Since the music submarket is very heterogeneous, it is difficult to generalise about the industry’s economic development as a whole. General statements tend to be only valid for individual segments. For example, those sectors of the market primarily aimed at exports and, in particular, the craft production of music instruments, were more susceptible to crises than the music trade or musical theatres. Nonetheless, it is still clearly evident that the music industry in total has recovered.
Across the music market, the shift to digital media has created a sense of a new era about to start. Yet aside from the intensive focus on virtual products and the immense growth rates in this area, the Federal Music Industry Association (BVMI) reports a continuing demand for physical sound carriers with sales still accounting for over 75 percent of turnover. Admittedly, though, over the longer term, this subsector does show a steady decline in sales.
IFPI, the International Federation of the Phonographic Industry, states that in 2013 the music industry’s global sales amounted to over US$ 16 billion. This figure is down 3.9 percent over 2012, largely due to the sluggish music market in Japan (with sales there dropping by 17 percent over 2012).
Companies have profitably exploited the digitisation of music, not only in Germany but also around the world. Globally, revenues from the digital music business rose by four percent and now account for 39 percent of the entire market. At present, then, music consumption and production is undergoing a global paradigm shift.
With a digital share of 19 percent, Germany is centrally placed in the European rankings. In 2013, the nationwide revenues from digital business rose in total by 12 percent to 328 million euros. Digital consumption is set to increase further as Germany expands its digital broadband network.
Various streaming services became established in the wake of Germany launching its digital network. Since 2006, these have been offering a range of subscriber services that have been very well received. The streaming services as a whole presently report 28 million subscribers worldwide. For example, the commercial music streaming service Spotify, whose headquarters in Germany are located in Berlin’s Friedrichstrasse, is the global market leader in this sector with over six million paying subscribers. According to the Federal Music Industry Association (BVMI), the turnover of the streaming services rose by 91 percent from 2012 to 2013. In this business model, the record labels also earn on each song played. Since 2008, Spotify has transferred US$ 500 million to the record companies in licensing fees. At present, Germany has 19 streaming services providing access to around 30 million titles. Despite the growth in legal download services, the issue of illegal use and the legal grey area has not yet been resolved.
Berlin is renowned globally as one of the world’s most exciting loca-tions for creativity, innovation, originality and authenticity. This also applies especially to the music business, not least for its pioneering mix of music production, festivals, live venues and club events. There is an enthusiastic audience across the entire spectrum of genres, from electronic to classical music. The Berlin music scene is supported by the special interest groups based here, such as the Association of Independent Music (VUT), the Federal Music Industry Association (BVMI), the Berlin Music Commission and the Club Commission.
In early 2013, the Berlin Senate set up the Musicboard project under Katja Lucker, appointed as Berlin’s music representative, with the aim of promoting the city’s pop music scene and strengthening its cultural and economic visibility and appeal. Initially, Musicboard was granted an annual budget of one million euros for fund ing artists, arranging events and infrastructural investment. Musicboard also functions as a point of contact for the music scene’s issues and concerns.
Berlin has an optimal infrastructure for music, both in the amateur and professional sectors. The 155 music schools across Berlin’s twelve boroughs have a total of over 540,000 students registered for music lessons. The city’s landscape of higher education institutions for music is unique throughout Germany with around 1,830 students enrolled, for example, at the Berlin University of the Arts (UdK) and the Hanns Eisler School of Music Berlin, training to become musicians, sound engineers or sound designers. Berlin’s opera houses, theatres and concerts halls are among the city’s leading employers, providing jobs for nearly half of all those working in the city’s music industry.
As well as hosting such major music companies as market leader UNIVERSAL MUSIc DEUTScHLAND, the subsidiary of Universal Music, and DEAG DEUTScHE ENTERTAINMENT AG, Berlin also has a diverse and multifaceted festival, event and club scene. Berlin’s music landscape also includes over 250 venues and around 150 music publishers, from the ROLF BUDDE MUSIKVERLAG or the MEISEL GROUP OF COMPANIES, one of the leading independent music pub¬lishing companies in Germany, to the Berlin office of international classical music specialists BOOSEY & HAWKES. The city is also home to over seventy recording studios, including the HANSA STUDIOS, and such internationally renowned orchestras as the BERLIN PHILHARMONIKER under Sir Simon Rattle.
