Analysis Of The Australian Recording Industry

Choose one sector from the key sectors of the entertainment industry listed below.

Provide a analysis of your chosen sector, and its role within the Australian market. Aspects to examine include, but are not limited to:

Players in the sector
Market characteristics (e.g. size, growth, evolution), revenue source
How the market operates (e.g. monopoly, oligopoly), % of GDP
Comparison with other markets worldwide (competition, etc.)
Pricing (how products in this sector are priced)
What contributes to the assessment value
Operation expenses
Elasticity (how different offerings have different elasticities, i.e. premium priced items vs standard or lower priced items)

These suggestions are not an exhaustive list, they should serve only as a starting point.

Key sectors in the Entertainment Industry:
1.The Australian Recording Industry
2.Australian Music Festivals
3.Australian Musical Theatre
4.Australian TV
5.Australian Movies
6.Australian Digital Music Market
7.Australian Music Retail
8.Australian Performing Arts (excl Musical Festivals & Musical Theatre)
9.Australian Music Education
10.Australian Music Publishing

Key sectors in the Entertainment Industry

The Australian Entertainment Industry Association is an organisation of employers who all are connected to the entertainment industry. Digital recordings is always well represented in Australia. During 200, the sales of albums were increasingly falling. On the other hand the digital sales grew very fast. The demand pattern of the music industry have been changing.

There had been few legislative changes faced by the recording industry. One of them is the copyright enforcement. The second one is private copying where consumers are allowed to make  a copy of acquired recording. The major recoding industry includes Festival, Universal, REA, CBS and EMI. The recording industry of Australia had achieved it fastest growth in 2017 in the last twenty years. On the other hand physical music continued to decrease in revenue. There had been a growth of 10.5% for the last ten years (Bernstein,  Weissman  & Sekine, 2013). The achievement was basically largely due to the success of the streaming services. The physical sales however continue to fall in the downward trend. The music industry comprise of those industries that earn money by creating songs, recordings of video and selling of the live concerts. The Australian Recording Industry Association which comprises of distributors and record labels which are small through record companies. The wholesale value of the recording industry fell down by ten percent. The key reason behind the downfall of streaming is that digital downloads brings in more profit. The music market of Australia has been the sixth largest in the world. The creative sector is usually quite small compared to the industries around the world( Cunningham, 2010). It is estimated that the music industry of Australia contributes around $4 to $ 6 billion to the Australian economy. Contemporary music industry generated revenue around $2.5 billion annually. The music industry of Australia had also generated jobs over a large scale. The small business of Australia comprises of one percent of Australian music and performing arts. This industry also contributed to the employment growth.

The Australian Recording Industry is represented by a trade group called The Australian Recording Industry Association formed in 1983 which then replaced Australian record manufacturers. The trade group was formed by the six major record companies. The recording industry of Australia. Australia had been the sixth largest music market in the world in terms of revenue. The recording industry is run by number of different organizations like The Australian independent Record Labels Association, The Australian Music Publishers Association, Phonographic Performance Company of Australia and many more. The industry has experienced the highest growth rate since 1996 and the value of the market in 2017 itself was A$391 million( Fagerberg, 2013). The streaming service also earned a lot and the revenue from the streaming service itself was A$213 million.

Market characteristics

The main sales statistics of the recording industry is done by the ARIA. Australian recording industry faces huge competition from the United States of America. The recording industry is made up  of music distributors, record labels and artists. Different kinds of workers work in the recording industry. The structure of the industry works in a quite different way. At first after the music had been written, it is promoted and distributed. There are different types of revenue earned by the recording industry. One of them is digital which includes revenue earned downloads and streaming then comes physical which includes revenue earned from selling CDs and cassettes. The primary source of revenue include physical and digital. Synchronisation is the  another channel of revenue where revenue is generated from synchronisation of the music. When revenue is earned from endorsements and merchandise, it is called ancillary    The main players of the recording industry are the artists, distributors and the record labels. The work of the artists is to perform music. After the artists finishes writing the music it is the job of the record labels for marketing and producing the music. The famous record labels of the recording industry are Sony Music, Warner music and the Universal Music. The music distributors then by making physical copies like Cds produce and sell it to the general public.

Due to the digital change there had been a major disruption in the recording industry of Australia and the sales declined to 11%. The major contributor to the Australia’s copyright industry had always been music.The second challenge faced by the recording industry of Australia is diversification. Due to digitalisation, Global financial crisis had increased the diversification of the music industry. There had also been an increase in illegal downloading which is also an issue faced by the recording industry. The illegal downloading of music is quite common in Australia. Another kind of challenge is the music tax. Live music performance by the artists are also on a rise which can also be considered as a challenge faced by the recording industry. Another major challenge faced by this particular industry is through usage of mobiles. Revenues are nowdays also collected from youtube. One of the real challenge is to sell songs to the public. Therefore it is very critical for the performance marketer to sell songs. Therefore marketing music and selling music related products online are one of the key challenges. The recording industry usually needs microphones, CDs and softwares to perform.

