Summary:
- The cultural sector accounted for 2.3% of GDP in France in 2019. This figure does not take into account the indirect link to other industries (tourism and luxury goods) or the social benefits.
- The cultural sector as a whole has been severely impacted by the Covid-19 crisis, with varying degrees of impact across different branches. Within the EU, the sector is estimated to have lost 31% of its turnover between 2019 and 2020. In France, this decline is estimated to be around 12%.
- Studies do not yet allow us to know the number of jobs lost in the sector, but it is highly likely that it will be the most affected in terms of percentage of the total number of workers in the sector.
- Finally, this note also provides a more structural description of the electronic music market, which has been growing rapidly over the last ten years.
Usefulness of the article: This article reviews estimates of the loss of activity for the cultural sector. This note also focuses on the rise of electronic music in France in recent years.
Since the beginning of the Covid-19 crisis, culture has been considered « non-essential, » making it the second most impacted sector by the crisis. With festivals canceled and concert halls closed, the loss of revenue is very significant for the sector and those involved in it. In this note, we summarize the various existing studies on the sector in France and, to a lesser extent, in Europe, as well as initial estimates of the impact of the crisis on activity. Finally, we focus on the electronic music market and how it functioned before the crisis.
I – Overview of the cultural sector in France and Europe in the midst of the health crisis
According to estimates by the Ministry of Culture based on INSEE figures, the economic weight of culture represented 2.3% of GDP, or €49.9 billion in 2019, a share that has remained stable for seven years. However, this figure does not take into account (1) the indirect impact on other industries such as tourism and luxury goods, and (2) the social, anthropological, psychological, and philosophical benefits, which are difficult to measure. Furthermore, the activity in France of the various players in the digital economy, whose content is often partially or totally cultural, is not currently fully measured, and it is difficult to assess the contribution of the free services facilitating cultural consumption provided by these digital players. In terms of employment, the sector employed 692,900 people in 2018, which corresponds to 2.6% of the working population.
In recent years, culture in the broad sense of the term—including ten sectors: music, visual arts, performing arts, books, video games, press, architecture, advertising, radio, and audiovisual—has been at the forefront of the European economy. These ten sectors accounted for 4.4% of the European Union’s total GDP in 2019 in terms of turnover and provided 7.6 million jobs with an estimated turnover of €643 billion, according to a recent study by EY.
In France,audiovisual is the leading cultural sector (28%), ahead of live performance (15.4%), which has grown significantly and surpassed the press and books at the end of 2019 (Figure 1). This growth can be explained in particular by a sharp increase in household spending on creative, artistic, and entertainment activities in recent decades. However, the weight of live performance is likely to decline sharply, as it is the sector that has been most affected (after cinema) by the restrictions that have been in place since March 2020.
Graph 1: Weight of sectors in cultural value added since 2000
Sources: INSEE and Ministry of Culture
The development of streaming platforms (Spotify, Deezer, YouTube) has enabled the recorded music market to recover as a whole.Between 2001 and 2013, total revenues in the sector fell by almost 40% (from USD 23.6 billion to USD 14.4 billion), mainly due to the development of illegal peer-to-peer (P2P) download platforms. In 2020, revenues now stand at $21.1 billion, with streaming accounting for almost 65% of the global market in 2020 and even experiencing strong growth in 2020 (+7.4% compared to 2019).
The arrival of the Covid-19 health crisis and the restrictions that have been in place since March 2020 have led to the closure of cultural venues(museums, concert halls) and the cancellation of several events. Overall, culture was the second most affected sector by the health crisis, slightly behind the aviation industry but ahead of tourism. According to a study by EY, in 2020, the European cultural and creative economy lost around 31% of its turnover. Compared to 2019, turnover for theater and live performances fell by 90%, while that for music[2] fell by 76%. All other sub-sectors have been affected, including the visual arts, architecture, and the press. Only video games have seen an increase of around 10% compared to 2019.
In France, estimates from the Ministry of Culture show that annual revenue fell by 12% in 2020, but this loss of activity could still be revised upwards.The sectors most affected (Figure 2) are film projection (-65%), live performance (-43%), advertising (-16%), and the press (-14%). The book industry also declined (-5%), despite a rebound in the book sector starting in the summer of 2020. Only the video game industry saw its revenue grow by more than 20%.
