The Finnish music industry’s finances and exports grew significantly in 2019 compared to the previous year. Besides rising revenue from recordings, another strong sector was live music, which generated about half of the industry’s value and was clearly the largest core area within music exports. In 2020 the music industry’s finances and abilities to generate income have however been dramatically affected by the coronavirus.
The pandemic brought organising of live music events to a complete halt in March and has weakened the financial status of the music industry and music consumers in many other ways as well. Many actors in the industry are partly or entirely dependent on live music revenues, so the repercussions have been felt widely.
In spring 2020, Music Finland created a real-time snapshot (read in Finnish) showing the latest financial estimates from the industry at any given time. The assessment is based on the procedures used to compile Music Finland’s annual report on music industry finances. The latest evaluations of the situation have been gathered from industry organisers. This snapshot was most recently updated in August 2020, using data on music industry finances and exports from 2019 as benchmarks.
As of August 2020, it is estimated that the pandemic will cause more than 220 million euros loss of revenues for the industry, mostly from the live music sector. This figure takes into account corona relief grants provided by the Ministry of Education and Culture and private foundations to music industry actors, which so far total more than 10 million euros. Altogether the loss of revenues will result in a decline of about one third of the Finnish industry’s value in 2020.
Live music comes to a halt
The music industry core sector most directly hit by the pandemic has been the live music field, which has traditionally been the biggest of the music industry’s core sectors (2019 value: 512.2 million euros).
During the spring, events were widely cancelled in line with Finnish government policies and decisions by the Regional State Administrative Agencies. Restrictions were extended to various degrees throughout the summer, traditionally the busiest season for live music. It is now estimated that the value of the private live music sector will decline by about 70 percent, representing a total loss of at least 210 million euros.
LiveFin, a network and lobbying group representing live music organisers, estimates revenue losses at about 70 percent, totalling some 300 million euros. The association’s calculations are based on a survey of the sector, according to which its total turnover in 2019 was 452 million euros. LiveFin’s turnover-based calculation takes more broadly into account live music’s various income streams. Besides ticket sales, these include restaurant sales, revenue from free events, sponsorships and other income.
Publicly funded symphony orchestras and the Finnish National Opera and Ballet have also suffered significantly, but their losses are in the millions rather than tens of millions.
According to the live music sector survey, about 40 percent of event venues’ costs stem from their programming, so revenue losses are also directly reflected in the income of booking agencies, musicians and technical staff. For instance, the situation has resulted in furloughs and cancelled work for freelance musicians. Live music also has a significant multiplier effect on other sectors, as some of the income streams go to composers, songwriters and publishers in the form of performance royalties. Furthermore, for artists and small music labels, record sales also often take place in conjunction with concerts or tour marketing.
Impacts also visible in recording sales and copyright royalties
Revenues from recordings have grown sharply in recent years, due largely to the popularity of streaming services. The negative impacts of the Covid-19 crisis can however be seen in sales of physical recordings, where the drop in sales is now estimated at about five million euros, based on consumer prices. It has also affected listening habits: during crisis situations, people seem to concentrate more on listening to older music, while new music revenues may decline.
Meanwhile interruptions in album production, diminished investment opportunities, marketing difficulties and declines in consumption will all have impacts in the future.
Besides live music ticket sales and sales of physical recordings, the Covid-19 situation is also affecting audiovisual productions, the use of background music, and advertising sales for commercial radio and television. All these declines in income streams will be seen in copyright royalties, over both the short and long runs. The Finnish Composers' Copyright Society (Teosto) estimates that the pandemic will reduce copyright royalties collected in 2020 by about 15 percent, which would mean revenue losses of more than 10 million euros for songwriters and publishers.
Royalties collected directly by publishers also appear set to drop by about 30 percent, depending on how long the situation lasts. According to the copyright society Gramex, the heaviest losses are in the largest royalty sectors, background music and radio and television usage, and appear to be rising into the millions. Before long, Gramex’s revenue losses will carry over into income by recording producers and musicians.
Musicians, composers and songwriters see income streams dry up
Musicians, composers and songwriters receive income from various sources, and the lower income streams from the sectors mentioned above will eventually be reflected in their livelihoods. Concert fees and composition commissions have come to a virtual halt, while those on monthly salaries face codetermination negotiations and furloughs, and shrinking royalties will affect their income levels for years to come.
Many music industry professionals serve in a variety of different roles in the business, for example as musicians as well as songwriters or composers and teachers. Income from all of these sources may have dropped suddenly. Estimating revenue losses by professional group is difficult, but the Musicians’ Union estimates that freelancer musicians’ combined revenue losses were some 44 million euros by the end of August. About half of these losses were from employment income and half from earnings as entrepreneurs.
Exceptional grants have been channelled toward the music industry to help ease the situation. The Ministry of Education and Culture has so far directed 7.2 million euros in specific support for orchestras, the Finnish National Opera and Ballet and cultural organisations. Meanwhile a total of 3.8 million euros in support has been distributed to music industry actors through the Arts Promotion Centre (Taike). In addition, private foundations and the Finnish Music Foundation have announced new grant applications. Within the music business, new grants have been set up by the Musicians’ Union and Teosto, among others. Some of these supports have not yet been granted, so the overall total will still rise.
What is the future of music exports?
Based on surveys carried out by Music Finland, music exports have slowed significantly or even halted completely for several months. The biggest single sector within the exports market is live music, which has now stopped for a large part of the year. The value of exports is estimated to fall by at least some 15 million euros, mostly related to live music.
With some income sources, such as copyright royalties, the delay before revenue recognition is longer. As a result, the pandemic’s impact will continue to be seen in music export revenues in future years as well. Delays in the careers of export artists and songwriters will also lead to revenue losses in future years, which are difficult to estimate at this point.
The revenue losses mentioned here should be compared to the value of the Finnish music industry presented in Music Finland’s previous annual reports on the sector’s finances.