Local Music and the International Marketplace^*

One of the most notable developments in the world's popular music in the post-war era has been the growing internationalisation of its sound. Those musical genres which, indisputably, have left the strongest mark on popular music in the world have originated in the United States of America and, to a lesser extent, the United Kingdom. The first of these was mainstream American jazz, which became popular in Western European countries in the 1930s and 1940s, was picked up by local musicians and then had a significant influence on local popular music scenes. Subsequent developments, like the advent of rock'n'roll, rock, soul, funk, disco, rap, hiphop and house in the United States and »beat« and punk musics in the United Kingdom have had a substantial impact on the continental Western European music scene.

The prominent position of the United States as a global cultural trendsetter can be traced back to changes in power relationships during and after World War II, changes which produced a situation in which »Americana« became the model for the Western world in general. The United States embodied, for most Western European countries, a young, modern, free and industrializing country, one which provided the perfect developmental model for continental countries then in chaos. Moreover, American culture turned out to be an attractive alternative to those things the 'old' European culture had to offer, especially to European youth. Older, European structures for the 'production of culture', consisting primarily of organisations established along ideological — and mainly religious — lines, were not capable of meeting the 'demands' of people living in a modern industrialised society in which the electronic mass media had become the main providers of everyday culture. American entertainment products conquered the European continent as an integral part of the American life-style, marketed by a cultural industry whose products, most notably movies and popular, recorded music, were new and American.

For the most part, European cultural industries have been organised along the lines of the American model. In the music, movie and print industries, the market became the dominant factor shaping production and distribution. However, the organisation of broadcasting in Western European countries represented a compromise of sorts between the old and new forces within specific national contexts. In almost every European country, the state played an active role in the organisation of the radio and television landscape by establishing some sort of public broadcasting, which, in many cases, was the only form of broadcasting available. In recent years, European broadcasting systems have come under pressure from corporate capital seeking to introduce commercial broadcasting in Europe. Developments over the last few years indicate that this pressure has been successful: commercial broadcasting is gaining ground in many European countries.

As far as the music industry is concerned, the market has been the dominant factor in production and distribution from the very beginning, in Europe as well as in the United States. Moreover, the scope of activities of the music industry has always been very international. For the Dutch music industry, for instance, the recording and marketing of local artists has, throughout that industry's development, been only one of its activities. At present, the principal activity of Dutch recording firms — both majors and independents — is that of distributing and marketing foreign, mainly American and British product.

This article is mainly concerned with discussing the position of local popular music within national and international markets, taking the Dutch situation as a starting point. »Position« refers here to the economic viability of local music in the context of structures for the production and distribution of music operating on the national and international levels. The use of the concept 'local popular music' presupposes a specific relationship between a certain spatial context described as local and a certain kind of popular music. The relationship between the local and the music is very often conceived of in terms of notions of the indigenous, such that local music is seen as a static cultural-musical form said to be historically rooted in a specific local context. This prescriptive definition robs popular music of two of its main characteristics: its dynamism and its intertextuality. The concept of a local, popular music used here refers to a dynamic cultural practice through which people living in a specific spatial context engage in the production and reproduction of popular music. This cultural practice encompasses musical composition, the playing of music and its live performance on stage, and getting music recorded on phonograms, played over the radio, and, finally, into shops. Conceiving of the politics of local, popular music in this way links it to issues having to do with mass communication, culture and democracy, and away from the politics of a narrow-minded cultural nationalism.

The position of local music defined in these terms refers, then, to the viability of specific cultural practices within the context of a modern industrialised society where the market is the principal force shaping production and distribution. In this respect, the »viability« of a musical practice refers to its commercial value. This value depends on the extent to which the music industries can expect to recoup their investments in musical product and eventually generate profits from selling it on the national and international market. Irrespective of the specific qualities of each individual musical piece, the commercial value of local music is largely determined by the structure of the national and international music market. Relevant factors in this context include the size of the home market, the share occupied by local music within the home market relative to that of music from abroad, and the importance of this local music on the international scene.

