Digital developments and the music industry: Changes in the ecosystem, challenges and economic impact, evidence from Greece

ΙΟΒΕ/FEIR in May 2023 published a report regarding the music production and reproduction ecosystem in Greece, assessing the contribution of this ecosystem to the country’s economy and highlighting the main challenges it faces[1]. The music production, reproduction and use ecosystem has been undergoing radical reformation in recent decades due to technological developments and changes in consumer habits. With the penetration of digital technologies, the market for physical music storage media has declined, while new music streaming streaming platforms have grown rapidly. These changes have brought structural changes to the ecosystem’s operation and the payment procedures of creators, musicians and other professionals.

The music ecosystem of Greece has not been affected homogenously. The effects are strong in the pre-recorded media manufacturing and trading industries, which continue to experience a significant decline in economic activity. Employment in the sector shrunk to 192 jobs in 2019 from 468 jobs in 2015 and 687 jobs in 2008. Similarly, in the retail trade of audio and video recordings, employment declined over the same period from 1,462 to 476 and 407 jobs, respectively. By contrast, employment in recording and music publishing has remained relatively stable, at lower levels than before 2010. Indicatively, the number of people employed in this sector totalled 598 people in 2019, from 509 people in 2015 and 955 people in 2008. A strong recovery after 2015, and until the outbreak of the pandemic, was recorded in industries such as bars and restaurants that use music as an input to their economic activity.

What is more, there is a significant decline in music piracy over the internet in Greece by music end users. In particular, the number of visits to websites and apps with pirated music content is estimated to have decreased by 71% from December 2017 to December 2020. However, Greece remains higher than the EU average (0.82 vs 0.60 monthly hits per user in 2020).

As part of the project, a field survey was conducted through telephone interviews, in collaboration with the company DataPower SA., to capture the habits and consumption behaviour in relation to music. The survey concluded that music plays a major role in people’s daily lives, yet a relatively low share of the listeners pay for music products and services. About 4 out of 5 respondents listen to music daily; of these people, 4 out of 5 listen for at least 1 hour a day. Radio dominates as a medium with 76.7%, followed by streaming services with 54.7% of listeners. Meanwhile, 39.7% of listeners do not pay for music, while 41.1% pay less than €100 per year to buy music, attend concerts and pay subscriptions. Finally, 39.5% of respondents said that paying for music potentially influences their choice of dining or entertainment venue.

In addition to the survey of music listeners, the study carried out three more surveys – businesses that use music for their operations, musicians and creators. The survey of professional music users revealed that music contributes significantly to the value of the product offered by these sectors. Yet, a relatively high share of businesses are unwilling to pay for the relevant rights. Specifically, 85.6% of the surveyed companies use music, and 68.6% said they would not operate as successfully without music. The absence of music due to the restrictive measures during the pandemic is estimated to have negatively impacted customer numbers, average length of stay and average spending in the food services. Despite acknowledging the value of music, only 56.4% of the music users consider it reasonable that music creators demand payment, while 62.2% of the users state that they pay for copyrights. Of the businesses that pay for copyright, 75.6% spend less than €500 a year.

On the side of musicians and music creators, low levels of payment, employment and social security issues, and intellectual property management concerns emerged as the most important issues. It is estimated that royalties are the major source of income for 40.6% of the creators, followed by concerts & performances with 38.1%. For musicians, concerts &performances and appearances in entertainment venues are by far the most important sources of income. Only 4.0% of the creators consider that the payment of royalties is at the desired level in Greece, while almost 8 out of 10 musicians consider that they are not adequately remunerated.

Regarding its economic footprint, the music ecosystem in Greece generates directly or indirectly more than €200 million in GDP terms per year (0.11% of GDP). Music production and reproduction activities support about 5,400 jobs (in full-time equivalents). Improving intellectual property rights management in Greece could, under certain conditions, increase the impact to €300 million in terms of GDP and to 7.900 full-time equivalent jobs.

Strengthening the economic footprint of the music ecosystem and ensuring sustainable conditions for its operation requires significant improvements in its institutional and legal framework. In this regard, the report concludes with a number of policy recommendations, in the direction of  strengthening copyrights management, educating creators, musicians, users and the public regarding the significance of intellectual property rights, enhancing employment rights, supporting new artists, strengthening musical education, and promoting the Greek music culture abroad.

[1] The study can be found (in Greek) here: http://iobe.gr/research_dtl_en.asp?RID=292

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