Measuring the Central European Audiovisual Industry

Policy, market and transaction analysis across central and southeast Europe

Music publishers Uses:#printed sheet music Uses:#film rights#advertisement #film rights #film rights#theatre rights #advertisement #advertisement

Booking agencies #software #theatre rights #theatre rights#sound recordings #software #software

Music sheets #sound recordings #sound recordings

Manufacturing

Radio & TV Background m Wholesale

Promoters of cultural venue operatorsIndependent and integrated concert promoter and publishers

Club venues WebshopStreaming Record shops

Broadcast and public

performance…

… Record buying

audience

Home copying audience

Audience of production music, such as advertisement, soundtracks, software games.

Music students, (hobby) musicians. Digital audience

Other Creative Industry usesSale of audio devices

Advertising industry, audiovisual industry, software games, theatres.

public performance and broadcasting via CMOs Home copying

and PCRZAPRAF performers' CMO

HDS ZAMP HUZIP producers' CMO

Aggregators

Author's stream Sound recording stream

Mechanical reproduction

#total Slovak repertoire #total Slovak repertoire

Self-publishedRecord labels

#no. musical works and lyrics per yer #no. of sound recordings made in Slovakia#exploited Slovak repertoire #no of songs exploited in Slovakia (active repertoire)

Music composers and authors Performing musiciansAuthors who create music and lyrics Session musician

Measuring the Central European audiovisual industry- measuring the Croatian national markets -

Daniel Antal, CFA

Why you need a data map?

Why do you need a data map in Europe?•Our product: CEEMID

Further information• Industry mapping• Statistical methodology

Methodology

Market research: cultural access and participation. Market transact-ions, private copying and piracy.

Market size, purchasing power. Average spending. Channels. Predictive models.

Market Demand

Regional approach:Both content import and local output is increasingly regional. We survey the local industry and demand consistently in the region.

Regional horizon

Industry analysis.Mapping of supplier networks. Value added, employment, output volumes and market values.

Capacity & Supply

Candole Parnters is an economics and investments consultancy covering SEE. CEEMID is an entertainment and media database system. Daniel Antal, CFA is a creative industry specialist.

About us




Manufacturing


Promoters of cultural venue operators

Independent and integrated concert promoter and publishers



performance…

… Record buying

audience









Aggregators







Why you need a data map?

o In the US you can always find at least a handful of public companies which can be used are often used as comparators or provide data to establish basic economic and market factors and prices.

The EU companies are very rarely public, and there is very little data available about them from vendors.

You have to collect your own data or make FOI or PSI data requests.

Markets are less efficient and there is more value in research. There is more value left on the table.

We are experienced consultants to query government data, conducting custom research, and even selling data via ThomsonReuters.

Our CEEMID Central European Entertainment and Media Database aggregates financial, statistical and market research data for the EU28.

We have the map and provide you with data or analytics.

o In the US, most information can be derived from the analysis of financial reports, management discussions and other filings. Such data is available an a pre-processed, analysis-friendly format from data vendors such as Bloomberg,Thomson-Reuters or Yahoo! Finance.

o Nielsen provides you in-depth market research. Such products are not available for Central European emerging markets.

CEEMID database system

FILM CREATOR

S

Audiovisual

production

Download this awesome diagram. Bring your presentation to life.

POST PRODUCI

ON

MUSIC PERFORMANCES

Concerts, venues,

festivals,DJ shows.

Songwriting capacity, works available, creators, publishers.

• Hundreds of quantitative indicators.• Longitudinal and cross-section data

MUSIC INDUSTRY DATABASES

Prices, budgets, sales

RECORDING

INDUSTRY

• Audience demographics.•Substitutes.• Local catalogs.• Production capacity.•Export and tax reliefs.

BROADCASTING

BOX OFFICE

Audience and revenue

FILM & AUDIOVISU

ALINDUSTRY DATABASES

Collective right management,

national authorities

• 2 granting institutions, 9 CMOs in the region and have ample experience in tariff setting and competition policy issues.

5

Further information:#Mapping of the Croatian industry

Music industry is “bracketing” the audiovisual industries, because sound recordings are related to films, videos and multimedia, and of course radio and television broadcasting. However, live music is part of the “performing arts” classification in NACE, which makes it especially difficult to map from governmental sources. The data about musicians is mixed with actors.

The audiovisual industries are well clustered, with one outlier part. Relatively high amount of audiovisual production is used in advertising (so is music). Many audiovisual works are classified under advertisement, and vice versa: cinema advertising is classified as cinema and not advertisement.

The governmental economic statistics of the UN and EU member states were designed in the 20 th century to represent manufacturing and agricultural production. Creative industries are very difficult to find in these statistical systems. In the US many better classifications exist because of the abundance of public companies and their public data. In the EU where almost all relevant companies are not public, careful data mapping and auxiliary data collection is needed. We are providing these services for all audiovisual and music industries.

