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Central and Eastern Music Industry Report 2020
Author:
© Daniel Antal, CFA, 2020.
Contributors:
Richard Bancroft (proofreader)
Theo Gardner (data preparation)
Andy McFarland (data preparation)
Jerome Wynne (data preparation)
Aistė Zabitaitė (cover design)
Catalogue information:
https://
Keywords: 1. Music business; 2. Music – Economic Aspects;
3. Music – Europe; 4. Popular Music.
This book can be viewed as interactive website or downloaded in other
formats from https://ceereport2020.ceemid.eu.
Publishers:
Consolidated Independent
CEEMID
Central and Eastern Music
Industry Report 2020
Contents
1 Introduction 3
2 The Audience of Music 7
2.1 Seasonality Concentrated Demand . . . . . . . . . . . . . 8
2.2 Entertainment Technology for Music Recordings . . . . . . 9
3 The Creation of Music 11
3.1 Market Players . . . . . . . . . . . . . . . . . . . . . . . 11
3.2 Creators of Music . . . . . . . . . . . . . . . . . . . . . . 13
3.3 The Three Income Stream Model . . . . . . . . . . . . . . 15
3.4 The Royalty Gap . . . . . . . . . . . . . . . . . . . . . . . 16
4 Market & Distribution 21
4.1 Live Music Markets . . . . . . . . . . . . . . . . . . . . . 22
4.2 Recorded Music . . . . . . . . . . . . . . . . . . . . . . . 24
4.3 Collective Management . . . . . . . . . . . . . . . . . . . 29
5 Music Export and Music Import 31
5.1 Cultural Tourism: Imported Audience . . . . . . . . . . . . 31
5.2 Touring . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
5.3 Exporting & Importing Recordings . . . . . . . . . . . . . . 32
5.4 Import and Regulatory Quotas . . . . . . . . . . . . . . . . 34
6 Conclusions, Policy & Business Strategy Recommendations 39
6.1 Support Schemes for Developing the Music Scene . . . . . 40
6.2 Industry Advocacy, Economic Impact and Taxation . . . . . 42
6.3 Valuing Music . . . . . . . . . . . . . . . . . . . . . . . . 43
6.4 Private Copying . . . . . . . . . . . . . . . . . . . . . . . 46
6.5 Algorithms & AI . . . . . . . . . . . . . . . . . . . . . . . 48
Appendix 50
2
1 Introduction
The rst Central European Music Industry Report is the result of a co-
operation that started among stakeholders in three EU countries ve years
ago to measure the economic value added of music – the basis of a modern
royalty pricing system. This gave birth to CEEMID, originally the Central &
Eastern European Music Industry Databases, a data integration programme
that now in 2020, covers all of Europe. CEEMID fulls similar roles to the
planned European Music Observatory and supports all pillars of the future
pan-European system.
The comparison of Western and Eastern music audiences reveals key demo-
graphic differences that make the unchanged adoption of business practices
from mature markets in the region questionable. Chapter 2of this report will
show these differences and their consequences on music markets, in terms
of visiting and acquisition likelihood, frequency, seasonality and purchasing
capacity. This is an example of how CEEMID fulls the role of Pillar 3 (music,
society and citizenship) in the planned European Music Observatory.
Chapter 3contrasts market demand with the supply strategies of musicians.
CEEMID has been surveying music professionals, including artists, techni-
cians and managers about their working conditions, market conditions and
plans for ve years across a growing number of countries. In 2019 we invited
100 national and regional stakeholders to distribute our surveys. In some
countries, our surveys already have several years of historic data, making the
resulting musician database probably the largest ever source of data about
how music is produced and how musicians live. We are constantly looking
for partners to roll out this survey to new countries in new languages.
The CEE region has comparative advantages in big music events like festi-
vals, and it has become one of the most important hubs for cultural tourism
in the world. We explain this phenomenon in Chapter 4by showing the dif-
ferences in demand composition, demography and supply of venues in the
second chapter. The lack of a modern and dense network of permanent
music venues gave rise to magnicent music festivals in the CEE. Open’er,
Sziget and Exit are among the biggest and best festivals in the world, closely
3
1 Introduction
followed by several smaller festivals in all countries. The share of festivals
in the live music market is many times higher than in Western Europe and
they provide vital export revenues to the local music economies. However,
they play a limited role in nding new audiences for local artists, as they are
increasingly programming for Western audiences by providing shows of in-
ternational hits. They can only very partially ll in the gaps left by the small
venue problem that hit the emerging markets harder than the UK or Australia,
where policy action had been already taken to reverse the decline of the avail-
ability of smaller live music venues.
On the recording side, our analysis shows that modern digital services are
growing at a faster rate than in mature markets. Because of lower repertoire
competition, streaming quantities are similar for a typical Austrian, Czech,
Hungarian, Polish or Slovak track than in the mature markets. However, rev-
enue growth is limited because of the interplay of several analysed factors.
Our analysis of the live and recorded music markets shows that CEEMID ful-
ls the roles of the Pillar 1 (music economy) of the planned European Music
Observatory.
Most recorded music sales revenue in the region comes from streaming plat-
forms, just like in the mature markets. Successful sales strategies require a
solid knowledge of the global marketplace and the ability to understand and
train sales algorithms. Micro-enterprises, such as independent labels, have
very limited ability to cope with these functions, given that they do not have
market research or R&D functions. CEEMID and Consolidated Independent
have started initiating open, national R&D consortia to create the necessary
concentration in data assets, analytical capacity and budgets to close this
gap. As a rst step, CEEMID and Consolidated Independent have created
a large, independent music dataset based on hundreds of millions of royalty
statement entries to create our market indexes, styled after stock market and
bond market indexes. Streaming opportunities are fast changing as roll-out
of streaming services is happening at a different rate in various territories;
subscription charges and the exchange rate to the producer’s currency vary
and repertoire competition emerges in the market. Our volume and revenue
indexes in Chapter 5.3 are aimed at creating sales algorithms that optimize
sales volumes and expected revenues. We believe that this analysis also re-
veals that CEEMID partially fulls the roles of Pillar 2 (music diversity and
circulation) and feeds important data into Pillar 4 (innovation).
The region has far bigger untapped potential than most music business ex-
ecutives believe. Households in the region spend a signicantly lower share
of their recreational budget on music than their Western, Southern or Nordic
4
1 Introduction
peers. The region has a lot of untapped cultural purchasing power because
servicing is particularly challenging in both the live and recorded sides of the
business.
This upside potential cannot be tapped without better pricing. Royalty levels
are often very low in the region. Due to many combined effects analysed in
this short report, the gap between royalties earned in the CEE and Western
Europe is several times bigger than the difference in GDP or national average
wage. These gaps are partly caused by special interests preventing collec-
tive management from charging appropriate tariffs for restaurants, media
companies or electronic appliance importers and manufacturers, and partly
by unfavourable taxation of cultural products and services.
CEEMID was designed to create economic evidence on royalty pricing, pri-
vate copying compensation and the creation of economic value added in the
industry. In the rst Hungarian Music Industry Report of ProArt and in the rst
Slovak Music Industry Report we have shown that economic and taxation
policies of the CEE countries aimed to support car and electronics manufac-
turing create a distorted, unfavourable economic regime for creative indus-
tries. We want to help local stakeholders with economic evidence to correct
these discriminatory policies during the overhaul of the EU VAT system. We
have been helping various national organizations with economic evidence,
presented in the light of latest EU jurisprudence, to improve their pricing ac-
tivities. Our thousands of indicators were also used in ex ante evaluations of
granting schemes.
In 2020, all EU member states will change their copyright administration
legislation because of the national implementations of the 2019/790 Digital
Single Market directive. CEEMID provides evidence in several countries
about the size and impact mechanism of the value transfer, and generally
the widespread use of the copyright exemption for private copying. We
believe that the thousands of pan-European music industry indicators that
we have aggregated over the ve years will play a vital role in these regulatory
processes.
CEEMID fulls its roles with a very thorough exploitation of the EU’s 17-years-
old Open Data regime with the re-use of public sector information, and a very
careful mapping of the music industry. These maps help us conduct an-
nual surveys among musicians and the audience, and they help us connect
(always with pre-approval and with a user mandate) to industry databases.
We do not only cover the EU countries, but increasingly (potential) candidate
countries and neighbourhood countries.
5
1 Introduction
In our vision, this data collection and integration, i.e. Pillars 1-3 should be
available for all music stakeholders, should remain public and publicly funded.
The last Pillar of the observatory, innovation, is where private entities should
compete. The founders of CEEMID and Consolidated Independent believe
that this report demonstrates the business and policy benets of such a sys-
tem with the analysis of the Central & Eastern European music markets. We
believe that this way CEEMID is in a position to serve most of the planned
functions of the envisioned European Music Observatory, and we are look-
ing for ways to make either our thousands of indicators, or our data collec-
tion and integration software open source and available for all stakeholders
in the EU and its neighbours. CEEMID was born out of necessity to level
out the different levels of public research and statistical coverage of the EU
member states. In our view, private entities in the future should focus their
investments in Pillar 4 of the planned observatory, i.e. competing in innova-
tion with creating new models, algorithms and services based on data that
is available throughout the European Union without giving further advantage
to the already mature markets.
6
2 The Audience of Music
The Central & Eastern European music audience is signicantly differentfrom
US, Western European and Nordic audiences. Importing business practices
from advanced markets is questionable because of these differences.
