Buzzing Down Under – State of the Biz

Published in Impact Magazine


Declining sales of physical sound-carriers, a lively touring market, a thriving publishing scene and as-yet unfulfilled promises of a glorious digital future…Australia, like so many other music markets, faces familiar issues.

“The recession that hit the world music industry did not miss Australia,” explains Universal’s Bob Aird.

Major labels trade body ARIA reported domestic sales of music at Aus$496.7million (€272m) in 2007, down 9.6% over 2006.

The drop in the market seems to be slowing down as ARIA reports a 4% decline in the first half of 2008, compared with the corresponding period in 2007. On the flip side, digital sales rose by 43% over the same period. In 2007, a total of 17.6 million digital tracks were legally downloaded, up 60% on 2006.

And as the market welcomes new subscription models, such as Vodafone’s MusicStation, Nokia’s Comes With Music and the Microsoft-Sanity service Load-It, Stephen Peach, CEO of ARIA and collecting society PPCA, remains confident that the worst of the cycle is now history. “We’re seeing the digital market move ahead,” says Peach. “We haven’t yet got to the point where digital sales have made up for the loss of physical product which is down about 10% in value year-on-year. But digital is looking good, and I’m confident we’ll soon turn the corner.”

According to informed estimates, the indie label sector accounts for anywhere between 25%-32%, and the community’s issues are all too common. “We’ve been treated differently in the digital space,” notes Marcus Seal, CEO of indie Shock Records. He points to indie labels’ body AIR and the independents’ global rights agency Merlin – launched by his former colleague Charles Caldas – as “very important points in the future for helping indies be represented fairly”. AIR is in the process of collating market figures for the first time.

For the 2006/2007 financial year, collecting societies APRA (performance) and AMCOS (mechanicals) posted combined revenue of Aus$189.7m (€104m), up 12.8% on the previous period, with both growth in performance and mechanicals rights.

Although financials were yet to be published at deadline, APRA figures for 2008 are understood to have soared by 8%, while its sister organization experienced a shortfall. “AMCOS revenue was down somewhat,” says CEO Brett Cottle. He notes that the previous year included a one-off sum in regards to a court victory over P2P network Kazaa. Strip that figure out, and the year has been relatively flat, says Cottle.

“Because AMCOS had gone through the preceding five years with very steep growth – in fact AMCOS revenue doubled in five years to 2007 – a flat year in 2008 isn’t seen to be so negative, particularly in the context of fairly dramatic declines around the world,” he adds. The ringtone market is also experiencing a dramatic falloff in revenue, plummeting about 40% in the year.

One of the biggest moving targets on the publishing community’s radar is a digital download royalty-hike case brought by APRA/AMCOS in the Copyright Tribunal last year.

The authors’ societies are hoping to better the current 8% rate which was negotiated in the infancy of the digital market, and the business will be encouraged by groundbreaking cross-industry agreements on digital music rates taking place Stateside.

A decision from Australia’s Copyright Tribunal is expected in mid-2009.

Some are also predicting a hurdle on the horizon for the live scene, particularly the festivals scene, which has been enjoying an extended golden summer in recent years.

The disappearance of Australia’s Great Escape Festival (due to be staged on 4 and 5 October outside Sydney) has started speculation within the sector that saturation, coupled with other factors such as rising living costs, is taking its toll.


Click here for Lars Brandle’s Impact feature on Australia’s music scene.