7 Market Research, Collaborative Research & Development

we would like to create a strong, national, internationally open collaborative research consortium that supports the market research and R&D needs of microenterprises, small enterprises, associations and small public institutions in Czechia. Building on best practices from Europe, we would like to pool data assets, research material, analytics tools, research capacities and find funding for them in national and EU grants.

As a starting point of this development program, SoundCzech, CEEMID and the state51 music group formed an open Research Consortium. The workshop was facilitated with information resulting from this cooperation. The invitation to be involved was extended to all participants, including young researchers present.

The special problem of the creative and cultural industries is that very small enterprise size and the complexity of economic activities in a small enterprise. These small enterprises do not have their own market research and R&D capacities, which makes them less competitive against large global players or competitors from EU countries where national stakeholders have already formed collaborative research functions.

7.1 Program Considerations

Because most countries apply simplified accounting, tax reporting and statistical reporting for SMEs and especially for microenterprises, there is usually not enough information is available in governmental statistical systems about the music industry. Industry stakeholders must make efforts to survey their members and workers, and to map their activities among many interrelated activities. (Bína, Vladimir et al. 2012; UNESCO Institute for Statistics 2012) Some CEE stakeholders started CEEMID with this mandate, originally with the invitation of OSA, who decided to opt out from this work.

SoundCzech started a research consortium with CEEMID and Consolidated Independent, the creators of the Central European Music Industry Report, to provide the data and know-how to help achieving the goals set out in this programme, and to provide indicators to make sure that all work is going into the right direction. This document is the first result of this cooperation.

This research consortium is open for all music stakeholders, i.e. associations, collective management organizations, granting authorities, labels, publishers and concert promoters. We would like to welcome private people, musicians, technicians and managers as volunteers to help reach our aims. We are also aiming to internationalize some of our efforts, for example, in the field of data analytics and algorithm-design, because these critically important sales ares require more data than the combined data assets of all Czech music stakeholders.

7.1.1 Impact On Artists, Professionals & Enterprises

Please give your personal example, if the change above would start, what positive impact you would expect to feel on your professional career or on your enterprise / organization?

Karolína Pavlova, founder of record label Label s.r.o: Our research budget is non-existent, our team is only three people. Our Dutch partners can rely on market research provided by their indie association, and I think that we should also find a way to collaborate on market research, otherwise we are just wasting a large part of our tiny promotion budgets.

Jan Svoboda, club owner, Rock Club s.r.o: In the program preparations the most surprising comparison was the much higher presence of medium-aged people in German or Benelux clubs. We have very little experience in this field, and I believe that understanding what keeps richer, older people away from the music club is absolutely necessary to increase the value of our programming.

7.2 Mapping the Czech Music Industry

CEEMID uses a methodology that has been recognized as a standard mapping of the music industry in the United States and later adopted for the EU. (Hull et al. 2011; Leurdijk and Ottilie 2012). CEEMID further adopted these mapping to Hungary, Croatia and Slovakia (Dániel Antal 2015b, 2015c; Antal 2019).

In the preparation of this work, SoundCzech, in cooperation with Intergram and SAI, helped to start surveying the music professionals. However, a full mapping is not possible without a broader access to data and the involvement of all stakeholders.

7.3 Economic Impact Assessment

In Hungary and in Slovakia detailed economic impact assessments supported the music industry reports to collect good argument for taking the industry more seriously and to understand what the economic policies in place that are benefit or harm the industry. In these two countries, the biggest problem was a tax system that is favourable for car manufacturing, electronic appliance manufacturing, which are favoured industries of the local economic policies. These economic incentives were very counterproductive for the creative and cultural industries, and they are hampering employment and tax base growth.

CEEMID has produced an open-source software iotables on the basis of Eurostat’s manual how to make such calculations (Beutel 2008; OECD 2010). This software is already available, but rather difficult to use. We would like to offer the opportunity to the Working Group on Better Regulation of Music to create meaningful cases studies, and within the research program to create such detailed impact assessment as Sziget’s assessment was, which helped changing its tax status (KPMG 2005, 2011).

7.4 Measuring Cultural Access & Participation

CEEMID has processed the EU-wide CAP Surveys of 2007 and 2013 (European Commission and TNS Opinion & Social 2012; TNS Opinion & Social 2013), which provide a very important comparison and methodological basis for further research. Furthermore, following the technical guidelines of the Eurostat ESSNet-Culture, and the developers of the original CAP methodology (Haan and Adolfsen 2008; Haan and Broek 2012), CEEMID has conducted so far 7 in-depth CAP surveys designed specially for music and film.

In 2020 and 2021 we suggest adopting and create in-depth, high quality CAP surveys in Czechia to understand in detail issues that are deemed highly relevant for the industry stakeholders, similarly to the Hungarian CAP surveys of 2017 and 2018. From 2022 cheaper, potentially online CAP surveys can focus on market developments without the aim of methodological adaptation and in-depth research.

7.4.1 Understanding the value of music events

Similarly to the movie theaters, concert venues should be able to modernize and re-position their offering to new audiences in order to increase the value of concerts. The CAP survey is particularly good form to empirically segment the audiences and start to understand the value drivers and costs of various audiences. It should be noted that in the absence of many modern venues, countryside audiences often must spend more on travelling to music events than the cost of the event itself.

This element of the CAP survey should be included only when needed, and probably only 1-2 times in every decade.