The CEE music audience is younger, less educated and poorer than the West-
ern and Nordic audience – but not because of more young people attending
shows. In the region, middle-aged and older audiences are sadly missing
from the venues. These characteristics are slowly changing as newer and
better educated cohorts are entering the audience, but the demographic dif-
ferences will be very signicant for a long time. They must be accounted
for when adopting grant schemes, planning an international tour or event, or
adopting business models from more mature markets.
Our research shows that previous access to music education is a very strong
indicator of lifelong concert visits and buying music services. Throughout
the region this creates a signicant handicap, because much of the region
is lagging behind Western and Northern Europe in music education. In the
CEE, most music education is classical music education, which plays a very
different role than popular music education. Some countries, most notably
7
2 The Audience of Music
Hungary, had been pioneers in introducing then-popular music into the gen-
eral education with the Kodály method, but the method became largely irrele-
vant throughout the decades as the dominant popular music changed from
folk-based music to rock and hip-hop based music.
In some parts of the CEE the main languages of global pop music, i.e. English,
Spanish and Portuguese, are only spoken by a relatively small minority of
people as a second language. The linguistic preferences of these audiences
are distinctly different from other countries. The use of English as a language
of songwriting is also less prevalent than in some other, non-native-English
regions like Scandinavia.
2.1 Seasonality Concentrated Demand
The CEE region has characteristically a smaller audience proportional to the
general population, and a lower visiting frequency than Western and Northern
Europe. The technology and economics of music production and the com-
petition from other cultural and entertainment opportunities do not create an
equal shortfall in concerting opportunities throughout the year. All cities in
the region exhibit highly seasonal concert demand with a peak in December.
Compared to the peak, the demand in the low-season, for example, in Jan-
uary, is lower in the weaker markets than in Vienna, the strongest city market
in the region. For performers, the seasonality makes tour scheduling more
critical than elsewhere.
2014 2016 2018
google search on web
AT CZ HR HU PL RO SI SK
Weekly avareage compared to five−year average
Concert Interest Seasonality Compared To Austria
© CEEMID Analytics, 2019
Figure 2.1: Seasonality of Concert Demand Compared to Austria
8
2 The Audience of Music
Figure 2.1 shows Google search intensities by weeks in the time period 2014-
2019. Our more in-depth analysis earlier revealed that search intensities are
very highly correlated with tickets sales. Compared to the stronger, red line
of Austria’s ticket searches for Konzert, searches in the region for koncert,
the spelling of concerts in most CEE languages, tend to have a much higher
uctuation between good weeks and bad weeks. It means that the difference
compared to an ‘average’ week can be 2-3x bigger than in Austria, and the
difference between ‘good’ and ‘weak’ weeks 4-6x times bigger.
Our model compares Google Search data with other relevant data, and
we can compare competing interests for festivals, theatres and cinemas.
Scheduling is very challenging because in many cities’ cinema and concert
interest peaks in December, when venues and crews are running at peak
capacity.
This is a chicken and egg problem: peak demand periods could accommo-
date more shows, but that would require the maintenance of even more
largely empty crew and venue capacities throughout most of the year’s
low season. The CEE music business accommodated to this high level of
seasonality by developing a far stronger festival scene than Western Europe.
As we will show in the 4.1 subchapter about live music markets, festivals
create a dense concentration of audience demand and artist supply in time
and geographic space on temporary festival infrastructure.
2.2 Entertainment Technology for Music
Recordings
The CEE region is lagging a few years behind Western and Northern Europe
in the adoption of new entertainment technology, gadgets, devices, and sig-
nicantly lagging behind in music services available on these gadgets, and it
is not necessarily following the same path.
We selected a few countries to highlight the regional differences. Kosovo has
the lowest number of computers in households in all Europe, yet it has a high
penetration of mobile or smart phones. Generally, Romania and Serbia have
signicantly fewer connected devices that can play music than households
in Hungary, Slovenia, Poland, Czechia or Slovakia. Usually the penetration of
entertainment technology is the best in Austria, the richest country in the re-
gion, which is slightly behind roll-out rates of the United Kingdom or Nordic
9
2 The Audience of Music
markets (not shown in the chart). In some device categories several coun-
tries have already leapfrogged the richest, most mature market, Austria in
the region.
other mobile device
tablet
laptop netbook tablet
mobile or smart phone
any computer
desktop computer
GB
SE
CZ
AT
LT
SK
SI
PL
HU
RS
RO
XK
GB
SE
CZ
AT
LT
SK
SI
PL
HU
RS
RO
XK
GB
SE
CZ
AT
LT
SK
SI
PL
HU
RS
RO
XK
Penetration of Online Music Devices
CEEMID based on Eurostat, 2019.
The use of mobile internet for telecommunications, i.e. the use of free alterna-
tives to mobile calls and text messages, such as WhatsApp or Viber, or other
similar services, usually leads to a very fast roll-out of cheap smartphones
and tablets through the world. Therefore the difference between smartphone
penetration is smaller than the difference between computers or laptops (not
shown separately).
The availability of licensed streaming services is lagging behind the roll-out
of technology, not necessarily because of the small potential market size in
terms of euros. Slovenia, as a small population country with a unique lan-
guage is similarly disadvantaged as the poorest and smallest territories in
Southeastern Europe, i.e. Montenegro and Kosovo.
All in all, partly because the households have smaller budgets, and partly be-
cause the legal alternatives are partly or fully missing from these territories,
private copying and torrenting remain very important sources of music. In
the countries where private copying remuneration collection is low (like in
the Baltic states, Poland) or virtually non-existent (like in Bulgaria, Slovenia,
or outside the EU) the royalty gap as dened as a proportion of household
recreational and cultural spending is usually extremely large compared to
Austria and Western Europe. (See further Subchapter 3.4 The Royalty Gap
and 6.4 Use cases: Private copying.)
10
3 The Creation of Music
The creation, live and recorded performance of music is different in the case
of popular music and classical music, and has special characteristics for jazz
and world music.
Throughout the world, and even more in the CEE region, the cultural sectors,
and music in particular, are dominated by freelancers and micro-enterprises.
In European countries, freelancers and micro-enterprises are subject to
various simplied tax and nancial reporting requirements, and are ex-
empted from most mandatory statistical reporting. Furthermore, they often
creatively combine various economic activities, such as performing arts
and technical services. As a consequence of this, the creators of music are
often invisible for policymakers.
3.1 Market Players
When analysing the creation of music, we have to design specic surveys
after carefully mapping the activities of musicians.
• We have to bear in mind that the simplied nancial accounts of most
music enterprises do not allow for sophisticated nancial analysis.
• As a consequence, national statistics ofces only estimate the com-
bined economic performance of such related activities as sound
recording, music publishing, lm- and TV production.
• Any more music-specic analysis must rely on industry-specic sur-
veys that are usually not included in the government statistical pro-
gramme, and the industry itself has to organize it 1.
1(Bína, Vladimir et al.,2012)
11
3 The Creation of Music
CEEMID used the three income streams model presented in subchapter
??threestreams), which is essentially a value chain based model that was
developed in the United States and adopted by the European Commission’s
Joint Research Centre for European creative and cultural industries for
policy purposes. We made minor adaptations in the three-income model for
applicability in Central Europe, and created survey programmes to estimate
the strength of demand and the actual income in the three main streams
2.
In the original American music business model recording income is the
“main” income stream. In the 21st European music business, just like in the
early 20th century, live performance creates far more revenue than record-
ings. The author’s income stream is the oldest, traditionally and analytically
rst business-like revenue, which is dominated in the US by music publishers.
In the fragmented and less developed European markets, most artists are
not represented by publishers and the relevant revenues are collected by
collective management societies. We modied our model’s labels according
to these regional differences. See, for example, the mapping we used in
Croatia (see Figure ??g:mapping), Mapping the Music Industry).
Figure 3.1: Mapping the Music Industry
The most important difference between the emerging markets of the CEE
and the mature markets of the US or the UK is that only 5-10% of the artists
have a publishing agreement or an (exclusive) recording agreement.
2In the bibliography see (Artisjus et al.,2014;Hull et al.,2011;Leurdijk and Ottilie,2012;
Antal,2015a)
12
3 The Creation of Music
Because royalties are low for both compositions (copyrights in the common
law countries) and for the neighbouring rights of recordings (sound record-
ing copyrights in the common law countries), publishers and labels do not
see a business opportunity to represent music, and musicians do not see
the added value to pay for these services. Similar to the hard to reap oppor-
tunities in the live music market, here is another chicken-and-egg problem of
the emerging market: publishers and labels do not have a sufciently large in-
come base to invest into new music and promotion, which undermines their
credibility. Many artists do not believe in the necessity of label and publisher
services, even though they do not have the time and the skills to sell or claim
revenues in many music uses. Most of the artists remain self-managed and
self-published, even though in the absence of label and/or publisher represen-
tation, they have to perform the roles of accounting, promotion, marketing,
auditing or rights management.
In our view, one of the most important business challenges in the region is
the development of adequate record label and, especially, publishing services
that are tailored for the lower monetary value and lower cost bearing capac-
ity of the emerging market repertoires. Existing market practices, technology
used and regulation should be reviewed in the light of designing cheaper ser-
vices to tap new or not well managed revenue ows. We believe that this is
the only way forward to professionalize the publishing and recording side of
the business.
