Creative Economy: A Feasible Development Option

5International trade in creative goods and services: Global trends and featuresAgainst this picture, the trade figures shown in thischapter as well as in the annex of this report should be seenas indicative of market trends, not absolute values, since thereal value of the international market for music is muchhigher. The issue is how to measure the full economic impactof the music industry in the absence of disaggregated andreliable data for trade, employment and copyrights as well asfor marketing and distribution services. Political will at thenational level, combined with a well-coordinated effortbetween relevant international and national organizationsand the music industry, is needed to improve market transparencyand deal with the asymmetries affecting the functioningof the music world market.The recorded music market consists of consumerspending on albums, songs and music videos, whether distributedin physical and digital format. It does not includelive performances or other merchandising revenues. Digitaldistribution includes music downloaded to mobile phonesthrough wireless carriers or to computers over the Internetthrough licensed services. 15 The world production, marketingand distribution of recorded music has a complex marketstructure. On one hand, it is an oligopolistic marketdominated by four major labels in the North (Sony/BMG,Universal Music, EMI and Warner Music) and their subsidiariesspread out all over the world. Together, they commandmore than 80 per cent of the world music market (seecompetition issues in chapter 3). On the other hand, themarket is extremely fragmented with thousands of independentartists and bands that function as small companiesor microenterprises. As a result, independent domestic musicproducers from the South have few opportunities to accessthe world market, even within their own countries. This alsoexplains why revenues from copyrights are not available andare not reflected in the trade balance of developing countries.The UNCTAD global database for trade in creativeindustries, based on national figures reported to the UnitedNations, indicates that the international trade flows forrecorded music (mainly exported as CDs) totalled $26 billionin 2008 (table 5.13). Meanwhile, global revenues fordigital music grew from $400 million in 2004 to $3.7 billionin 2008, according to the International Federation ofthe Phonographic Industry (IFPI) 16 (chart 5.10). It shouldbe noted, however, that the UNCTAD figures are for internationaltrade based on world exports and imports, while theIFPI figures are for global music sales, including for domesticmarkets.Digital music sales rose another 12 per cent from 2008to 2009, when they reached $4.2 billion, ten times higherthan in 2004. 17 Digital channels now account for around 25per cent of all trade revenues to record companies. Singletrack downloads are driving the online market, with about 1.4billion units downloaded globally in 2008. In 2009 some 1.7billion tracks from over 500 legal online music services wereidentified by IFPI around the world. Music fans can nowaccess and pay for music in diverse ways, and more than 6million music tracks are available online. UNCTAD does notyet collect data for the online music trade.A recent study published by the International TradeCentre (ITC) 18 emphasizes that the “long tail” (see chapter3) of niche product distribution over the Internet and oncellular networks offers tremendous possibilities by enablingmusicians, producers and record companies around theworld to cater to small groups of consumers at much lowercosts than in the physical world. For instance, newlydigitized recordings of traditional music from Tajikistancould be made available to world music amateurs and ethnomusicologists.The ITC study, which involved a survey of six developingcountries (Brazil, India, Mali, Senegal, Serbia andChart 5.10 Digital music revenues, 2004 - 20084.03.53.02.52.01.51.00.50.0(in billions of $)2004 2005 2006 2007 2008Source: IFPI, Digital music report 200915 For further information consult PricewaterhouseCoopers (2008).16 IFPI publishes an annual report, Recording Industry in Numbers, with data from 1,450 member companies in 75 countries and affiliated industry associations in 49 countries.The IFPI figures are widely used as a reference for business in the world music market. Nevertheless, as many developing countries are not members of the federation, its data donot have a universal coverage and do not capture the interests of small firms or independent music composers, producers and performers from most countries in the South.17 IFPI (2009) and IFPI (2010).18 ITC/WIPO (2008). For further information consult www.intracen.org or ifcreg@intracen.org. ITC is the joint agency of UNCTAD and the World Trade Organization.144 CREATIVE ECONOMY REPORT 2010