7.4.2 Measuring the Use of Paid and Non-Paid Recorded music

This element of the CAP survey should be incorporated in the deeper, methodological surveys of 2020 and 2021 and in the simpler, annual surveys, like in Hungary.

7.4.3 Measuring Participation in Live Music

Our data is currently based on the EU CAP survey and Google search intensity models. These data was presented in Nouvelle Prague and will be incorporated into the final version of this documents with your comments. This is a useful first step, but a join Czech CAP survey and the validation of big data models against actual Czech ticket sales would be necessary to increase the timeliness and precision of such market research data.

This element of the CAP survey should be incorporated in the deeper, methodological surveys of 2020 and 2021 and in the simpler, annual surveys, like in Hungary.

7.4.4 Measuring the Value Transfer To Media Platforms

This element of the CAP survey should be incorporated in the deeper, methodological surveys of 2020 and 2021 and in the simpler, annual surveys, like in Hungary.

7.4.5 Increasing Royalty Levels

IFPI Commissioned a study in 2008 to PriceWaterhouseCoopers to show the possible ways how music can be evaluated, and the price corresponding to this value can be set (PwC 2008). CEEMID has introduced all of these models into practice in Hungary, Slovakia and Croatia, after successfully mapping the CEE industries and modifying these models (Leurdijk et al. 2012; Leurdijk and Ottilie 2012), taking into consideration European statistical guidelines (Bína, Vladimir et al. 2012) and new IFRS Fair Value international accounting principles (Their use is mandatory in the EU.) (EUR-Lex 2012).

We would like to introduce this methods in Czechia, because we believe that royalty levels are currently not (always) follow the economic conditions, and they may not beneficial for local stakeholders.

7.5 CEEMID Music Professional Surveys

CEEMID had been asking local music stakeholders to help persuading their members to provide annual data in the form of anonymous surveys. In some countries, we have 4-6 years of data history, which was used in many price setting and grant design exercises.

In many cases, asking musicians and professional, who are present in the concert, who actually receive (or not) royalty statements, who ask the help of technicians is the main source of information that is not recorded anywhere else. The hard indicators that could measure the progress with the proposed development program can only be produced with this annual survey. Because the survey is made every year in more and more countries, it also offers a comparison of best / worst practices and helps setting realistic aims.

Annual data collection is important, because people’s memory is not limitless, and any information or data that may be important for the Czech stakeholders in 2023 will not be available if it was not collected in 2020, 2021 and 2022.

7.6 Analytics Support for Digital Sales

In the world, most recorded music is sold by algorithms, trained on vast datasets using AI and machine learning. Such analytics is increasingly used in radio programming and even in festival and tour design.

The problem of small nation repertoires like the Czech, Hungarian, Slovak repertoires, that the combined repertoire of all local labels is not sufficient to successfully train algorithms. This puts local stakeholders at a huge disadvantage: their own market is increasingly taken by foreign algorithms and robots, and they have no resources to protect their market and use the same technology to contest markets.

The founders of the Research Consortium realized that independent actors and small country music export offices cannot rationally plan their promotion efforts, because their sales prospects are based on many unknown factors:

  • The (future) availability of new platforms in their key markets
  • Number of subscribers in their domestic territory and key foreign markets
  • 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 currencies
  • In the early stages of market development, minimum licensing requirements distort the revenues

The combination of these five factors cannot be intuitively guessed and the information is not available to local market players. To make meaningful comparisons, we combined cc 700m royalty statements and selected for in each national territory to the ‘typical’ songs in each month between January 2016 and February 2019. We defined the typical song(s) in a territory as the sound recording that took the median position in number of plays on the Spotify, Deezer and Apple Music, i.e. half of the songs in our database had less, half of them had more plays in the channel..1

CEEMID streaming indexes

Figure 7.1: CEEMID streaming indexes

Based on these initial work, we would like to create meaningful tools for concert promoters, labels, publishers, and for SoundCzech itself that can rank contestable markets and market segments based on similarity of taste to Czech repertoire supply, local price level, local repertoire competition and other factors. Because Czech players are too small to gain market intelligence on all 200 music markets of the world, we would like to offer a practical toolset that can focus their efforts, and design marketing budgets for contestable markets.

7.7 Working Group On Market Research and Joint Research and Development

Please give the following details if you would be ready to join this working group: Jan Svoboda, concert promoter, Concerts s.r.o, 17 years of concert promoting experience.

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.

7.8 Indicators to Measure Progress & Keep Direction in Research and Development

7.9 Strategic indicators

  • Number of participants in the Research Consortium

  • Research budget of the Consortium

7.10 Impact indicators

  • Analytics tools are available for publishers and labels to promote their music abroad

  • Analytics tools and market research is available for concert and festival promoters to increase their audiences

  • Tools available for venue operators to better manage seasonality and capacity

7.11 Effect indicators

  • All other program indicators are calculated, measured and presented for the working groups working on music education, market building, music export, professionalization, granting, regulation and creative alliances.

References

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Antal, Dániel. 2015c. “Creating Better National Cultural Statistics with Eurobarometer Datasets and ESSNet-Culture Technical Recommendations.” Köln:Germany. http://www.gesis.org/fileadmin/upload/events/EB-Symposium/Poster/Antal_Poster.pdf.

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  1. If Spotify or Apple Music was not present in the market in a period, we treated the median value as zero