3.2 Creators of Music
Musicians and their bands create new music works, they record them, and in
the CEE region in most cases they are self-producing and self-publishing their
work. Because of the small revenues in these markets, there is little special-
ization. Creators often must play several artistic, managerial and technical
roles, and even this way they cannot make a living from music alone.
For example, technical roles related to the production and distribution of
sound recordings belongs to division 59 of the Section J Publishing,
audiovisual and broadcasting activities of the statistical classica-
tion of economic activities in the EU countries, whereas creating music
works and performing them belongs to Section R Arts, entertainment
and recreation.3Creative workers usually build a multi-path career that
3This statistical nomenclature is largely harmonized worldwide, and the problems men-
tioned here are relevant in the United States, Australia or elsewhere, too. In the European
13
3 The Creation of Music
incorporates various economic activities. Many musicians, even rather
popular, successful ones have a other jobs because they cannot make a
living alone from these music related activities.
This is one of the reasons why creative and cultural industries, and particu-
larly music is so hard to understand for outsiders. Freelancers and microen-
terprises carry out various economic activities, which are not related in the
governmental economics statistical system or in the tax systems. Statistical
ofces do not create detailed economic statistics where most of the activity
is carried out by microenterprises and mixed prole businesses. In these
cases, the music industry can only represent itself on a factual basis if it or-
ganizes the representative collection of this information.
technician
other
management
education
artist
none
technician
other
management
education
artist
Primary & Secondary Roles in Music
Source: CEEMID Music Professionals Survey 2019.
Figure 3.2: Mixed Career Routes: Primary And Secondary Roles
CEEMID has been organizing representative music industry surveys since
2014. These music professional surveys are very important inputs to our
datasets, and our national policy documents, advocacy reports and royalty
valuations.
Economic Area, Regulation 1893/2006 makes the use of this statistical system manda-
tory in all countries.
14
3 The Creation of Music
3.3 The Three Income Stream Model
In every country, the relative majority of artist income is earned in live perfor-
mances, with important differences. In Figure ??g:incomecomp) The Rel-
ative Importance of Income Streams by Country we depicted the average
share of live music income with light blue.
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RS
BG
HU
SK
CZ
AT
LT
SI
AM
0% 25% 50% 75% 100%
Income Composition By Country
* Labels & Publishers [no text on chart], **includes corporate sponsors,
***music related non−artists work, **** collective management,
Music Professionals Survey, artists only. © CEEMID, 2019.
Figure 3.3: The Relative Importance of Income Streams by Country
The other colours:
• Brown shades: other music related income, such as teaching, manage-
ment, technical roles besides primary artistic role
• Yellow shades: public grants and private sponsorship
• Green shades: various forms of collectively managed royalties
• Blue-to-green: various forms of label, publisher and individually man-
aged royalties
It is notable that recording revenues are only signicant in the richest market,
i.e. Austria. In Bulgaria they appear strong, but in fact this is mainly a result
of the weakness of other income streams. In Hungary, royalty levels are high
because of the high level of collectively managed royalties. In this country,
as we have shown in more in-depth analysis, the decline of small venues and
15
3 The Creation of Music
the collapse of the concert infrastructure hit performing musicians especially
hard.4
Slovenia is a particularly interesting country. Even though it has one of the
strongest live music markets in Europe, because of the small size of the coun-
try, many services, for example YouTube, are just not monetizing the music
products. Furthermore, Slovenia did not have any meaningful private copy-
ing compensation in the past 10 years. While the country has very strong
fundamentals for growth, the market building tasks are the most pressing in
this territory.
The new digital sales channels are very important in the emerging markets
where collective management cannot produce signicant income – this is
particularly true in the former Soviet republics and most of the countries of
the Balkans.
5
It is not easy to compare the income levels of musicians from Vienna to Yere-
van, or from the Lithuanian countryside to Salzburg province. In our survey
research, we used the same subjective income question that has been asked
in Pan-European surveys for more than a decade. We asked how often the
music professional had difculty with paying his or her bills.
With the exception of Bulgaria our respondents were more likely to have dif-
culty with paying their bills from time-to-time or almost all the time than the
general population.
3.4 The Royalty Gap
The biggest difference between how the music business works in the CEE re-
gion and in mature markets is determined by the total amount and the level of
4For details, see the rst Hungarian music industry report (Antal,2015b).
5Our research is well representative of Hungary, Czechia, Slovakia, and Austria, and to a
lesser degree in the other countries, and more in-depth research in those countries may
lead to slightly different results. We surveyed ‘hobby’, ‘part-time’ and ‘full-time’ musicians.
Because of the low revenues, much of the national repertoire are produced by individuals
whose income is only partially made from music events and recordings. Many individuals
work in music-related technical or managerial roles, too, or in completely different walks
of life.
16
3 The Creation of Music
Figure 3.4: Relative income levels: difculty of paying bills among musicians
and the general population. *No comparative national data is
available for Armenia.
royalty payments. In the region, fewer composers, producers and performers
receive royalties, and the level of royalties is lower. 6
• Households in the region have lower income than in mature markets
• Out of this lower income, a higher percentage of the available house-
hold budget goes on necessities and less on entertainment and culture
• Participation in music is lower than in the mature markets
• The music business can achieve a lower market share in the recre-
ational and cultural spending in the region than elsewhere in Europe
The rst two factors are demographic, macroeconomic factors that need to
be quantied, but music stakeholders can do little about them. The third and
the fourth factors can be directly inuenced by better or worse policies and
business practices in the sector.
As Fig. ??g:digitalgap) Digital Revenue Gap shows, digital music business
revenues are disproportionally low from household recreational and cultural
6We have analysed this phenomenon in detail in Slovak Music Industry Report (Antal,
2019b)
17
3 The Creation of Music
Figure 3.5: Digital Revenue Gap
spending, which is already adjusted for lower household income and lower
percentage of recreational spending in the region.
With signicant national differences, we found the following problems:
• In almost all countries, recently including Austria, the taxation of music
is less favourable than in other sectors of the economy. In most coun-
tries, there are no credible economic impact assessments that could
change the tax prole of the industry in the forthcoming regulatory de-
bates around the modernization of the EU VAT system.
• In some countries, the participation level in music, both on active,
singing, playing, and passive, listening levels is very low. We believe
that an important factor is the inadequate music education. The
institutions and stakeholders of popular music must take the initiative,
because music education in many countries only serves the needs of
classical music.
• A far smaller portion of the households is paying for music, and a higher
portion is engaged in home copying and torrenting. Some countries,
like Hungary and Slovakia, signicantly increased their private copying
compensation levels. Others, for example, Lithuania, Poland, Romania,
Bulgaria or Slovenia, do not compensate private copying as it would be
required by the EU law. Outside the EU, such compensation is minimal.
• Royalty levels in some collective management channels are low. In
some cases, this is due to mis-pricing, i.e. too high or too low royalty
18
3 The Creation of Music
tariffs, and in some cases this is due to problems with market mon-
itoring or enforcement. In many countries, we see serious problems
with public performance royalty collection in background music; and
in almost all countries there are serious problems with the way broad-
casting royalties are administered or collected. Some countries have
very unfavourable legislation for enforcing payment in the case of unli-
censed, illegal uses.
• In some cases, the pricing of digital streaming services appears prob-
lematic, and there are no clear national marketing or roll-out strategies
present.
• Some national market protection quotas are present, and most coun-
tries spend signicant taxpayer money on public broadcasting, but the
efcacy of these government actions is questionable. This reduces the
market share of the domestic repertoires.
• Music promotion in the new, super-competitive global sales channels,
such as on YouTube, Apple Store, Spotify or Deezer, requires signi-
cant R&D investment, and an understanding of AI, machine learning
and data-driven algorithms. Given the small repertoire sizes in the re-
gion, this is challenging even on a national level and poses an impossi-
ble challenge for small local labels.
• Revenues are collected from more and more sources, which means
that royalty payments are increasingly micropayments. The cost of col-
lection requires extremely high levels of transactional efciency at the
level of labels, distributors and collective management. The cost of
collection often exceeds the actual income, yet throughout the region,
isolated, costly, small systems are being developed. This is extremely
problematic in the SEE markets.
• After years of policy and regulatory debates, the new DSM directive 7
gives hope to close the value gap and increase royalty revenues from
certain platforms, including YouTube and Facebook. However, in most
countries, no calculations and case studies have been made, and there
is very little preparedness on the side of rightsholders for the national
transposition of the DSM directive.
7Directive (EU) 2019/790 of the European Parliament and of the Council of 17 April 2019 on
copyright and related rights in the Digital Single Market and amending Directives 96/9/EC
and 2001/29/EC
19
3 The Creation of Music
• In some countries, the granting of popular music is non-existent, like in
most SEE countries, or uncoordinated among different levels of govern-
ment, like in Czechia. Grants are usually not based on ex ante assess-
ment of the needs of music stakeholders, and often follow the logic of
classical music, jazz or authentic folk music grants, even though such
areas of the music scene have distinctly different needs.
• In many cases, the music sector faces similar problems to the lm
sector, broadcasting or other performing arts, including theatre, ballet,
opera. Cooperation in policy advocacy, grant design, research and de-
velopment, market research and business development is very weak.
We hope that the subsequent chapters will help national stakeholders to re-
assess their strategies in these elds, where the initiative clearly must come
from the music business.
