THE SWEDISH MUSIC INDUSTRY

During the 1990s, the music industry in Sweden has become a significant exporter. Artists like Roxette, Ace of Base, The Cardigans etc. has been instrumental in creating this up-front position for Sweden, but they’re not the only ones. Producers such as Max Martin and Denniz Pop and video directors such as Jonas Åkerlund and Johan Renck (Stakka Bo) have also contributed to the international success of the Swedish music industry. The success has changed the view, not only on the music industry, but also on culture and entertainment businesses and its economical importance. The exports have experienced a tremendous growth placing Sweden third in the world in music exports only after USA and Great Britain. The effects has been that the music industry has gone from being viewed as an “unserious” or an “underground” business to being a business of great economic importance and one that politicians like to refer to when promoting Sweden as a part of the new economy internationally. These trends can also be seen on the domestic market. A greater regional interest in the music and entertainment industries is apparent all over the country where investments are being made in different regional and local areas.

This survey will focus on different parts of the Swedish music industry. First of all a description of the industry, its actors and the institutions and organisations that are included will be made. Secondly will some quantitative data, related to the first part, be presented to describe the size of the Swedish music industry.

SWEDISH RECORD SALESThe value of the domestic record sales has increased by almost 85 percent between 1990 and 2001. This during a time when Sweden became one of the most prominent actors on the international music arena. The increase in the value of the domestic sales can only partially be explained by the rise of the Consumer Price Index. A larger consumer interest in music and an increasing release rate (re-releases of old vinyl albums on CD) are also factors that can explain the growth. This is further implied by the 20 percent growth in unit sales during the same time (table 2). While the unit sales in albums holds a quite steady growth (except for some of the years) the unit sales in singles changes from year to year. But the single sales are much lower than the album sales which is a fact that is evident all over the world. The value of the single sales was reduced by more than 25 percent between 2000 and 2001.

Table 1: Value of the Swedish record sales 1990-2001 (millions of SEK)

Singles Albums Total1990 62,88 961,56 1024,441991 56,91 1104,72 1161,631992 60,47 1212,92 1273,391993 62,87 1492,68 1555,551994 64,9 1601,22 1666,121995 62,5 1637,39 1699,891996 72,11 1512,98 1585,091997 76,82 1599,54 1676,361998 86,44 1713,04 1799,471999 111,65 1720,99 1832,642000 102,04 1788,29 1890,332001 74,93 1815,00 1889,93(Source: IFPI 2002)

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Table 2: Unit record sales in Sweden 1990-2001 (millions)

Singles Albums Total1990 4,91 22,35 27,621991 4,03 21,74 25,771992 3,35 21,96 25,311993 2,86 24,02 26,881994 2,83 24,53 27,361995 2,39 24,12 26,511996 2,97 22,62 25,591997 3,46 23,67 27,131998 4,34 24,79 29,131999 6,2 25,18 31,382000 5,88 27,32 33,22001 4,46 27,68 32,14(Source: IFPI 2002)

Sweden is one of the countries with the highest record sales per capita ranked number 6 in the world. The Nordic countries all hold a top spot in this category except for Finland.

Figure 1: Countries with highest unit sales per capita 2001

0

0,5

1

1,5

2

2,5

3

3,5

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(Source: IFPI 2002)

DEFINITIONS OF THE MUSIC INDUSTRYThe music industry comprises several different activities. It is a complex network with a number of actors who, despite different interests and presumptions, must work together. The core products and activities of the music industry are sound recordings (CD’s, cassettes, LP’s etc.), live performances, music productions and administration of copyrights. To fully understand the music industry it is necessary to regard it as a compounded industrial innovation system, a cluster. This system can be divided into different areas as described in the figure below. On the one hand there is the aesthetic part of the production chain that consists of the creators of music, on the other, there is the industrial part that consists of industrialists and the distributors. The final part are the consumers who eventually buy the finished product or attend a certain concert. The creators are those who actually make the music i.e. musicians artists, producers etc, or those who hold the rights to a certain recording (usually a production company). The industrialists are those who produce and manufacture the core products (the record companies), those who administrate the copyrights (the publishers) and companies promoting and arranging concerts. The distributors are the channels used to bring the core products to the consumers.

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Figure 2: Different areas in the music industrial cluster

(Source: Hallencreutz 2002)

To view the full system one also has to take machinery and equipment (instruments, recording equipment, computers etc.) and related and associated services into account. The latter consists of, for example, management and marketing, legal services, public agencies and business-related networks (like STIM, IFPI, SAMI etc.) which will be more thoroughly described later. It is important to recognise the music industry’s production system not only as a linear chain of events, rather it is a round production network where some of the different actors has interests ranging from the recording of music to promotion and sales of the finished product. There are a few record companies dominating the Swedish music industry. These companies function as national subsidiaries of giant TNC’s with interests ranging over the entire entertainment market. To simplify the Swedish music industry one can say that it consists of a creating, a producing, a selling and a supporting step (Forss 1999). The most important parts of the industrialists and creators are the artists, record companies tour production companies and the publishing companies.

An artist company’s or artist’s area of activityThere is a wealth of different musical genres and styles, but there are really only two types of artists: those who have their own company and those who do not (and can thus be said to work on a project basis for record companies and music publishers, etc., if they are not just amateurs. Musicians who do not have their own companies are paid “salaries” by record companies and music publishers. In this case, the companies themselves are naturally responsible for paying social fees and tax, just like any other employer.

The three main sources of income for an artist are recording royalties, copyright royalties, and income from concerts. Each of these sources of income accounts for roughly a third of the income of a general artist. The importance of direct income from recording sales has declined somewhat for many, while income from either copyright royalties or concerts has risen. In the case of some artists, what is known as merchandise (shirts sold at concerts, for example) and sponsorships or advertising can also be important sources of income.