Before turning to a comparative analysis of the situation of several national markets, some observations should be made concerning the changing situation within the international market. One current development with potential long-term implications is a decline in the relative importance of the American phonogram market, on the one hand, and a growth in the importance of the Western European and Japanese markets, on the other. The principal causes for this shift are a decline in the value of the American dollar, as well as the relatively higher growth rates of the phonogram markets in Western European and Japan compared to that within the United States. Given the recent economic opening of Eastern Europe to the music industry, the importance of the whole of Europe as a market for the music industry will likely increase even more in the future. This development may possibly lead to a thorough reordering of the structure of the international music market, and, as a result, to significant changes in the policies of the international music industry, with as-yet uncertain consequences for the international popular soundscape.

Table 1 compares the share of the US, Western European and Japanese markets in 1984 and 1989 relative to the total world market¹.

Table 1: Share of the Turn-Over on the World Phonogram Market for Different Regions in 1984 and 1989

Data for Table 1 taken from: Hung, Michèle & Morencos, Esteban Garcia (1990).

There are essentially two possible reactions by the music industry to the developments just described. The first is the investment of more money in domestic European and Japanese artists so as to generate profits within their domestic markets. This option was put forward by the president of MCA Music, Al Teller:

»For all the obvious reasons, ultimately MCA will have to participate in domestic repertoire throughout the world. ... Right now, fundamentally we are dependent on the English language for our product. We don't enjoy the benefits of local artists selling enormous quantities of records in their territories. To be competitive with the other worldwide majors at some point we have to tap into local repertoire. That is certainly an important item on our agenda as we look out into the future internationally. ... It is just human nature at work here. You know people love their hometown heroes. The industry could not possibly be as healthy if all the big sales came from artists who came from distant shores. In America people love it when an artist from their local city makes good. Why shouldn't the same thing be true here? I think it is important that German artists should be able to sell enormous quantities in Germany, and the same thing for French artists in France. You'll never get a healthy industry without that«².

The second option is to go for expanded sales of internationally established — mainly English and American — artists. This option has been the strategy of Warner Music in the Netherlands for some years now. Warner decided to end investment in Dutch domestic artists some time ago, and to concentrate on the distribution and marketing of foreign, mainly Anglo-American repertoire within the Dutch market.

It seems more than essential for the former communist countries in Eastern Europe to built up a local music industry infrastructure in which there is room for the recording and marketing of local musics. It is not automatically the case that if the switch to market economy is completed in the field of the production of culture that the market will provide for of local music on phonograms in large quantities. If the dominant strategy of the major record companies will be the one which was applied by Warner Music in the Netherlands the future for local music on the relative small national Eastern European countries could well be gloomy. It is more than evident that the international music industry is preparing to enter the 'new found land'. One of the main obstacles which has be done away with is the poor copyright legislation and the poor legal prosecution of infringments on existing copyright-laws. In that respect former Eastern Europe constitutes a priority area for IFPI (International Federation of Phonogram Industries).

In its newsletter IFPI marks the situation in Poland, were the market is almost completely in pirate hands, as disastrous. The situation in Poland even affects the situation in the Czech and Slovak Federative Republic were the law is adequate for record producers. The problem in this country seems however that there is an influx of imported Polish cassettes which has seen »... cassette piracy rise from virtually nothing to 40% of the market« (IFPI, 1991; p.8). IFPI complains that in Czechoslovakia, legal measures against this practice are insufficient. Reviewing the general situation in Eastern Europe IFPI concludes:

»Clearly there is much that needs to change in the area before either local or international recording industry interests can begin to thrive. The region has tremendous growth potential and its hoped that concentrated IFPI activity will go a long way towards its fulfilment.« (IFPI, 1991, p.9)

The Dutch experience reported here, can be valid for situations yet to come in Eastern European countries.

The present crisis within the American economy has made the American music industry vulnerable. This has resulted in a series of take-overs of American music-companies, by Japanese and, to a lesser extent, European companies. Recent examples include the take over of the music-division of CBS by Sony. After MCA took over Geffen, it was itself acquired by another Japanese electronics company, Matsushita. One of the bigger American independent companies, A&M records, was bought by Dutch Polygram, which also bought the English independent Island. Recently the Japanese hardware company Toshiba acquired a stake in Time-Warner. This development will, ultimately, lead to a situation in which Anglo-American music is distributed and sold all over the world by companies which were formerly American and are now Japanese. A one billion dollar deal by Sony Music (formerly CBS) with Michael Jackson is another sign of the willingness of Japanese capital to invest heavily in American popular culture.