20
4 Market & Distribution
The CEE markets are emerging and future markets with very different
demand characteristics than the mature Western and Nordic markets,
and sometimes they show resemblance to the markets of Southwestern
Europe.
On the live performances market, Estonia, Hungary, Czechia, Slovakia and
Latvia are medium developed markets.
142 ~< 164
119 ~< 142
97 ~< 119
74 ~< 97
52 ~< 74
29 ~< 52
7 ~< 29
Demand driver for live performances
Private Expenditure: Concerts, Theatre, Cinema
Source: Eurostat.
Visualization: © CEEMID, 2019.
Figure 4.1: Comparison of CEE Median Concert Ticket Prices
In the case of recorded content, the whole region, with the exception of Esto-
nia is underdeveloped. Only a very small segment of the population is willing
and able to pay for services.
21
4 Market & Distribution
This makes the whole region dependent on collective management, similarly
to the emerging markets of Latin America. In the publishing and recordings
market, around half of total revenues are made from public performance and
private copying remuneration. In those countries, where any of these income
sources are not performing well, there is very little recorded business at all.
4.1 Live Music Markets
The current price level of concert tickets more or less reects the differences
in purchasing power in the regional countries. Some markets are very much
centralized around the capital city. The comparison below is made with the
help of the CEEMID Music Professionals Survey 2019. In the comparison we
excluded free concerts and ticket prices above 40 euros.
The typical audiences are reported as 30-130 visitors, which shows the im-
portance of small venues, and the fragility of the live music business: the
total ticket revenue in the case of small venues is between 500-1000 euros.
Pre-sales are rare, and even these small revenues are very risky. Foreign per-
formers visiting the region can usually expect somewhat bigger audiences,
higher ticket prices. (See Figure 4.3 for national differences in the region.)
As we have seen in the Subchapter 2.1 Seasonality, the demand for live mu-
sic performances is extremely seasonal in the region. Most of the concerts,
and the most valuable concerts (in terms of ticket revenue) are usually held in
22
4 Market & Distribution
capital
countryside
abroad
€0 €10 €20 €30 €40 €0 €10 €20 €30 €40 €0 €10 €20 €30 €40
AM
RS
HU
BG
LT
SK
CZ
SI
AT
concert location capital countryside abroad
*excluding free events and ticket prices above € 40
Comparison of CEE Median Concert Ticket Prices*
Source: CEEMID Music Professionals Survey, at 2018 average EUR/national currency rates.
© CEEMID, 2019.
Figure 4.2: Comparison of CEE Median Concert Ticket Prices
December. Another peak is the summer festival-season, but the largest festi-
vals often target foreign audiences and put foreign performers on the stage.
The festival season can account for a quarter of the total revenues, but not for
the artists. The festival season provides income for the technical ecosystem
of sound, light, stage engineers, promoters, but only to a lesser extent to local
artists. Most of this income is an export income in the national accounts (do-
mestic production is nanced by ticket sales to people earning their income
abroad) and it is the most important music export revenue source in Hungary
and Serbia, and probably several other CEE countries.
The income structure of musicians and bands is very fragmented. In the
20th century advanced market model, the main income source was related
to recordings, and it was received from one quasi-employer, the label. Even in
the case when an artist is represented by a label or a publisher in the region,
it is likely that the main income source is live performance income. A typical
professional plays in about 10-50 events in a year, which means payments
from 10-50 sources. A consequence of this structure is that musicians do not
have ‘employers’, their earning structure does not even resemble an atypical
wage income. The special taxation, social security and pensions problems
of musicians are usually not well represented in the national social dialogue,
because popular music is not well unionized, and the employer side is not
taken by any institution. The income of musicians is volatile, cyclical, risky,
23
4 Market & Distribution
AT
SI
RS
SK
BG
CZ
HU
LT
0 50 100 150 200
Reported Concert Audience Sizes*
*Median values, and reported audience sizes between lower 10% and top 10%
of the reported audience sizes by country;
CEEMID Music Professionals Survey, © CEEMID, 2019.
Figure 4.3: Reported Audience Sizes in CEE countries
and often very unfavourably taxed.
Royalty income plays a very important role in stabilizing the volatile live music
income, if and when it is available. However, only very few musicians are rep-
resented successfully by publishers and labels in the region. While publishers
and labels can perform certain roles that are usually the roles of human re-
sources and legal affairs at an employer, these services are not available for
most of the music professionals in the region. This gap is sometimes partly
lled by collective management organizations, but not to the point that would
be usual in other business sectors. In our view, in the CEE, probably authors’
societies are in the position to play some quasi-employer roles, and represent
at least tax and social security issues in the social dialogue.
4.2 Recorded Music
The market conditions are very different across Europe, and the headline g-
ures known by market players are misleading for a typical artist or label, be-
cause their sales prospects are based on many unknown factors:
• The (future) availability of new platforms in their key markets
24
4 Market & Distribution
• Number of subscribers in their domestic territory and key foreign mar-
kets
• Strength of repertoire competition in their domestic and key markets
• Subscription fee and advertising revenue in the respective markets
• National currency exchange rate in platform / distributor functional cur-
rencies
• In the early stages of market development, minimum licensing require-
ments distort the revenues
4.2.1 CEEMID-CI Volume indexes
The combination of these six factors cannot be intuitively guessed and the
information is not available to local market players. To make a meaningful
comparison, we combined c. 700m royalty statements and selected for in
each national territory the ‘typical’ songs in each month between January
2016 and February 2019. We dened the typical song(s) in a territory as the
sound recording that took the median position in number of plays on Spotify,
Deezer and Apple Music, i.e. half of the songs in our database had fewer, half
of them had more plays on the channel.
AT
CZ
HU
PL
SK
AL
AM
BAMEMK
RS
CH
DE
GB
NL
TR
BG
HR
LT
RO
SI
Emerging [AL, AM, ME, MK, RS]
EU East [BG HR LT RO SI]
AT + V4 [AT CZ HU PL SK]
benchmark [GB DE CH NL TR]
Total Streams* of Median (Typical) Song
*Apple Music + Deezer + Spotify, rolling monthly sums of three month
Source: Central European Music Rerpot by CEEMID & state51 © 2019
Figure 4.4: CEEMID-CI Volume Index for Typical Recordings. Streaming in-
come of the typical (median) song from Spotify, Deezer and Apple
Music. If Spotify or Apple Music was not present in the market in
a period, we treated their median value as if it was zero.
25
4 Market & Distribution
Even though the United Kingdom or Germany are much bigger markets than
Austria and the Visegrad region of Hungary, Czechia, Poland and Slovakia,
the exploitation of song in these mature markets was not much higher than
in Austria and the Visegrad region. In fact, the exploitation level of a typical
song is similar to Switzerland, the Netherlands or Turkey.
In these smaller markets, the number of subscribers is smaller, and the reper-
toire competition is also smaller: a smaller number of subscribers will almost
certainly select fewer songs to play than a larger number of subscribers. In
the emerging markets of Albania, Montenegro, Macedonia the number of
plays is very low because the number of subscribers is small and the only
available platform is Deezer.
After analysing the path of the typical (median) sound recordings, we
re-created the same analysis for relatively successful songs. We dened a
song successful if it had more plays on Deezer, Spotify or Apple Music than
90% of the songs that were played at all in our reference database. These
songs are not hits (the real hits are in the top 1%, or even in the top 0.01% of
the songs), but certainly far more successful than most recordings on the
market.
AT
CZ
HU
PL
SK
AL
AM
BA
ME
MK
RS
CH
DE
GB
NL
TR
BG
HR
LT
RO
SI
Emerging [AL, AM, ME, MK, RS]
EU East [BG HR LT RO SI]
AT + V4 [AT CZ HU PL SK]
benchmark [GB DE CH NL TR]
Total Streams* of Successful** Song
*Apple Music + Deezer + Spotify, rolling monthly sums of three month
**Defined as more successful than 90% of the songs and less successful than top 10%
Source: Central European Music Rerpot by CEEMID & state51 © 2019
Figure 4.5: CEEMID-CI Volume Index for Successful Recordings
The picture is somewhat different than in the case of typical songs. Overall,
a relatively successful song can gain a larger audience in the United King-
dom and Germany than in the smaller countries. Successful songs in Turkey
benet from the size of the population, but due to lower penetration rates a
Turkish success in terms of listening quantity can expect as many streams
as a successful Austrian, Czech, Hungarian, Polish or Slovak song.
26
4 Market & Distribution
4.2.2 Typical income
In the Central and Eastern European markets artists are disadvantaged by
the smaller local population size, but the lower level of repertoire competition
also benets them. If a song starts its career in Austria or Hungary, it does
not typically reach a much smaller audience than in Germany or the UK, but
the revenue prospects are clearly different.
AT
CZ
HU
PL
SK
AL
AM
BA
ME
MK
RS
CH
DE
GB
NL
TR
BG
HR
LT
RO
SI
Emerging [AL, AM, ME, MK, RS]
EU East [BG HR LT RO SI]
AT + V4 [AT CZ HU PL SK]
benchmark [GB DE CH NL TR]
Total Stream Income* of Median (Typical) Song
*Apple Music + Deezer + Spotify, rolling monthly sums of three month
Calculated at reporting end exchange rate in GBP
Source: Central European Music Rerpot by CEEMID & state51 © 2019
Figure 4.6: CEEMID-CI Revenue Index for Typical Recordings
As we can see in the chart, the typical revenues were relatively at in the
past three years. While listening quantities were growing, so was the num-
ber of subscribers and range of exploited songs. In fact, as more diverse au-
diences entered the market, the market shares of the typical labels started
to shrink. As a consequence, the typical artists did not see any signicant
revenue growth from the rising number of users.