Expenses are, to a certain extent, dependent on the nature of the contract between the artist company or artist and the various other parties involved. If one is working with a record company based on a contract that deals primarily with distribution, the expenses/costs are about the same for any record company in the music industry. Examples of expenses include costs for renting recording studios and studio equipment, costs for renting more general facilities, costs for paying studio musicians, costs for paying a mastering studio, costs for copyright licences (NCB), instruments, photographs, stylists, designers, CD producers, video producers, distributors, marketing and PR companies, and costs for pure administrative work, such as bookkeeping and accounting. If the artist has a manager to run part of the business, the manager is also a cost. A contract with a tour production company also incurs costs.

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Producers & suppliers of machinery and equipment

Creators

Copyright- owners

Musicians/artists

Producers/engineers

Industrialists

Publishers

Recordcompanies

Concertproducers/promotors

Consumers

Record buyers

Liveaudiences

Media

Etc.

Distributors

Media

Retail

Clubs

Concerts

Related and associated services

As an alternative to signing an artist contract with a record company, some artists choose to take the primary responsibility for producing recordings themselves. This can be done in many different ways, and licence contracts with the record company that handles distribution and marketing can also take a variety of forms. In general, the agreement between the production company can be presumed to accord with one of the aforementioned models, but hybrid models are also found, and it is frequently the small special clauses in a contract that reveals the way in which a particular record company works or the special needs of a production company/artist.

A record company’s area of activityRecord companies earn money both from the sale and commercial exploitation of recordings. Companies that also distribute recordings or are part-owners of a distribution company also earn money from distribution. It should be noted that distribution is quite an important part of a record company’s business, as this accounts for a considerable portion of the company’s earnings.

As regards the production of new recordings, a record company has basically three options: contract an artist via an artist contract and then rent a studio and hire a producer. The

producer often shares the responsibility for budgeting with the company’s A&R department contract an artist and then outsource then entire production to a production company, which

must then deliver a final master, keeping to a set budget licence or purchase a master from an artist company or a production company

Record companies thus generate some of their income from selling CDs they produce themselves, but licensing a company’s own repertoire is also very important. The major record companies – which combined account for some 80% of all turnover in the business – have their own systems for internal licensing and distribution. This fact has considerable bearing on earnings generated by the local Swedish office.

A publisher’s area of activityThe business conducted by a music publisher is based on administrating the financial rights linked to a copyright. Put somewhat simply, a copyrighted work consists of two parts – the intellectual property right (the actual “innovation”, the composition) and the financial right (the fact that the originator is entitled to income generated by the innovation). When signing a publishing contract, the originator transfers to the publishing company the task of administrating the financial right to a work (copyright law stipulates that the ideal right cannot be transferred at all!) in exchange for a portion of the income. Just as with record companies, music publishers doing business in Sweden can be divided into majors and independents. In general, the independent publishers are Swedish-owned companies, but there are also a number of international companies operating in Sweden that are not part of a major company and should thus be considered to be independents.

Originally, music publishers were companies that produced and sold sheet music, as this was how composers could earn income from their works – in addition to payment/a share of ticket sales in

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FACTS BOX: BASIC ITEMS IN AN ARTIST CONTRACT1. The artist, who may consist of one or more persons, becomes exclusively

bound to the record company, and the performances the artist does, whether they are recordings or masters, belong to the company as long as they are copyright protected.

2. The contract often applies to a single production with the option of one or more albums, or an album production with the option of further albums. The options are unilateral – the company decides if more productions are to be made.

3. The record company bears all costs in connection with the recordings and the costs for the cover, manufacturing and marketing.

4. The artist receives royalties based on the PPD price. The royalties vary between approx. 6 – 12% initially and may increase when certain stipulated sales levels have been achieved. Royalties for compilation albums are often reduced to 50 – 75% of the basic royalty.

5. The royalty is subject to certain deductions, e.g. for video costs, which can be deducted in their entirety or partially – sometimes the company bears the cost of the first video and deductions are made for subsequent videos. Other deductions can be so called cover deductions, technical deductions or deductions if the company has provided “tour support”.

6. After the contract has expired the artist may not re-record those songs released by the company until five years have passed.

connection with concerts – before music could be made “mechanically” accessible (on a 78 rpm record, for example). Today, only a very few publishing companies produce sheet music to any significant extent, and right to print sheet music is then often licensed to another party that specialises in this area.

A modern music publishing company today receives income from different sources. These are licences for record production, so-called mechanical licences, performance licences (music on the radio, Internet, performed live, etc.), synchronisation licences (music used in films/ads), and different forms of permission, such as when lyrics are printed in newspapers.

The drawing up of contracts and commercial exploitation are often handled by the same staff, known as “creatives” or “A&Rs”. In this regard, publishing companies are increasingly resembling record companies. Commercial exploitation involves trying to ensure that a work generates at least one of the forms of income described above. Initially, this means ensuring that the work is recorded and released by an artist – if it is a major international artist, the income can be very considerable. In order to achieve international recordings, publishers often work with licensees abroad, who represent the work in their own territory via a subcontract. If the publisher is a major company, the company’s affiliate in the country in question is expected to handle this. Today, music publishers frequently have more or less management-like work procedures, and make considerable effort to find an appropriate record company for new artists who compose their own material. This often means that the publisher invests in recordings that may be demos or nearly finished master recordings. Publishing companies sometimes also visit record companies abroad to try to get works recorded by foreign artists – to place songs. The most common way of contracting new songwriters is to offer them advances on future royalties. In Sweden, these advances are increasingly approaching international levels, and it happens frequently that foreign publishing companies sign contracts directly with Swedish songwriters.

