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Briefing | Music industry grossed US$16 billion globally in 2016 ... And Jamaica got?

Published:Thursday | July 13, 2017 | 12:00 AMDr Andre Haughton
Patrons at last year's Reggae Sumfest event.
Luciano performing at sumfest Reggae Night last year.

What is the Value of the Global Music Industry?

Reggae Sumfest, the Greatest Reggae Festival on Earth, is a week away. Under the theme 'Our Music, Our Festival', the 25 anniversary will be a celebration of Jamaican music. Local and international tourist flock the Second City of Montego Bay to enjoy the greatness. According to the International Federation of Phonographic Industry's (IFPI) Global Music Report, global recorded music revenues increased by more than 5.9 per cent to gross more than US$16.7 billion in 2016. The amount that Jamaica amassed from this total is uncertain, but what we do know is that the country has failed to find the correct formula to negotiate what it deserves. Jamaica - the originator of ska, mento, kumina, reggae, dancehall, and many more - has laid the foundation for the world to emulate, should also be at the forefront of the revenue stream earnings as well. In this regard, the delivery of music must be consistent with changes of consumers' appetite for music consumption, due to change in technology.

How have consumption patterns of music evolved?

The global business of music is constantly evolving; streaming is becoming a favoured method of viewing entertainment. More than 112 million users paid for streaming subscriptions in 2016, which increased global streaming revenue by 60.4 per cent. The digital world is gradually phasing in. Digital income now accounts for 50 per cent of global revenues. The report outlined that the existing value gap remains biggest challenge to sustainable growth of the industry. According to the IFPI, streaming is helping to drive growth in developing music markets. Streaming increased by 20.3 per cent in China, 26.2 per cent in India, and 23.6 per cent in Mexico. If a country can package its music and/or entertainment, these would be excellent markets to explore, especially India and China, where there are billions of people. Digital revenue grew by approximately 17.7 per cent in 2016. The paradigm shift is obvious; revenue generated from the sale of physical music declined by 7.6 per cent and revenue from downloads decreased by 20.5 per cent. IFPI has identified the value gap as being the greatest challenge to revenue generation.

What is the Value Gap?

According to the IFPI, the value gap describes the growing mismatch between the value that user upload services, such as YouTube, extract from music, and the revenue returned to those who are creating and investing in music. The value gap is the biggest threat to the future sustainability of the music industry. User upload video-streaming services, benefiting from the misapplication of 'safe harbours', comprise the world's largest on-demand music audience, conservatively estimated at more than 900 million users. The revenue returning to rights holders through these services in 2016 amounted to US$553 million. By contrast, a much smaller user base of 212 million users of audio subscription services (both paid and ad-supported), that have negotiated licences on fair terms, contributed more than US$3.9 billion.

The European Commission has identified the value gap as a market distortion that needs a legislative fix and has proposed draft legislation that is currently being considered by the European Parliament and Council of Ministers.

What should be Ja's strategy?

Jamaica, given its originality in the music business, has a very rich history that can be exploited if it markets itself properly to the right interests. I was fortunate enough to visit Fleet Street, downtown Kingston, Jamaica, where a very creative display of Jamaica graffiti on the walls running along roadways provides an impeccable backdrop for music videos and movies, these must be fully exploited to increase the livelihood of the people. Many communities are eager to practise garrison tourism similar to the tourism practice in the Favelas in Brazil, but are unable to do so due to lack of understanding of how the process works. Many believe the country is slow to implementing various strategies that are basic, but effective in increasing entertainment and activities that will attract more tourists. Industry coordination is outlined as one of the main strategies for any country to maximise revenue from any activity. In some instances, supporting activities make more money than the actual sporting event itself for the locals. Entertainment, eating, travelling, and sleeping if coordinated, can improve the residual earnings for the Jamaican economy. Jamaica will only benefit from music if all the interest groups coordinate to achieve a national objective. Dean McKellar, who sits on the board of Jamaica's Intellectual Property Rights Organisation, has identified many revenue streams that Jamaica can readily exploit but has not received any support. It appears this country does not really want to increase its income and generate wealth, it is designed to frustrate its people, but I guess diamonds are built in frustration.