We can clearly group the countries into ve groups:
1. The United Kingdom
2. Germany, Switzerland and the Netherlands
3. Austria, Czechia, Hungary, Poland, Slovakia, Southeastern Europe and
Baltics, Turkey
4. Non-EU emerging markets, except for Turkey
In fact, the least developed, emerging markets saw signicant decreases. We
believe that this is mainly caused by the diminishing revenue from telecom-
munication cross-sales and the levelling of the minimum licensing fees per
territory.
27
4 Market & Distribution
4.2.3 Successful recordings’ income
The difference among successful songs is similar to the typical songs, but in
the emerging markets, where relatively small audiences listen to a relatively
small number of songs, occasionally local hits can achieve great success,
especially if they are helped by transitory factors. 1
AT
CZ
HU
PL
SK
AL
AM
BA
ME
MK
RS
CH
DE
GB
NL
TR
BG
HR
LT
RO
SI
Emerging [AL, AM, ME, MK, RS]
EU East [BG HR LT RO SI]
AT + V4 [AT CZ HU PL SK]
benchmark [GB DE CH NL TR]
Total Income* of Successful** Song
*Apple Music + Deezer + Spotify, rolling monthly GBP sums of three month
**Defined as more successful than 90% of the songs and less successful than top 10%
Source: Central European Music Rerpot by CEEMID & state51 © 2019
Figure 4.7: CEEMID-CI Revenue Index for Successful Recordings
4.2.4 Summary
Streaming completely altered the way recorded music is sold. The key differ-
ence is the extraordinary growth in competition. Whereas national markets
did not have on inventory more than a hundred thousand songs in record
shops, in streaming, about 1000x more, maybe 100 million recordings are
available. The level of competition is extremely high in the mature markets,
and somewhat lower in the emerging markets.
The emerging markets apply lower prices, which naturally result in lower in-
come in these markets. The combined effect is huge: a typical song in the
UK earns about 10x more than in the CEE markets. Obviously this makes rich
markets very lucrative for exports.
For some CEE market players, access to all global markets creates an oppor-
tunity. For most of them, they pose an existential threat. Not only do they
1A similar pattern is present in quantities and we removed the few outstanding quantities
for clarity in the previous, quantity-based chart.
28
4 Market & Distribution
bring in 10x less revenues in their home markets than their UK or German
peers, but they are facing increased competition from foreign producers in
this small, fragile market.
We will address the problem of music export and import in Chapter 5about
music exports.
4.3 Collective Management
Many markets in the region are very reliant on revenues from collective man-
agement. This is not a CEE but more an emerging market phenomenon, be-
cause similarly developed Latin American countries have a similar income
structure.
In some countries, for example Czechia, Hungary, Croatia, we see rather
strong collective management revenues, with a much smaller gap compared
to rich countries than in the case of individual digital revenues.
The following chart is taken from the IFPI Global Music Industry Reports’ data.
We have made estimates for small countries not included in the report. We
can clearly separate the regions by their income structure. The Nordic coun-
tries and Switzerland have the highest level of individual royalties due to the
strong performance of subscription streams. They are followed by Western
countries, except for France, which has very strong individual and collective
revenues. The CEE countries and Turkey rely the most on collective manage-
ment.
We have analysed the radio, television, and background music tariffs and col-
lections for several producer or performer societies in the region. Our anal-
ysis shows that their tariffs, or collections, or both, are signicantly below
any properly set benchmarks within the single EU market. The heavy depen-
dence is not based on strong collective management, but on extremely weak
digital sales.
In the absence of strong streaming revenues, the audience appears to be
more inclined to rely on torrenting and home copying than in Western Eu-
rope. Our CEEMID databases started out from measuring the value of home
copying in Hungary, Slovakia and Croatia.
As we will see in the next chapter, the relative strong performance of col-
lective management is both a blessing and a curse, because it is unusually
heavily tilted towards author’s rights. It provides a relatively stable lifeline for
29
4 Market & Distribution
Figure 4.8: Ratio of individiually managed and collectively managed revenues
in various regions of Europe
the recorded business, but it does not align well with the innovative nature of
digital music, because normally producers are better placed to invest in new
recordings and promote them than authors.
However, there are some countries, for example, Moldova, Bosnia-
Herzegovina, or Armenia, where we cannot talk about a functional collective
management system.
30
5 Music Export and Music Import
The region, like most regions of the world, is a net importer of music, but
has very signicant export potential. In this decade, the live music sector
created greater opportunities for exports, both because of its higher value
and because of the comparative advantages of the region in creating music
events.
5.1 Cultural Tourism: Imported Audience
The most important source of revenue for the local music scene is export
revenue from visitors to the region. Cultural tourism is the best carrier of
music export both in economic and cultural terms. When foreign visitors buy
tickets to music events, they create export revenues while they spend foreign
earned money in the local economy. These events also have the potential to
introduce the work of the local music business to foreign people.
Austria is one of the most important global destinations for cultural tourism,
and particularly music tourism throughout the year. Music and opera related
tourism has a very long tradition, which had been increasingly diversied with
jazz, rock and new music. Bratislava, Budapest and Prague because of their
cultural and geographical proximity often play a role in these programmes,
especially when visitors are arriving from other continents. Budapest, the
largest capital city in Central Europe, attracts many classical music and opera
fans in her own right.
In popular music, the region has strong comparative advantages for festival
tourism. First of all, the festival market is relatively strong, because the do-
mestic demand is less condensed in space and time, and there is a strong
ecosystem present to stage events on temporary infrastructure. Live music,
particularly festivals, is very labour intensive – large stages are often served
by hundreds of people, and large festivals employ temporarily up to 10,000
people. Because of the relatively cheaper labour and locations, such mega-
events can be organized in the CEE with a cost advantage.
31
5 Music Export and Music Import
In the period of 2009-2019, Open’er (Poland) won 3, Exit (Serbia) and Sziget
(Hungary) won 2-2, and Untold (Romania) won the Best Major Festival Award,
allowing the prize of the European Festival Association to go to Western Eu-
rope only three times to other regions of Europe.
5.2 Touring
Our research in the past ve years has tried to map, with an increasing num-
ber of countries and regions, the touring map of the CEE region. This period
coincided with the closure of many domestic small venues, which further
forced bands to seek new tour destinations. These tours follow the European
touring routes, but they are heavily inuenced by cultural factors. Cultural and
linguistic proximity plays a huge role in the interconnected Czech and Slovak
live sectors, or the Hungarian band’s routes in Eastern Romania and Southern
Slovakia where many Hungarian-speakers live. Another, increasingly impor-
tant demand driver for tours is the large Central European diasporas in major
British, German and Benelux cities. Vienna for Serbs, or London for Hungari-
ans and Poles, are the second largest cities in terms of purchasing capacity,
and in some cases, the population of the diaspora is approaching the size of
the second largest cities in these countries.
5.3 Exporting & Importing Recordings
As we have seen in chapter 4.2 , if a CEE recording has only a domestic audi-
ence, its income prospects are very poor compared to similar recordings in
mature markets.
In the countries that we compared, domestic recordings had the best
prospects in our large, independent reference database. This is the case
in very underdeveloped markets (in our example: North Macedonia) or in
developed markets.
Cultural and geographical proximity played a great role in the performance
of foreign tracks: in Austria, German songs; in Czechia, Slovak songs; and
in Slovakia, Czech songs had much better sales prospects than songs from
any other countries.1
1We have to highlight that we only dealt with typical and mildly successful songs, and did
not analyze the greatest hits on the charts - which are usually the same international hits.
32
5 Music Export and Music Import
Sales in MK
Sales in NL
Sales in SK
Sales in AT
Sales in CZ
Sales in GB
2016 2017 2018 2019 2016 2017 2018 2019 2016 2017 2018 2019
quantity
domestic recording recording from selected neighbour from any other country
Sales Prospects: Domestic & Foreign* Typical (Median) Recordings
*Selected countries: AT: German songs, CZ: Slovak songs, SK: Czech songs
Figure 5.1: Market Position of Typical Songs in Select Countries
• typical Austrian (red) and German (blue) song in Austria, with the listen-
ing quantities of ‘any other typical song’;
• the typical Czech (red) and Slovak (blue) song in Czechia and – in this
case the Czech song is the ‘domestic song’;
• typical Slovak (red) and Czech (blue) song listening quantities in Slo-
vakia, in this case, the Slovak song is the ‘domestic song’.
For comparison, we show the ‘typical Macedonian’, ‘typical Dutch’ and ‘typical
British’ recordings’ position against a song coming randomly from all over the
world.
There are about 200 countries and territories that are trying to export their
music globally. No wonder that a ‘typical song’ from anywhere in the world
has very little chance of success in any of the countries. A ‘typical’ song
has a far better prospect in its home market, where the musicians have fans,
friends, and where their language is understood.
