interstate but also export live music services when visitors from interstate attend shows. Likewise, mastering studios that export by servicing interstate clients, carry out the creative part of their process in Adelaide then import by contracting the physical duplication of media interstate.

First, this report outlines the data sources and methods used for analysis. The population of interest and the sample used in the analysis are described. Then the resulting estimates of the economic contribution of the music industry to South Australia are presented and interpreted.

2.Method

2.1Economic Contribution

Determining the economic contribution of an industry requires data on the aggregate size of the industry, the activities and relationships within the industry, the linkages between the industry and the broader economy, and the characteristics of the broader economy itself. This study drew upon several sources of aggregate data to determine the size of the music industry on several dimensions. It collected data on the activities and relationships within the industry and linkages to the broader economy through a survey of consumers and businesses and interviews with key stakeholders.

The main components of net direct economic contribution to South Australia are surpluses made by music industry businesses in South Australia, wages and drawings¹ paid to South Australians, and surplus and wages associated with expenditures made by those businesses into other domestic (South Australian) industries. Regarding live music, related expenditures by event attendees (such as food and beverages, taxis and accommodation) also lead to economic contributions that can be attributed to the event, and therefore, the music industry. Where multiple linked activities take place within an industry, transactions between the businesses that carry them out are simply transfers within the industry, not net economic contributions. Payments outside of South Australia (imports) are also not economic contributions to South Australia. This is why an understanding of these linkages is necessary to make a reasonable estimate of the economic contribution of the industry.

For example, when a live music promoter pays a musician for performing at their event, the payment is simply a transfer within the industry of money that entered the industry when attendees of the event bought their tickets. Counting both the ticket sale and the payment to the musician (as well as the fees paid to the event technology services provider, the audio engineer and the hire fee to the venue) would double-count the economic contribution so these are cancelled out in this analysis and counted only once. The same promoter may have printed promotional materials interstate and distributed them through an agency in South Australia. The expenditure on printing does not lead to an economic contribution to South Australia as it is an import, the fee charged by the local distribution agent however, does lead to an economic contribution because it occurs domestically and is outside of the music industry (so it is not just a transfer). Likewise, domestic expenditures by the venue (such as with beverages suppliers) lead to economic contributions, while those occurring outside of South Australia do not. Finally, when attendees at the venue spend money on beverages or other items, this also leads to an economic contribution. This example is illustrated in the Figure 2 . Importantly, the arrows in Figure 2 represent payments between agents, the economic contribution is the surplus that results from these payments, not the payments themselves.

Figure 2 Concept of economic contribution

Promoter

Consumer

Venue

Printer

Musician

Interstate

South Australia

Music industry

Economic contribution

Not an economic contribution

Beverage supplier

Beverage supplier

Distributor

The music industry is more difficult to delineate than more traditional industries. While it is relatively easy to determine whether a business is part of the commercial fishing industry or the steel manufacturing industry, for example, many music industry businesses carry out activities that cross traditional industry boundaries. For example, the Adelaide Symphony Orchestra can be considered to be entirely within the music industry, but the Adelaide Festival Centre puts on music and non-music shows, so only part of its activities can be attributed to music.

To delineate the music industry, this study follows a similar concept to the satellite accounting method currently used each year by the Australian Bureau of Statistics (ABS) to estimate the economic contribution of tourism to the national economy (Australian Bureau of Statistics 2016a). Tourism is a similarly difficult industry to delineate. The ABS also applied the method in a context closer to the music industry when they estimated the contribution of cultural and creative activity to the national economy for 2008/09 (Australian Bureau of Statistics 2014). The method adopted for this study incorporates into the music industry the activities of:

• 
  specialist workers – workers who produce music outputs within music businesses
  
• 
  support workers – workers who produce non-music outputs within music businesses
  
• 
  embedded workers – workers who produce music related outputs in non-music businesses.
  

Where data were not available on how many workers within a non-music business produce music outputs or where this categorisation of workers didn’t make sense for particular business activities, the proportion of business activities included for non-music businesses was determined by a proxy. The proxy was selected on a case-by-case basis but was usually attendance numbers, expenditures or revenue.

