Music Trades December 2012 : Page56

THE GLOBAL MARKET MARKETS  SALES DATA  PROFILES GLOBAL T here are two ways of assessing global industry performance in 2011. Those with an optimistic outlook will note that sales of music and sound products advanced 3% to $16.3 billion (US), reclaiming ground lost during the 2009 financial crisis. Those who tend to see the glass as half empty will point out that rev-enues are still 10% off the record level of $18.2 billion. Both are undeniably correct. The demand for the industry’s broad product offering has proven far more resilient than many other consumer durables, like golf gear (off 24%), motorcycles (off 18%), and digital cameras (off 11%). Yet, access to credit and consumer caution worldwide continue to weigh on sales, creating a tough operating climate. “Music products sales” is a loosely defined term that means different things to dif-ferent people. For the purpose of this report, it refers to the full range of musical instruments—electronic and acoustic strings, winds, keyboards, and percussion—as well as small sound reinforcement systems, project studio gear, music-related soft-ware and computer peripherals, printed music, and the nearly infinite range of relat-ed accessory items. The market estimates presented in the following pages are based on a variety of sources, including industry association sales data and various public company fil-ings. However, the primary information comes from scouring the database of the World Trade Organization. Ever since the WTO, under the auspices of the Global Agreement On Tariff and Trade (GATT), instituted standardized product codes two decades ago, it has become easier to track the global flow of imports and exports. By pinpointing the number of Chinese guitars and power amps shipped to Denmark, MUSIC TRADES DECEMBER 2012 56

The Top Markets

Sales data on 39 leading music markets around the globe<br /> <br /> Market for music products<br /> <br /> There are two ways of assessing global industry performance in 2011. Those with an optimistic outlook will note that sales of music and sound products advanced 3% to $16.3 billion (US), reclaiming ground lost during the 2009 financial crisis. Those who tend to see the glass as half empty will point out that revenues are still 10% off the record level of $18.2 billion. Both are undeniably correct. The demand for the industry's broad product offering has proven far more resilient than many other consumer durables, like golf gear (off 24%), motorcycles (off 18%), and digital cameras (off 11%). Yet, access to credit and consumer caution worldwide continue to weigh on sales, creating a tough operating climate.<br /> <br /> "Music products sales" is a loosely defined term that means different things to different people. For the purpose of this report, it refers to the full range of musical instruments – electronic and acoustic strings, winds, keyboards, and percussion – as well as small sound reinforcement systems, project studio gear, music-related software and computer peripherals, printed music, and the nearly infinite range of related accessory items.<br /> <br /> The market estimates presented in the following pages are based on a variety of sources, including industry association sales data and various public company filings. However, the primary information comes from scouring the database of the World Trade Organization. Ever since the WTO, under the auspices of the Global Agreement On Tariff and Trade (GATT), instituted standardized product codes two decades ago, it has become easier to track the global flow of imports and exports. By pinpointing the number of Chinese guitars and power amps shipped to Denmark, or American-made guitars exported to Japan, to cite just two examples, we can estimate national market sizes with a high degree of accuracy.<br /> <br /> The 39 markets tracked in this report represent approximately 72% of the world's population. Data on music products sales in most of the Middle East, large swaths of Central Asia, and Africa is not included because the sales volumes are very small and in the absence of a clearly established distribution network, information is hard to come by. A bit of methodology is in order here to put these sales numbers in proper perspective. To facilitate comparisons, sales data from global markets is converted from local currencies into the U.S. dollar, at the December 31, 2011 exchange rate.<br /> <br /> Improved technology and transportation have made the world a smaller place, but it's still large enough to accommodate wildly divergent market performances. Greece was the worst performing market in 2011, with music products sales dropping a precipitous 27%. The drop is due to the fact that nearly 50% of the populace counts the government as their primary source of income and the government is broke. At the other end of the spectrum, sales in Indonesia surged 16.2%, followed by India, up 12.3% and China, up 8.5%. The growth in these emerging markets can be tied to a combination of rising incomes, an absence of any real competition from used products, and a favorable demographic profile, i.e. a lot of people in the 12-28-year-old segment.<br /> <br /> Bracketed by these extreme performances, sales growth in most of the world's markets was tightly grouped in the 2% to 4% range. Variations among those in this middle range could be traced to a combination of larger economic performance and demographics. Japan, with a sluggish economy and the world's oldest population, eked out a modest 1.8% sales gain. By contrast, better economic performance and a somewhat younger populace in Canada translated into a comparatively robust 4.1% increase. While market performances varied around the world, businesses everywhere faced the same two primary challenges: managing distribution networks in the internet age and adapting product lines to incorporate rapidly changing technology.<br /> <br /> The distribution challenge is probably most acute in Europe. In decades past, throughout the region, retailers used to buy from national distributors and consumers shopped at local stores. The rise of the internet and readily available shipping services have up-ended the old order of things. Large online retailers like German-based Thomann and U.K.-based Digital Village 24/7.com now serve consumers across Europe. Customers have benefitted from lower prices and greater product access, but manufacturers are left with the challenge of revising distribution policies to accommodate the new realities. Do they continue to appoint distributors on a national basis? How do they set a "trans-European" price?<br /> <br /> And, trans-border commerce isn't just occurring in places like Europe where there is high population density and distances are relatively short. U.S.- based Musician's Friend, along with numerous eBay retailers, are having an impact on the Australian market, despite the barrier of 3,500 miles of open ocean. Apparently the ability of Australian consumers to import instruments for personal use, free of a hefty duty, gives off-shore retailers a meaningful price advantage. How the scenario unfolds remains to be seen, but expect more in the way of disruption.<br /> <br /> Economics are the primary culprit behind the industry's recent sales declines. Cautious consumers working to unwind hefty debt burdens are simply not as willing to spend on deferrable discretionary items like music products as they were a few years ago. However, advancing technology shoulders a part of the blame as well. Just as an iPhone obviates the need for buying a camera, music player, address book, and encyclopedia, the same digital technology has made it possible for music makers to achieve their goals by spending less. A laptop computer, equipped with $1,000 worth of workstation programs and a few software and synth plug-ins, easily equals a recording rig from a few years ago that would sell at four or five times the price. Similarly, an exploding number of iPhone apps, priced between $0.99 and $19.99, have cut into the sales of traditional products, including tuners, effects processors, and even guitar chord libraries.<br /> <br /> The world's developed nations have been singing the same doleful economic tune for the past four years: a struggling financial sector, unsustainable government spending and benefits, over-leveraged consumers, a depressed housing market, and high unemployment, resulting in sub-par economic growth. However, the gloomy mood in the developed world has tended to obscure the great strides being made elsewhere. The music markets in countries such as Brazil, China, and Indonesia, as well as former Communist countries like Poland, are expanding at a brisk pace. Although the increases come from a relatively small base, the future potential is extremely encouraging for manufacturers everywhere.<br /> <br /> A higher rate of growth in emerging markets will present manufacturers with new sales opportunities. Retailers and distributors who deal only in the developed markets will see little impact. However, for all those who believe in the individual benefits that accrue from making music, a world where more people have access is undoubtedly a better place. <br />

Previous Page  Next Page


Publication List
Using a screen reader? Click Here