Musicians winning – record companies losing

16 September 2010

Following ten years of digitised music, the income of the average musician has increased by 66%. The only losers in the digital music revolution are the traditional record companies. These are the findings published in a study carried out by Richard Bjerkøe and Anders Sørbo, master’s degree students in business and economics at the BI Norwegian Business School.

Their master’s thesis, ‘The Norwegian Music Industry in the Age of Digitialization’, shows that the increase in musicians’ income is due to revenues from concerts,  remunerations and government subsidies between 1999 and 2009, while actual record sales were halved during the same period. However, the drop in record sales has a negligible impact on individual musicians, since they receive on average only 15% of those revenues, whereas they receive on average 50% from concerts and 80% from collected remunerations.

“In the interviews we conducted with a number of musicians and music products, the musicians said that they were losing a lot of money due to digitisation, while the figures show that it is the record companies, not the musicians, who are losing out," say Bjerkøe and Sørbo.

“The drop in record sales also means that the record companies are losing their significance as a launch pad for new artists and that recordings are to an increasing extent serving as business cards, or advertising opportunities, for drawing audiences to the concerts.

Espen Andersen, associate professor at the BI Norwegian Business School, acted as supervisor for the thesis. He thinks that the conclusion that musicians must draw is that they should expect to earn an increasing portion of their income from concerts and from air time on radio, TV and internet-based streaming services. The musicians must also take on more responsibility for their own marketing work. The record companies seem to be facing an uncertain future and will have to redefine their role within the music industry.

Facts:

  • Revenues from concerts increased by an average of 136% between 1999 and 2009.
  • Remunerations from TONO, Gramo and others increased by 108% between 1999 and 2009.
  • Government subsidies increased by 154% between 1999 and 2009.
  • The number of active artists has risen by approximately 28% during the same period.
  • All figures are adjusted for inflation.
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