2.1.1Indicators of Economic Contribution

The economic contribution of the music industry is conceptualised in this report as the economic activity that occurs within the music industry as it exists and the activity that occurs outside of the music industry as a result of this activity. This is conceptually different to economic impact in that impact refers to a change or shock so the marginal effect of the change is important. For example, estimating the economic impact of starting up or closing down a music festival would have to take into consideration the way that consumers will react and how affected prices and resource allocations within the economy might change because of the marginal change in activity in the industry. The focus of this report is the contribution of the music industry to the economy of South Australia as it exists so marginal effects aren’t relevant. The key economic activity indicators considered in the analysis are employment, gross state product (GSP) and household income (a component of GSP).

Employment units: Employment numbers are usually reported in either full time equivalent (fte) units or total job units. Both are presented in this report. They are defined as follows:

• 
  fte: is a way to measure a worker's involvement in a project or industry activity. An fte of 1.0 means that the person is equivalent to a full-time worker, while an fte of 0.5 signals that the worker is only half-time. Typically, different scales are used to calibrate this number, depending on the type of industry and scope of the analysis but the basic calculation is the total hours worked divided by average annual hours worked in full-time jobs. This report considers 48 weeks at 38 hours per week to be 1.0 fte job.
  
• 
  Jobs: is used to refer to the number of workers employed in an industry or on a project at any point in time. The report uses the average number of workers over the analytical period of the 2015/16 financial year.
  

Gross state product (GSP): is a measure of the contribution of an activity to the economy. GSP is measured as value of gross output (business revenue) less the cost of goods and services (including imports) used in producing the output. In other words, it can be measured as the sum of household income, gross operating surplus and gross mixed income net of payments to owner managers and taxes less subsidies on products and production. It represents payments to the primary inputs of production (labour, capital and land). Using GSP as a measure of economic contribution avoids the problem of double counting that may arise from using value of output for this purpose.

Household income: is a component of GSP, it is the payments to the labour input of production described above. Household income is reported separately to GSP in this report in order to indicate the contribution of the industry to South Australians who derive income from labour (employees), rather than through ownership of land and capital.

2.1.2Direct, Flow-on and Total Economic Contribution

A useful way to think about economic activity and economic contribution (as measured by employment, GSP and income) is using the concept of a ‘supply chain’. Broadly speaking there are four categories of contribution along the supply chain. To take employment as an example:

1. 
   Direct employment – this is employment in those firms, businesses and organisations that are directly engaged in producing music goods and services.
   
2. 
   First round employment – refers to employment in firms that supply inputs and services to the ‘direct employment’ businesses, i.e. those categorised under point 1.
   
3. 
   Industrial-support employment – is the term applied to 'second and subsequent round' effects as successive waves of output increases occur in the economy to provide industrial support, as a response to the original expenditure. This category excludes any employment associated with increased household consumption.
   
4. 
   Consumption-induced employment – is the term applied to those effects induced by increased household income associated with the original expenditure. The expenditure of household income associated with all three categories of employment (direct, first round and industrial-support) will generate economic activity that will, in itself, generate jobs.
   

Flow-on (or indirect) economic contribution is the sum of categories 2, 3 and 4. Total contribution is the sum of direct and flow-on contribution. In this analysis direct, flow-on and total employment, GSP and household income generated by the supply chain have been reported. A more detailed breakdown of results is presented in Appendix 1 with flow-on effects broken down into production (2 and 3) and consumption (4) induced.

2.1.3RISE Economic Models

Input-output (I-O) models are widely used to assess the economic contribution of existing levels of economic activity and economic impact of shocks. The economic contribution analysis presented here uses an extension of the conventional input-output method. Over the past decade EconSearch has developed an extended input-output model known as the RISE model (Regional Industry Structure & Employment). The RISE model provides a comprehensive economic framework that is extremely useful for interpreting the linkages between industries. The RISE models are frequently used by the Government of South Australia. A RISE model for the economy of South Australia was used for this assessment.