A tour production company’s area of activityFor a long time, the main activities of tour production companies involved booking concert venues for artists – and Swedish “dansband” were important customers. Today, however, the core areas of these companies are more varied. In addition to organising tours by major Swedish artists, they also work with foreign artists visiting Sweden, company events, the staging of musicals, theatre productions and different types of special events. Several of these companies also have management departments that offer management services to the artists they sign. A typical contract between an artist and a tour production company today makes the company responsible for handling all aspects of the artist’s tours and concerts. This includes everything from marketing to recruiting staff, and from hiring sound and lighting technicians to taking care of security. In addition, these companies book hotels and arrange transport, as well as administrating fees, salaries and the ever-increasingly important STIM/SAMI reporting. Although some artists still sign contracts in which the tour production company is primarily only responsible for booking concert dates – in exchange for a commission, usually of 20% -- complete solutions are becoming increasingly common.

Tour production companies often work closely with record companies to co-ordinate tours with new releases. In some cases, the record company will pay for some of the costs of a tour if it is felt that live performances can help to boost record sales. Another way of ensuring that individual tours are a financial success is to involve one or more sponsors in the tour. This is common today, and sometimes the job of finding tour sponsors is assigned to a third party. Sometimes tour production companies work with commercial radio stations to market concerts and tours.

This part of the business has seen considerable consolidation in Sweden – there are currently two dominant players in the market, although the sector organisation SVIMP lists some 30 companies as members. Some of these specialise in certain niche styles, while the large ones tend to develop their business towards events and complete solutions, as well as by investing in their management departments. A good Swedish example of this trend is United Stage.

INSTITUTIONAL SET-UPThe related and associated services are of great importance to the music industry. They are an important part the system and include a wide range of actors like lawyers, accountants but also an institutional part where the collecting societies are included. As seen in the figure below one can divide the supporting institutions into four main sub-groups.

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Table 3: Supporting institutions

National Regional Local

Public authorities Ministry of culture County Admistrative Board

Swedish National Council for Public Affairs

The Federation of Swedish County Councils

County Councils

The Swedish Association of local Authorities

Local Authorities

Thrid sector organisations Kontaktnätet ( a national organisation for voluntary culture associations

Local voluntary culture associations

Swedish national Council of Adult Education

Educational associations

Folkhögskolor

Public educational institutions College of Music Municipal school of music

Departments of musicology Musical education in primary school

College/University programmes in music management

Aesthetic secondary school programmes

Industry and workers' organisations

E.g. STIM, ExMS & IFPI

(Source: Hallencreutz 2002)

The main authority for cultural policy in Sweden is the National Council for cultural affairs. The money they grant are usually not for popular music. Instead other prioritised genres like classical music, folk music, children music or jazz etc. which usually doesn’t generate the sums popular music does, gets most of the funds. The third sector organisations can be divided into two groups, providers of musical education and local culture associations. Among the providers of musical education one can mention Folkhögskolor (Folk high-schools) who offer a wide range of different courses in music. These schools are adult educational institutions and 49 of the 150 existing have some sort of musical education. In addition to the folk high-schools there exist about a dozen study associations in Sweden providing musical education. In total, 350 000 study circles are arranged annually. The local culture associations are usually voluntary and its difficult to estimate an exact number on how many there exist. The national organisation of voluntary organisations “Kontaktnätet” have estimated there are 155 voluntary organisations in Sweden with a great number of musical activities. One can also place the Swedish “folkparker” in this category. Folkparker are local amusement centres were offering live music, theatre etc.

Educational institutionsThere are 9 colleges or universities in Sweden that have a focus on music. There are two having a focus on the music industry, Högskolan in Kalmar and in Skellefteå (Luleå technological university). Until a few years ago there were none. This is also result of the international success of the Swedish music industry which has increased the interest of higher education in the music management department. The schools have a close working relationship with the different areas of the music industry.

There are 29 ”Folk high-schools” in Sweden with a special focus on music. There are almost 300 municipal schools of music financed by the regions. The school system is often mentioned as one of the key reasons for Sweden’s international success. The fact remains that there are numerous of opportunities for the population, young and old, to learn to play or sing. This area will probably further develop, both on the national, regional and local arena.

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Industry and workers organisationsThere exist a wide array of industry organisations and workers’ organisations in Sweden and they are described in the table below. In addition to these, there are also two bodies promoting Swedish music in general, ExMS and The Swedish Music Information Centre. ExMS co-ordinates the Swedish participation in festivals, seminars, trade fairs etc. focused on the international music market. The Swedish Music Information Centre promotes copyright-protected music in close collaboration with the composers, lyricists and music publishers affiliated to STIM.

Table 4: Main Industry and workers’ organisations in Sweden

Core sector Supporting organisations

Composers, artists etc. (i.e. creators) The Swedish Society of Popular Music Composers (SKAP)*Swedish Performing Rights Society (STIM)*

Swedish Musicians' Union (SMF)

Swedish Artists' and Musicians' Interest Organisation (SAMI)*

Society of Swedish Composers (FST)

Record companies, publishers etc. (i.e. Industrialists) International Federation of the Phonographic Industry (IFPI)*

Independent Swedish Record Producers' Association (SOM)

The Swedish Publisher's Association (SMFF)

Swedish Impresario's Association (SVIMP)

Swedish Music Festivals (SMF)

Distribution The Association of Gramophone Suppliers (GLF)

* These organisations are also collecting societies and are described below (Source: Hallencreutz 2002)

When discussing originator’s rights and royalties, there are two constellations that should be described in some detail. The first such constellation is STIM/NCB. These are the organisations responsible for collecting and paying royalties on behalf of the originator (an originator is the person who has composed a melody or lyric). The second such constellation is SAMI/IFPI. These are people who are responsible for what are known as “related” rights belonging to “secondary” originators. People who are entitled to such “related” rights are, for example, studio musicians who play on a recording or the record company.