The distinctive feature of popular music is that it is mainly vocal, and the
artists are usually composers and performers at the same time. Since the
rock and roll revolution, audiences expect artists to interpret their own songs
with their own voice. As opposed to classical music and jazz, the language
of the artist is a very important feature. The cultural proximity of another
33
5 Music Export and Music Import
country, the common language, as in the case of Austria and Germany, the
presence of native ethnic minority or new diaspora, open routes to Serb, Slo-
vak, Hungarian, Romanian songs within the region and beyond.
The cultural geography of the CEE region is famously different from West-
ern Europe. Population density is lower, resulting in less dense and strong
national markets. The number of languages used is high, and most coun-
tries have mixed-language populations. Slovak speakers are spread out in
Slovakia, Czechia and Serbia; Hungarian speakers in Hungary, Romania, Slo-
vakia and Serbia. Serbian speakers are not only spread around in all the for-
mer Yugoslav republics, but their songs are largely understandable for speak-
ers of the Croatian, Bosnian or Montenegrin language/dialect. In the case of
the CEE repertoire, it is better to talk about ‘regional’ and not ‘national’ mar-
kets. These regions do not strictly follow the ‘territories’ dened by copyright
jurisdictions.
In these loosely dened cultural boundaries, for example, in Slovakia, the
Czech market is important; for Czechs, the Slovak market may bring as much
volume as several regions of Czechia. Becoming a hit and reaching the top 50
is challenging in these near markets, and less likely than taking a hitlist posi-
tion by a British or American superstar, but innitely more likely than breaking
into the chart by a ‘typical’ British or American performance.
The situation is similar if we take a look at relatively successful songs, which
are ahead in listening quantities of 90% of the songs in our sample. It is
important to keep in mind again that the sample does not contain any major
international hits.
5.4 Import and Regulatory Quotas
While the sales prospects of ‘typical’ domestic songs are usually much better
than the sales of foreign songs, this does not really reect the market share
of the domestic or international repertoire. Most of the artists and labels
never, or almost never, make it to the national hitlists, or get into the top list
of the streaming services – not even in their domestic country. However,
most of the listening time and money goes to these top hits. Because there
are about 100 million songs available in each country, the competition is very
strong and a small number of artists and producers are moving the national
market shares.
34
5 Music Export and Music Import
Sales in MK
Sales in NL
Sales in SK
Sales in AT
Sales in CZ
Sales in GB
2016 2017 2018 2019 2016 2017 2018 2019 2016 2017 2018 2019
quantity
domestic recording recording from selected neighbour from any other country
Sales Prospects of Domestic and Foreign Successful (Top 90%) Recordings
*Selected countries: AT: German songs, CZ: Slovak songs, SK: Czech songs
Figure 5.2: Market Position of Successful Recordings in Select Countries
There are about 100 million songs in competition globally, but there are only a
few thousand songs altogether in the European charts. Every year, only a few
hundred songs make it to the national charts, and these songs take probably
80-90% of the total royalties. We have seen in the previous chapters that
it is possible to nd a sizable audience in the region, but to gain a sizable
market share of the royalty distribution is beyond the reach of most artists
and labels.
If we take a look at the streaming charts of the region, we usually nd that the
vast majority of the streamed songs are foreign songs – except for in Aus-
tria, US songs. For comparison, we added a similar, middle-income emerg-
ing market (Argentina) and a rich, small-population English-speaking country,
Australia, to the chart. These countries seem to be in a similar position to the
CEE countries.
Arguably, the strongest countries for songwriting are the United States and
Brazil – these are the countries that have run out of the ISRC recording iden-
tier range. Their charts are lled with their domestic songs, but they are not
alone. Japan and the bigger EU countries, France, Germany and Poland have
very strong domestic performance, too.
Of course, there are many factors at play here. Large countries with large
artist populations generate a lot more recordings, so local fans always have
35
5 Music Export and Music Import
EE
AT
AU
AR
HU
SK
GB
SE
DE
PL
BR
FR
JP
US
0% 25% 50% 75% 100%
origin domestic US GB DE FR other
Spotify National Top 50 Charts, 2019−09−15
Country of Origin on Spoitfy National Hitlist
Source Spotify; calculated by CEEEMID, © 2019.
Figure 5.3: Country of Origin on Spotify National Hitlists
thousands of new songs to select from. In small countries, the total annual
creations, from pop to jazz, from authentic folk to classical, amounts to a few
thousand tracks. But it is not only size that matters. Sweden’s population is
similar to that of Austria, Hungary and Czechia, yet the Swedish repertoire
performs better in Sweden, and as we will see in the next chart, abroad, too.
We created a second chart to visualize how hits are travelling across na-
tional borders. To make the chart easier to read, we omitted the United
States, Brazil and Japan as countries of origin, and concentrated only on
intra-European hit ows.
The second week of September 2019 was not an exceptional week. Most
EU countries’ producers did not score any hits in any other EU countries’ Spo-
tify Top 50 hits. The UK exported many great hits all over Europe, as usual,
but there were other important hit ows. These hits mainly follow cultural
proximity.
France exported hits to the two Francophone countries of Europe, Belgium
and Romania, and furthermore to Greece, a Southern country with particu-
larly unique chart composition. Germany exported many hits to Austria, an-
other German-speaking country, and some hits to other Germanic countries.
Dutch producers placed a few hits in the Germanic countries and in Belgium,
where the Dutch-speaking Flemish community has its own radios, TVs, press
36
5 Music Export and Music Import
and hitlists. The Netherlands is a powerhouse of electronic pop music that
is not bound by language, which nds an audience in several countries.
Figure 5.4: Country of Origin on Spotify National Hitlists
The strength and competitive position of the national market where an artist
is most known and has a fan base is usually a determining factor of track
performance and revenue. The overall revenue prospects and competition
situation of a Hungarian or Croatian song are very different from a British or
even a Polish song. But overall, most European recordings are not bound to
a domestic country. Because of cultural proximity, the presence of native mi-
norities or new immigrant diasporas, even small-language songs are being
listened to in a much wider territory than the artists’ original countries. Some
relatively small EU countries, such as Sweden and the Netherlands, success-
fully export their music on a regular basis.
Nevertheless, as the streaming services slowly overtake all other forms of
use, the charts above depict a very fundamental market change. Whereas in
the traditional channels of physical sales, digital downloads and broadcast-
ing, the CEE countries, like other small- and medium-sized EU countries, en-
joyed 30-50% market share, among the streaming hits their producer’s share
is below 10%. It is not unusual to nd only domestic recordings in physical
sales hitlists, while domestic songs rarely enter the streaming charts in the
region, with the exception of Poland.
The traditional sales channels protected CEE markets in several ways. After
EU accession most import duties are gone, but physical products have very
signicant logistics costs, which give local producers a competitive edge.
Because physical products are increasingly sold at concerts and festivals,
37
5 Music Export and Music Import
where the market share of domestic performers is usually very high, the tra-
ditional, mechanically licensed sales had a protected market.
The broadcasting channel, which used to be the most important promotion
channel, too, was protected in many European countries by national content
quotas, or supported with generously funded national, regional, local public
broadcasters who gave a preference to national composers, producers and
performers. These market barriers are not present in the streaming markets,
which poses many questions. Our research is aiming to answer these ques-
tions, but it took several years to build a data infrastructure that can help
produce an accurate market overview.
5.4.1 Conclusions and discussion points
• What skills are necessary to promote the domestic repertoire on
streaming platforms?
• In the increased international repertoire competition, domestic players
will increasingly scrutinize the distribution of collectively managed rev-
enues, such as public performance royalties.
• • The role of public broadcasters at national, regional and local level,
and community radios will have an increased importance in audience
building for local acts. They have to nd new strategies to re-build their
audience in the streaming services.
• There is a growing discussion about the potential introduction of sim-
ilar quotas on streaming services. This is not at all a straightforward
task; a critical revision of existing quota denitions, market effects, and
possibilities in the global services is absolutely necessary. Many quo-
tas in the region are ill-dened, not well-monitored, and their effect on
the market share of domestic creators is unknown.
• Most music is now sold in the world by various machine learning &
other articial intelligence algorithms. In the past, local wholesale and
music professionals had an effect on the music sold, but currently their
role is minimal. Understanding how algorithms work and how new mu-
sic can be connected with its audience requires vast R&D investment
and regional cooperation, because the data requirements and engineer-
ing investments needed for algorithm training are beyond reach for CEE
labels. Often the total national repertoire is too small for competitive
algorithm-training.
38
6 Conclusions, Policy & Business
Strategy Recommendations
The initial motivation to create the CEEMID databases was the need to ad-
vocate for more favourable economic policies and regulation for music, and
to decrease the royalty gap as dened in Chapter 3.4 between the Western
and CEE regions of the EU Single Market with better pricing. This need has
not changed: the royalty gap between East and West, North and South is
large. There are new candidate countries where the situation is even worse.
Recently business royalty payers increased their efforts to lobby for lower roy-
alties and content prices. The value transfer is being groundlessly trivialised,
and the 60-years-old private copying exemption is under threat in those coun-
tries where it would be most needed: in Czechia, Slovakia, the Baltic states
and in the South. We believe that CEEMID can provide economic evidence in
the national transposition process of the DSM directive, or during the discus-
sions of local content quotas.
Our 5-year research programme has shown that most musicians work under
much nancial and regulatory uncertainty in the region in very precarious
working conditions. Despite these difculties, they have a calling that they
follow passionately. Even though their material conditions are worse than
the average of their country, they are usually more satised with their lives as
the majority of the people where they live.