2.2Survey

2.2.1Interviews

Twenty-seven semi-structured interviews were carried out by EconSearch with key industry stakeholders between June and July of 2017. Stakeholders were selected based on their active role in the music industry and their knowledge of their section of it. Most interviews were conducted face-to-face and took between 15 minutes and 2 hours, depending on the variety of activities that the stakeholder was involved in. A full list of interviewees appears in the Acknowledgements section of this report. Roles covered by interviews included:

Rehearsal studio	Music focused media	Education (informal)
Recording studio	Artist services	Venue operation
Mastering studio	Event promotion	Musician
Media duplication	Major festival promotion	Industry association
Music retailer	Instrument manufacture	Policy maker
Event technology services	Equipment manufacture
Music focused radio	Education (formal)

The intention of the study, concept of economic contribution, and reason for selection were explained to each stakeholder at the beginning of the interview. They were informed that their individual responses would not be published in any way that could be personally identifiable, but all agreed to be acknowledged by name in the report. Regarding their role, each stakeholder was then led to explain their:

• 
  business activities
  
• 
  employment activities
  
• 
  income and expenditures for the 2015/16 financial year
  
• 
  other areas of economic contribution
  
• 
  interstate and overseas expenditure and income
  
• 
  degree to which their business activities are attributable to music
  
• 
  understanding of other businesses operating in their section of the industry.
  

2.2.2Electronic Survey

An electronic survey was carried out over 5 weeks in June and July of 2017. The intention of the survey was to collect more detailed data on businesses in the music industry as well as to understand the related expenditures that consumers tend to make when they attend live music events.

Early interviews suggested that a single survey instrument would be required to capture the various business activities together with consumer data as each individual respondent would likely cover multiple roles in the industry while also being a consumer. The questionnaire first asked each respondent which roles they played in the music industry, including business and consumption activities, then presented the respondents with questions related to their selected roles.

Questions relating to business activities captured the same information as the interviews but were customised to the type of activities that the respondents carried out. For example, venue operators were asked about the number and type and attendance of music events at their venue and musicians were asked about their time spent and income earned from performing and writing music. These additional data aided imputation of incomplete data during analysis.

Questions relating to consumption activities captured data on live music attendance and consumption of recorded music, music equipment and instruments for consumptive uses (as opposed to business use as a musician). Age of respondent and personal income was also captured.

Regarding live music consumption, the questionnaire captured the number of music events each respondent attended in the last year, by genre, and by whether or not each event was free. Respondents were asked to indicate where the events were and the proportion that were by South Australian performers. To understand the kind of expenditures each respondent tends to make when they attend a music event, respondents were asked about a memorable event (such as a concert or a typical night at a music venue) that they attended in the last year. They were asked about the name, genre and location of the event, as well as whether they attended with interstate friends or relatives. They were asked how much money they spent on the ticket (if any) and on other items in relation to the event. Finally, they were asked to indicate whether or not they would have attended if the cost had been 10 per cent, 50 per cent or double what it was.

Regarding recorded music, music equipment and musical instrument consumption, respondents were asked how much money they spend on each in a typical year (or month for recorded music) as well as how much of that expenditure occurred within South Australia.

2.3Data

2.3.1Consumers

Data used to estimate the aggregate activity of music consumers in South Australia included:

• 
  total population of South Australia – 1.7 million (Australian Bureau of Statistics 2016b)
  
• 
  age distribution of South Australian population (Australian Bureau of Statistics 2016b)
  
• 
  income distribution of South Australian population (Australian Bureau of Statistics 2016b)
  
• 
  proportion of South Australians (15 years and over – as reported) who attended live contemporary music (35 per cent) and classical, musical theatre or opera events (18 per cent) in 2013/14 (Australian Bureau of Statistics 2015)
  
• 
  ticket sales and revenue for contemporary music (398,307 tickets, $33.8 million) and classical, musical theatre and opera (155,147 tickets, $14.1 million) in 2015 (Live Performance Australia 2016)
  
• 
  EconSearch SA Music Survey data were used to estimate number of free event attendances per paid attendance for contemporary music (0.8 per paid attendance) and classical, musical theatre or opera (0.3 per paid attendance)
  
• 
  Fringe 2017 number of visitors to South Australia – 18,655 (Adelaide Fringe 2017) was used to impute proportion of attendance to music events by visitors (around 3 per cent).
  

