THE GLOBAL POP MUSIC INDUSTRY: No evidence of damage to national cultures

Fears of cultural globalisation in which American products dominate the market seem to be misplaced, at least for the pop music business. That is the conclusion of research by Professors Fernando Ferreira and Joel Waldfogel, published in the June 2013 issue of the Economic Journal. Their analysis of data on over a million chart entries in 22 countries during the period from 2001 to 2007 shows that the US share of world music trade is not disproportionately large.


What”s more, the study finds evidence that far from being damaged by new technologies like MTV and the internet (which lower the costs of trade), many countries” indigenous bands and singers are now thriving. Some smaller countries benefit substantially in this global market, as they are able to achieve market shares that are sometimes two or three times larger than the relative sizes of their economies.


The authors compare each country”s share of the global music market with their share of the world”s GDP over the half century from 1960. The national repertoires that occupied disproportionate shares of trade during this period were those of the UK, Sweden, Canada and Australia. But the results also show the ”rise and fall of the British music empire”: the UK”s share rose to a peak in the mid-1980s but has fallen since.


While the US share has risen, it has been below its proportional share the entire time. Apart from the early 1960s, the US index has always been below the UK index and often below the indices for Sweden, Australia and Canada. But music trade is now closer to proportional than at any time in the past 50 years.


The shrinking music world


The researchers note that advances in communication technologies have made the cultural products of one country more readily available to consumers in another. While lower trade costs are generally good news for consumers, trade in cultural goods encounters less enthusiasm, largely due to fear of US cultural hegemony.


In 1993, French president François Mitterrand warned, ”If the spirit of Europe is no longer menaced by the great totalitarian machines that we have known how to resist, it may be more insidiously threatened by new masters – economisme, mercantilism, the power of money and, to some extent, technology… what is at issue is the cultural identity of nations, the right of each people to its own culture, the freedom to create and choose one”s images… a society that relinquishes to others its means of representation, is an enslaved society.”


Much of the fear of trade in cultural services concerns Hollywood, which accounts for nearly two thirds of movie revenue in the European Union. The recorded music industry is roughly half the size of the film industry, and fears of US dominance in music are not entirely unfounded. In 2001-07, 31 artists have appeared simultaneously in at least 18 countries” charts in at least one year; 23 of these superstar artists are American.


Local talent


The cultural trade debate matters for public policy. Despite a general trend towards free trade negotiated under successive international agreements, cultural goods have had longstanding exceptions. Most European countries subsidise their domestic audiovisual sectors and some regulate music as well. Many countries, including France, Canada, New Zealand and Australia, impose domestic radio airplay quotas to promote domestic musical artists.


But fears of large-country dominance may be misplaced; trade may promote rather than displace cultural services from small countries. While it has become easier for the world”s consumers to get access to US music, at the same time, it may also have become easier for the world”s music producers to get access to the US – and other – markets. It is entirely possible that in a connected world, small-country artists could find new export audiences.


The world music market


To explore this issue, the researchers collected novel data from singles charts covering, for example, the weekly top 40 songs, from as many as 22 countries, accounting for over 98% of the world music market. The dataset includes 1,202,554 chart entries covering 68,283 songs and 23,377 artists.


Based on the relationship between chart positions and sales documented elsewhere, the researchers create estimates of the sales of each artist. By employing the national origin of each of the artists, they can determine the penetration of each national repertoire into each importing country.


These data make it possible to calculate each country”s share of the world music market and to see whether a particular national repertoire”s share of trade is large relative to that country”s shares of world GDP.


Using measures that are available over multiple decades, five countries at times display disproportionately large shares of world trade: the UK, Sweden, Australia, Canada, and New Zealand. With the exception of the UK, these are not particularly large countries.


While the United States is by far the largest economy, its share of world music trade has been below its share of world GDP. Despite widespread concern about large-country dominance of markets for cultural goods, country repertoires” shares are roughly proportionate to their sizes, and US repertoire has not generally had a disproportionate share of world music trade.


MTV, radio and the internet


The research also finds that interest in domestic repertoire has risen steadily over the past 10-15 years throughout the world. Domestic shares of world music consumption have risen steadily since 1990. The study explores three possible factors relevant to the change in home shares over time: the appearance of locally-tailored MTV channels; the growth of the internet; and domestic airplay quotas.


While MTV emerged in the early 1980s as a single channel across the globe, since 1987, MTV has splintered regionally, creating region or country-specific channels carrying some local programming. Today, MTV operates a country-specific outlet in 20 of the 22 countries studied.


Because the internet makes music of each country available to consumers both at home and abroad, the web could either promote or displace domestic music. At the same time, the web may reinforce local distribution, for example by complementing the local promotion of concerts.


Finally, domestic airplay quotas – as in Canada, France, Australia and New Zealand – might less ambiguously be expected to promote domestic music consumption.


All of these factors – the presence of a local or a regional MTV station, the domestic adoption of the internet and the presence of domestic radio quotas – bear positive relationships with the domestic shares in each country. At a minimum, it is possible to say there is no evidence that new channels of communication, such as MTV and the internet, have eroded interest in local music.


”Pop Internationalism: Has a Half Century of World Music Trade Displaced Local Culture?” by Fernando Ferreira and Joel Waldfogel is publishedFREE in the June 2013 issue of the Economic Journal. Fernando Ferreira is at the Wharton School of the University of Pennsylvania. Joel Waldfogel is at the Carlson School of Management, University of Minnesota.

Fernando Ferreira


Joel Waldfogel