STIM and NCBHelp the originator (lyricist or composer) to collect various royalties earned when their works are used – played on the radio, television, at concerts, etc. – two such organisations active in Sweden: STIM (Svenska Tonsättares Internationella Musikbyrå) and NCB (Nordic Copyright Bureau).

An originator joins STIM by signing a contract with the organisation. When the originator joins STIM, he or she transfers all legal rights to compensation for public performances, recordings and reproduction to STIM. STIM undertakes in the contract to ensure that whoever performs music publicly or records music (via NCB – see below) has a licence to do so and pays a fee, which STIM then distributes and pays to the person or persons who own the rights to the music.

The two major areas that STIM and NCB are in charge of are performance royalties (STIM) and mechanical royalties (NCB). To put it somewhat simply, performances are all music that is broadcast over the airwaves or the Net, and all music that is performed in public places. Music played on the radio, on TV, over the Internet, at concerts, music played in department stores and at the hairdresser’s – these are all examples of musical performances on which STIM collects royalties. STIM strives to reach agreements with parent or sector organisations, so that they do not have to make such agreements with, for example, each individual hairdresser, but with the trade union to which all hairdressers belong. STIM currently maintains more than 30,000 licences in Sweden.

The royalties that NCB handles are referred to in general as mechanical royalties. The concept dates from the days when musical recordings were played on “mechanical” devices (think 78 rpm records!). When a phonograph record was produced, the producer (the record company) had to pay mechanical royalties, or copyright royalties for making the music accessible mechanically. Today, the term is applied to all means of making music accessible, which means that it also covers files that can be downloaded from the Internet and the printing of files containing music onto videotapes or DVDs of films containing music.

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Music publishing companies are also members of STIM and NCB, and receive via these organisations their share of the royalties on works they control, i.e., works for which they have signed contracts with the originators.

SAMI and IFPISAMI – Svenska Artister och Musikers Intresseorganisation – is the organisation that protects the interests of musicians in Sweden, while IFPI – the International Federation of the Phonogram Industry – protects the interests of record companies. In addition to protecting these interests, SAMI is what is known as a collecting society. This means that the organisation is responsible for collecting and paying royalties to the musicians and artists who contribute to the making of a recording or concert performances. IFPI is responsible for paying royalties to the record companies. Even though these two organisations represent two groups of rights-holders that actually have conflicting interests, they both share a common administration in charge of collecting and distributing the royalties to which performers (musicians and artists) and producers (record companies) are entitled.

In the same way as for people who belong to STIM/NCB, copyright law entitles the involved parties to compensation for the following uses of recorded music:

the playing in public of recordings (on CD, for example) public performances of radio/television programs containing recorded music or in which artists

etc. participate in other ways

Examples of situations in which recordings are played publicly include the playing of music in restaurants, hotels, discothèques and shops, etc., as well as when music is played on the radio or over cable systems (such as cable TV). In other words – as mentioned previously – hotels, shops, busses (for example, public transport companies must pay royalties in order for their bus drivers to be allowed to play the radio in the bus) must pay SAMI for the right to “perform” recorded music. It should also be mentioned that SAMI is responsible for collecting these fees (often in the form of a lump sum, so that small shops, for example, do not pay for each individual song they play). The collected royalties are then shared equally between SAMI and IFPI.

THE SWEDISH MUSIC INDUSTRY IN NUMBERSDetermining the number of actors and employees of the Swedish music industry is almost impossible since many of the companies are very small and not fully operational enterprises. Another problem-creator in this sense, is the fact that some record companies have control over the whole production chain which makes it hard to determine the line between, for example, production and distribution. In this project we’ve chosen to use the Swedish Business Database (Affärsdata) and NACE codes related to the music industry. Many companies, especially those who operates in the related and associated services, has been excluded since their main area of business is not in the music industry in most cases. We’ve chosen to include join-stock corporations and trading and limited partnership companies even if the latter doesn’t have any results shown. They are therefore placed in the 0 category in table 5. Some of the NACE codes also give a far-too-wide range of companies. For example are most of the companies in Mail order houses for books and media goods (NACE 52614) not at all related to the music industry. If you search only on the NACE code you’ll get 118 companies (inactive companies excluded). Using the search words music, records, CD, sound and cassettes together with the NACE code, narrows the total number of companies down to 20 which is a more probable result. This system have been used in the categories marked music in tables 5 and 6 below.

Forss (1999) and Burnett (1996) has estimated the number of record companies in Sweden to between 150-250. IFPI has around 50 members. One of them is SOM which is an organisation including around 20 independent companies who together are members of IFPI. The record companies are usually in the publishers of sound recordings or the wholesale categories. The total

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FACTS BOXA licence fee for an ordinary, full-price CD is 9.009 % of the shop’s purchase price (excluding VAT). Established record companies have an agreement with NCB that permits them to pay for the recordings they have actually sold. They can thus produce 5,000 copies of a CD, sell 3,000 of them, and destroy the rest or sell them at a reduced price and then report and pay the royalties afterwards. Smaller producers that do not have this type of agreement are known as “individual producers” and must pay for the number of CDs they actually produce, a number that is often kept track of by the CD producer used.

number of firms that can be classified as record companies is therefore higher in this survey. The differences exists mainly because of the difficulties for the companies to determine their main function. For example is Cheiron AB (a production company lead by internationally acclaimed producer and composer Denniz Pop) listed as a publisher of sound recordings when the company just as well could have been classified in any of the industrialists or the creators categories. Another reason is that many of the companies are small, releasing less than ten records a year with some releasing only their self-produced music. Most of the TNC’s are in the wholesale category. Table 5 below, is an attempt using Swedish business data and NACE codes, to categorise the different actors in music industry and to determine how extensive the Swedish music industry is.

