Europe’s Digital Single Market is Good for Music

Accustomed as music companies are to territorial licensing, pricing, windowing, and marketing it is understandable that there should be at least scepticism if not outright hostility to the European Union’s Digital Single Market strategy. Swedes with an average GDP (PPP) per capita of $45,000 can afford more music than Bulgarians with $15,000. It doesn’t take much imagination to understand that the inequalities in such a large and diverse market make it hard to price a service or a product which is available to all.

These inequalities are unsurprisingly reflected in the relative sizes of Europe’s national music markets, with Germany and the UK each more than half as much again as third place France, then a long drop to fourth place Italy. Populations and the size of the economy and the amount of discretionary spending are relevant of course, and it’s gratifying to see that the UK is second only to Japan in the amount spent per capita on music. The wide disparity in the size of the market as a whole and the per capita spend is illustrated well by the fact that the US is only fourth largest in the latter, while being the leader by far in the former.

There might be many reasons why, even corrected for purchasing power and the availability of discretionary weekly cash, some cultures buy more recorded music than others. In some places music is universally considered an appropriate gift, and record tokens or gift cards deal with the preference problem. Historical differences in economic development mean that the dominant vectors for recorded music are much less present in some countries (and this is why universal high speed broadband is so critical for Europe’s cultural industries).

But what would a European digital music market look like? It would start out at about €4b, or roughly the size of the US market. But it would have 500m consumers, versus 300m for the US, and a per capita GDP (PPP) of a very respectable $36,000. It would also have two powerhouse centres of music export excellence, in the UK and Sweden, and the benefit of an extraordinary array of local and regional cultural support programmes.

Back of an envelope maths says that is already an additional €0.75b just by taking away artificial barriers (GEMA, I am looking at you). Other positives might come from innovation, particularly in finding a way to address the less wealthy areas with affordable products and services, without undermining pricing for the higher end. If Europe can crack that there are a few more continents that could prove excellent importers of both music and the digital services and technology that sell it. The necessity of being multi-lingual and serving a very rich and diverse set of cultural preferences would surely give Europeans a strong advantage over the parachute business model strategies of our friends across the pond.

Even more, where there is already excellence in copyright administration and the digital skills that drive value, a larger internal market would strengthen the good and drive out the bad. Why would local artists trust their careers and livelihoods to inefficient and corrupt collecting societies if they could just join the best and get paid for the world’s biggest music market from one source? And perhaps regional diversity would re-create the middle class of record labels that provided so much value, before they were destroyed by the wave of enfeebling consolidation that left us with two and a half global businesses in a market a third the size it was at the millennium.

If Europe’s politicians are wise they will consider not the interests of those global businesses, even if one of them is headquartered in Paris, but rather regulate for the music industry we could have. One that has more opportunities for artists, no matter where they are from, and one that takes advantage of our diversity as well as our size. I can only see good in a European digital single market for music.

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