2 Developing The Czech Music Industry

Czech musicians are creators, and they would like to see an increasing audience for the live and recorded performances abroad and at home. They would like to see a better working environment that stimulates creativity. They would like to see cultural investments into more European quality stages where they can meet their fans. They want studios to record in world quality, because their music is in competition with the best music of the world in the radios, in shops, in restaurants, on the streaming services or on YouTube.

Czech creators know that they cannot earn as much money as their British or American competitors, but they do not want to fall behind Czech engineers, doctors and other professionals.

Czech musicians, and professionals working in the music industry as technicians or managers, like all Czech citizens, would like to have better working conditions and they would like to see their income catching up with the rest of Europe. They demand to be remunerated proportionally to the rest of the country – while they know that they cannot earn as much money as their British or American competitors, they do not want to fall behind Czech engineers, doctors and other professionals.

The working situation and the working conditions of musicians, and creatives in a more general sense are very different from ‘average jobs’. Almost nobody is employed in the music industry, nobody has a job description, and usually they are not entitled to sick leave. Working as freelancers and as entrepreneurs, music professionals are taxed differently than most people.

2.1 How Musician Work?

The CEEMID Music Professional Survey compared the relative income of Czech music professionals with the surrounding countries similar artists, technicians and managers. The way the survey was designed to allow comparison with the general public, or the ‘average person’, too.

In almost all countries that were surveyed, music professionals had more difficulties with paying bills at the end of the month than most people in the population.

The work of musician, music technicians and managers is peculiar. Full-time musicians often receive 60-70 small, unpredictable payments a year – after concerts, tours, festivals, radio and television plays, on streaming services, from grants. Only very few of them can be sure that their income will be provided a year from now.

A typical full-time musician plays at least 15 concerts a year, releases an album, and makes sure that it is played, and with luck, it is included in a film as soundtrack. Very few musicians have a permanent contract with a talent manager for the concerts, with a publisher for film and theatre music or with a record label that would give them an advance for their recording costs - they have to invest their own money into rehearsals, costumes, choreography and recording studios.

Income Composition of Musicians in the CEE

Figure 2.1: Income Composition of Musicians in the CEE

The income composition of Czech musicians is probably most similar to Hungarian musicians, with somewhat less collectively managed royalty income and somewhat more concert revenues. They are least similar to Austrians (who earn a lot more from modern, licensed music services) and Armenians (who do not rely at all on collectively managed radio, television, restaurant licensing fees.)

Many musicians do not only do artistic work - they often work in music clubs, in record labels, in publishers, in collecting societies, in promoting agencies within the music ecosystem to make ends meet (this is shown in the chart above as other income. And many musicians, technicians and managers are working only with one foot in the music world, because they cannot make ends meet.

All in all, the total survey respondents (not only Czechs) include amateurs, young students, young, middle-aged and older artists and professionals. Concentrating on artists alone, we can see that the sample is not balanced, because participation in music varies over the life cycle, too.

Full-time, Part-time and Other Musicians by Age

Figure 2.2: Full-time, Part-time and Other Musicians by Age

In the beginning, students and amateurs dominate the sample, below the age of 20. By the age of 30-35 ages full-time and part-time musicians dominate the sample, as many amateurs become either at least part-time musicians or give up on playing music. Becoming part-time musician is a dominant model in the late career stage when artists start to retire.

2.2 Why are the creative industries are so invisible?

The nature of the creative jobs is that they contain a wide range of activities. Economists and government policymakers classify industries with the Nomenclature statistique des activités économiques dans la Communauté européenne, in short, with the NACE classification in Europe. This classification is largely harmonized on UN level and can be used to compare almost all economies in the world.

The NACE classification is rooted in the economic structure of the middle 20th century, and it is more appropriate for the classification of manufacturing and trading activities, such as car manufacturing, or retail sale of cars.

The government statistics are largely based on tax returns and other filings of corporate entities with at least 5 employees. While most manufacturing or trading activities, or licensed service activities such as insurance or banking, are easy to classify, the creative industries are different. Because most creative enterprises are smaller than 5 people, they do not file many data for the government or the tax authorities, and they often carry out heterogeneous activities. For example, the music industry is not even recognized by the NACE classification – the live music and compositions can be found in the NACE 90 class, and the sound recordings in the NACE 58 class.