Table 5: Firms in industrial sectors related to the music industry 2000, number of firms by employment size

NACE code Number of employees

0 1-4 5-9 10-19 20-199 200- Total # of firms

Total # ofemployed

Creators92310 Performing artists (music) 790 435 25 7 2 1 1260 1252

Industrialists22140 Publishers of sound recordings 516 294 16 9 10 x 845 1121

22150 Other publishers (music) 87 51 5 3 1 x 147 191

22310 Industry for the reproduction of sound recording 28 8 1 X x x 37 24

24650 Industry for prepared unrecorded media 18 13 3 X x x 34 39

51433 Wholesale (CDs, tapes, records, videotapes) 63 43 11 15 14 x 146 990

Distributors52453 Stores for records & videotapes 151 117 25 7 3 x 303 605

52454 Stores for music, instruments & music scores 123 111 19 3 x x 256 396

52614 Mail order houses books & media goods (music) 10 6 x X 4 x 20 225

92320 Theatre & concert hall companies etc 521 118 15 11 11 5 681 3225

92340 Other entertainment establishments (music) 21 23 6 1 x x 51 89

Machinery & equipment36300 Industry for music instruments 24 25 8 2 x x 59 135

TOTAL 2352 1244 134 58 45 6 3839 8292

(Source: Affärsdata 2002)

The total number of firms in the Swedish music industry are 3 839 according to this survey. Most of them are small micro-businesses with less than ten employees. The total number of employed are 8 292 people which is a number one shouldn’t pay too much attention to since more than 2 000 of the companies haven’t shown any numbers or have no employees. The real number of employees in the industry is probably mush higher. An interesting aspect of this table are the firm sizes in terms of employment related to the NACE codes. The biggest category according to total number of firms is performing artists. It is also the category with most firms having less than 5 employees. This is mainly because many of the artists sets up a company in their own name having no employees at all, except for in some cases themselves. Theatre and concert hall companies is the category with the largest number of employees (3 225). There are even five companies with more than 200 employees in this category, but this is because some of the concert halls have their own symphony orchestra and they should probably count as performing artists. Most of the companies producing machinery and equipment for the music industry are based abroad leaving the total number of Sweden based companies to 59. All in all one can see that the employment rate of the Swedish music industry is quite evenly balanced between the creators, industrialists and distributors, especially if you consider the large number of firms in the creators sector, showing no statistics.

Table 6 below shows the average and median turnover in the different business sectors. The average turnover for the companies in the Swedish music industry differs dramatically in some cases. The mail order houses for books and media goods had the largest average and median turnover in 2000. There are few companies in this sector, and those who exist are big with a large number of employees (see table 3) like Ginza or Bokia. The companies in the wholesale category had an average turnover of SEK43,6 millions in 2000. The high number is a result of, as mentioned earlier, that the TNC’s are listed in this category. The lowest average turnover is in the performing artists and other entertainment

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establishments categories. More interesting is the median turnover of the year 2000. The distributors have the highest median turnover where mail order houses for books and media goods is the biggest category. Among the Industrialists the wholesale category have an annual median turnover of SEK7,3 millions in 2000, which is very high considering the large number of companies. Table 6: Limited companies in industrial sectors related to the music industry 2000, average and median turnover in SEK (millions)

NACE code Average turnover Median turnover

Creators92310 Performing artists (music) 1,67 0,62

Industrialists22140 Publishers of sound recordings 5,51 0,66

22150 Other publishers (music) 5,89 1,01

22310 Industry for the reproduction of sound recording 2,49 0,54

24650 Industry for prepared unrecorded media 2,04 0,72

51433 Wholesale (CDs, tapes, records, videotapes) 43,60 7,30

Distributors52453 Stores for records & videotapes 6,66 3,42

52454 Stores for music, instruments & music scores 4,70 2,51

52614 Mail order houses for books & media goods (music) 94,60 15,12

92320 Theatre & concert hall companies etc 10,91 1,17

92340 Other entertainment establishments (music) 1,71 0,79

Machinery & equipment36300 Industry for music instruments 3,03 1,34

(Source: Affärsdata 2002)

The annual turnover of the Swedish record companies differs a lot. The biggest ones, the TNC’s, all have an annual turnover of over SEK200 million to be compared with, for example, small independent record companies who have an annual turnover of approximately between SEK1-2,5 million. Table 7 shows the biggest record companies in Sweden and their corporate mother in 2000.

Table 7: Top ten record companies in Sweden by turnover 2000 (millions SEK)

Record company Turnover Corporate motherUniversal Music AB 324 Vivendi/Universal (Fra/US) EMI Svenska AB 277 EMI Group (UK)Sony Music 271 Sony Corp (Jap)Warner Music 261 Time-Warner (US)BMG Sweden AB 211 Bertelsmann AC (Ger)Edel Records 170 Edel Company (Ger)MNW 139 MNW Group (Swe)Zomba Records 136 Zomba Records Holdings BV (Hol)Stockholm Records 120 Vivendi/Universal (Fra/US) Virgin Records 103 EMI Group (UK)(Source: Affärsdata 2002)

The biggest record company in Sweden is Universal Music which is owned by the French/US based company Vivendi/Universal. The company is in the media and entertainment industry owning TV-channels like Canal + and movie studios etc. The annual turnover for the Sweden based subsidiary is SEK324 millions. The company is followed by, in order based on annual turnover, EMI, Sony Music, Warner Music and BMG. All but one company in the top ten list have their corporate mother based abroad. The largest Swedish-owned company is MNW (Music Network) that had an annual turnover of SEK139 million in 2000. The company has, however, gone through several organisational changes during the last year thus making it difficult to determine the status of the company today. In the year 2002 EMI and Virgin records united into one company. It is important to remember that the annual turnover of the record companies can differ dramatically from one year to another. For example, the

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annual turnover of Sony Music was SEK341 millions in 1999 which is SEK70 millions more than in 2000.

