Soloveichik (2013)
Contents
Source Details
| Soloveichik (2013) | |
| Title: | Music Originals as Capital Assets |
| Author(s): | Soloveichik, R. |
| Year: | 2013 |
| Citation: | Soloveichik, R. (2013) Music Originals as Capital Assets. BEA Working Paper 0096, Bureau of Economic Analysis. |
| Link(s): | Open Access |
| Key Related Studies: | |
| Discipline: | |
| Linked by: | Soloveichik (2013) |
| About the Data | |
| Data Description: | The study draws upon music sales and revenue data from secondary sources, primarily the Recording Industry Association of America website. |
| Data Type: | Primary and Secondary data |
| Secondary Data Sources: | |
| Data Collection Methods: | |
| Data Analysis Methods: | |
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| Country(ies): | |
| Cross Country Study?: | No |
| Comparative Study?: | No |
| Literature review?: | No |
| Government or policy study?: | No |
| Time Period(s) of Collection: |
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| Funder(s): | |
Abstract
“In 2007, I estimate that musicians and recording studios created original songs, including recorded performances, with an estimated value of $7.8 billion. These songs were sold on CDs in 2008 and will be played on the radio, on television and at live concerts for decades to come. Because of their long working life, the international guidelines for national accounts recommends that countries classify production of music and other entertainment, literary and artistic originals as an investment activity and then depreciate those songs over time. However, BEA did not capitalize this category of intangible assets until the July 2013 benchmark revision. In order to change the national accounts, I collected data on music production from 1900 to 2010. I then calculated how GDP statistics change when songs are classified as capital assets.
To preview, my empirical results are: 1) In 2007, musicians and studios created recorded music worth $4.3 billion and non-recorded music worth $3.5 billion. Together, these musicians and record studios created original music with a nominal value of $7.8 billion producing recorded music, approximately 0.056% of nominal GDP; 2) Nominal music investment has grown much slower than overall GDP. Between 2000 and 2010, music investment fell from 0.083% of GDP to 0.053%. 3) Original music remains valuable for decades after it is first produced. I calculate that the aggregate capital value of all original music was $30 billion in 2007.”
Main Results of the Study
• Revenues for music sales have been ‘plummeting’ since 2000 (estimating a shrink of ‘real production for music’ from $9.1 billion in 2000 to $7.8 billion in 2007), which may be attributed to diversion of sales to illegal downloading. Instead, most music royalties are paid in respect of performance royalties, rather than sales.
• Whilst music sales have been decreasing, live concert revenues increased by 132% between 2000 and 2007. This may again be a response to illegal downloading, and a need for alternative sources of revenue.
• More than 75% of CD sales occur in the first year, declining rapidly past the first initial five years of release. Original songs similarly depreciate in value by 65% over the first year of their life, eventually stabilising at approx. 4% of their initial sales per year.
Policy Implications as Stated By Author
The study does not make any explicit policy recommendations.
Coverage of Study
Datasets
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