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.

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Donald Trump promises quick Brexit trade deal - but the pound still falls

The incoming President was talking to cast out Brexiteer, Michael Gove. 

The incoming President, Donald Trump, told the Brexiteer Michael Gove he would come up with a UK-US trade deal that was "good for both sides".

The man who styled himself "Mr Brexit" praised the vote in an interview for The Times

His belief that Britain is "doing great" is in marked contrast to the warning of current President, Barack Obama, that Brexit would put the country "at the back of the queue" for trade deals.

But while Brexiteers may be chuffed to have a friend in the White House, the markets think somewhat differently.

Over the past few days, reports emerged that the Prime Minister, Theresa May, is to outline plans for a "hard Brexit" with no guaranteed access to the single market in a speech on Tuesday.

The pound slipped to its lowest level against the dollar in three months, below $1.20, before creeping up slightly on Monday.

Nigel Green, founder and chief executive of the financial planners deVere Group, said on Friday: "A hard Brexit can be expected to significantly change the financial landscape. As such, people should start preparing for the shifting environment sooner rather than later."

It's hard to know the exact economic impact of Brexit, because Brexit - officially leaving the EU - hasn't happened yet. Brexiteers like Gove have attacked "experts" who they claim are simply talking down the economy. It is true that because of the slump in sterling, Britain's most international companies in the FTSE 100 are thriving. 

But the more that the government is forced to explain what it is hoping for, the better sense traders have of whether it will involve staying in the single market. And it seems that whatever the President-Elect says, they're not buying it.


 

 

Julia Rampen is the editor of The Staggers, The New Statesman's online rolling politics blog. She was previously deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines.