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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When is the Budget 2017?

Chancellor Philip Hammond will present the last ever springtime Budget to Parliament on March 8th. He has a tricky hand to play.

Fans of the Chancellor’s red box photocall outside 11 Downing Street are in for a treat this year - the abolition of the Autumn Statement means Philip Hammond will present not one but two Budgets to the Commons.

The first – the last ever Spring budget – will be published on Wednesday 8 March 2017. A second – the first Autumn Budget – will come later in the year. This will be followed by a new Spring Statement, which will respond to forecasts from the Office for Budget Responsibility but will no longer introduce new tax and spend changes. 

But what is likely to happen this time around? The Institute for Fiscal Studies set out a grim outlook for the chancellor in its "Green Budget" earlier this month. This year’s deficit will be higher than in 47 of the 60 years before the crash of 2008, the national debt is at its highest level since 1966, and the chancellor is still committed to the diet of austerity prescribed by his predecessor, George Osborne. With day-to-day spending on public services set for a real-term fall of 4 per cent between now and 2020 and those same public services already in a parlous state, Hammond has a difficult hand to play. 

However, Theresa May’s government has proved adept at U-turning when it needs to – think the Brexit White Paper and Amber Rudd’s lists of foreign workers. Here's what to look out for:

Changes to business rates

MPs of all stripes have been pressuring the government to rethink its plans on business rates, which will see new rates based on updated property valuations introduced for the new financial year. 

Initially, the government maintained that three-quarters of businesses won’t see any changes to their rates at all. But the fact that rates for pubs, shops, GP surgeries hospitals could be set to more than double riled Tory backbenchers, several ministers, the CBI and right-wing papers including the Sun and Daily Mail

We will likely see a concession from the Treasury on controversial changes, which were slated to kick in from April. Communities and Local Government secretary Sajid Javid told the Commons that a solution would be in place by Budget Day. 

Reassurances for social care

Britain’s crisis-stricken social care system – and the vexed question of how we’re going to pay for our ageing population – also looms large. In the aftermath of the controversy around the government’s supposed “sweetheart deal” with Surrey County Council, local authorities and charities have been lobbying Number 10 for a new settlement – or at least some extra cash to ease the pain. 

Indeed, the Health Service Journal has revealed the Care Quality Commission is to be handed regulatory oversight for how councils manage their social care services, and a number MPs are increasingly convinced that the government could be set to unveil a modest increase in funding. Any such package would only be a sticking plaster.