The statistical recommendations that we followed in this work (in more detail, see Mapping the Czech Music Industry) suggest that creative industries are mapped across these NACE classifications and surveyed with the help of the industry stakeholders. This is precisely what we do with the CEEMID Music Professionals Surveys we always ask for a primary role in the music industry and an optional secondary role.

For example, musicians often perform music (NACE group 90), compose music (NACE group 90), and at the same time do sound recordings (NACE group 58) and teach music (NACE group 85). This is the main reason why music is not well represented in governmental statistics, which is mainly based on tax returns data from ‘clear’ activity groups, such as sound recordings only. To add to the difficulty, the music industry do not have a NACE code, so any calculations have to be based on a combination of at least data about NACE 58 and NACE 90 activities.

To create a realistic approach for measuring the economic and employment capacity of the Czech music industry, we first have to map the activities of participants.

Primary And Secondary Professional Roles in the CEE Music Industry

Figure 2.3: Primary And Secondary Professional Roles in the CEE Music Industry

While we do not have a lot of respondents in 2019 in Czechia, and we may have missed some groups, but the activity map is very similar, with a bit more artists who do not have a secondary role compared to the larger CEE picture. Most Czech artists have a secondary role in another artistic field (for example, they perform music, work as producers), and in many cases a secondary educational activity. Very few managers and technicians filled out our questionnaire, but they are also involved in secondary artistic or educational roles.

In 2019, only a few stakeholders participated in the survey, and we received only about 10% of the responses that we usually receive in Hungary or Slovakia. Our data shows that we can safely rely on the mapping made in other CEE countries, but further work is necessary so that the development program can help all parts of the music industry, i.e. various players in composition, publishing and author’s right management; performers, producers of sound recordings, labels and distributors; DJs, musicians, sound, light, stage technicians, talent managers, concert and festival promoters (for more details see 7 Market Research, Collaborative Research & Development.

Because of the nature of these economic activities, musicians are often entrepreneurs in micro enterprises, which also do not have a clear economic classification.

Enterprenurship Among CEE Musicians

Figure 2.4: Enterprenurship Among CEE Musicians

2.3 What is Musicians’ impact on the general economy?

The Czech economy has many similarities with the Slovak and Hungarian economies. As a relatively small country, its’s production is deeply integrated in the upstream German manufacturing industry, and it sells many products and services abroad. The aging population is not supporting domestic growth, so increasing economic performance and meeting increasing social costs is only possible by extending revenues from abroad.

This makes the Czech economy almost as vulnerable as the Slovak and Hungarian one. It is specialized on industrialized, low value-added manufacturing. The Czech GDP, which is total gross income of worker’s remuneration, corporate profit and government taxes, relies on large-scale, highly robotized manufacturing, which has a low profit rate at a high turnover. It leaves little taxable employment income in the country. It sells low-value added production abroad, so creates a relatively low value added tax base (data on chart: (OECD 2019b, 2019a)). Many corporations are owned by foreign entities and do not leave significant profits in the country.

Creative and cultural industries, including the music industry are very different. They create high-value added products and services, pay very high taxes, and from relatively little turnover they support many jobs, even if these jobs are often precarious and not full time. The music industry has one of the highest potential to create jobs to young people with relatively low level of education – who are the most threatened by long-term unemployment (EYGM 2014).

The music industry has a significant capacity to earn export revenues, mainly in the form of selling concert and festival tickets to foreigners, and to an extend to sell concert tickets and recordings abroad. Compared to manufacturing exports, these are small-scale, but high value added exports which are not highly automated and support many jobs.

A small venue concert is usually produced by a band of four or five artists, the sound, light and stage technician crew, and a support team in transport, logistics, security, and merchandise sales, supported in the background by concert promoters and tour managers. On a larger arena or festival stage the number of support crew is up to 200 people. Creating an album of recordings is also a labour intensive work which includes artists, sound engineers, producers and of course the supporting work of a label or the artists’ management.

The music industry has a very important role in the future of the European economy. It creates jobs where automatization and robotization makes them redundant, and creates a high-value income base for workers, entrepreneur and the government that taxes them. In a manufacturing-oriented country like Czechia, preparing for higher levels of automatization and an aging population makes it very important to increase value added in production. The Czech music industry is well-placed to share ideas with Hungarians and Slovaks. (Poland in the Visegrad Group is rather different, partly because of the size of its domestic economy, and partly because of its very different economic structure.)

