Ágúst Einarsson, Nordic Music, 13th of October 2006 1

Dr. Ágúst Einarsson Professor

University of Iceland

Faculty of Economics and Business Administration

agustei@hi.is, www.agust.is

The Nordic Music Sector, Nordic Co-operation and

Creative Industries

Reykjavik 13th of October 2006

Ágúst Einarsson, Nordic Music, 13th of October 2006 2

The Nordic Music Sector

The Nordic music industry is a growing industry

Related industries, such as music videos and software play an increasing role

No clear boundaries between sectors, such as record companies, publishers and distribution

Tax reduction could be very effective

Education and music schools are among the most important factors

Ágúst Einarsson, Nordic Music, 13th of October 2006 3

Composers

Musicians

Producers

Distributors

Consumers

Production process in the music industry

Ágúst Einarsson, Nordic Music, 13th of October 2006 4

Characteristics

Supporting factors

Music education

Business education

Financing

Primary activities

Composers Musicians Producers Distributors Consumers

InstrumentsNational, international and global impact

Enterprises-records-concerts-videos-films-DVD

RadioTVInternetShops/retailCinemaConcert hallHomes

Demand depending on quality, utility, taste and price

Value Chain in the Music Industry

Ágúst Einarsson, Nordic Music, 13th of October 2006 5

More business education is vital

A better coordination between cultural and business policy is needed

Export is the key to success, as the Nordic market is relative small

More research and better data are required

The Nordic Council of Ministers can play an important role in supporting the Nordic music industry

Ágúst Einarsson, Nordic Music, 13th of October 2006 6

Employment in the music industry

Retail value of records in Million USD

DenmarkFinlandIcelandNorwaySweden

3.000 - 7.5003.000 - 7.500

1.0007.500 - 9.000

6.000 - 15.000

180120

15250240

Ágúst Einarsson, Nordic Music, 13th of October 2006 7

Global music market is approximately 33 billion USD

The Nordic music market is about 3% of the world record market, but represents only 0,5% of the world’s population

Denmark’s export of music is 100 Million $ and the turnover of Denmark’s music industry is 900 Million USD. It comprises 0,2% of all Danish industries

Sweden is exporting for 920 Million USD of music products

In the global industry only 2 of 10 albums succeed to recover production costs through selling. It is a risky business

Ágúst Einarsson, Nordic Music, 13th of October 2006 8

The turnover of the music market in Finland is 700 Million USD

The music sector is a significant part of the Icelandic economy, 1% of the GDP

The number of students attending music schools has grown by a factor of almost eleven over the last four decades

The organisation of music schools in Iceland, with its mixture of private and public enterprises, is excellent

Have all cultures the same opportunity to make their influence felt?

Small areas often don’t have the financial ability to spread their influence

Ágúst Einarsson, Nordic Music, 13th of October 2006 9

Expenditures of the general government to cultural activities for 59 countries

Country % Country % Country %

Iceland (2004) Estonia (2001)New Zealand (2004)Luxembourg (2004)Latvia (2004)Georgia (2004)Tajikistan (2001)Kazakhstan (2004)Belarus (2004)Iran (2004)Kuwait (2003)Denmark (2004)Netherlands (2004)Lithuania (2004)Russian Federation (2004)Hungary (2002)Israel (2004)Slovenia (2004)Mauritania (2003)Portugal (2002)

6.185.555.004.853.663.653.533.413.263.203.173.093.082.952.842.782.782.712.622,62

Canada (2004)Spain (2002)Australia (2004)Czech Republic (2004)Norway (2004)Switzerland (2002)Finland (2003)Croatia (2003)Italy (2003)Belgium (2003)Mauritus (2004)Romania (2002)Slovak Republic (2003)Austria (2003)Bulgaria (2004)Ukraine (2004)Sweden (2003)Bolivia (2004)Poland (2003)Ireland (1997)

2.602.592.582.542.532.462.432.402.402.382.362.332.102.042.021.981.851.691.641,62

Bhutan (2004)Moldova (2004)France (2003)Malta (2001)Germany (2003)Albania (2002)Lesotho (2003)Thailand (1996)El Salvador (2003)Kenya (1994)United Kingdom (2004)China (2003)Indonesia (1993)United States (2004)Greece (2003)Costa Rica (2003)South Africa (2002)Japan (2003)Argentina (2004)