Three structural parameters largely determine the position of a specific local music:

1. The size of the local music market.

2. The share of local music within the overall turn-over of the local music market.

3. The importance of local music within the international music market, expressed as the share of local musics within the turnover of music on the international market.

Before proceeding to a typology of the relationships between local music and national markets, a few comments should be made concerning the data used to assign cases to specific categories, as well as regarding the scope of the argument presented here. The information used to assess the specific condition of each individual country consists of music industry statistics on the development of phonogram market size and market structure for those countries considered significant markets within the international music industry. This information possesses two weaknesses which, while they do not undermine its usefulness, nevertheless warrant comment.

Firstly, this data refers to the market for phonograms (musical recordings) and does not include revenues generated through the music industry's exploitation of rights. As a result, this information does not provide an exhaustive picture of the size and structure of a given music market. The importance of rights exploitation within the music industry is rapidly increasing. One indicator of this development is the growing involvement of record companies in music publishing. Only a small part of the time spent on musical consumption consists of that devoted to listening to tapes, CD's and albums bought in the shops by consumers, the traditional source of revenue for the music industry. An important objective of the music industry is that of acquiring a greater share of revenues from music which is »freely« consumed by people, as they listen to the radio, watch television, and so on. In addition, the use of music in advertisements, motion pictures and television series offers another domain in which considerable revenues are generated for the music industry (Frith, 1988)³. The efforts undertaken by IFPI to establish copyright laws in Eastern European countries referred to earlier, also point to the importance of rights-exploitation by the music-industry. Furthermore IFPI recently introduced an equivalent to the International Standard Book Number (ISBN) for recordings, called the International Standard Recording Code (ISRC). Each digital sound recording will be provided with a ISRC. IFPI exlains one of the main reasons of the introduction of this code:

»New technology is rapidly increasing the variety of media by which recordings reach the consumer and the recording industry needs to insure it derives income from the use of its product (e.g. by broadcasters, cable/satellite operators, music banks, private copying) in addition to the sale of physical carriers (e.g. singles, LP's, cassettes, CD's).« (IFPI, 1991b)

That exploitation of rights (authors as well as neighbouring rights) will become increasingly important with the advent of digital information storage and transmission was underlined recently by one of the speakers at the 38th conference of CISAC (the Confederation of Societies of Authors and Composers), David Baron (Program Director and Associate Editor Syebold Seminars and Publications). He claims that:

»With digital information, we have effectively seperated the content from the carrier. Let me repeat that: The content — music, video, data. what have you — is no longer bound to a particular medium — a book, record, tape, score etc. We can now access information and entertainment without regard for the media upon which it is delivered. In many cases, there may not even be a physical medium, as more information is delivered 'over the ether,' or through cables or airwaves.'« (Baron, 1992, p.3)

There is, however, no indication that, in the period under study here, the revenue generated through rights exploitation is gained from types of music significantly different from those which feature prominently within the phonogram market. In this respect, the size and structure of different phonogram markets may still be used to generate valid indicators of the position of local musics.

The second weakness of the information used here lies in the fact that it is derived only from those countries and territories which are considered relevant markets for the international music industry. Other countries are not included in the official marketing policy of the internationally organized industry and are, therefore, left out of the statistics. These countries are not yet integrated within the international music-industry system because their local infrastructures of music production and distribution do not permit that industry to operate successfully. This is a result both of the relative smallness of these phonogram markets relatively to those of the West⁴ and of the fact that the international music industry cannot get a hold of the biggest part of these markets, due to the large share thereof taken up by pirated cassettes. Moreover, local scenes in non-western countries are often based on other modes of production and distribution than those typical within Western countries. Live-performances, for instance, seem to be involve less an extension of that music which is marketed and distributed by the music industry, than a mode of music-distribution in its own right. The analysis put forward in this article applies principally to those countries wherein the viability of local musical activity is heavily dependent on the distribution and marketing of phonograms through the structures of the music industry.