In 2019 in the Czech economy this is more of a promise than a reality. As we have shown in the previous 2.2 subchapter, before the industry creates its own research program and collaborative functions, it will remain largely invisible to the government and policymakers. The music industry is suffering from social dialog institutions that favor large entities, taxation and regulation that favors manufacturing, and an educational system that is not supportive enough for microenterprises.

The musicians, technicians and managers who participated in this research are a bit pessimistic - they have lower expectations about the music industry in Czechia than about the Czech economy as a whole, and they see their personal prospects a bit more negative than those of their families. The reason why we started this work is that we would like to draw a more positive future for the next year.

2.4 Life satisfaction

The music industry has a fantastic economic potential, but currently it is in its infancy in Czechia. Working conditions are chaotic, people are fulfilling several jobs. Public understanding of how creative industries work, and why royalties are important for musicians is low. Musicians and their support teams feel that the appreciation of music, particularly popular music is low in Czech society and in Czech general education. Nevertheless, the industry is full with positive people.

CEEMID is asking similar questions than standard EU surveys to understand how satisfied are musicians with their work, their careers and their life in general. In spite of material difficulties and lack of public appreciation, Czech music professionals on average are more satisfied with their lives. The difference is mainly due to the fact that while there are many unsatisfied people in the country, music gives at least a fair level of satisfaction for the artists, technicians and managers working in this field.

This enthusiasm should be translated into collective work to professionalize the industry and set it on a path of growth.

We suggest to set up the following working groups:

  • Working Group on Music Education & Advocacy - There was a general consensus that this is the most important working group, and it should include very senior people from national stakeholders, furthermore professionals in music education.

  • Working Group on Market Building - mainly for publishers, labels, concert and festival promoters and their associations, very experienced professionals on these fields. Directors of collective management associations.

  • Working Group on Music Business Professionalisation - mainly for training companies, employers, and very experienced professionals in artistic, technical or managerial roles, with at least 10-20 years of experience. International experience shows that training programs are most effective if employers are actively involved. This would be a suitable working group for experienced music entrepreneurs. Trade unions, performer associations would be more than welcome.

These working groups are also important but require specialist knowledge and it is not tragic if they start working later Foreign experts may be needed from the region, as some topics are very special.

  • Working Group On Music Export & International Competition - This working group would require the active participation of SoundCzech, publishers, labels, tour managers, and talent managers with many years of experience in foreign sales. The working group should focus on repertoire competition and imports, and potentially with experience on audiovisual and radio quotas. It would be very good if the collective management societies were involved.

  • Working Group on Creative Alliances - Very experienced labels, publishers, concert promoters, talent managers, festival promoters who have successfully managed ongoing partnerships. Editors of music programs on TV and radio. Managers, directors of film production companies, film producers, TV or radio stations, movies, houses of culture with an undoubted love and interest for music. Business consultants who have a working knowledge of media, broadcasting, film production and music industry enterprises.

  • Working Group on Better Music Grants & Sponsoring - professionals and artists with at least 3-4 successful and not successful grant experience, grant managers, researchers and experts in the field of ex ante and ex post evaluations. It would be very good to involve the Music Fund and the OSA Foundation into this working group. Usually there are similar know-how available around the managers of national and regional operational programs of the EU. Foreign experts may be needed, as this is a very special topic.

  • Working Group On Market Research and Joint Research and Development - This working group is critical, because the current work is started as a preparation for this, and SoundCzech has a deadline on 31 October 2019 to apply for a grant at TACR to follow the work. Endorsements and participation is very important - senior university researchers, founders, managing directors of established labels, publishers, collective management, national organizations. Joint membership with the other working programs is possible, because we want to give methodology to the work of all programs.

References

EYGM. 2014. “Creating Growth – Measuring Cultural and Creative Industries in Europe.” EYGM Limited. http://www.creatingeurope.eu/en/wp-content/uploads/2014/11/study-full-en.pdf.

OECD. 2019a. “Domestic Value Added in Gross Exports (Indicator).” OECD Data. https://doi.org/10.1787/3959a0c6-en.

OECD. 2019b. “Import Content of Exports (Indicator).” OECD Data. https://doi.org/doi: 10.1787/5834f58a-en.