Revenue sources

In case of streaming music pricing had always been an issue. The recording industry is usually highly competitive all over the world. Most of the expenses goes into advertisement, promotion and for publicity of the artists. The pricing of the CDs have been slashed down due to the innovation of the digital world. Computers are one of the necessities in this industry as the recording studios are mostly digital. Most advanced computers are therefore highly priced. One of the primary software used in the recording industry is the Digital Audio Workstation which is used for editing and mixing music is priced anything between  $300 to $900. Microphones, headphones, mic, audio interface are some of the instruments which are quite heavily priced.

As it can be seen from the above discussion, there is good amount of growth prospect to the Australian Recording Industry and as per the future prospect of the same, it is expected to grow by a large extent by the end of 2020 (Donoughue, 2018). In addition to this, under the oligopoly market structure of the recording industry in Australia, it can be seen that the firms utilize the predatory pricing policies that allow them to gain much amount of profit from the wide market of the industry. As per the assessment, it can be seen that, with the rise in the potentiality of the industry, it is expected that Australian recording industry is going to enhance its reach and potential by a large extend by the next one decade, with the growth rate of 7.5%. As of now, the organization is enhancing with the growth rate of 10% compared to the growth rate of 2010 and if the growth rate of previous year is considered, then it can be seen that the industry has grown by 54% showcasing the large amount of rise in the overall revenue of the industry (Australiacouncil.gov.au., 2018). Digital world of Australia is providing more service to the large audience, which is allowing the same to have greater amount of operational value and as per the assessment it would see strong upward trend. As per the rise in the domestic demand of the recording industry it can be expected that the performance of the industry will remain good by the end of these decade and in the coming years, it would face good amount of growth.

As per the statistics it can be seen that the Australian recording industry has been facing large amount of potential during the present day, however, the cost of the same has also been aggravated by a large extent. Under the illegal downloading of the music and videos, it can be seen that Australian recording industry has been facing issues with their operational cost. More than 3.6 million utilize the online media sources to download and avail the music from the illegal sources that makes it hard for the industry to control the market expenses (Musicinaustralia.org.au., 2018). As per the US and Australia joint survey, it has been observed that most of the population who showcase economic demand in front of the Australian Recording Industry is aged between 25 years to 34 years and the same age group download music illegally depicting the controversial situation of the Australian recording industry. Moreover, rise in the illegal downloading is also enhancing the cost of operation for the Australian Recording Industry, which is allowing the same to have good amount of performance disorder with the rise in the internet services.

Elasticity is one of the factor that depends upon the relation between the supply and demand with the price level (Dixon & Nassios, 2016). With higher relation, elasticity becomes higher that allows a small change in one of the factors to showcase a large amount of impact on the overall performance of the economy. As it can be seen from the Australian Recording Industry, the good can be considered as the luxury good and it has positive relation with the elasticity of income. With rise in the price, there would be rise in the demand of the same; however, considering the different price level and the market structure of the Australian Recording Industry, it can be seen that there is different magnitude of elasticity (Conlon & Perkins, 2018). Premium prices products showcase negative relation with the income, whereas, standard or lower prices items will have positive elasticity.

Reference

Australiacouncil.gov.au. Retrieved 5 August (2018), from https://www.australiacouncil.gov.au/workspace/uploads/files/the-music-recording-sector-report-2012.pdf

Bernstein, A., Weissman, D., & Sekine, N. (2013). The global music industry: three perspectives. Routledge.

Conlon, R., & Perkins, J. (2018). Wheels and deals: The automotive industry in twentieth-century Australia. Routledge.

Cunningham, S. (2010). The media and communications in Australia. ReadHowYouWant. com.

Dixon, J. M., & Nassios, J. (2016). Modelling the impacts of a cut to company tax in Australia. Centre for Policy Studies, Victoria University.

Donoughue. P. (2018). The music business just had its best year of growth since the Macarena. ABC News. Retrieved 5 August 2018, from https://www.abc.net.au/news/2018-04-16/music-business-best-year-since-1990s-aria-figures/9654322

Fagerberg, J. (2013). A technology gap approach to why growth. Output Measurement in Science and Technology: Essays in Honor of Yvan Fabian, 16, 33.

Fudenberg, D., & Tirole, J. (2013). Dynamic models of oligopoly. Routledge.

Gibson, C., & Connell, J. (2016). Music festivals and regional development in Australia. Routledge.

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The Australian Recording Industry - Music in Australia - Knowledge Base. (2018). Musicinaustralia.org.au. Retrieved 5 August 2018, from https://musicinaustralia.org.au/index.php/The_Australian_Recording_Industry#Industry_Issues_Raised_by_ARIA

Watson, A. (2014). Cultural Production in and beyond the Recording Studio. Routledge.

Wikström, P. (2013). The music industry: Music in the cloud. Polity.