Figure 2 illustrates the population used in this analysis. The population is all South Australians 14 years and over², plus visitors from interstate or overseas who attend live music in South Australia (a total around 1.42 million people). Assuming that the proportion who attended music events in 2013/14 is the same as in 2015/16: around 58 per cent of this population did not attend any music events in 2015/16; around 26 per cent attended contemporary music events only; around 6 per cent attended classical, musical theatre or opera events only; and around 9 per cent attended both types of event.

Figure 2 Population for benchmarking purposes, proportion who attend by genre

Source: Australian Bureau of Statistics (2016b), Live Performance Australia (2016) and Australian Bureau of Statistics (2014)

The income (Figure 2 ) and age (Figure 2 ) distributions of the population are presented below. These distributions were used to weight the consumption survey responses.

Figure 2 Population income distribution

Source: Australian Bureau of Statistics (2016b)

Figure 2 Population age distribution

Source: Australian Bureau of Statistics (2016b)

2.3.2Musicians

The aggregate number of APRA writer members, APRA royalty payment quintiles and the number of live performance returns (LPRs) from South Australian APRA members in 2015/16 were provided under confidentiality by APRA (2017). These data were used as benchmarks to weight the musician responses to the electronic survey.

2.3.3Venues

A list of South Australian venues licenced by APRA to perform live music or recorded music for dance use was provided under confidentiality by APRA (2017). The list included a range for annual expenditure on live music for most venues and a range for gross revenue from attendances for some venues. This list was treated as a census of venues in South Australia and was matched with the EconSearch SA Music Survey responses to estimate aggregate activity.

A list of relevant businesses in the City of Adelaide area was provided under confidentiality by the City of Adelaide and included the number of full-time and part-time employees at each business. These data were used to estimate the activity of City of Adelaide music venues that did not respond to the electronic survey.

2.4Description of the Sample

The electronic survey captured 1,369 unique, usable responses. Figure 2 presents the activities that respondents indicated that they carried out ‘over the last year’. The most frequent activities of respondents were consumption activities – attending events, purchasing music and purchasing equipment and instruments, respectively. Venues were the least well represented in the survey but this was supplemented by interviews with key stakeholders and employment data from the City of Adelaide.

Figure 2 Activities of survey respondents

Source: EconSearch SA Music Survey

Figure 2 categorises the survey responses into mutually exclusive groups. Most responses (68 per cent) were from consumers, 17 per cent were from musicians who were also consumers and 9 per cent were from musicians who operated a music business and were consumers of music.

Figure 2 Categorisation of survey respondents

Source: EconSearch SA Music Survey

2.4.1Consumers

Most consumers who responded to the survey were around 35 to 64 years old (Figure 2 ), the most frequent income range of consumers was $65,000 to $103,999 (Figure 2 ).

Figure 2 Age distribution of survey respondents and population (consumers)

Source: EconSearch SA Music Survey

Figure 2 Income distribution of survey respondents (consumers)

Source: EconSearch SA Music Survey

Consumption activities were split into three categories in the survey: live music, recorded music, and equipment/instrument expenditure. Respondents were asked to recall a memorable music event that they attended ‘in the last year’ and to indicate how much they spent on the ticket and any other items in relation to the event. Table 2 presents the proportion of the total expenditure per event spent on each related item. On average, food and beverages received the highest spend (34 per cent), followed by tickets (25 per cent) and clothes (11 per cent). For ticketed events, tickets were the most expensive item (36 per cent). For free events, expenditure on food and beverages made up nearly half (45 per cent) of consumption expenditure related to events.