1.591.521.481.481.421.391.361.151.141.011.010.980.930.890.880.760.710.440.39

Ágúst Einarsson, Nordic Music, 13th of October 2006 10

The Nordic Co-operation

Nordic Council established 1952Cultural co-operation, agreement 1972Goals of the co-operationWays of reaching these goalsThree areas:• Nordic countries• neighboring areas (Baltic States, North-West

Russia, Arctic region)• European Union (EU) and European Economic

Area (EEA)

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Priorities now are:• children and young adults• professional work of art and culture• minorities• non-governmental organizations (NGO)

The Nordic ministers of culture are responsible for the co-operation

Two funds: the Nordic Cultural Fund and the Nordic film and Television Fund

Ten Nordic institutions, including the Nordic Houses

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Art co-operation in the following institutions:

The Nordic Literature and Library Committee (NORDBOK)

The Nordic Music Committee (NOMUS)

• to promote co-operation by awarding grants

• to increase composition, teaching and number of performances

• secretariat of the Nordic Council Music Prize

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The Nordic Center for the Performing Art (NordScen)

The Nordic Institute for Contemporary Art (NIFCA)

The Nordic Museum Committee

EU and EEA activities according to the Maastricht treaty

Four Nordic Cultural prizes

Ágúst Einarsson, Nordic Music, 13th of October 2006 14

Reform decided 2005, full effect 2007

• more flexibility

• co-operation

• new working procedures

• response to the challenges of the cultural life in the Nordic region

• departure from sector thinking

• thematic ventures

• programs with limited time frame

Ágúst Einarsson, Nordic Music, 13th of October 2006 15

Three new programs:• The Nordic program of computer-games

to increase the quality of games for children and young people

• Mobility and residence program for artists• Program for Nordic art and culture co-

operation (cross-sectoral art program)Closing institutions:The Nordic Literature and Library Committee

(NORDBOK)The Nordic Music Committee (NOMUS)

Ágúst Einarsson, Nordic Music, 13th of October 2006 16

The Nordic Center for the Performing Art (NordScen)

The Nordic Institute for Contemporary Art (NIFCA)

The Committee for Children’s and Youth Culture

The Committee for Culture and Mass Media Co-operation

The Committee for Culture Projects Outside the Nordic Region

The Committee for the Nordic Museums Co-operation

The Nordic Journalists Center (NJC)

Ágúst Einarsson, Nordic Music, 13th of October 2006 17

Music

Culture

Creative industries

Ágúst Einarsson, Nordic Music, 13th of October 2006 18

Creative industries

advertising, architecture, art and antiques market, crafts, design, designer fashion, film, video and cinema, interactive leisure,

libraries, museumsmusic, performing arts, photography,publishing,software and computer

services, software, television, radio and

media

Ágúst Einarsson, Nordic Music, 13th of October 2006 19

The concept of creative industries is an opportunity for the Nordic countries to become a global center for research, education and innovation in the creative industries

An important aspect of any discussion of creation is to realise that creation often takes place in clusters

For countries with a relatively low population it is important to stress cultural affairs

Ágúst Einarsson, Nordic Music, 13th of October 2006 20

We can look at the individuals in the separate occupations and classify their work into the following four categories, i.e.primary production, manufacture, services and creative industry

•Four dimensions instead of three dimensions

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The Global Creativity Index (GCI). 2004SwedenJapanFinland United StatesSwitzerland DenmarkIceland Netherlands NorwayGermany CanadaAustralia BelgiumIsrael United Kingdom

0.8080.7660.6840.6660.6370.6130.6120.6110.5950.5770.5480.5280.5260.5250.517

South KoreaFrance New ZealandAustria Ireland Czech Republic GreeceSpain EstoniaRussiaItaly Ukraine Slovak RepublicHungary Croatia

0.4650.4620.4590.4380.4140.3820.3710.3650.3600.3390.3350.2960.2910.2820.28

Bulgaria LatviaUruguayPoland PortugalChinaGeorgiaArgentinaTurkeyChileIndiaMexicoBrazilPeruRomania

