MI Industry: Significant part of the cultural and creative business

The three most important pillars of the music economy in Germany are the concert and event sector (theater and concert promoters, concert halls, etc.), the phonographic sector (sound carrier publishers, music publishers, retail trade of recorded sound carriers, etc.), and the MI industry (retail trade of musical instruments and sheet music, wholesales and manufacturing of musical instruments). These and some other smaller submarkets, such as music and dance ensembles, autonomous musicians and various services for the performing arts, make up the German music economy as submarket of the cultural and creative economy.

With its commodities and products, the MI industry stands at the beginning of an economically prized value-added chain that belongs to a submarket of the cultural and creative industries – that is, it stands in the key area of a whole industry. With its companies, the MI industry is market-oriented and concerned with the conception, manufacturing, production, dissemination, and distribution as well as sales of cultural and creative goods and services.

The German total market of musical instruments and musical instrument equipment was able to grow a total of 14 percent points in the period from 2009 to 2012. Hence, according to data from the Federal Statistical Office, the total revenue with musical instruments and accessories increased by 300 million EUR, from 1.6 billion EUR in 2009 to a revenue volume of almost 1.9 billion EUR in 2013.

The share of the specialized retail trade in the total revenue was of about 1.3 billion EUR in 2012, which corresponds to 68 percent of the total revenue (see Fig. 3a). Looking nine years back and comparing the revenue of the retail trade with musical instruments in 2003 (969 million EUR) with that of 2012 (1,265 million EUR), an increase of 30.5 percent can be verified.

Closely observing the revenue shares of the musical instrument and music equipment industry in the total market of the music business, it becomes evident that the total fraction of 1,866 billion EUR1 in 2012 gains importance for the music economy. While the turnover share rate of the MI industry only comprised about 26 percent of the total turnover within the music economy in 2009, this value was of 26.9 percent in 2012.

Value-added chain: Structures of the total market within the MI industry

The MI industry stands out by the polymorphous symbiosis of its market participants. In this sense, manufacturers, wholesalers (distribution), retail traders and the associated publishers (media as well as sheet music) are situated in a bilateral relationship of the value-added chain. All subdomains of the musical instrument and music equipment market are subject to each other, depend upon each other, and thus portray the MI industry.

The following representation is based on official statistical data. However, the empirical analyses are based on widely accessible data from the Federal Statistical Office and the Federal Employment Agency, as well as on own industry statistics and special assessments. The presented bears no direct total monetary relation, but rather represents an individual efficiency of the single subdomains of the revenue within the industry.

Industry

The MI industry sees itself as the source and core of the music industry and thus as part of the cultural and creative industry. For example, other industries such as advertising, film, the music business (record industry) and broadcasting, use the MI industry ‘s content and products to generate billions in sales.

Precisely for this reason, the economic importance of the cultural and creative industry cannot be overemphasised. Since the late 1980s it has developed into one of the most dynamic economic sectors in terms of revenue and employment. In 2008 alone, it contributed an estimated €65 billion to overall economic output (gross value added) in Germany. This makes it comparable with major industry sectors such as automotive, engineering and ICT.

The Society of Music Merchants (SOMM) e. V. – the leading association of the musical instrument and music equipment industry in Germany - represents the interests of almost 60 leading manufacturing, sales, trade and media companies in the musical instrument industry, which together represent roughly two-thirds of the German MI market. The association coordinates matters within the industry and to the outside, and cultivates close ties with political bodies, public authorities, institutions and other business associations and market partners. These market partners include:

Messe Frankfurt

  • Consulting services for Messe Frankfurt
  • Coordination, preparation and implementation of a trade fair presence in the interests of members
  • Coordination of working groups to improve the trade fair structure in the interests of members
  • Participation on the advisory committee


NAMM


An ongoing exchange of information and views with the following market partners takes place at least twice a year.


In addition, several annual trade fairs and events that are important for the industry take place around the world.

Cultural and Creative Economy

Covering everything from architecture to music and advertising, the cultural and creative economy is a diverse industry. Its members include freelance artists and cultural professionals as well as micro-entrepreneurs and entrepreneurs, such as art dealers, gallery owners and agents. In addition, there are medium-sized businesses such as film and music production companies, manufacturers of musical instruments and computer games, and publishing companies.

The cultural and creative economy continues to go from success to success. In 2010 its revenues increased by 2.2 percent to €137 billion, putting its gross added value at close to €64 billion. This highlights the impressive extent to which the creativity and innovation of the industry contribute to growth and prosperity in Germany, and puts the cultural and creative industry among Germany’s key economic sectors.

(Source: German Federal Government Cultural Creative Industries Initiative)

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MI Industry: Part of the cultural & creative business

The musical instrument and music equipment industry is a branch of the music business, and thus part of the cultural and creative economy. With its commodities and products, the industry stands at the origin of the economically valuable value-added chain of a whole industry.

The MI industry and its companies is profit-oriented and deals with the creation, manufacturing, fabrication, distribution and the market placement as well as sales of cultural and creative goods and services. The MI industry integrates the music business, along with the economies of the music (recording media) and event industries (live and concert events).

Fig.: Share of the MI industry in the total music business revenue in 2010
Fig.: Share of the MI industry in the total culture and creative industry revenue in 2010 / Fig.: Total revenue of the MI industry (2009–2010)

The total trade with musical instruments and related equipment in Germany increased 5.4 percent from 2009 to 2010. This way, the total turnover with musical instruments and accessories, according to data from the Federal Statistical Office, increased from 1.6 billion EUR in 2009 to a total revenue volume of 1.7 billion EUR. Hereby, the specialized retail trade contributed with around 1.1 billion EUR in 2010, corresponding to a revenue share of 68 percent. The business branch of manufacturing, with a share of 551 million EUR in 2010, thus participated with 32 percent in total revenue (see Fig.: Total revenue of the MI industry (2009–2010)).

In closer observation of the turnover participation of the musical instrument and music equipment industry it becomes clear that the total share of 1.7 billion EUR in 2010 has an increasing importance for the music business in Germany. Whereas the proportion of revenue shares of the MI industry in 2009 represented only 26 percent of the total turnover within the music business in the country, this value was already 27.5 percent as of 2010.

Value chain: Structures of the total market within the MI industry

The MI industry is distinguished, among others, by its diversity and the symbiosis of its economically relevant structures. This way, manufacturers, distributors and retail traders, as well as the associated media, stand in equal measure in the focus of the value chain within the industry. Subdomains of the industry are dependent upon each other, and thus represent the total market of the MI industry.

The following empirical analyses are based on official statistical data. In addition to the widely accessible data from the Federal Statistical Office and the Federal Employment Agency, industry statistics and special evaluations are also made available.

 

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