Table 2 Expenditure profile for event attendees in South Australia

Source: EconSearch SA Music Survey

Survey respondents reported total expenditure on music equipment over the last year of just over $250,000 (almost $190 each) with around 80 per cent of these expenditures occurring at South Australian businesses. After weighting the responses, the total expenditure on equipment was estimated at almost $16 million across the state (an average of around $15 per person).

Respondents reported consumption expenditure on instruments over the last year of almost $420,000 (an average of $310 per person) with 80 per cent of these expenditures also occurring at South Australian businesses. After weighting, we estimate a total consumption expenditure on music instruments of almost $47 million across the state (an average of around $33 per person).

Respondents reported a total annual spend on recorded music over the last year of around $355,000 (just over $260 per person), including 35 per cent on CDs, 24 per cent on vinyl, 20 per cent on downloads, 17 per cent on streaming and 5 per cent on ‘other’. After weighting, we estimate a total expenditure on recorded music of around $35 million (an average of around $25 per person) with around 38 per cent of these occurring at South Australian businesses.

Regarding their ‘memorable event’, consumers were asked whether they would have attended if it had cost them 10 per cent, 50 per cent or 100 per cent (double) more. This gives an indication of the contribution to consumer surplus of attending the event for each respondent. Consumer surplus is the difference between the price paid by a consumer and their willingness to pay, summed across all consumers who purchased the item. This is a key input into cost-benefit analysis. On average respondents indicated that they wouldn’t have attended their memorable event if it had cost them more than 30 per cent more than it did. Broadly speaking, this suggests that the consumer surplus from the various consumption activities occurring due to music events in South Australia is around 30 per cent of its total cost. Detailed analysis of consumer surplus is outside the scope of this report.

Of particular interest to several key stakeholders were visitors from interstate or overseas who attend music events in South Australia. The questionnaire asked respondents to indicate how many friends or family from outside of South Australia attended the event with them. This question resolves the problem that analysis of ticket sales data fails to capture the visitors for which South Australians purchased tickets. Table 2 shows the proportion of respondents who were accompanied to their ‘memorable event’ by friends or relatives from interstate or overseas and the average number accompanying all respondents, by venue type and by genre mix. The results suggest that outdoor mixed-genre and contemporary events tend to attract a higher proportion of attendees from interstate or overseas. On average, 43 per cent of respondents indicated that they were accompanied by friends or relatives from interstate or overseas and the average number of them accompanying respondents was 1.7.

Table 2 Interstate and overseas visitors to music events in South Australia

Source: EconSearch SA Music Survey

Respondents indicated the number of free and paid events they attended over the last year. Around 56 per cent of reported attendances at contemporary live music events were ticketed and 75 per cent for classical/musical theatre/opera events.(Live Performance Australia 2016)

2.4.2Musicians

Figure 2 shows the distribution of time spent by respondents on musician activities expressed in full-time equivalent jobs. Around 78 per cent of musician respondents reported working on musician activities part-time, the rest working full-time or longer hours.

Figure 2 Distribution of hours worked by musician respondents (fte jobs)

Source: EconSearch SA Music Survey

Table 2 shows the musician activities reported by musician respondents and the average fte jobs worked within each activity group. The most common response was from musicians who write music and perform live, followed by musicians who perform but don’t write and musicians who write but don’t perform. Musicians who write music tend to spend around 50 per cent more time on musician activities in a typical week compared to those who don’t.

Table 2 Musician activities and average fte jobs of respondents

Source: EconSearch SA Music Survey

The musicians who responded to the survey earned, on average, around 5 per cent of their income from writing music, around 26 per cent from live performance, 6 per cent from DJ performances and about 63 per cent from other sources. Around 96 per cent of this income was earned within South Australia. Table 2 presents the average expenditure profile reported by musicians who responded to the survey.