Location of the music industryMost of the companies in the music industry are localised in the counties with the large urban centres like Stockholm, Göteborg and Malmö.

Figure 3: A map showing the where the 3839 music industry companies in Sweden are localised (by county).

(Source: Affärsdata 2002)

Most of the companies situated in the non-urban regions are small with few employees. Most of the music industry companies are very much dependent on the services the large urban centres can offer. Most musicians, producers, distributors etc. are situated in the three largest city’s but also the media plays an important part in the localisation process. But the localisation is, however, not decisive for a companies success. There are examples of companies, that despite being situated in small urban areas, having managed to create an up-front position on the domestic market.

Gender distribution in the music industryThe record and publishing companies are divided in different areas of work. The most important and sought after positions music-wise are CEO and A&R (Artist & Repertoire). The A&R is the head of music in the record companies and decides which artists to sign. To be qualified for the position as A&R one need to both be able to hear what music have hit-potential, and be familiar with the technology involved with sound recordings. Other areas of work includes promotion, economy, computer, sales etc. The gender distribution between these main areas of work are described in figure 4 below.

Figure 4: Occupational gender distribution in the five biggest record and publishing companies in Sweden

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(Source: Berg et.al. 2002)

It is evident in this figure that men dominate the most important areas within the record and publishing companies. There are for example currently no women working as A&R and only one female CEO (Åsa Törneryd, EMI-Virgin). The promotion department on the other hand has traditionally been the main occupation for women in the music industry. Administration is the area where women are most dominant mainly because of the high number of women working as secretaries or assistants and in the reception.

ExportsThe export incomes of the Swedish music industry has gone through a tremendous growth during the 1990’s. Unfortunately aren’t there any empirically determined numbers from the beginning of the decade but indications shows of an annual growth rate of 15 percent between 1990 and 1997 (Forss 2001).

Table 8: Export incomes of the Swedish music industry 1997-2000 in different categories (millions of SEK)

1997 1998 1999 2000Export of goods 2 200 2 375 3 150 2 918Export of services 424 384 400 647Income of royalties 707 717 771 989

Radio, TV & other public Performances (STIM)

116 146 155 186

Radio, TV & other public Performances (SAMI)

22 24 25 27

Mechanical rights (NCB) 238 238 257 247

Royalties from subpublishers

330 309 334 529

TOTAL 3 368 3 476 4 321 4 554

(Source: Forss 2001)

The table above shows the incomes of the Swedish music exports from 1997-2000 in terms of export of goods, services and royalties. The export of goods includes all CD’s exported from Sweden as well as CD-manufacturing equipment. The exported CD’s doesn’t necessarily have to be by Swedish artists. The export of services includes, among other things, income of live performances abroad, incomes to studios from mixing, producing or lease of recording studios to clients abroad. But also the contract payments the artists get from their record companies depending on the international sales

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(between SEK8-20 per record depending on the status of the artist). The income of royalties is the money Swedish artists get from international performing rights societies depending on the airplay in a certain country or region (Forss 2001). The largest export incomes comes from the export of goods category. Even though a decline can be seen between 1999 and 2000. But the total export increased because of the growth in income of royalties and export of services.

The growth of income in the export of services and income of royalties categories in 2000 is an effect of international stars using Swedish songwriters and producers. Artists like Britney Spears, Madonna, Bon Jovi, Backstreet Boys etc. have all successfully used Swedish producers, songwriters and video-directors thus giving Sweden a good reputation in this area making more foreign-based artists interested in using the services of the Swedish production companies which in the end effects the export of services and the income of royalties. The export of goods has fluctuated a lot during the 1990’s according to Forss (2001).

Airplay statisticsThe differences between public and commercial radio are very clearly shown in table 9.

Table 9: Airplay statistics (radio & TV) & revenues of the Swedish media sector 2001

Total number of songs played

Number of different songs played

Revenues (millions

SEK)Swedish public radio 180 155 48 557 38,4Swedish public TV 55 728 15 541 45,6Commercial radio 11 790 185 11 621 21,9Commercial TV x x 79,4TV3 x x 13,2TV4 8 044 3 284 31,5Channel 5 8 350 1 579 13,2Pay TV x x 13,2Foreign cable channels x x 3,5Other commercial channels x x 4,8Movie theatres x x 11,6Regional radio stations x x 2,3(Source: STIM 2002)

While the total number of songs played on public radio in 2001 is 180 155 the songs played on commercial radio stations are almost 12 million. But the number of different songs played is far more on public radio. One can identify three reasons behind these differences: (1) there are more commercial than public radio stations, (2) the public radio stations has to play a more varied range of songs and music to satisfy all kinds of listeners while commercial radio stations are more determined to play the latest hit songs until the listeners grow tired of them, (3) the commercial radio stations play commercial-jingles thus making the number of different songs played lower, and the total number of songs higher.

The differences are also apparent between public and commercial TV. The total number of songs played on public TV is larger than on the commercial TV stations. This is mainly because public TV shows more concerts, usually classical or church music, than the commercial channels. While “real” songs are topping the airplay list on both public and commercial radio the song played most on public TV is the theme for the daily news program Aktuellt, and for commercial TV “Livet har sina goda stunder” (a McDonalds jingle). The revenues gathered by STIM also differs. Commercial TV brings in the most revenues since there are numerous channels. Most of them pay a standardised assessment sum and have therefore no data indicating total and different number of songs played.