Together, the three aforementioned parameters provide a valid indicator of the economic viability of specific local sounds within existing structures for the production and distribution of music. On the basis of these parameters, a simple typology and categorisation of countries and their local music may be elaborated. For convenience, only two categories indicating size, share and role will be used: big and small. Using more sophisticated measures would automatically lead to a more sophisticated typology. Furthermore, only those types for which concrete examples exist will be mentioned. This means that only four out of the hypothetical eight (2x2x2) will be discussed.

The four types which can be distinguished are:

I. A country with a big phonogram market, with a big share for local music within the turn-over of the local market and a relative important role for its local sounds within the international music market.

II. A country with a big phonogram market, with a big share for local music within the turn-over of the local phonogram market and a relatively unimportant role for local sounds within the international music market.

III. A country with a small phonogram market, with a big share for local music within the turn-over of the local phonogram market and a relatively small unimportant for local sounds within the international music market.

IV. A country with a small phonogram market, with a small share for local music within the turn-over of the local phonogram market and a relatively unimportant role for local sounds within the international music market.

In Table 2, some 9 countries are categorised according to the above typology.

Table 2. Four types of countries based on size of phonogram market and share of local music on the local market in 1989 and the importance of local sounds internationally.

Source: Hung, Michèle & Morencos, Esteban Garcia (1990) and Music Industry Sources, 1990.

The only country which really fits the description of TYPE I completely is the United States of America. It has by far the biggest national market by far, and a share for local music within the national market which exceeds two-thirds. Furthermore, the US may be considered a global trendsetter as far as popular music is concerned. This holds true as well, though to a lesser extent, for the United Kingdom. The UK market is only one third the size of the American. However, the role of British popular music within the world's overall »sound« today is comparable to that of the US. It is clear that the structural parameters are the most favourable for both these TYPE I countries. They provide the sounds defining the world beat of today.

Considering that the USA and UK are the only two countries whose music plays an important role within the structure of the international market, we may move on to consider the other two parameters in this typology: those having to do with size of the market and the share of local music within the national market. This leads, first of all, to TYPE II. The only country which really fits this description is Japan. To some extent France meets these criteria, as well, but the French market, like the British, should be considered as medium-sized. Also the share of local sounds within the French market is three-fifths that of Japanese music within the Japanese market.

Two countries meeting the criteria for Type III are Brazil and Italy. The markets of both countries are relatively small. The share of local music within the national market is reasonable, particularly insofar as Brazil is concerned. A great many countries in the world — for example Canada, the Netherlands and Norway — meet the criteria for inclusion in Type IV.

It should be clear that a certain ranking is implicit in the typology just presented. The present condition of the international music scene works to the benefit of local musics from the United States and Great Britain, while things seem less promising for musics from the Netherlands, Canada and Norway. There are relatively large markets for American and British music within their respective home countries, as well as plenty of opportunities for this music to be marketed internationally, in large measure as a result of the cultural history of the world's popular music. The international potential of local sounds from Canada, Norway and the Netherlands is far less, given the shares they occupy within their domestic markets. The fact that there is a very limited domestic market for local musics in »Type IV« countries poses important problems, given the skyrocketing costs of recording and marketing. It is necessary to look to larger markets in order to recoup investments in a band or an artist. This is highly problematic for performers from countries with small markets and small shares for local product within those markets, as these have no tradition as musical trendsetters and, consequently, little chance to market their musics abroad.

In the end, this process can lead to the withering away of a vital cultural practice, in that a whole sector of cultural activity — one consisting of musicians playing music, performing live in concert, being recorded by a local music industry and receiving airplay on domestic radio —is slowly disappearing. This is only because this activity cannot survive in a context in which the economic scale necessary for its success has been expanded beyond its own capabilities.

In more analytic terms, the typology just presented may serve as a point of departure for research into the music industry in countries which are tied in to the international music industry system. The position of a country and its local music, within the force field outlined here, is a significant determinant of the central concerns, goals and appropriate modes of operation of the music industry within a given context. This may be illustrated with material from a study of the position of Dutch rock music within the national and international markets.

