volume 2
july 1999

The economic importance of music in the European Union

4. Musical instrument and consumer audio markets

by Dave Laing

In September 1996 the European Music Office published its report on "Music in Europe". The first part of this study, written by Dave Laing, describes the economic importance of music in the European Union. This is the fourth chapter of his study about musical instrument and consumer audio markets.

Musical instruments. Surveys of leisure activities in Europe consistently show that up to 15% of the population state they have played a musical instrument during the previous 12 months. Even if only 10% of the population over the age of 12 plays an instrument, this is a potential market for instruments of at least 30 million in addition to the numbers of professional musicians.

Table 4.1:	Musical instrument sales 1994 (in millions of ECU) (source: EMO, NAM)
	Keyboards	Guitar	Electronic	Recording	Other	Total
France	82.1	61.7	110.1	114.0	132.5	500.4
Germany	136.5	36.3	46.0	185.0	137.1	540.9
Italy	50.1	50.8	32.7	56.9	43.0	233.5
Netherlands	n/a	n/a	n/a	n/a	n/a	207.8	*
Spain	13.5	14.3	n/a	140.9	30.9	199.6
United Kingdom	78.2	69.7	101.2	71.4	125.0	445.5
()1993 # production 1993*

Table 4.1 shows full statistics of retail sales of instruments for the five largest national markets in the European Union. The table indicates that some of the largest sectors of the industry are electronic instruments and recording equipment. If the level of sales is projected for the whole of the EU, the 1994 value of instrument sales would have been 2 billion ECU's.

Table 4. 2:	Employment in the musical instruments industry 1994-'95 (sources: EMO, government statistics)
	Manufacturing	Retail	Total
Austria	n/a	n/a	5,317
France	n/a	n/a	7,500
Ireland	n/a	n/a	278
Italy	n/a	4,250	n/a
Netherlands	20	2,000	2,200
Spain	1,600	n/a	n/a
United Kingdom	n/a	n/a	4,300

Employment. Table 4.2 provides information from seven countries on the numbers of employees in instrument manufacture, distribution and retailing.

Based on these figures, it can be estimated that musical instrument manufacturers and distributors provide at least 30,000 jobs in the European Union. Apart from specialist activities like the Spanish guitar and the Celtic harp, the manufacturing sector is in decline because of the success of imported instruments and electronic equipment, notably from Japan. National trade statistics show that all EU countries have a trade deficit in musical instruments.

Table 4.3:	Audio equipment ownership (% of households) 1994 (source: EMO)
	Record player	CD player	Cassette recorder	Radio	TV	VCR
Austria#	66	37	n/a	70	91	42
Belgium	n/a	88	n/a	n/a	n/a	n/a
Denmark	63	50	86	98	95	64
Finland	n/a	45	100	100	93	66
France	40	34	70	70	94	65
Germany	58	78	80	n/a	97	70
Greece	n/a	22	n/a	n/a	n/a	n/a
Ireland	68	35	n/a	n/a	98	57
Italy	n/a	25	n/a	n/a	n/a	n/a
Netherlands	n/a	71	n/a	97	99	60
Portugal	n/a	25	n/a	n/a	n/a	n/a
Spain	n/a	37	58	n/a	98	44
Sweden	n/a	n/a	n/a	n/a	n/a	n/a
United Kingdom	76	66	93	n/a	n/a	n/a

The audio equipment sector. Table 4.3 shows the differences in the level of ownership of CD players across the European Union. While over half of the households in many Northern European countries have a CD player, in Greece, Portugal and Italy the numbers are less than 25%. In contrast to these levels of ownership, almost all households in most countries possess a television set, a radio set and one or more cassette players.

Table 4.4:	Audio equipment markets 1995 (in millions of units) (sources: GfK, E.F.E.R., Ministry of Culture (Spain))
	CD player	Cassette deck	Hi-fi system	Radio	Portable audio	Total millions of ECU
Germany	1.4	0.7	2.7	1.23	11.8	1,102
Spain	1.0	n/a	n/a	n/a	n/a	261
United Kingdom	0.3	0.1	2.0	n/a	5.7	1,220

According to the European Federation of Electronics Retailers, European consumers spend about 52 billion ECU's on audio and video products. A relatively small proportion of this amount is attributable to sales of music-related audio equipment such as CD players and radio receivers. For the purposes of this study, the turnover of the audio hardware sector has not been included as part of the revenues of the music industry. However, the availability of a wide range of recorded music undoubtedly adds value to the audio products industry.

The retail value of the audio equipment markets of Germany and the UK was more than double that of the respective markets for musical instruments. The unit sales figures show that CD player ownership continues to increase at a strong rate. As well as the figures for CD players alone, the hi-fi system and portable audio categories also include CD players. In the UK the number of units of CD hardware purchased in 1995 was 2.8 million including over 400,000 portable CD players. In Spain, the number of households owning a CD player is increasing rapidly.