Table 2 Expenditure profile for musicians in South Australia

Source: EconSearch SA Music Survey

^a Imports are all goods and services purchased outside of South Australia

^b Capital expenditure includes equipment, hardware, vehicles and buildings used to carry out business activities

^c Cost of goods sold includes merchandise, CDs and other stock sold

2.4.3Venues

Twenty-seven survey responses included some information about a venue in South Australia. These responses were supplemented with employment data for 59 venues located in the Adelaide CBD and North Adelaide provided by the City of Adelaide and music performer expenditure data on 428 venues in South Australia provided by APRA AMCOS (2017). The venues that responded to the survey or were interviewed as part of the study reported their expenditures for the 2015/16 financial year. The proportions of these expenditures that occurred on various key items are reported in Table 2 . The greatest expenditure was on wages and drawings by owners (40.6 per cent), followed by the cost of goods sold (16.4 per cent).

Table 2 Expenditure profile for music venues in South Australia

Source: EconSearch SA Music Survey

^a Cost of goods sold includes merchandise, CDs and other stock sold

^b Imports are all goods and services purchased outside of South Australia

^c Capital expenditure includes equipment, hardware, vehicles and buildings used to carry out business activities

2.4.4Businesses

A total of 114 music businesses responded to the electronic survey, an additional 21 were interviewed directly and activities for a further 39 businesses were estimated by key stakeholders making the total sample size for businesses of 174. Figure 2 shows the number of businesses in the sample that carry out each business activity. The categories are not mutually exclusive and most businesses carry out multiple business activities. The sum of the categories is, therefore, greater than the number of responding businesses.

Figure 2 Business activities of sample of businesses

Source: EconSearch SA Music Survey

^a Includes all businesses that indicated recording, rehearsal or mastering studio activity

^b Includes artist managers, publicists etc.

The businesses that responded to the survey or were interviewed as part of the study reported their expenditures for the 2015/16 financial year. The proportions of these expenditures that occurred on various key items are presented in Table 2 . The greatest expenditure was on wages and drawings by owners (42.3 per cent), followed by imports (around 24.9 per cent).

Table 2 Expenditure profile for music businesses (excluding venues) in South Australia

Source: EconSearch SA Music Survey

^a Imports are all goods and services purchased outside of South Australia

^b Cost of goods sold includes merchandise, CDs and other stock sold

^c Capital expenditure includes equipment, hardware, vehicles and buildings used to carry out business activities

2.5Survey Analysis

2.5.1Survey Weighting

Sufficient aggregate data were available (see Sections 2.3.1 and 2.3.2) to weight the survey sample of consumers and musicians to be representative of the population. The GREGWT method, developed by the Australian Bureau of Statistics (Bell 2000), was used to weight each dataset as described below. This method determines which characteristics are under or overrepresented in the sample (compared to the population) and weights each record in order to compensate for all characteristics simultaneously. The result is a survey sample that represents the population in each relevant characteristic.

2.5.1.1Consumers

Figure 2 shows the sample age distribution compared to the population. Ages 35 to 64 were overrepresented in the sample and the other age groups were underrepresented. The sample size was sufficient for the GREGWT procedure to weight the sample to match the population exactly.

Figure 2 Sample, population and weighted sample age range

Source: EconSearch SA Music Survey and Figure 2

Figure 2 shows that higher income groups were overrepresented in the sample but that sufficient responses were collected to allow a complete weighting, as with age groups.

Figure 2 Sample, population and weighted sample personal income range

Source: EconSearch SA Music Survey and Figure 2

Figure 2 shows that a higher proportion of respondents to the survey attended a music event in the last year compared to the population of interest, this was also controlled for successfully by the weighting method.

Figure 2 Sample, population and weighted sample live music activity level

Source: EconSearch SA Music Survey and Figure 2

2.5.1.2Musicians

As with consumers, musician responses were weighted to match aggregate data. The survey and aggregate distributions used for the weighting process are not published here to preserve the privacy of APRA members. The distributions used were royalty income quintiles and quintiles for the number of new works registered in 2015/16. Using APRA data as an indicator of aggregate activity is a conservative approach as any working non-APRA member musicians are excluded from this analysis. The analysis likely underestimates the economic contribution of musicians by an amount dependent on the number of non-APRA member musicians working in South Australia. Comments from key stokeholds suggest that the number of working musicians may be double the number of APRA members as there is little incentive to register as an APRA member for musicians who do little or no writing.

