Financial outcomes: Discussion of Export Strategies survey
In this section we provide a window into the activities of music exporters based upon the Expox-t Strategies survey conducted in 2018. Four hundred and five artists and artist managers who had completed the above Sounds Australia survey and attended an international industry event were surveyed about their approaches to and investments in music exporting. The purpose of the survey was to ascertain the time it took to achieve an outcome, the tangible or intangible value of that outcome and the resources and investment required. As it can take time to see a return on investment, participants were asked about their various activities since 2009.
The surveyed participants reported that, on average, most of the international music activities are expected to have financial returns within two years. This response represents the average return, given that they may have participated in selected activities more than once since 2009 or with multiple artists. Activities such as a showcase, international tour, support slot or TV appearance are believed to have potential future profit returns. A large percentage of financial losses were from activities such as hiring an international record producer, international showcase event costs and gaining an international tour or support slot.3
All manager interviewees acknowledge the amount of time it takes to see a return on activities: 45% of participants saw a financial return within 12 months; 26.22% within two years; 11.18% within five years; and 0.81% within ten years. This suggests that for most participants involved in export activities since 2009, the average amount of time involved from planning to fruition is four to five years; more than five years is not uncommon:
I feel like you kind of have to lose about $100,000 touring the USA before you get to break-even point. Like, your first tour with a band might lose $40,000. And your next one might lose thirty, and your next one twenty, and your next... and then you finally break even ... But then you also have to do that in Europe, as well. So if you’re trying to do it all, kind of, globally, there’s, kind of, $200,000 of losses you have to swallow in one way or another, before you can be at a point where you know you’re going to make money on a tour.
(Interview 10, 2018)
Apart from revenue received from the sale of goods and services, financing in the industry involves a mixture of sponsorships, donations, grants. Financing provided by family or friends is an example of the “gift economy” which is based on relationships and where there is no expectation of a financial reward but some reciprocity is involved (Klamer, 2003). Klarner provides a general interpretation of a gift as “any ‘good’, including money, that is transferred, conveyed or transmitted from one party to another when the nature, value and the timing of an equivalent is left undetermined” (ibid., p. 243); the most important gifts are not recorded, such as parenting or volunteering (ibid., p. 244). More than 70% of art- ists/self-managed artists and 50% of artist managers identified that family/peer financial support was important in realising their music export activities. As one artist noted, “my mom really gave me a little nudge out of the door. In fact, she got a $10,000 loan to buy me my campervan” (Interview 34, 2018).
Both artists and artist managers (93% of those surveyed) believed that government funding is very important. A high level of respondents received government funding, the majority received from the Australia Council for the Arts. Participants stated that their attendance at international industry events was financed by either a federal or state government grant, Export Market Development Grant (EMDG), label, company funds, self-financed, family or peers. Other than government sources, artists and artist managers received most financial assistance from recording labels. Family and publishers were also popular funding sources. Slightly more financial support is received from family than from publishers.
Participants who obtained industiy support, received grants and/or private investment, had a higher success rate in achieving outcomes. Of the 28 participants questioned about the importance of government funding, 93% of participants who received government funding showed a high level of satisfaction in achieving goals. Respondents who did not obtain financial assistance had a lower rate of success in setting up and establishing deals. Artists with support from both government and industry had the highest success rate in setting up and establishing deals for export.
The three biggest areas of investment cited were the engagement of an international record producer, international touring and renegotiating existing partnerships. In terms of the financial gain over the ten-year period, participants reported that, as a result of these investments, they were able to receive accumulative amounts from engagement of an international record producer international touring, or renegotiate existing business partnerships. This shows that, while specific activities can be expensive in the short term, it is the combined activities that can enable a financial gain (seen, for example, in the flow-on effects from touring or the combined effects from multiple marketing and investment strategies).
An overarching issue has been the turnaround time to see a return on an opportunity. Planning for an opportunity to eventuate is only the first part of the time involved in exporting. The second part is the waiting time for a return on investment which can on average take about two years; however five years or more is also possible.
Cash flow is the most difficult part of developing a career ... Because it’s so much investment of time, and the funnels by which money flows back to artists and then eventually, to managers after that are pretty slow and cumbersome ... But the financial realisation for the artist is not until seven or eight months after, and sometimes, nine or ten months for the manager. So, there are huge difficulties, I think, with that.
(Interview 4, 2017)
Figure 3.3 Percentage breakdown of reasons for discontinuing exporting.
Those surveyed who identified as no longer exporting (9 out of the 75 participants) gave reasons for discontinuing exporting such as lack of funding and the decision to focus on the domestic market (see Figure 3.3).4