The economics of house music

The beat goes on.

For DJ (and chartered accountant) Ali Miraj, house music is still on the rise. And the numbers back him up.

"Not everyone understands house music", as the words of one club anthem make clear. How times have changed. From its humble origins in a Chicago nightclub in the 1980s the genre – now dubbed electronic dance music (EDM) – has exploded into the mainstream.

And the financials reflect what has happened. According to a report commissioned last year for the International Music Summit, the EDM market is valued at approximately $4bn annually with recorded-music sales revenue representing 5.1 per cent of the global music market.

James Palumbo, an Eton- and Oxford-educated former investment banker who established the Ministry of Sound (MOS) – a nightclub in South London – in 1991, was one of the first to recognise the huge money-making potential of the industry. Having successfully built a global brand, the MOS group is now a multi-million pound business spanning merchandising, events, radio, mobile applications and bars, as well as a number of record labels including the hugely popular HedKandi. Others such as Pacha and Space from Ibiza have also leveraged their brand identity internationally.

The appeal of EDM has also been driven by DJ/producers such as David Guetta and Calvin Harris who travel between venues on private jets commanding up to $100,000 a night. Cracking the US market has been key. According to Nielsen Soundscan – an industry data-provider – 46.6 million digital electronic/dance tracks were sold in the US in the first half of 2012, making it the fastest-growing music genre with a 65.2 per cent increase compared to the previous year.

As well as music sales there is real money to be made in events. Last December Swedish House Mafia saw tickets to their performance at Madison Square Garden in New York sell out in just nine minutes. Beacon Economics, a consultancy, which was commissioned to assess the financial impact of the Electric Daisy Carnival in Las Vegas this year on the regional economy, found that the event generated an estimated $136m for businesses including hotels and restaurants. The Ultra Music Festival – where the industry's great and good hobnob by swanky hotel pools and engage in panel discussions on challenges facing the industry – attracted some 200,000 people.

In the UK, Live Nation Entertainment acquired Cream Holdings Limited in May this year for £13.9m ($21.9m) and intends to launch new festivals in North America, Europe and Southeast Asia. Pete Tong, a UK-based DJ who has long been at the forefront of the scene, has said there is increasing interest in emerging markets demonstrated by the Sunburn festival in Goa, India as well as huge potential in China.

With the numbers showing anything but a slow down, some fret about the fickle nature of the music industry and predict the hype may die down. But for now, at least, the beat goes on.

This story was originally written for economia.

Dancers from the Olympics opening ceremony. Photograph: Getty Images.
Photo: André Spicer
Show Hide image

“It’s scary to do it again”: the five-year-old fined £150 for running a lemonade stand

Enforcement officers penalised a child selling home-made lemonade in the street. Her father tells the full story. 

It was a lively Saturday afternoon in east London’s Mile End. Groups of people streamed through residential streets on their way to a music festival in the local park; booming bass could be heard from the surrounding houses.

One five-year-old girl who lived in the area had an idea. She had been to her school’s summer fête recently and looked longingly at the stalls. She loved the idea of setting up her own stall, and today was a good day for it.

“She eventually came round to the idea of selling lemonade,” her father André Spicer tells me. So he and his daughter went to their local shop to buy some lemons. They mixed a few jugs of lemonade, the girl made a fetching A4 sign with some lemons drawn on it – 50p for a small cup, £1 for a large – and they carried a table from home to the end of their road. 

“People suddenly started coming up and buying stuff, pretty quickly, and they were very happy,” Spicer recalls. “People looked overjoyed at this cute little girl on the side of the road – community feel and all that sort of stuff.”

But the heart-warming scene was soon interrupted. After about half an hour of what Spicer describes as “brisk” trade – his daughter’s recipe secret was some mint and a little bit of cucumber, for a “bit of a British touch” – four enforcement officers came striding up to the stand.

Three were in uniform, and one was in plain clothes. One uniformed officer turned the camera on his vest on, and began reciting a legal script at the weeping five-year-old.

“You’re trading without a licence, pursuant to x, y, z act and blah dah dah dah, really going through a script,” Spicer tells me, saying they showed no compassion for his daughter. “This is my job, I’m doing it and that’s it, basically.”

The girl burst into tears the moment they arrived.

“Officials have some degree of intimidation. I’m a grown adult, so I wasn’t super intimidated, but I was a bit shocked,” says Spicer. “But my daughter was intimidated. She started crying straight away.”

As they continued to recite their legalese, her father picked her up to try to comfort her – but that didn’t stop the officers giving her stall a £150 fine and handing them a penalty notice. “TRADING WITHOUT LICENCE,” it screamed.


Picture: André Spicer

“She was crying and repeating, ‘I’ve done a bad thing’,” says Spicer. “As we walked home, I had to try and convince her that it wasn’t her, it wasn’t her fault. It wasn’t her who had done something bad.”

She cried all the way home, and it wasn’t until she watched her favourite film, Brave, that she calmed down. It was then that Spicer suggested next time they would “do it all correctly”, get a permit, and set up another stand.

“No, I don’t want to, it’s a bit scary to do it again,” she replied. Her father hopes that “she’ll be able to get over it”, and that her enterprising spirit will return.

The Council has since apologised and cancelled the fine, and called on its officials to “show common sense and to use their powers sensibly”.

But Spicer felt “there’s a bigger principle here”, and wrote a piece for the Telegraph arguing that children in modern Britain are too restricted.

He would “absolutely” encourage his daughter to set up another stall, and “I’d encourage other people to go and do it as well. It’s a great way to spend a bit of time with the kids in the holidays, and they might learn something.”

A fitting reminder of the great life lesson: when life gives you a fixed penalty notice, make lemonade.

Anoosh Chakelian is senior writer at the New Statesman.