Live MusicThe size of the live music market is almost impossible to determine since there are too many actors involved and little data on the subject. It is also hard to determine what should count as a live concert. According to ExMS (Export Music Sweden) the live performances of Swedish artists abroad, has an annual turnover of around SEK200 million (Forss 1999). This number is just an appreciation of the

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value and they clearly state that it can change dramatically from one year to another. Recent numbers published by the culture department indicates that almost 60 percent of the Swedish population between 7-79 years old has visited at least one concert during the year 2000 (figure 5). These statistics also take classical and church music into account.

Figure 5: Concert habits during the last years. Percentage of population 7-79years that has visited a concert last year.

(Source: Kulturbarometern 2000)

According to STIM has their revenues from live performances grown during the last years which is shown in figure 6 below.

Figure 6: Revenues collected by STIM for live performances in popular music 1999-2001.

(Source: STIM 2002)

Revenues from live performances of church and classical music are not accounted for in the table above and were SEK5,2 million in 2001. The large increase in the year 2001 is due to better coverage of the area, and that concert halls, clubs, discos etc. have increased their annual turnover. A continuance in growth for the year 2002 is expected. According to the NACE codes there are 681 theatre and concert hall companies and 51 other entertainment establishments related to the music industry (see table 5). But the numbers are not fully accurate since many of the concert hall companies are listed in other categories. An example is the famous concert arena Cirkus in Stockholm which is listed in the restaurant business.

ConclusionsThis paper is first of all an attempt to describe the actors, networks and linkages that is the Swedish music industry more extensively thus helping the reader to understand the whole production system that is instrumental in creating the up-front position Swedish music has internationally. It is also an attempt to describe the extent of the Swedish music industry in a statistical context thus examining firm sizes, extent of the export, the value of the domestic sales etc. We’ve chosen to divide the music industry into six different categories: creators, industrialists, distributors, customers, related and

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associated services and machinery and equipment. It is empathised that each one of these areas make up an important part of the music industry’s production system. The core products and activities of the music industry consists of sound recordings, sheet music, concerts and administration of copyrights.

The extent of the music industry is difficult to determine since many of the actors doesn’t have their main area of profession in the music industry. According to the Swedish business data base there are almost 4 000 companies that can be related to the music industry. Most of these companies are small with few or no employees. Many of them are companies set up by an artist or group to handle their income. But there are also large companies i.e. the TNC’s, that have interests ranging over the entire production system. A description of the collecting societies and the money-transfers taking place have also been done in this report showing that an artist or a record company collects their income from a variety of different sources. Important in this perspective is also the amount of airplay music get on the Swedish radio- and TV stations.

This paper has also put focus on the exports, gender distribution, live market and localisation. The exports have had a tremendous growth during the 1990’s and even if there has been some stagnation during the last years, the growth seems to continue. The gender distribution of the music industry is very divided. While there are mostly men involved in the music making decisions, women tend to hold positions in marketing and administration. The size of the live market is extensive even if there aren’t any actual number on the annual revenues of this area. According to STIM has their income from live music risen substantially during the last years. The Swedish music industry is very much focused to the main city areas, Stockholm, Göteborg and Malmö. Localisation to a main city area is important but not decisive for a company’s success. It rather depends on what focus the company has.

The complexity of the music industry also makes it difficult to determine in which part of the music industry the different companies should categorise under. Most of the record companies are, for example, listed under wholesale (NACE 51433) when their main area of business should be publishers of sound recordings (NACE 22140). These are problems that have been discussed in the text. All in all one can say that the music industry by nature is a complex network of different actors, from municipal music schools to TNC’s, that in spite of different interests must work together to get a fully functional system.

Sources for further reading

Berg, T. (2002): ”Den oberoende musiken: en studie av tre independentbolag i Sverige utifrån ett klusterperspektiv”, Arbetsrapport 447, Kulturgeografiska institutionen, Uppsala universitet

Berg, T. Hallencreutz, D. Lundequist, P. and Pettersson, K. (2002): ”Kön och hållbar tillväxt i sektoriella innovationssystem inom TIME-sektorn: exemplet svensk musikindustri” Idépromemoria till Vinnova, Uppsala, Intersecta AB,

Burnett, R. (1996): ”The Global Jukebox: the international music industry”, London: Routledge

Burnett, R. (1997): ”Den svenska musikindustrins export 1994-95”, Stockholm, ExMS

Durrant, P. (2001): ”Swedish Music Exports: With a case study on the exports of the Swedish music industry to Japan”, Department of Human & Economic Geography, Gothenburg University

Forss, K. (1999): ”Att ta sig ton: om svensk musikexport 1974-1999”, Ds 1999:28, Stockholm

Forss, K. (2001): “The export performance of the Swedish music industry: an update for the year 2000”, Stockholm, ExMS

Hallencreutz, D., Lundequist, P. and Malmberg, A. (2000): Production of popular music: on the industrial geography of the Swedish music cluster, Nordisk Samhällsgeografisk Tidskrift, 30, 37–59.

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Hallencreutz, D., Lundequist, P. and Malmberg, A. (2002, forthcoming): Local embeddedness and international competitiveness: the case of the Swedish music cluster. I Amin, A., Goglio, S. and Sforzi, F. (eds.), The institutions of local development. London: Ashgate.

Hallencreutz, D. and Lundequist, P. (2002, forthcoming): Making knowledge funky: localised learning and SME competitiveness in the Swedish music cluster. Entrepreneurship and Regional Development.