2.5.2Benchmarking

2.5.2.1Consumers

Weighting the consumer sample to age, income, live music attendance and population count data corrects for these variables and any other variables that are correlated with them. It does not correct for how active each individual is in live music. Further, consumers were asked to describe a ‘memorable event’ in the survey and this was multiplied by the consumers’ total number of attendances in order to estimate their annual expenditure at music events. Each of these factors were expected to cause an overestimation of expenditure due to a self-selection bias where respondents are more active than the average South Australian and the event they recall is likely more expensive. These biases were each observed in the sample. To correct for this, the weighted total attendances at paid events and the weighted total expenditure from the sample were scaled down to match reliable aggregate attendance and ticket revenue data from 2015 published by Live Performance Australia (2016). This means that data for each respondent were used to described the relative amounts that they spent on different items and the types of events they attended while the overall spend was described by reliable aggregate data.

The same scale factor as for expenditure at live music events was adopted as a proxy for music activity in general and applied to scale down the weighted total expenditure by consumers on recorded music, music equipment and instruments. No aggregate level data were available for this kind of consumption expenditure so this was adopted as a solution to correct for self-selection bias.

2.5.2.2Musicians

As with consumers, the weighted survey responses from musicians were scaled together to match aggregate data from APRA (2017) on total royalties paid and live performances reported in 2015/16. These aggregates are left unpublished for privacy reasons.

3.Results

3.1Overall Music Industry

The overall economic contribution of the music industry to South Australia in 2015/16 is reported in Table 3 . This includes the activities of musicians, venues, music businesses and related spending by consumers. The total employment contribution was around 6,300 jobs (or 4,500 fte jobs³), including almost 1,800 (or 1,600 fte jobs) from flow-on effects⁴. Gross state product (GSP) contributed by the music industry was around $375 million, including $221 million from flow-on effects. Household income (one component of GSP) contributed from the music industry was around $249 million, including $126 million from flow-on effects.

Table 3 Economic contribution of the music industry to South Australia, 2015/16

Source: EconSearch analysis

The right hand column of Table 3 shows the type II multipliers for the music industry. These multipliers are calculated by dividing the total contribution by the direct contribution. For example, for every fte job contributed directly by the music industry, an additional 0.6 fte jobs are contributed from flow-on effects, making a total contribution of 1.6 fte jobs. For GSP, each $1 million contributed directly by the music industry leads to an additional $1.4 million contribution to GSP from flow-on effects.

Table 3 focuses more closely on the contribution of the music industry to GSP. The table shows that around one third of the direct contribution to GSP was due to related expenditures made when consumers attended music events. The other two thirds were contributed by activity within the music industry. The table also shows that the consumption induced effects were almost double the production induced effects. This means that most of the flow-on effects in the total economic contribution were generated by households spending income earned as a result of music industry activity. Table 3 presents the same detail for employment on an fte basis and can be interpreted in the same way.

Table 3 Economic contribution of the music to South Australia, GSP ($m), 2015/16

Source: EconSearch analysis

Table 3 Economic contribution of the music to South Australia, employment (fte), 2015/16

Source: EconSearch analysis

3.2Live Music

The overall economic contribution of live music to South Australia in 2015/16 is reported in Table 3 . This includes the activities of venues, performing musicians and supporting music business activities as well as the related expenditures by consumers. The total employment contribution was around 4,200 jobs (or 2,900 fte jobs), including over 1,200 (or 1,100 fte jobs) from flow-on effects. GSP contributed by live music was around $254 million, including around $148 million from flow-on effects. Household income (one component of GSP) contributed from live music was around $162 million, including $83 million from flow-on effects. The type II multipliers for live music are the same as for the overall music industry.

Table 3 Economic contribution of live music to South Australia, 2015/16

Source: EconSearch analysis

Table 3 focuses more closely on the contribution of live music to GSP. The table shows that almost half of the direct contribution to GSP was due to related expenditures made when consumers attended music events. The other half was contributed by activity within the music industry including venues, musicians and other businesses involved in live music. The table also shows that, like the overall music industry, the consumption induced effects were almost double the production induced effects. Table 3 presents the same detail for employment on an fte basis and can be interpreted in the same way.

