Indie Music – Trends in Concert Industry.
The regression model discussed in my previous blog Indie Music Industry – Change in Functioning, gives a detailed understanding of the possible relationship of price of indie music videos with record sales of indie music. Initially, only the price of video from 1998-2011 proves statistically significant showing the expected sign for a coefficient on the price of a substitute product. Once the broadband and time trend variables are included, the video price indices of the first period become significant with the latter becoming insignificant. The steady downward trend in price of video during the 2000s may cause multicollinearity with the Internet variables, which display oppositional linear growth. The regression results presented in this section confirm the difficulties facing record sales of indie music, and record companies, over the last dozen years. The negative, statistically significant, coefficients of the internet variables certainly suggest an adverse impact on the real value of music sales. Including a time trend from 2000-2012 allows us to capture not only the internet’s rise, but also its broader implications including shifts in consumer preference, social changes and new channels for distribution and promotion among other aspects.
It is important to note, that the widespread use of the Internet also birthed other phenomena such as social media and online communities, which would play a large role in the music industry as the 21st century continued. As discussed in my blog Indie Music- Trends, with widespread legal digital distribution becoming available in 2004, consumers now at least had the option of purchasing music online, which was reflected by the first growth, a modest 1.4% in indie music record sales by value since 1999. Thus, the role of the rise in Internet and broadband penetration take on a new set of implications regarding record sales expanding to include, not just piracy, but also digital music purchases and the beginnings of new channels of marketing and promotion. The recovery of sales in 2004 may also reflect the RIAA’s key legal victories in the previous year that helped shut down Napster and other similar P2P file sharing services. New developments of the 21st century, though, have expanded consumer selection and means of obtaining music, forcing the price of music towards one that is more reflective of its demand schedule in a free market. The shift is seen as the price of audio is significant in the absence of the broadband and time trend variables, whose further reaching implications may in fact reflect these changes. Although the coefficient on the price of video variable is economically minimal, its statistical significance could highlight downward adjustments in price by different entertainment-related industries that were not similarly made by the recording industry until more recently.
While it may have been appropriate to use the rise in the prevalence of the Internet as a proxy file sharing in the early 2000s, the true implications of the Internet today are far more expansive. Still, when looking at record sales, the time trend is alarmingly negative reflecting the abrupt change to an established and thriving industry that now faces the challenge of adjusting to the digital landscape.
Concert Industry Trends: 2004-2012
The drastic fall of record sales in the early 2000s coincided with consecutive record-breaking years in terms of revenue for the concert industry. The more accessible means of distribution and greater opportunities for consumption, while hurting the sale of pre-recorded indie music, may have served as a powerful sampling mechanism for the promotion of live shows. Since most indie artists generate more income from their live performances than music sales, this would imply the general welfare shift suggested by the literature presented earlier. Although it remains relatively unlikely that concerts could serve as the sole revenue stream for a viable music industry model, its rapid growth offers new, valuable opportunities in the music industry. Using data from PollStar’s “2012 MidYear Report,” I will briefly illustrate and discuss the updated trends in the live music sector, in my next blog. Please share your experiences and I will add them to my future blogs.
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