Hallencreutz, D. and Power, D. (2002, forthcoming): Cultural industry cluster building in Sweden. I Oinas, P. and Lagendijk, A. (eds), Proximity, distance and diversity: Issues on economic interaction and local Development. London: Ashgate.

Hallencreutz, D. (2002): So you wanna be a rock ’n’ roll executive: gender and employment structure in the Swedish music industry 1990-1999. Artikel skickad till Economic and industrial democracy.

IFPI annual reports 1995-2002

Jansson, J. (2000): ”Musikindustri i Hultsfred och Malmö: en studie av två lokala produktionsmiljöer”, Arbetsrapport 395, Kulturgeografiska institutionen, Uppsala Universitet

Power, D. and Hallencreutz, D. (2002, forthcoming): Profiting from creativity: The music industry in Stockholm, Sweden and Kingston, Jamaica. Environment and Planning.

Runarsdottir-Svensk, L. (2000): ”Techno: avantgardemusik i Sverige på 1990-talet”, Arbetsrapport 367, Kulturgeografiska institutionen, Uppsala universitet

Statens Kulturråd (2000): ”Om 2000 världen: kulturrådets omvärldsanalys”, Trelleborg, Berlings Skogs

STIM Annual reports 1999-2002

Wallis, R. (1990): ”Internationalisation, localisation and integration: the changing structure of the music industry and its relevance for smaller countries and cultures”, Göteborg, Institution for journalism and mass-communication

Wallis R, Malm, K. (1984): ”Big sounds from small peoples: the music industry in small countries”, New York, Pendragon press

The Swedish music industry on the Internet

Association of Gramophone Suppliers: www.grammotex.se

Export Music Sweden: www.exms.se

Independent Swedish Record Producers' Association: www.som.a.se (links to members)

International Federation of the Phonographic Industry: www.ifpi.se

Nordic Copyright Bureau: www.ncb.dk

Society of Swedish Composers: www.fst.se

Swedish Artists' and Musicians' Interest Organisation: www.sami.se

Swedish Impresario's Association: www.svimp.se

Swedish Music and Cultural Schools Council: www.smok.se

Swedish Music Industry News: www.musikindustrin.nu

Swedish Musicians' Union: www.musikerforbundet.se

Swedish National Association for Cultural Affairs: www.kur.se

Swedish Performing Rights Society: www.stim.se

Swedish Publisher's Association: www.smff.se

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Swedish Society of Popular Music Composers: www.skap.se

ANNEX

Colleges of music

Musikhögskolan vid Göteborgs universitetMusikhögskolan i MalmöKungliga musikhögskolan i StockholmMusikkonservatoriet i FalunStockholm MusikkonservatoriumMusikhögskolan i IngesundMusikhögskolan i ÖrebroStockholms Musikpedagogiska institutMusikhögskolan i Piteå

Music managementMusikutbildningen vid Kalmar högskolaMusikutbildning i Skellefteå (Luleå Tekniska Högskola)

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Music schools, primary schools (Skolverket)

Christian IV:s skola / Musikskolan Kristianstads kommun Gymnasieskola Eda Kommunala Musikskola Eda kommun Gotlands Musik- och dansskola Gotlands kommun Grundskola / Gymnasieskola Gårdeby Natur och Musikskola Söderköpings kommun Grundskola Karl Johans Skola med Örebro Musikklasser Örebro kommun Grundskola Kommunala Musikskolan Malungs kommun Kungsholmens gymnasium/Stockholms Musikgymnasium Stockholms stad Gymnasieskola Lilla Akademiens Musikgymnasium Stockholms stad Gymnasieskola Musikgrundskolan Synkopen Helsingborgs kommun Grundskola Musikkonservatoriet Falun Falun kommun Gymnasieskola / Komvux Musiklådans friskola Uppsala kommun Fritidsverksamhet / Grundskola Musikskolan Nacka kommun Grundskola / Gymnasieskola Musikskolan Uddevalla kommun Fritidsverksamhet Musikskolan i Norrköping Norrköpings kommun Specialskola Musikskolan i Skövde Skövde kommun Musikskolan Lilla Akademien Stockholms stad Grundskola / Specialskola Nordiska Musikgymnasiet Stockholms stad Gymnasieskola Skellefteå Musikskola Skellefteå kommun Grundskola / Gymnasieskola Stockholms Musikkonservatorium Stockholms stad Gymnasieskola / Specialskola Stockholms Musikkonservatorium (Rytmus, Memus, Diskus) Stockholms stad Gymnasieskola / Specialskola Sävegymnasiet - Musikgrenen Gotlands kommun Gymnasieskola

Some folk high-schools with music education

Billströmska FolkhögskolanBirka FolkhögskolaBollnäs FolkhögskolaBäckedals folkhögskola i SvegDalarö FolkhögskolaDalkarlså FolkhögskolaFramnäs FolkhögskolaFridhems FolkhögskolaGeijerskolan, Folkhögskolan i RansäterGotlands läns FolkhögskolaHelsjöns FolkhögskolaHjo FolkhögskolaHärnösands Folkhögskola

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Kalix FolkgögskolaKristinehamns Folkhögskola KPSKävesta FolkhögskolaLiljeholmens FolkhögskolaLjungskile FolkhögskolaLunnevads FolkhögskolaMalungs folkhögskolaMellansels FolkhögskolaMotala MusikpedagoglinjeSolviks FolkhögskolaSundsgårdenSjöviks FolkhögskolaSödra Vätterbygdes FolkhögskolaVadstena FolkhögskolaWendelsbergs FolkhögskolaÅsa Folkhögskola

Figure: Value of the Swedish record sales 1990-2000 (Source IFPI)

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Figure: Unit sales records in Sweden 1990-2000

Figure: Export incomes of the Swedish music industry 1997-2000

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