Fig: ESSnet-Culture Technical Recommendations, p48, emphasis CEEMID

6

Further information:Detailed mapping of music in HR, HU, SK

Creative and cultural industries are made of a network of micro enterprises and freelancers, often working in different roles. The data of the Croatian music industry is to be fined in a many boxes. We follow the US and EU classification of the three income streams, from creative works (music and lyrics, staged for live performances and recorded for sales, broadcast and streaming. Each box represent a different data source!




Manufacturing


Promoters of cultural venue operatorsIndependent and integrated concert promoter and publishers



performance…

… Record buying

audience


Classical music audience



Consumption, audience, market transactions, non-market transactions (private copying, piracy)

Other Creative Industry uses

Entertaining music audience: concerts and festivals

Sale of audio devices

Advertising industry, audiovisual industry, software games, theatres.Festivals Concert halls

Independent concert promoters

Cultural and music education public performance and broadcasting via CMOs Home copying

and PCR

Musical instrument manufacturing and retailAudio- and stage technology

Rehearsal studios ZAPRAF performers' CMO

SOZA authors'right CMO HDS ZAMP HUZIP producers' CMO

Concert Promoters Aggregators

Production, creation of

artistic originals, events.

Live entertainment stream Author's stream Sound recording stream

Management, non-artistic

value added, dissemination

and trade, collective rights management.

Management, tour management, assisting personell

Mechanical reproductionBackground industry and services

#size of the repertoire exploited on Slovak stages #total Slovak repertoire #total Slovak repertoire

Self-publishedBands Ensembles, choirs Record labels

#no of concerts, no of concert venues used per year #no. musical works and lyrics per yer #no. of sound recordings made in Slovakia#music festivals, music festival capacities in Slovakia #exploited Slovak repertoire #no of songs exploited in Slovakia (active repertoire)

Performing musicians Music composers and authors Performing musiciansMusicians who play on live states Authors who create music and lyrics Session musician

7

Further information:Methodology and history

https://www.academia.edu/18155317/Creating_better_national_cultural_statistics_with_Eurobarometer_datasets_and_ESSNet-Culture_technical_recommendations



Market research and demand size

Measuring the consumption of broadcast, licensed, privately copied and pirated music, feature films, TV series and TV programs for compensation (2012, 2014, 2015.)• Hedonic price and other models for measuring B2B demand in the HORECA sector for music, royalty pricing (2013,2014.)• Market demand for Hungary, Slovakia and Croatia (2015.)• Analyzing the audience for domestic films in the motion picture, broadcast and streaming market in Hungary (2015.)• Various competition-law based relevant market definitions.

The illustrations in the presentation are taken from actual Croatian, Hungarian, Slovak presentations and contain labels from in the original language.

Examples



Market demand

• Representative, optimum stratified polls. Government statistics. Google Trends. Financial data. Industry data.•Panel and time-series analysis.•Classifications with machine learning, unsupervised and supervised data analytics.

Methods




Manufacturing






performance…

… Record buying

audience









Aggregators







9

International comparison

The Central and Southern European audience is very different from Western and Nordic audiences. Our data collection methodology and post-processing of various public and private surveys allow to make comparisons and zoom on the particular issues of emerging national or smaller regional markets. Data: CEEMID

10

Demand analysis and forecast

A magyarországi lakosoknál kisebb arányban mennek a romániai, portugáliai és bulgáriai lakosok moziba.

Visitinglikelihood

Visitingfrequency

Ticket sales per capita

1. The likelihood of visits is a macro-level segmentation. We analyze the reason for non-visits to make factual arguments for government policy changes and better theatre locations.

2. The frequency of visits is better measurement and the basis of our segmentation. Most tickets are sold to returning consumers. We analyze regional and national differences in detail to explain and predict visits.

3. Ticket sales per capita are measured in volumes or revenues. Cinema ticket prices differ due to differences in local cost and applicable taxes.

Differences in ticket prices and applicable taxes. Financial reasons for visiting less cinema. Substitutes: pay-TV, television, online streaming, rentals, home copying and piracy. Travel time and costs to cinema. Reach of marketing tools. Companion to cinema visits.(Many people never visit without companion)

11

Measuring all consumption

1. Demographics of watching hours per screen (theatre, TV, YouTube, online stream on computer, tablet, home movies, home copyies, P2P piracy.)

2. Access to multimeida devices. 3. Collection sizes (licensed, home copy, illegal.)4. Estimated losses in compensated home copy (most

EU jurisdictions) and to be litigated.

Watching hours. Watching frequencies. Collection sizes. Spending / reasons for not spending more. Genres. Substituting entertainment programs.

Text

E, F, G, H regions

In Central and Southeastern Europe, not only purchasing power is different. Urbanization, population density, transport availability and access to culture facilities is varied, and unfulfilled market demand is high.