Table 3 Economic contribution of live music to South Australia, GSP ($m), 2015/16

Source: EconSearch analysis

Table 3 Economic contribution of live music to South Australia, employment (fte), 2015/16

Source: EconSearch analysis

References

Adelaide Fringe 2017, Adelaide Fringe 2017 Annual Review, Adelaide, July.

APRA AMCOS 2017, EconSearch Data Request: Member and Licence Data for South Australia (confidential), Sydney, July.

Australian Bureau of Statistics 2014, 5271.0 - Australian National Accounts: Cultural and Creative Activity Satellite Accounts, Experimental, 2008-09, Canberra, February 2017.

Australian Bureau of Statistics 2015, 4114.0 - Attendance at Selected Cultural Venues and Events, Australia, 2013-14, Canberra, February.

Australian Bureau of Statistics 2016a, 5249.0 - Australian National Accounts: Tourism Satellite Account, 2015-16, Canberra, December.

Australian Bureau of Statistics 2016b, Census of Population and Housing, Canberra, July 2017.

Bell, P. 2000, Weighting and standard error estimation for ABS household surveys, Australian Bureau of Statistics, Canberra, November 2011.

Live Performance Australia 2016, Live Performance Industry in Australia: 2015 Ticket Attendance and Revenue Survey, November.

UNESCO. (2015). Adelaide | Creative Cities Network. Retrieved from http://en.unesco.org/creative-cities/adelaide

Disclaimer

The assignment is a consulting engagement as outlined in the ‘Framework for Assurance Engagements’, issued by the Auditing and Assurances Standards Board, Section 17. Consulting engagements employ an assurance practitioner’s technical skills, education, observations, experiences and knowledge of the consulting process. The consulting process is an analytical process that typically involves some combination of activities relating to: objective-setting, fact-finding, definition of problems or opportunities, evaluation of alternatives, development of recommendations including actions, communication of results, and sometimes implementation and follow-up.

The nature and scope of work has been determined by agreement between BDO and the Client. This consulting engagement does not meet the definition of an assurance engagement as defined in the ‘Framework for Assurance Engagements’, issued by the Auditing and Assurances Standards Board, Section 10.

Except as otherwise noted in this report, we have not performed any testing on the information provided to confirm its completeness and accuracy. Accordingly, we do not express such an audit opinion and readers of the report should draw their own conclusions from the results of the review, based on the scope, agreed-upon procedures carried out and findings.

Appendix 1 Detailed Economic Contribution Results

Appendix Table Economic contribution of the music industry to South Australia, employment and income, 2015/16

Source: EconSearch analysis

Appendix Table Economic contribution of the music industry to South Australia, output and GSP, 2015/16



^a Total output for combined sectors is lower than the sum of output for individual sectors as it excludes transfers between sectors to prevent double counting.

Source: EconSearch analysis

Appendix Table Economic contribution of live music to South Australia, employment and income, 2015/16

Source: EconSearch analysis

Appendix Table Economic contribution of live music to South Australia, output and GSP, 2015/16



^a Total output for combined sectors is lower than the sum of output for individual sectors as it excludes transfers between sectors to prevent double counting.

Source: EconSearch analysis

1^ Drawings are income drawn by business owners from their business’ operating surplus.

2^ The survey sample was limited to people over 14 years of age for ethical reasons. We allowed responses from people under 18 years of age (but no less than 14) as the data were not political or private in nature.

3^ Adding the total hours worked each week by the 6,300 workers and dividing by the number of hours in a full-time week (assumed to be 37.5 here) calculates the number of fte jobs (around 4,500) (see Section 2.1.1).

4^ Flow-on effects are the effects of the broad economic activity that begins with the music industry and spreads out across South Australia as businesses supply one another, pay their employees and sell consumption goods to households (see Section 2.1.2 for an explanation and Appendix 1).