A central tension running through every segment of the Dutch music industry — be it big or small, major or independent — is that between the exploitation of national repertory (music made and recorded by Dutch artists) and that of international repertory. Most of the companies active within the Dutch market combine the exploitation of Dutch local musics with that of musics from abroad. They acquire musics of foreign-origin, either through licensing deals with foreign labels (this applies to independent companies as well as majors), or by being part of a major company with a big international network through which they acquire the artists signed by sister companies in other territories. In almost every case, the greatest part of turn-over and profit within the national market comes from international repertory, with the exception of one or two companies which concentrate on national musics.

As previously mentioned, the Dutch office of the American Warner Music decided some time ago to end its involvement with local repertory and to serve only as the local sales office for music from abroad, primarily from the United States. Warners' principal argument was that the exploitation of local music was so time-consuming, costly and unprofitable that it prevented them from releasing commercial interesting, but less costly, material from the United States.

Let us now take a look at the way in which the national-international tension is reproduced within the operations of major companies in the Netherlands. All the major companies (Sony Music - former CBS records-, Warner Music, EMI, BMG, Polygram) have offices in the Netherlands. Most of these have international headquarters in London and New York. Both the American and English units of the major companies operate almost autonomously within the structure of the majors, given that both these countries are the most important sources for new internationally marketable musics, as in Type I of our model. These units generate a good deal of music which offices in territories other than the US and the UK are more or less obliged to release in line with international corporate policy. The local offices of majors, like those in the Netherlands, mostly have their own A&R managers and release local product. Their most important priority with their own releases is that of recouping investments within the local market, which is increasingly difficult given the declining market share of local product within local (small) markets on the one hand, and the rising costs of recording and marketing on the other. International exploitation through affiliates abroad could offer a solution to this, but this, in most cases, is hardly possible. Local offices must fight, within their own structures of their own companies, in order to have products released abroad.

Let's take the average president of the national office of a major company operating in the Netherlands. For him (it is almost always a man) it is almost impossible to get his artists released in the USA and the UK. The affiliates in those countries put out so much product themselves — product which he, along with his colleagues on the European continent, must release — that there is little room left for the exploitation of Dutch material in the UK and the US. Even if our president of the Dutch office gets the UK and the US A&R managers to listen to his artists, they find easy ways of backing off from them. If the music sounds different from what is current in the US or UK market, they will say: »This is not suitable for our market«. If, in contrast, it sounds English or American, the argument will take a different tact: »We have dozens of acts like this ourselves«. So our president leaves, having accomplished nothing. Another option for our director of the Dutch office — who is very enthusiastic about his product and wants to go for international success — is to disregard the UK and the US, buy a roundtrip airline ticket and visit every affiliated office on the European continent (and maybe, also, Japan.) He probably will get his product out in some countries, but under his arm, when he comes back, will be five to ten mastertapes of albums by acts from Italy, Spain and perhaps even Japan — albums he must release in Holland in exchange for the release of his product in those countries. Then, trying to be a smart guy, he will release those records, send a confirmation copy to his faraway affiliates and do nothing with respect to those releases — no promotion, no plugging, etc.. What he forgets, of course, is that his Italian, Spanish and Japanese colleagues are also smart (perhaps, in fact, that's why they ended up in the same business, maybe even in the same company), and they will likewise do nothing to make the release of his record a successful one. In the end, nothing happens. The local president's only success comes in being able to state, in the press release which accompanies the release of the album, that the record is out in more than ten countries around the world.

Cognizant of this way of proceeding, the directors of several affiliates of the major companies have in each case established and taken seats on European boards which attempt to agree on a list of European priorities to which each continental office of the appropriate major may commit itself. This commitment implies a release for a record, as well as the devotion of considerable effort towards marketing and promoting it. As a result, every national office of that multinational firm attempts to get its artists on the priority list. One of the strongest arguments for being on such a list, of course, is success within the home market. If pan-European success follows, the company which signed the act has cause to once again knock on the doors of the American and British A&R managers. In many cases, the answer, even then, is »no«.