We believe that industry representatives and policymakers should build on
these positive sentiments to make the working environment in the Central
and Eastern European creative industries more favourable. The music indus-
try has far more potential to create new jobs, new tax base and high value
added in the national economy than most industries preferred by national
economic policymakers, but currently this potential is largely untapped.
39
6 Conclusions, Policy & Business Strategy Recommendations
Figure 6.1: Relative income levels: difculty of paying bills among musicians
and the general population
6.1 Support Schemes for Developing the Music
Scene
Throughout Europe, national, regional and local governments subsidize cul-
tural activities, practices, and cultural enterprises. In many CEE countries,
such subsidies are almost exclusively targeted at the classical music scene,
and some parts of the cultural infrastructure. In Austria, Hungary and Bul-
garia a very high number of respondents applied for grants, and many of
them were successful. On the other hand, in Lithuania and especially Arme-
nia the success rate was (very) low.
The problem with many grants in the region is that the grant calls were either
generally prepared for culture, or developed over years for classical music
and jazz only. In some countries, there is no national granting for modern
popular music. If some forms of corporate subsidies or local grants exist,
the sponsors and granting agencies are not well informed about the needs
of musicians. We hope that our Central European Music Industry Report, and
the earlier Hungarian, Slovak reports helped to shape a more focused view
on the popular music scene.
40
6 Conclusions, Policy & Business Strategy Recommendations
SI
CZ
AM
LT
BG
SK
RS
HU
AT
0% 25% 50% 75% 100%
total respondents to the question
Grant application not applied not successful successful
Did you recieve a grant, or applied to a grant in the past 12 month?
Availability of Grants
CEEMID Music Professional Survey. © CEEMID, 2019.
Figure 6.2: Availability of Grants in Select Countries
We recommend the use of our structured, 360-degree workshops to establish
the strengths and weaknesses of a national granting system. This methodol-
ogy takes into consideration all music professionals’ views: not only the mu-
sicians, the manager, and the grant writer, but also the musician’s technical
staff including stage, lighting and sound engineers, the composers, the pro-
ducers, the promotion/social media team, the band transporters. We usually
try to make sure that at least 30-40 different roles are present. This is neces-
sary to get a fair view of how live or recorded music is produced, what is avail-
able, what needs support, and what the pitfalls are. Unfortunately, in grant
design, often only artists are asked, even though performances or recordings
have obstacles much better known by technical professionals, engineers, or
managers.
We are helping music granting authorities with ex ante and ex post indicators
to make sure that they know what they want to change, and to measure if
their grants have helped to achieve the required change.
Our detailed economic impact assessments have shown in Hungary and Slo-
vakia 1that the music business is very unfavourably taxed. In several CEE
countries it is very likely that the music sector is not a net recipient of subsi-
dies but a net taxpayer. In fact, proportionally the music business pays far
1In the bibliography see: Antal (2015b); Antal (2019b)
41
6 Conclusions, Policy & Business Strategy Recommendations
more taxes than manufacturing activities, such as car manufacturing, which
is the preferred economic activity of the region.
6.2 Industry Advocacy, Economic Impact and
Taxation
While classical music and national folk music have long merited public sup-
port, jazz and popular music have been seen, correctly, as market activities.
Their important role in keeping national culture relevant for new generations
is a relatively novel idea in the region. These well-intended, but not always
yet robust support schemes usually only represent a drop in the ocean of an
otherwise unfavourable market situation. In the region, the available grants
are often dwarfed by taxes payable, and we believe that music businesses
should place less focus on lobbying for better grants and supports systems,
and more for less unfavourable taxation for musicians and generally for cre-
ative activities.
A more focused industry cooperation may be necessary in the forthcoming
modernization of the EU VAT regulation which will change the VAT levels and
brackets. This could be a once-in-quarter century opportunity to argue for
more just taxation of music in the whole European Union 2.
A more focused industry cooperation may be necessary in the forthcoming
modernization of the EU VAT regulation which will change the VAT levels and
brackets. This could be a once-in-quarter century opportunity to argue for
more just taxation of music in the whole European Union.
Economic impact assessments are crucial parts of public policy and advo-
cacy reports on better taxation, or in the design of better creative industry
strategies and economic policies. They are also often statutory requirements
for EU grant calls or increasingly for national and municipal grant calls, for
example, some granting authorities for large grants often want to trace the
effect of the grant for up to ve years.
Our methodology enables music and other creative stakeholders to create
impact assessments for economic and cultural policy consultations. For ex-
ample, in the Slovak national music industry report Správa o slovenskom hu-
dobnom priemysle we showed the relative economic impact of car manufac-
2On this important policy topic, refer to the thematic website of the European Parliament
or the European Commission
42
6 Conclusions, Policy & Business Strategy Recommendations
turing and a music festival is similar in Slovakia, however, the music business
creates a many times bigger tax base (Antal,2019b). A similar argument
could be made in Hungary and Croatia where the tax treatment of music is
one of the biggest obstacles to growth.
CEEMID made iotables, its data processing, integration and calculation
tool for economic impact assessments, open source and available for
peer-review and comparison with national statistics ofce calculations, for
example, on value-added and employment multipliers. 3The use of this
software requires programming skills, an understanding of input-output
economics and national accounts. We are currently looking for smaller
users, such as concert halls, granting authorities or individual festivals to
use our data, and to create tools such as web-based apps that can make this
software more user-friendly, standardised, and can help smaller players who
do not employ specialists to make their own impact assessments, which is
often required by granting authorities for larger funding applications.
6.3 Valuing Music
When CEEMID was founded, most of the CEE stakeholders had little or no ex-
perience in valuing their intellectual property and setting its prices. Over the
years it turned out that this is not a regional phenomenon, but very typical for
all smaller national market players even in mature markets. While copyright
administration usually follows national jurisdictions, many prices are set out-
side of national markets, or the CEE region in the form of various agreements
(for example, in the case of traditional mechanical licensing) or in the case of
global digital platforms. The nationally set prices are often set by collective
management organizations. These prices are differently regulated in the re-
gion, and often have not been changed since gaining national independence
or transition to the market economy.
While all EU member states are participating in international agreements that
regulate royalty setting principles, this international law does not create an un-
ambiguous ex ante price regulation. Ex ante regulation means that prices are
not freely set by music stakeholders, but there is a regulated procedure that
creates clear prices before they are entering force in general terms and con-
ditions. Certain state governments and legislation have created de facto ex
ante price regulations in the region, for example in Hungary, Lithuania, Croa-
tia, which is at least contentious in the light of higher level international and
3In the bibliography see: (Antal,2018)
43
6 Conclusions, Policy & Business Strategy Recommendations
EU law, and in all cases, it is very difcult for rightsholders to work with. Such
quasi-regulations politicize valuing music, and often give unfair advantage to
politically better organized interest groups, such as IT manufacturers or the
restaurant business.
However, in the absence of clear legal mandate for an ex ante price regu-
lation, most price disputes go to competition authorities and special com-
petition courts which have an EU-wide jurisdiction for ex post price reviews.
Since competition law is directly applicable EU law, some cases are sent to
the Court of the European Union for preliminary rulings. Because in the CEE
region most music stakeholders have lower prices or revenues than would
be justied, these procedures can create opportunities to decrease the roy-
alty gap introduced in Chapter 3.4. However, competition policy is a double-
edged sword. The proof of burden is very high, and litigation, which involves
courts in both national capitals and in Luxembourg is very costly.
In our view, several legal precedents, which are binding now in all mature
and emerging EU markets, were decided unfavourably for the music industry
because of the weak evidence produced by music rightsholders.4
Stakeholders in the creative and cultural sectors are micro-, small and
medium enterprises, and often non-prot organizations who are lacking
professional skills to ght a competition case. On the other hand, royalty
payers are often large technology or media corporations who do have the
expertise to enter price negotiations or competition disputes. Because the ex
post nature competition disputes result only in downward price modication,
the fact that competition law applies already starts a downward spiral in
prices.
CEEMID has been used in competition cases, but we believe that the mu-
sic industry should be more proactive, and not only react to such reviews,
because they by nature can only decrease royalties. Another common prob-
lem is that in the absence of own valuations, stakeholders, if challenged in a
competition court, usually rely on a comparison of market prices in the Single
Market. While this is an accepted type of evidence in such cases, it brings
no new information into the disputes, and it is free-riding in the few original
4Probably the most important, EU-wide applicable royalty setting precedents were set in the
CEE region in AKKA/LAA vs Konkurences padome and Léčebné lázně Mariánské Lázně v
OSA (InfoCuria,2017,2014). This jurisprudence was set out in the context of background
music use in hotels, restaurants and catering, but may be applied to any licensed form
of music. In these cases, the EU Court set out that royalty prices should be equal in the
European single market, subject to objectively veriable differences in social, cultural and
economic conditions.
44
6 Conclusions, Policy & Business Strategy Recommendations
valuations created by a handful of organizations. The current, one-sided ap-
plication of competition law is a recipe for disaster, and will lead to a race to
the bottom. This is not only a threat in the less developed markets, where
usually both royalty levels and total royalty collections are very low, but in the
richer markets like Austria, or even France, Denmark and Germany. Because
of the methodologies adopted by the EU Court, royalty levels are compared
across the EU and unjustied differences can be leveled out by the Courts.