Graph 2: Annual and quarterly changes in turnover in the commercial cultural sectors in 2020 compared to 2019
Sources: INSEE, Ministry of Culture, BSI Economics
Studies do not yet provide information on the number of jobs lost in the sector, butit is highly likely that it will be the most affected in terms of percentage of the total number of workers in the sector. The economic consequences of the crisis will be long-lasting, and the sector will take much longer than others to return to its pre-crisis level, as it is very likely to be more affected by an increase in bankruptcies.
Furthermore, while players in traditional sectors of the economy are easily identifiable by the various government agencies, those in the cultural sector are more difficult to recognize. Around 30% of workers in the sector are self-employed (compared with 12% of the total working population), which makes it more difficult to access the aid put in place by the state, such as partial unemployment, particularly for self-employed workers who benefit from the solidarity fund (calculated as a percentage of lost revenue), which may be less generous than partial unemployment. For intermittent workers, the introduction of a « blank year » extending intermittent compensation was intended to mitigate the impact of the crisis on the incomes of performing arts and audiovisual artists.
Before the crisis, live performance was becoming increasingly important in the sector, and the electronic music market was enjoying great success. A number of interesting studies describe this little-known market in full expansion.
II- Focus on electronic music and related cultural events in France
Electronic music, which was considered a counterculture in the 1990s and 2000s or an alternative (underground) movement, has now become a true generational movement. Nevertheless, there is still a relative lack of knowledge about the subject in the media and institutions. Although there is little data available on the subject, a few studies published over the last five years have shown the extent of the growth of electronic music among contemporary music in France.
In 2016, the electronic music market in France represented 17% of the contemporary music market, or €0.42 billion out of a total of €2.5 billion in 2016, according to a study by SACEM. The development of streaming platforms, giving them greater visibility, and the proliferation of cultural events specific to electronic music have contributed to the public’s growing interest in this genre. A CNV study also shows that in 2017, electronic music accounted for 10% of total admissions among all performances in France (including comedy shows, musicals, etc.), and the number of paid performances increased by 13% between 2016 and 2017.
The vast majority of revenue from electronic music in France comes from events generated by festivals and clubs, which are increasing year on year.
Revenue comes mainly from events through clubs and festivals (82%). This strong dependence of the sector on events has therefore had a significant impact on the market and its players during the crisis (artists, bookers, promoters, etc.). Following on from the estimates made by SACEM, which carried out the first detailed study in 2016, the ticket distributor Shotgun conducted a study in 2018 in an attempt to supplement this initial initiative with an approach based on variables relating to events (via social media and data from its website) in electronic music.
The electronic events market was experiencing explosive growth before the arrival of the health crisis. While in 2014, just over 2,000 events were organized in France, 8,000 were recorded in 2017, a figure that quadrupled in four years. From a geographical perspective, the Île-de-France region has accounted for half of the electronic event sector since 2014, but a trend towards geographical decentralization has been observed in recent years with an increase in supply in several regions.
In terms of genre, house and techno, which were previously considered alternative genres, now account for more than 50% of the genres featured at events organized in recent years.
The gradual reopening of cultural venues (with reduced capacity and seated audiences) since the end of May 2021 across the country will enable the electronic music market and the cultural sector as a whole to rebound, but pre-crisis levels of activity will not be restored for several years due to job losses and bankruptcies, which are likely to increase.
Bibliography
Oxford Economics (2020), « The Economic Impact of Music in Europe, » November (link)
Pietrzyk N. (2020), To what extent does culture contribute to national wealth, BSI Economics & Melchior (link)
Lhermitte M. et al. (2021), “Rebuilding Europe: 2nd European Panorama of Cultural and Creative Industries,” January 2021 (link)
Gombault A. et al. (2020), “Covid-19: in France, culture sacrificed?”, The Conversation, December (link)
SACEM (2017), “Electronic music in France” (link)
Shotgun (2018), “The electronic music events market in France,” May (link)
Turner L. (2021), “The direct economic impact of culture in 2019,” Culture Figures Collection, Ministry of Culture, February (link)
DEPS Ministry of Culture (2020), “Analysis of the impact of the Covid-19 crisis on the cultural sectors,” May (link)
Ifpi (2021), “Global music report” (link)
DEPS Ministry of Culture (2021), Economic analysis of cultural revenue in thefourth quarter of 2020, March (link)
CNV (2018), The Distribution of Variety Shows and Contemporary Music in 2017, Statistical Studies, September (link)