One conclusion which might be drawn from this is that, in order to understand the workings of the music industry, and the consequences of these workings for the state of musical diversity in the world — because, in the end, this is what is at stake — one needs an approach attentive to the specific situation of each country within the world music market. This situation may be analyzed using the parameters sketched out in the course of this essay. Having determined the specific situation of each country which interests us, we must grasp those structural factors which shape the context within which the music industry operates. Doing so might require some understanding of local musical history, or grasping the legal context within which the music industry operates. Up to this point, we have been mainly concerned with contextual information, and this stage in research is more-or-less in line with the so-called »production of culture« perspective (Peterson, 1976). A subsequent step would investigate the ways in which music industry executives elaborate their specific forms of conduct within the contexts in which they operate. This analysis would not presume, as its point of departure, that industry policy is completely determined by these contexts, but would look at ways in which that policy results from the particular construction of realities undertaken by specific persons within specific positions within these contexts. What is needed, at this stage of research into the music industry, is an »interpretative approach to the production of culture« (Jensen, 1984). It is precisely within that space wherein music executives construct their versions of reality that one may locate the potential for change. As Line Grenier has argued, music should be considered as essentially » ... the result of a constant process of iteration between various actors who through their respective practices, construct musics as socially and culturally meaningful realities« (Grenier, 1990: 231).

Acknowledgements

The author wishes to thank the Dutch Ministery of Culture and the Dutch Rockmusic Foundation for their support of the research on which this study is based.

Notes

* A slighly different version of this paper has been published as an article in Cultural Studies (1991) vol. 5, no.3, pp. 294-305. ( zurück)

¹ World market is defined here as the sum of turnover in the markets of the following countries whose Music Industry Associations are members of, or affiliated to, the International Federation of the Phonographic Industry (IFPI): Argentina, Australia, Austria, Belgium, Brazil, Canada, Czechoslovakia, Denmark, Finland, France, Federal Republic of Germany, Greece, Hungary, Republic of Ireland, Italy, Japan, Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, United Kingdom and the United States of America.

The volume of the four markets in 1984 were (in $ 1,000.000): Western Europe - 2.981; United States - 4,370; Japan - 1,282; rest of the world - 1,022. In 1989, the market volumes were: Western Europe - 7,633; United States - 6,464; Japan - 3,087; rest of the world - 1,626.

The volume of the Western European market is the sum of the market volumes of the following countries: Austria, Belgium, Denmark, Finland, France, Federal Republic of Germany, Greece, Republic of Ireland, Italy, Netherlands, Portugal, Norway, Spain, Sweden, Switzerland, and the United Kingdom.

The volume of the market of the rest of the world is the sum of the market volumes of the followng countries: Argentina, Australia, Brazil, Canada, Czechoslovakia, Hungary, New Zealand, Singapore.

The share of each of the regions in 1990 are: Western Europe 44%, United States 35%, Japan 14% and Rest of the World 7% (IFPI, 1991).

The volume of the four markets in 1984 were (in $1,000.000): Western Europe - 2.981; United States - 4,370; Japan - 1,282; rest of the world - 1,022. In 1989, the market volumes were: Western Europe - 7,633; United States - 6,464; Japan - 3,087; rest of the world - 1,626.

² Interview with the author, Summer 1990.

³ To illustrate this point: Polygram president Alain Levy claimed in 1989 at a music industry convention held in Amsterdam that the music industry has to get between 20 and 50% of its revenues out of rights exploitation in the next ten years if it wants to remain a healthy business. Russ Curry, vice-president of A&M Europe claimed: »The music-industry should stop considering itself as producers of vinyl and cardboard. We are engaged in the business of marketing of artists and their creative talent. We are right-owners«.

⁴ The 15 biggest markets of the world with their turn-over:

Country	Turn-over in in 1989 (US $ 1,000,000)
1. United States	6,464
2. Japan	3,087
3. United Kingdom	1,981
4. F.R.G.	1,694
5. France	1,325
6. Canada	594
7. Australia	456
8. Italy	447
9. Netherlands	439
10. Spain	431
11. Brazil	371
12. Sweden	267
13. Switzerland	214
14. Austria	176
15. Belgium	170
Others	694
Total (*)	18,810

* IFPI countries, see note 1.

Source: Hung, Michèle & Morencos, Esteban Garcia (1990)

References

© 1997  Paul Rutten