The only way to close the royalty gap is to increase enforcement and increase
prices. This requires investment into own, independent pricing capacities,
that not only show that in an international comparison a certain price is not
unlawfully high, but which also reveals if the value of music has increased in
a certain use. As music stakeholders tend to be small in the region, they usu-
ally do not have human resources and nancial capacities to build out nan-
cial analysis or economic analysis competences. The original idea behind
CEEMID was to pool data and methodology resources and help stakehold-
ers. CEEMID and Consolidated Independent has initiated national research
consortia that aim at creating independent valuations.
There are several methods of counteraction by the music industry, but all
require signicant investments into data, economic and competition skills,
and international cooperation among stakeholders. This is why we believe
that making CEEMID open source, as a beta version of the planned European
Music Observatory, would benet the whole industry in a challenging decade.
Our data in the past 5 years were used all pricing methods reviewed by IFPI’s
public Valuing music document (PwC,2008).
• We used the hedonic price method to review and correct tariffs for
restaurants and hotels, instead of relying only on international compar-
ison in Hungary and Slovakia;
• A complex market comparator model to value broadcasting rights and
private copying in Hungary and Croatia;
• We used experimental methods in disputed public performance pay-
ments in Hungary;
• We used hypothetical evaluations when no other data was available in
Hungary, Slovakia and Croatia.
45
6 Conclusions, Policy & Business Strategy Recommendations
6.4 Private Copying
Private copying has been a very important way of spreading recorded music,
books and audiovisual works in the last 60 years, and when lawfully compen-
sated, it remains a very important source of revenue for artists, composers,
writers, lm writers and performers. According to our empirical research con-
ducted in several countries, the value of private copying is far bigger these
days than when most CEE private copying remuneration mechanisms were
set up.
In all countries of the region, large device manufacturers and media plat-
forms are allying with various libertarian and pirate activist groups to cam-
paign for abolishing or lowering the private copying levies. On the other hand,
according to our research, in many countries of the region it should be in-
creased by 100-1000%, because in the absence of willingness and ability to
buy content online, the private copying exemption is widely used by house-
holds.
HU SE EU28
Percentage of Online Purchasers Paying for Music or Film
CEEMID based on Eurostat surveys, 2019.
Figure 6.3: Percentage of Online Purchasers Paying for Music or Film
As opposed to licensed music sales, where the music stakeholders have mar-
ket knowledge and data to set royalty levels, devise sales strategies and mon-
itor use, in private copying this is not the case. The private copying exemption
was created rst in Germany and later throughout the EU and other countries
46
6 Conclusions, Policy & Business Strategy Recommendations
because the representatives of rightsholders’ would not be able to collect re-
muneration without infringing the privacy of households.
To set the level of private copying to an adequate level, home copying must be
measured with the use of anonymous and representative household surveys,
and such survey data must be integrated with other relevant data to set the
appropriate price level. We work together with respected polling companies
and use carefully adopted, standardized EU surveys following the Eurostat-
ESSNet guidelines 5to create inputs for our economic models and to create
hard-to-refute evidence for litigation.
Figure 6.4: The Full Market Model to Set Prices for Private Copying, Value
Transfer or Broadcasting, Randomized Excerpt from Our Hungar-
ian Model
CEEMID data were used in the modernization of the Hungarian, Slovak and
Croatian private copying schemes. While most of this work is business con-
dential, the less detailed Private Copying in Croatia 6gives a public glimpse
into our approach and methodology.
The national adoption of the DSM Directive creates a unique opportunity to
review and modernize the copyright administration laws of all EU countries.
This would create a good opportunity to create new private copying remuner-
ation systems in Bulgaria and Slovenia, where there are no workable systems
in place, or replace the under-performing schemes in the Baltic countries.
It would also offer a good opportunity to review the two examples where
member states have opted to abolish private copying levies and promised
to provide rightsholders with adequate compensation from general tax rev-
enues.
5(Bína, Vladimir et al.,2012)
6In the bibliography see: (Antal,2019a)
47
6 Conclusions, Policy & Business Strategy Recommendations
6.5 Algorithms & AI
Most music is sold in the world by automated ‘robot’ programs using algo-
rithms. Without a thorough understanding of the working concepts behind
the buzzwords of ‘big data’ or ‘articial intelligence’ it is impossible to cre-
ate workable sales strategies for recordings, particularly for exporting pur-
poses. Machine learning and algorithms are playing an increasing role in the
programming of large music festivals or planning international tours in live
music, too.
Digital streaming is provided by global players who are usually present in all
mature and emerging markets, and often even in very early, edgling future
markets. This has increased repertoire competition in the national markets
1000 times. Understanding market dynamics or following releases is impos-
sible for talent managers, music journalists or radio editors without ‘articial
intelligence’ tools.
Streaming platforms are the most important platforms for ‘clean’ music
streams, but because of their strong technology and business model, they
are increasingly taking over mixed, spoken word and music programmes,
that were traditionally dominated by radio and, in the audiovisual world,
by television. The strongest radio content providers, such as the public
broadcasters of the United Kingdom, the United States or Australia, are suc-
cessfully expanding the audience of their radio programmes to a global level.
As Netix and YouTube are increasing their market share versus traditional
and cable television, podcasts are replacing the broadcast versions of radio
programmes.
In the last century, the most important music platform was radio, which was
often subject to the explicit regulation of local content quotas, and by the
local gatekeeper activity of music journalists and radio editors. National,
regional and local radio providers played a crucial role in communicating
new music to a large audience. As the radio audience is migrating towards
streaming platforms, and the most valuable radio programmes are becom-
ing podcasts, these measures need to be modernized. Our music circulation
indicators and indexes were designed to foster a meaningful policy discus-
sion on local music content regulations and support schemes.
Most music stakeholders, even on the level of national, representative bodies,
are too small to successfully train algorithms, which puts small nation reper-
toires at a new disadvantage versus major labels and large nations. They
need large, consolidated data assets and the most up-to-date know-how to
48
6 Conclusions, Policy & Business Strategy Recommendations
successfully create sales strategies, to adopt good sales and granting goals,
and to become partners of the premiere radio and audiovisual content cre-
ators to nd new uses for their music.
CEEMID is driven by the principle of data integration. We have been building
regional cooperation since 2014 to reach critical data masses and make
emerging European markets more competitive. CEEMID has teamed up
with Consolidated Independent, a leading technology platform for indepen-
dent music, to create large enough data assets for creating models and
algorithms for smaller European national repertoires, and we have started to
initiate open, national research consortia to build innovative tools to promote
these national repertoires. We hope to bring these efforts to an EU level in
the coming years.
49
Appendix
In 2014 three collective management societies, SOZA, Artisjus and HDS,
realized the need to make further efforts to modernize the way they measure
their own economic impact and the economic value of their licenses in
order to remain competitive in advocating their interests vis-à-vis domestic
governments, international organizations like CISAC and GESAC and the
European Union. They signed a Memorandum of Understanding Measuring
and Reporting Regional Economic Value Added, National Income
and Employment by the Music Industry in a Creative Industries
Perspective with their consultant to set up the CEEMID databases and to
harmonize their efforts. (Artisjus et al.,2014).
CEEMID cooperated over ve years with almost 100 music organizations,
and thousands of music professionals participated in our surveys and work-
shops. We would like to thank them for their support and their views here. In
no particular order, we would like to acknowledge a few music professionals
here for this work.
Thanks for Nenad Marčec, Anton Popovič, András Szinger for their initial
support in initiating CEEMID; long-term users of our data, Ľubomír Burgr,
Adam Dvorzak, Marina Feric Jančic, Péter Horváth, Eszter Kabai, Dávid
Kitzinger, Tereza Landová, Tomáš Mikš, Darko Stanicic, Péter Benjamin
Tóth; in ex ante grant evaluations, Zsolt Bajnai, Márton Náray and Zsó
Sápi; great educators Emília Barna and Fruzsina Morcz; in exports, the
Hangfoglaló, the Lala, the Music Estonia and the SoundCzech teams, our
partners in national surveys Dávid Bali, Agnė Begetė, Lilyt Bleyan, Gergely
Békés, Tanja Bukvic, Santa Cristescu, Richárd Demčák, Stefan Germanov,
Mark Adam Harold, Franz Hergovich, Viljem Marjan Hribar, Zsolt Jeszenszky,
Nikoa Jovanovic, Kristina Deln Kanceljak, Rumyana Koleva, Sandra Laura
Luhtein, Dan Murau, Martin Nedvěd, Slobodan Nešović, Anton Petrov, Darjo
Rot, Virgo Sillamaa, the Consolidated Independent data team Theo Gardner,
Andy McFarland and Jerome Wynne; Tamás Falus and Péter Molnár at the
Kantar-Hoffmann survey team; workshop assistants Kati Csatlós, Zsuzsa
Fried, Monika Klementová, research assistant Kátya Nagy, cover design
Aistė Zabitaitė; the consultants of European Music Observatory Marin Martin
50
6 Conclusions, Policy & Business Strategy Recommendations
Clarke, Emmanuel Legrande, Fabien Miclet, Paul Vroonhof. Special thanks
for their ideas and criticism to Tereza Raabová and Sanne de Rover.
This document was created in a reproducible research framework with book-
down (Xie,2020). The visualizations were made with ggplot and ggalluvial
(Wickham et al.,2019;Wickham,2016;Brunson,2019). Whenever European
data was charted, we used the ©EuroGeographics administrative boundary
visualizations published by Eurostat.
51
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