The BERTELSMANN MUSIC GROUP (BMG), one of the leading players in the music industry, is also headquartered in Berlin. The Group’s sales are constantly rising with growth in turnover of be tween 300 and 500 million euros predicted over the next four to five years. In 2012, UNIVERSAL MUSIC DEUTSCHLAND reported sales amounting to 31 million euros. These companies are not included in the table above since they have been categorised as part of a different set of data. 4 The same applies to the discos and clubs 5 which, according to the official figures, generated a turnover of 17 million euros in 2012.
Over ten percent of music companies in Germany are headquartered in Berlin. In a national comparison, the city has an above-average concentration of businesses and entrepreneurs in ticketing, record¬ing studios, musicians and composers, publishers and concert promoters. The figure for music industry companies in Berlin has increased by nine percent over 2009, while the jobs in this sector rose by over eight percent by 2013. Despite a changing value-added chain, Berlin’s music sector returned a growth in turnover of over 60 percent from 2009 to 2012.
The turnover development varies considerably in the individual sectors of the music industry. Music publishing and recording studios showed the strongest growth; in contrast, the reproduction of recorded media experienced a drop in sales of over nine percent compared to the previous year.
The number of jobs in the different music industry sectors mirrors this development with, for example, two-digit growth in the retail trade with musical instruments, printed music and accessories as well as publishing of sound recordings (17 percent and 11 percent respectively). Only the auxiliary technical services experienced a marked downturn, with a drop in sales of almost 20 percent. Approximately one third of all those employed in Berlin’s music sector are in jobs subject to social insurance contributions. In comparison to other market segments in the creative industries, this is below ave¬rage and hence harbours a significant potential for growth.
Quite apart from the leading companies cited above, Berlin can boast innumerable composers and producers, many working as freelancers. The Berlin labels with a national and international reputation include, for example, JACK WHITE, MOTOR MUSIC, PIRANHA, EMBASSY OF MUSIC, K7, GET PHYSICAL, TRAUMTON and
many more. On the international music scene, Berlin is the acknowledged capital of electronic beats. Here, the Berlin clubs play a major role. Not only have they steadily developed into a major magnet for tourists to the city, but they also offer signifi cant potential for innovation in the cultural sector.
In particular, the club landscape is now unimaginable without software producers such as ABLETON, NATIVE INSTRUMENTS or MAGIX and their music software solutions. Berlin has also become home to a rich diversity of online platforms, such as BEATPORT or TONSPION, which provide access to a broad range of legal downloads. Other new companies in this industry sector founded over the last years in the city include, for instance, the SOUNDCLOUD portal and such start-ups as TAPE.TV, WAHWAH FM and AUPEO, as well as a broad spectrum of new service providers offering administration and accounting services or expert advice on copyright and the clearing of rights. The music industry companies set up in Berlin or moving here testify to the city’s key role in attracting creative workers and entrepreneurs, and above all underscore the impor-tance of Berlin as an innovative music metropolis.
Berlin’s music industry is not only home to an exceptional range of music genres and types of music companies, but this diversity is equally evident in the events on and about music regularly drawing leisure and trade visitors here in large numbers. Every year, the ECHO AWARDS, the most important music prize after the Grammy, are presented in Berlin. The city also hosts a wide variety of annual music festivals including, to mention just a few, the FETE DE LA MUSIQUE WORLD MUSIC DAY, THE CLASSIC OPEN AIR FESTIVAL and the BERLINER TAGE FÜR ALTE MUSIK early music festival. The Berliner Festspiele puts on a wealth of festivals every year, from the MaerzMusik – Festival of Contemporary Music to the Musikfest Berlin and Jazzfest Berlin.
The BERLIN MUSIC WEEK, launched in 2010, provides Germany’s capital city with a series of events to present a wealth of activities, enhance communication and drive forward synergies. This broad and cooperative platform strengthens Berlin as a location and its international reputation as a music hotspot. Rather than solely being a music industry event, BERLIN MUSIC WEEK encourages cooperation with the steadily growing start-up scene and creates many new promising formats. It provides an interface for contact between music fans, the trade audience, the media and political spheres, and offers a platform where they can pursue their interests, generate value added and discover inspiring niches. The long term objective is for the BERLIN MUSIC WEEK to become one of the largest and most popular music festivals, establishing the city in the top rank of the world’s music capitals.