Interview: music economist Will Page on the value of music and why it matters

In times of economic difficulty, the creative industries, such as the music industry, can be seen as a soft and easy target for politicians seeking to look strong, decisive and pragmatic in the face of financial hardships. While more traditional industries such as manufacturing, finance and defense are championed by MPs and the press, the music industry, and the creative sector at large, is treated almost as a luxury the country can ill afford.
This is far from the case in reality.
In June, the Intellectual Property Office added an extra £3 billion to the national accounts after revising how they capture and measure the music industry’s contribution to the economy – a huge figure to suddenly be discovered and one which underlines how misunderstood music’s impact on the economy is.
With LOCOG embroiled in a row over paying musicians to play at the Olympics, and David Cameron calling for other creative sectors to make more mainstream-friendly products, is the music industry being undervalued and misunderstood by politicians and the public in the UK?
Will Page, former chief economist of the PRS, had this to say about the IPO’s announcement:
“This vital revision by the IPO represents a broader recognition of all the rights and revenues of creators who contribute significantly to the UK creative industries.
“With this improved understanding of investment, the challenge for national accounts is now more about re-classifying the economic activity, than capturing it. Music, for example, contributes more to the UK economy than just buying records and going to gigs. Even those two activities have diversified well beyond their conventional SIC codes. The problem is that the broader contribution of music to the economy will be captured in GDP but simply not classified under music.”
We spoke to Will about the IPO revision, how music is valued and whether there are other contributions by the music industry that are currently under-recognised or unrecorded.
The IPO’s revisions have added an extra £3bn to the nation’s accounts. Is music’s contribution to the UK economy undervalued?
Yes, it’s undervalued for two reasons: under measurement of known knowns and lack of measurement of known unknowns.
National accounts provides six SIC codes for music* and the values that are captured fail to capture the true economic contribution of music.
For example, sound recording and music publishing will not capture all the export value of monies that come back to the UK via the societies and through sub-publishing networks.
Secondly, there is a lot of activity going on outside of these SIC codes which needs to be brought inside the definition of music.
For example, where does studio recording equipment or activity involved in touring sit within these narrow definitions? It’ll be in the national accounts, just not classified under music.
Live music is often assumed to be the key source of income for artists but in economic terms, is it just record sales and copyrighting that counts?
The revenues generated by live music overtook that of recorded in 2008, and since then the gap has widened. However live revenues are dominated by big shows, and those big shows are increasingly dominated by heritage acts. This raises a question of who’s going to be selling out those stadiums and arenas of the future.
The simple fact is that it is the record labels and publishers who invest in new talent and develop careers. The interdependencies between live and recorded are now much better understood thanks to economic analysis.
It is important to note that PRS for Music plays a vital role here too in that our royalty statements are likely to be the first form of income a new artist or emerging band will receive. That may influence their decision to stick it out, and pursue a career in music.
Music tourism is term we’re seeing more and more in the mainstream press at the moment. What other revenue streams does music bring into the UK economy?

Music contributes a hard number to GDP and my belief is that hard number is a lot bigger than is currently being measured.
GDP is a combination of Consumption, Investment and Government plus exports minus imports – and the recent IPO press release only deals with one of those variables – investment. What we’ve seen is that investment needed to be increased by a factor of eight. We can expect similar upward revisions as the IPO work progresses.
But there are economic and social impacts which go beyond boring statistics. Consider the impact of music on education, whether it be music education or the brand of UK Plc in attracting students here. It’s much harder to prove this but it feels intuitively right – one of the reasons the UK attracts foreign students will include the image that our musical exports projects upon the wider world.
UK plc doesn’t exactly have a long list of goods and services that it excels in exporting, but we know music is definitely one of them. Government should think about the spillover benefits that this gives rise to.
Tourism, education – there is a long list of spillover effects and the Government of Canada gets this more than any other country in the world. We would do well to understand more about their cultural policies.
Why does it matter that musical instruments and recording gear are incorrectly classified in the country’s accounts?

We checked this with Imperial College. At the moment, manufacture of musical instruments is in SIC 36.3.  PA and studio equipment would be in manufacture of electrical machinery, SIC 31. The contribution to the economy of these two sectors is around £36m.
Now, we cross checked this with Paul McManus of the Music Industry Association, a trade body representing instrument retailers and he estimates the total turnover value of musical instruments to be closer to £1 billion! This shows the shortfall in current national accounts.
Some may question how relevant established economic indicators are to the creative industries in the age of the internet. Why do these figures matter to musicians?
Two reasons: The Government devotes attention to industries that matter. If music is being under-measured, then it risks losing the attention of Government.
Secondly, if the Government wishes to push through reforms that are designed to deliver growth, we need to step back and recognise that growth is a statistic. If music is not being captured statistically, then how can it properly affect a statistic called growth.
*The six SIC codes are as follows:
59.2 – Sound recording and music publishing activities
18.20/1 – Reproduction of sound recording
90.01 – Performing arts
90.02 – Support activities to performing arts
90.03 – Artistic creation
90.04 – Operation of arts facilities
78.10/1 – Motion picture, television and other theatrical casting
Thanks for talking to us Will.
Will Page is one of the leading figures in the economic analysis and research of the music industry. His annual report, Adding Up the Music Industry, is regularly reported on by The Guardian, Financial Times and The Times and Will also contributed to the campaign to save radio station BBC 6 Music. Before joining the PRS he worked for the Scottish Government and is a regular speaker at industry and university lectures, seminars and events.
Do you think the music industry, and musicians themselves, are under valued? How would you like to see the government better support music?