Norwegian Music Industry in the Age of Digitalization

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* Thesis: The Norwegian Music Industry in the Age of Digitalization. Richard Bjerkøe and Anders Sørbo. Norwegian School of Management, 2010



In this thesis the authors had one main research problem. How has digitalization and the consequent downloading of music changed the economic situation for the Norwegian music industry and for the Norwegian record artists the last 10 years?

Extracts below are from pages 82,83.

1. What are the primary income sources for Norwegian record artists today?

The authors have through this research determined that the artists in the Norwegian recording industry have 4 main sources of income: live revenue, state subsidization and grants, collection distributed to artists, and sales of music physically and digitally. It turned out the declining record sales, which dominate the media picture, only amounted to about 19% of the total artist income in 1999. Today after many years of decline it is 11% of the total income for artists. As such the media were right to point out that record sales are dropping and income will decline, however the total importance of this income source was never more than 20%. This is a reflection of the calculations that from a record sold from producer to retailer, only about 20% in average of the sales amount is returned to the record artists. Live revenue on the other hand has an artist share of about 50% from all income and hence all income increases here will have a larger effect both negatively and positively if the total amount in the industry changes.

2. Has the total music related income for record artists today decreased compared to 10 years ago?

As figure 17 shows the actual total artist industry income in all four different income sources have increased the last 11 years. However so has also the number of artists, as discussed in the annual report section of the thesis. Many more artists now divide the total amount accumulated and in average the actual income has increased 74% adjusted for inflation in the period. From this it is possible conclude that the total income for Norwegian record artists has clearly not declined in the last 11year period. On the contrary it has increased substantially, even when adjusted for the total number of artists. One must however take into account that the figures say nothing on how the amounts are divided between the artists. The insight gained from the interview section of the thesis however indicated to the authors that a lot of these funds are not evenly divided. Rather the Norwegian music industry can have a few well known artists who earn what can be considered a very good living, a large majority of artists who just barely manage to make a living out of playing their music, and finally a group of artists who have the record music industry as a minor part of their income.