Research at the end of last year revealed the overall contribution made by the UK music industry now stands at £3.5bn. This is no small sum, particularly when £1.6bn comes directly from musicians, composers and songwriters. In terms of jobs, this boost the economy is generated by more than 100,000 full time employees.
While the industry has been traditionally dominated by the giant record labels, promoters and the talent scouts (known in the business as A&R people), the winds of change are blowing hard in the direction of the small independent producers and bedroom-based musicians.
Previously, these one man/woman bands (in both the literal and metaphorical sense) were never likely to see any great success and certainly not generate vast revenues; but the digital age has transformed their fortunes. Now the machinery of the major labels is available to download in a DIY frenzy of studio-quality recording software, global distribution websites and social media publicity channels.
This is because musicians are now having to become entrepreneurs with as equal a grasp of business principles as writing chord sequences. For many, this is a major culture shock and something imagined as part of their dreams of musical stardom. And now they need help, and plenty of it: business support, accounting advice, royalties expertise, expenses mitigation, tax returns, cashflow planning.
For specialist accountants working with the creative sectors in general, and the music industry in particular, there is now a very strong demand for not just basic accounting advice, but the ability to deliver wider business support. This means cultivating deeper knowledge of the issues surrounding the industry itself.
The digital aspect has become a double-edged sword, both for accountants and their music clients. While it has dramatically increased the size of the potential audience, it has also complicated monitoring and collection of royalty income for example. This means more sophisticated accounting tools are required that can handle multiple currencies or infinitely segment income streams.
Given that, for some musicians, the music itself has become almost a ‘give-away’ from which to launch lucrative concert tours, merchandising sales or synchronisation (use of music for film, TV or advertising), their accountants now have to look beyond the relative simplicity of vinyl or CD sales. Understanding – and being able to advise on – the financial implications of a sales contract is just as important as helping a confused client get to grips with the increasingly arcane regulations on expense allowances.
Last, but not least, digital has created ‘always-on’ expectations. No longer is the music industry just talking about the latest streaming opportunity or video portal. Promoters, managers and musicians themselves expect to be able to access their financial information whether they’re sitting on the tour bus between gigs in Bognor and Bradford, or in the VIP area of a Tokyo nightclub after a hard night’s networking. The challenge is, not only do they expect technology to be always-on, accurate and in real time, they are starting to expect the same from their accountants. We not only need the complementary systems, we also have to be prepared for that familiar ‘ping’ as a text arrives at three in the morning from your latest superstar client.
If you are interested in finding an accountant with experience in working within the pressure of the music industry, Just Accountants can help entirely free of charge. Fill in a quote form or give us a call and we will get you started in organising your finances and making you money.
Image provided by Rebecca Portsmouth Photography