0.2750.2620.2400.2390.2340.2300.2190.1990.1860.1850.1770.1640.1590.1320.127

Ágúst Einarsson, Nordic Music, 13th of October 2006 22

The World Competitiveness Index (WCI), 2006Switzerland Finland Sweden Denmark United States Japan Germany Netherlands United Kingdom Norway Iceland Israel Canada Austria France

5,815,765,745,705,615,605,585,565,545,425,405,385,375,325,31

Australia Belgium Ireland New Zealand South KoreaEstonia Chile Spain Czech Republic Portugal Latvia Slovak Republic Hungary ItalyIndia

5,295,275,215,155,135,124,854,774,744,604,574,554,524,464,44

Greece Poland Croatia China Mexico Turkey Russia Brazil Romania Argentina Uruguay Bulgaria Peru Ukraine Georgia

4,334,304,264,244,184,144,084,034,024,013,963,963,943,893,73

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The Index of Information and Communication Technology (ICT), 2005

United States Denmark Iceland Finland Canada Sweden Switzerland United Kingdom Netherlands Norway South Korea Australia Japan Germany Austria

2,021,801,781,721,541,491,481,441,391,331,311,281,241,181,18

Israel Ireland New Zeeland France Estonia Belgium Portugal Chile Spain Czech Republic Hungary India Slovak Republic Italy Greece

1,161,151,141,110,960,870,560,520,470,360,270,230,190,160,08

Turkey China Latvia Brazil Poland Mexico Romania Croatia Uruguay Bulgaria Argentina Russia Ukraine Peru Georgia

0,00-0,01-0,03-0,04-0,09-0,14-0,23-0,23-0,31-0,31-0,38-0,39-0,49-0,70-0,82

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The Index of Information and Communication Technology (ICT), 2004

Iceland Finland DenmarkUnited StatesSwedenJapanSwitzerland CanadaAustralia United KingdomNorwayGermany Netherlands Israel Austria

1,661,621,601,581,531,351,301,271,231,211,191,161,081,021,01

France New ZeelandIreland South KoreaEstoniaBelgium Spain PortugalChileHungary IndiaCzech Republic GreeceChinaItaly

0,960,950,890,810,800,740,430,390,290,240,230,210,170,170,10

BrazilSlovak Republic TurkeyRomaniaLatviaCroatiaMexicoRussiaUruguayPoland Bulgaria ArgentinaUkraine PeruGeorgia

0,080,03-0,14-0,15-0,23-0,25-0,28-0,36-0,39-0,50-0,51-0,62-0,68-0,91-0,94

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Gross National Income (CNI) per capita at PPP, 2004

United StatesNorwaySwitzerland Ireland Iceland Austria DenmarkUnited KingdomBelgium Netherlands CanadaJapanSwedenFinland France

39.71038.55035.37033.17032.36031.79031.550

31.46031.36031.22030.66030.04029.77029.56029.320

Australia Germany Italy Spain Israel New ZealandGreeceSouth KoreaPortugalCzech Republic Hungary Slovak Republic EstoniaPoland Argentina

29.20027.95027.86025.07023.51022.13022.00020.40019.25018.40015.62014.37013.19012.64012.460

LatviaCroatiaChileRussiaMexicoRomaniaBrazilBulgaria TurkeyUruguayUkraine ChinaPeruIndiaGeorgia

11.85011.67010.500

9.6209.5908.1908.0207.8707.6806.2506.2505.5305.3703.1002.930

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Potential entrants

Threat of new entrantsBargaining power of suppliers

Bargaining power of buyers

Threat of substitute products or services

Industry competitorsRivalry among existing firms

BuyersSuppliers

Substitutes

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Government Firm strategy, structure and rivalry

Factor conditions

Related and supporting industries

Demand conditions

Ágúst Einarsson, Nordic Music, 13th of October 2006 28

The contribution of the music industry to the Gross Domestic product (GDP) in the Nordic countries is from 0,5% to 1%

Estimated proportion of the contribution of the music industry to GDP

DenmarkFinlandIcelandNorwaySweden

0,7%0,6%1,0%0,8%0,7%

Ágúst Einarsson, Nordic Music, 13th of October 2006 29

Huge economic impact through art festivals

Film festivals

Music festivals

Marketing, impulses, tourism

Nordic Music Days

Valuable artistic and economic contribution