Rural areas

C & D regions

Case study: why not visit more concerts in regions of Slovakia?

CitiesNo more tickets: only if

not interested

F, G, H regionsOnly if (further) interest

is lacking

Only big citiesNot enough time small children?

Larger towns:No more tickets: only if

not interested

Smaller towns: Not enough time travel time


Rural areas:Lack of

opportunity!

Analytics: demand constraints


1. Predictive models to forecast visits in target groups. 2. Classification of cultural access patterns.3. Surveying entertainment in totality, including

substitution between drama and film theatre, concerts, television, home movies.

4. Standardized questions for lack of (further demand)

Comparing visiting and not visiting populations. Understanding explicit and implicit (time) travel costs. Understanding travel / parking opportunity. Differences in purchasing power and demographics.

5. Supply problems: market opportunities, culture policy failure.

6. Demand problems: low purchasing power, unfavorable demography.

13

Substitution and revenues1. When there is no way to sell another concert or

cinema ticket, the second best option is that interest is channeled to a licensed sale.

2. The third best options is substituting active participation with broadcasting. We are modeling royalty revenues and their outlook on broadcast media.

3. In Central Europe, collectively managed royalties have a much higher share in the revenue mix than in Western Europe. Managing private copy compensation is important.

4. Substitution to piracy is partly motivated by lack of adequate supply, especially feature films and TV series.

Understanding competing entertainment activities. Opportunity: local supply, travel, media equipment. Purchasing power. Cultural differences. Relative values of royalty channels. Compensation mechanisms for home copying. Piracy developments.

Ages 10-75

licensed

copiedN

ot audiovisual

Licensed sale

TV broadcasting

Private copy / compensated

Piracy / not compensated

Unclear substitute

Not audiovisual substitute

14

Revenues and consumer benefits

We are comparing uses of media and distribution channels (hours) and accompanying royalties, licensed, compensated (private copy) and illegal consumption to identify undervalued royalty rates, support compensation claims and policy against illegal content distribution.

Music consumption Hungary 2015

Broadcasting: television

Broadcasting: radio

Physical records

Digital streams: YouTube

Spotify

Deezer

Google Play

Digital files on computer

Digital files on telephone

Tablet

Mp3 players

15

Complementing Surveys with Searches

Besides surveys and industry-specific data sources such as collective royalty statistics we analyze Google Trends to understand short-term seasonality and music festival visits (the biggest driver of AT, HR, HU music markets. As a vast portion of the ticket purchases are online, Google Trends are reliable proxy for short-term seasonality.

Distribution & production capacities

Measuring the consumption of broadcast, licensed, privately copied and pirated music, feature films, TV series and TV programs for compensation (2012, 2014, 2015.)• Hedonic price and other models for measuring B2B demand in the HORECA sector for music, royalty pricing (2013,2014.)• Market demand for Hungary, Slovakia and Croatia (2015.)• Analyzing the audience for domestic films in the motion picture, broadcast and streaming market in Hungary (2015.)• Various competition-law based relevant market definitions.

Examples



Market supply

• Representative, optimum stratified polls. Government statistics. Google Trends. Financial data. Industry data.•Panel and time-series analysis.•Classifications with machine learning, unsupervised and supervised data analytics.

The illustrations in the presentation are taken from actual Croatian, Hungarian, Slovak presentations and contain labels from in the original language.

Methods




Manufacturing






performance…

… Record buying

audience









Aggregators







17

Example: income analysis in the regional music industry

52%

65%

63%

49%

32%

7%

9%

13%

30%

19%

34%

11%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

UK

HU

SK

HR

Individual revenue Music and Record Publishing Collective Rights Management Other

The relatively high level of royalties is probably due to the fact that less part-time and young artists participated so far in our survey. However, it is clear that the collective rights management is very important in Croatia. Probably CMOs can take on some roles played by publishers, but the very different type of business development and income that music publishers can bring to the market is missing from all over the region.

18

Example: VAT and local taxes on live performances

Western European countries apply lower VAT rates on live music due to its very high labor component. The tax rates on music events is very high in Croatia, which curbs domestic demand and makes cultural tourism less competitive for the country. Data: Live Nation Central & Eastern Europe. * Austria before VAT level rise.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Taxes

Royalty

Artist fee

19

Example: digital distribution strategy

Digital streams came a bit late to Croatia, but they will soon change the market. Each stream has a different distribution and promotion strategy, so income from YouTube, Spotify, Deezer, Bandcamp and SoundCloud requires a differentiated strategy, both at the level of CMOs, record labels and artists. Again, survey data are crucial to understand this extremely important topic.

Data: preliminary survey results in Croatia, market estimate calculated for Artisjus (2015), actual digital distribution data of a successful independent catalog in 2014, courtesy of WMMD.

