IFPI report: Music is a €81.9 billion business in Europe contributing to 2 million jobs

By Emmanuel Legrand

The music sector contributed €81.9 billion in 2018 to the economy across the 27 EU Member States and the UK (EU28), according to the report 'The Economic Impact of Music in Europe' penned by Oxford Economics for international trade body the IFPI.  

  The study, based on 2018 data, looked at the contribution to GDP the music sector generated itself, and stimulated elsewhere in the European economy through its procurement and payment of wages; analysed the jobs supported around Europe by the music sector; quantified the music sector’s contribution to government finances in the EU27 and the UK through the payment of taxes in 2018; and highlighted the export earnings generated by the European music sector from sales to businesses and consumers outside the EU in 2018.

  “By investigating how the music sector interacts with the rest of the economy, our study maps how it stimulates economic activity, supports jobs and generates tax revenues throughout the whole of Europe. In doing so, we highlight how the music sector — an ecosystem of large and small firms undertaking a wide variety of activities — directly accounts for a sizeable contribution to the European economy, comparable to the entire economies of several Member States," said Pete Collings, Director of Economic Impact Consulting at Oxford Economics.

A wider footprint

  He added: “However, the sector’s economic footprint extends far beyond its own activities. The purchases it makes from firms throughout Europe support lengthy pan-European supply chains. These multiplier effects reach every part of the European economy, further sustaining employment, delivering tax revenues, and generating GDP throughout the continent.”

  Findings from the report include:  
  > The music sector supported two million jobs within EU28, of which 65% (1.3 million) were in the music sector itself;    
  > It contributed €81.9 billion in gross value added to GDP.  
   > Exports accounted for €9.7 billion worth of goods and services to countries outside the EU28 – of which record companies, music publishers, and audio streaming services generated almost half (€4.7 billion);  
  > The music sector generated tax revenues of €31 billion in the EU28 in 2018. This was equivalent to 19.4% of the entire EU budget in the same year; 

  > The music sector’s gross value added (GVA) contribution amounted to €37.5 billion;  
  > For every €1 in GDP the music sector directly generated in 2018, it supported the creation of an additional €1.20 in GDP elsewhere in the European economy.

  IFPI Chief Executive Frances Moore said that Oxford Economics’ report demonstrated that "music makes a vital economic contribution to the European Union and UK – supporting jobs, boosting gross domestic product and tax payments, and driving exports. At the heart of this contribution are the EU’s 7,400 record companies. In addition to employing nearly 45,000 people across the EU, they invest significantly in other parts of the music sector and make a major contribution to Europe’s exports."

An essential contribution

  Moore added: “For music’s essential contribution to Europe to be sustainable for the long term, fair value must be returned to those who create and invest in music. To enable this, the sector needs a fair legal and policy environment in Europe, and we continue to work with policymakers to achieve this.”

  In the study, the “music sector” was defined as encompassing the following sub-sectors, in accordance with the WIPO Guide methodology: record companies; music publishers; recording studios; authors; performers; artist management; collective management organisations; music radio; music television; digital music services; physical music retail; live music event production; concert venues; touring services; manufacturing and retailing of musical instruments and music equipment; music merchandising; and music teachers.

  Meanwhile, British music industry umbrella organisation UK Music unveiled 'Music By Numbers 2020', its yearly update on the value of the British music sector, showing that in 2019, the UK music industry contributed £5.8 billion (€6.49bn) to the UK economy, up 11% from £5.2 billion in 2018.

Devastating impact of Covid-19

  Employment in the industry reached an all-time high of 197,168 in 2019, up 3% from 190,935 in 2018. The total export revenue of the music industry was £2.9 billion in 2019, up 9% from £2.7 billion in 2018. UK Music also measured the music industry’s direct economic contribution, with music tourism alone contributing £4.7 billion in terms of spending to the UK economy in 2019, up 6% from £4.5 billion in 2018.
 

   

  “This report shows just how valuable our music industry is – and how important it is that we take action to protect it," said UK Music Chief Executive Jamie Njoku-Goodwin (pictured, below). UK Music noted that these figures "do not reflect the devastating impact of the Covid-19 just weeks later in early 2020" and called for urgent help to revive “our world-leading industry."

  The report outlined that due the pandemic and social distancing restrictions, venues were forced to close and that the "buoyant" 2019 figures are unlikely to be repeated in 2020. "The industry now faces a marathon effort to get back on its feet as it strives to return to pre-Covid levels of success as swiftly as possible," said UK Music.

Need for support

  “2019 was a fantastic year for the UK music industry, and we were firmly on track to be one of the great British success stories of the coming decade," said Njoku-Goodwin. “Music By Numbers 2020 shows just how successful our industry was before the catastrophic blow of Covid-19 knocked it down, and how important it is that we get it back on its feet."  

  He added: “When the time comes to recover from this pandemic, our world-leading music industry can be a key part of our country’s post-Covid economic and cultural revival – but we need the right support to get us there.”

  In the foreword to the report, Minister for Digital and Culture Caroline Dinenage said: “The UK music industry is at the heart of our arts and cultural sector, which is the envy of the world. It is a key national asset and something that should make us all proud. Music enriches all of our lives, but it also makes a huge contribution to our economy. However, we know what an immensely tough year 2020 has been for the music industry as a result of Covid-19 which has presented significant challenges for the sector. That is why the Government stepped in with an unprecedented £1.57 billion Culture Recovery Fund to help the sector weather the impact of coronavirus and protect music venues, festivals, and our vital cultural assets.”   

   
  Geoff Taylor, Chief Executive of the BPI, BRIT Awards and Mercury Prize, said the report underlined "the tremendous contribution music makes to the UK’s economy, its culture, and its reputation overseas," but surmised that "next year’s report will tell a bleaker story, and we are calling on government to sustain and expand the support it is giving to the live sector, so that music can play its full role in powering the UK’s economic recovery.”