Entertainment & Media Outlook 2011-2015 - PwC

Industry adapts, butpiracy still an issuePhysical music sales have beendeclining for a number of years, as thetables show, and while digital saleshave grown, they have not replacedlost physical revenue. Radio revenue,however, has been relatively stable,and most commentators agree this willremain the case. “Radio is the mostrobust medium – it doesn’t spike toohigh and doesn’t fall too low,”says BrettChenoweth, Chief Executive of APN,owner of The Radio Network. 36Music industry players have not sat idleduring the switch to digital, althoughthe way songwriters and copyrightowners generate income is shifting. 37The industry has adapted to extractrevenue from new, or renewed, sources;for example, live music has made acomeback, and merchandise sales nowmake up a greater share of revenue.Falling physical record sales have madethe relationships between bands andbrands more important. Composershave shown a greater willingness to seekexposure by having their material usedin advertising, and more brands arealigning themselves with bands. 38Radio networks have followed theiraudiences online by investing inwebsites, streaming content andpodcasting. Networks are still attractinglarge audiences but increasinglypeople are turning to the internet, toiTunes and YouTube, for music. APN’sBrett Chenoweth agrees that iTunesand other internet services have hadan impact on music radio, but notestalkback is still going strong. 39He believes digital radio will not takeoff until the technology becomes morewidely available, particularly until itis included as standard in cars. Thetransition to digital radio cannot beginuntil analogue television services endand the necessary VHF bandwidthbecomes available. State-owned Kordiahas already trialled a digital service,Digital Audio Broadcasting (DAB), butthe Government has not committed toa long-term rollout of the technology.Illegal downloading of music and videocontent remains an issue. The Copyright(Infringing File Sharing) Amendment Billwas passed into law in April 2011 40 to reinin piracy. Under the new law, copyrightowners can alert ISPs to a user who isillegally downloading material. ISPswill send up to three warning letters tothe user and if the downloading doesnot stop, the copyright owner can take aclaim to the Copyright Tribunal where theinternet account holder could be finedup to NZ$15,000. If, in two years time,the law has had little impact on illegaldownloading, the Commerce Ministermay introduce harsher measures. 41The recorded music market (NZ$ millions)Historical dataForecast dataNZ$ 2006 2007 2008 2009 2010 2011 2012 2013 2014 20152011-2015CAGRPhysical 129 114 101 94 85 76 68 61 56 50 -10.0%Digital 13 13 14 17 18 19 24 26 29 32 12.1%Total 142 127 115 111 103 95 92 87 85 82 -4.4%Sources: Recording Industry Association of New Zealand, PwC New Zealand, Wilkofsky Gruen AssociatesThe radio advertising market (NZ$ millions)Historical dataForecast dataNZ$ 2006 2007 2008 2009 2010 2011 2012 2013 2014 20152011-2015CAGRRadio 269 274 268 236 240 219 242 261 268 275 2.8%Sources: Advertising Standards Authority, PwC New Zealand, Wilkofsky Gruen Associates37 Brett Chenoweth, APN, to PwC, 18 April 2011.38 ‘Sound: Roll over Beathoven’, Patricia Moore, Admedia, 1 February 2011.39 ‘Sound: Roll over Beathoven’, Patricia Moore, Admedia, 1 February 2011.40 Brett Chenoweth, APN, to PwC, 18 April 2011.41 ‘Copyright hurdle for fast internet’, Hamish Fletcher, The New Zealand Herald, 18 April 2011.42 ‘Internet law may catch parents unawares’, Bronwyn Torrie, The Dominion Post, 15 April 2011.New Zealand Entertainment and Media 2011-2015 | Outlook 31