Croatia (survey)

Physical

Digital download

YouTube

Spotify

Deezer

Bandcamp

Soundcloud

Other stream

Hungary estimate

Physical

Digital download

YouTube

Spotify

Deezer

Bandcamp

Soundcloud

Other stream

Local stream

Hungary case study

Physical

Digital download

YouTube

Spotify

Deezer

Bandcamp

Soundcloud

Other stream

Local stream

20

Example: global competitiveness in Central- and Southeastern Europe

In Central Europe, collective right management societies and performer’s unions play an important role, because most of the artists’ revenue comes from fragmented sources. In the UK, music and record publishers play this role. Data: EchoNest, CEEMID.

EU ranking population % plays instrument EU ranking population % plays instrument

Echo

Nes

t Hot

ness

rank

ing

Echo

Nes

t Disc

over

y ra

nkin

g


•National country reports that estimate total spending, investments and supply facilities.• International benchmarking.• Tax incentives.

Examples

Regional approach:Both content import and local output is increasingly regional. We survey the local industry and demand consistently in the region.

Regional Approach• The national markets in Central Europe, apart from Poland are very small. Conent-owners, rightholders of catalogs understand the need to consolidate catalogs and form a regional distribution strategy – both importing to the region and exporting from the region.• Our database was formed in partnership with collective right management organization who recognized the need to regionally develop this market in an increasingly competitive and global market. • The Visegrad Countries, the former Yugoslavia and Austria are a sizeable market, but even more a very competitive production hub. Budapest and Prague are among the big film producing capitals of Europe with Zagreb and Bratislava playing niche roles.

Broaden the horizon!




Manufacturing






performance…

… Record buying

audience









Aggregators







22

This region requires a unique strategy

In Central Europe, collective right management societies play a very important role in maintaining the recorded repertoire. In 2014, about 40% of the industry income came from collective management of radio and television broadcasts, public performance in the HORECA sector and certain digital streams.

But digital distribution will bring unseen competitions among Croatian and international acts. It is important to see what are the similarities and the significant dissimilarities with the EMEA region in general. Data: IFPI, compilations for CEEMID.

0 5 10 15

UK

Sweden

Germany

Austria

France

Netherlands

Czech Republic

Poland

Slovakia

Hungary

Croatia

Physical

Digital

Performance

Synch

0% 20% 40% 60% 80% 100%

UK

Sweden

Germany

Austria

France

Netherlands

Czech Republic

Poland

Slovakia

Hungary

Croatia

Physical

Digital

Performance

Synch

23

CCI policy advocacy: secondary employment in the music industry

Staging a live event requires technicians for sound, light and stage setting or building. A transporter is almost always needed. Ticketing and merchandise sales also require at least one help. Even amateur musicians employ about four people for such roles. Full-time musicians are supported by on average by 8 people on a concert. Venues often employ many people. A well equipped music club has about 20-40 people on duty during a live event. Arena shows employ about 100-200 people and festivals with their temporary installations often far more.


Consultancywww.candole.com

Datawww.ceemid.eu

Daniel Antal, CFAnl.linkedin.com/in/antaldaniel

About us• Visegrad Investments was a Budapest-based economics and investment consultancy. After three years of cooperation, it became associated with Candole Partners, a similar company based in Prague and Bucharest to provide better regional services. • Daniel Antal, CFA, has 15 years of consulting experience in strategy consulting, and data-driven consultancy. He is currently specialized in the entertainment and media inudstries.

• CEEMID is a system of databases. Some databases are proprietary to a group of users, such as the CEEMID Authors’ Society database. Other databases are open for subscribers. We create custom databases from Client data that can be complimented with our public databases. • We are covering cultural participation (concert, movie and drama theatre, comedy, broadcast media, talent supply) and culture industry supply in the EU28 with a special emphasis on AT, CZ, HR, HU, SI, SK, PO, RO.

Consultancy

Data products




Manufacturing






performance…

… Record buying

audience









Aggregators







25

Daniel Antal, CFA is senior consultant. Daniel has worked as an economic regulator, promoted policy and investor interests in Hungary and Southeast Europe in the past 15 years. He serves customers in Budapest and the Benelux region. He is specialized in the regulated price setting (royalty tariffs) and business development in regulated environments. Within Candole he is specialized on creative industries, especially live and recorded music, film production and distribution, radio and television, online media and publishing.

Daniel holds an MSc Economic Regulation and Competition Policy from the City University London, and has finished the Chartered Financial Analyst program in 2014. He is currently enrolled in the John Hopkins University Data Science distant learning program.

[email protected] or nl.linkedin.com/antaldaniel www.candole.com www.ceemid.eu

mailto:[email protected]

http://www.candole.com/

http://www.ceemid.eu/

Data & Analytics

Measuring the Central European Audiovisual Industry