1 South African Music Export Strategy (2)

South African Music Export Strategy

Contact: David Alexander
Tel: 011 438 7000
Mobile: 0836009488
Email: info@samex.org.za
2 South African Music Export Strategy (2)


1. Introduction

This music export strategy has been drafted by SAMEX as part of broader development efforts in the
South African music sector. Since the 1998 Cultural Industries Growth Strategy Report (CIGS) music
has been identified as a significant factor of growth and development in the country. This strategy
aims to use the foundation of various efforts to support music exports as a solid base for an
expanded strategy that engages with national priorities as outlined in the Medium Term Strategic
Framework, the National Export Strategy and the Industrial Policy Framework and Industrial Policy
Action Plan. The latter highlight the importance of:
Improving our non-traditional export performance - particularly in more sophisticated, value
added products - is an important objective for industrial policy.
1


In particular, the music sector presents significant opportunities to contribute to the Medium Term
Strategic Framework for 2009 2014. These specifically include contributing to the growth of the
economy by improving the ability of the sector to compete regionally and internationally along with
other creative industries. In addition, the music sector is comprised largely of small businesses
creating significant opportunities for Broad-Based Black Economic Empowerment and involvement
of young people thus creating opportunities to support small young black businesses.
2. Overview of the Music Industry

2.1 Global Trade

A report entitled The Creative Economy released by UNCTAD in 2008 documents the phenomenal
growth of the global market for traded goods and services of the creative industries, of which
music is a key component. The highlights the fact that the value of world exports of creative industry
goods and services reached $424.4billion in 2005, accounting for 3.4 per cent of world trade as
compared with $227.4 billion in 1996. Between 2000 and 2005 global trade in these good and
services grew by an annual rate of 8.7% in both the goods and service categories although services
represent a much smaller proportion of global trade
2
.

The research goes on to note that while developed countries, and particularly the United States and
European Union dominate world trade, developing countries, which include South Africa, have
increased their share of trade year after year. In 1996, exports from these economies accounted for
29% of global trade in creative industries goods and services, increasing to 41% in 2005. This growth
is primarily due to the extraordinary growth experience in Chinese exports of goods and services.

1
National Industrial Policy Framework, page 41
2
OECD Report 2008
3 South African Music Export Strategy (2)




Source: UNCTAD (2008)


Music is traded as both a good and a service comprising the following major categories of
economic activity:

Recorded music
Live music
Music rights administration
Sponsorship
Merchandise

With regard to music as a cultural good and as a service, there has been consistent growth over
time, as indicated in the figure below:


Source: UNCTAD (2008)

4 South African Music Export Strategy (2)

2.2 South African Music Sector

The global music market is worth $36.9 billion in 2007 with total sales of 3.5 billion units. South
Africa is ranked the 25
th
largest music market in the world. The global market was dominated by 5
large multi-national record companies, AOL Time Warner, Vivendi-Universal, Sony, BMG and EMI.
Since the merger of Sony and BMG there are four majors and speculation amongst industry players
at the worlds largest music market MIDEM, is that there will soon be three majors
3
.

In 2008, the South African recording industry generated locally just short of R900 million4 which is
down from the 2 previous years where the figure approximated R1 billion. 55% of that was from
International albums released locally and therefore a large portion of that is remitted as royalties to
international companies and artists. Broadcast and performance rights amounted to R206 million,
mechanical rights R30 million and estimated needletime rights approximately R25 million. While the
live music aspects remain difficult to quantify, it is estimated that it contributed R1,5 billion to
overall industry value of R 2,8 billion.

2.3 SWOT Analysis of the SA Music Industry

S
t
r
e
n
g
t
h
s

Moshito as a development and trade facilitation mechanism
Music infrastructure and capacity in the country?
Cultural Diversity and International appetite for our Music
General strong rights administration regimes
Industry support for structures such as SAMEX
Relationship with Government and related agencies that are working with the sector in key
initiatives e.g. Moshito and SAMEX

W
e
a
k
n
e
s
s
e
s

The small size of the domestic market
Difficulties in attracting investment
The costs of promotion in large music buying territories given logistics and exchange rates
The costs and restrictions of doing business and touring in foreign territories e.g. visas, work
permits
Government policy and export incentives that is not tailored to the needs of creative industries
Lack of professional live music circuit
Lack of bandwith and access to the internet
O
p
p
o
r
t
u
n
i
t
i
e
s

The rise of digital music with track downloads in the US outselling CDs by a ratio of 2.5 to 1
Continued growth in usage and ownership of various forms of digital audio platforms, including
online radio, iPod/MP3 players, and podcasting
High penetration of mobile telephones in the population
iPod/portable MP3 player ownership and iPod use continues to grow consistently
Continued growth in global trade in cultural goods and services
Exporting of services and goods within Africa and the creation of South-South relations
Competitiveness in Global Events hosting
T
h
r
e
a
t
s

Piracy
Total album sales dropped to 428.4 million, 14% fewer than in 2007, and have fallen 45% since
2000
Global Recession


3
SAMEX business plan
4
Info from RISA
5 South African Music Export Strategy (2)

2.3 Benchmark Export Economies

In developing the strategy, reference has been made to a range of successful music export
economies with clear strategic and/or institutional frameworks in place to support trade in the
sector. The table below highlights the results of the benchmarking
5
.
Australia Canada Finland Jamaica
Purpose To support the
development of
Australian music
and assist the
music industry
overseas
Provide assistance
towards the
growth &
development of
the Canadian
independent
recording industry

Initiates, assists &
facilitates the
promotion,
marketing & sales
of Finish popular
music abroad

Subsidise artists
airfare for
Jamaicas
participation at
showcases at
music trade fairs

Revenue Federal
government
through Australia
Council for the Arts

Voluntary
contribution from
radio broadcasters
Canadian
Department of
Heritage -
Council Music Fund
Membership funds
State subsidy via
Ministry of Trade
and Industry
Project Funding
from a variety of
ministries
Government
funded

Activities Provides export
marketing
advances &
promotion
expenses
Loans for
development of
international
markets
Marketing of
artists at
international music
events
Development of
website for
Australian music
Business & market
development
strategies
Co-ordination with
industry bodies
Young & emerging
artists initiatives

Supports
songwriters and
Artists in
production,
creation of videos
& International
tour support

Promotes member
company products
Collects &
distributes export-
related
information
Facilitates
participation in
international trade
fairs
Collects &
disseminates
information
Develops funding
& support
structures
Initiates &
produces Finnish
music export
projects
Subsidized rate for
music companies
to participating in
national pavilions
at trade fairs
Annual music
directory
Produces
compilation CD
sampler MIDEM
and other trade
shows
Special vehicle
company (TEB)
facilitates
distribution of
press kits to
potential buyers
for artists unable
to attend
Organizing
sponsorship
support for
workshops and
seminars

In each case, specific and tailor-made services exist with a focus on information, trade facilitation
and support for internationally oriented marketing opportunities both locally and abroad.

5
SAMEX Business Plan 2008
6 South African Music Export Strategy (2)

3. National Export Strategy and System in SA

The South African National Export Strategy outlines the following core objectives:
Build export awareness and create an export culture.
To increase exports in targeted priority markets and the number of exporters, with specific
focus on SME and BEE enterprises.
Improve export participation in geographically marginalised and economically depressed
areas within South Africa.
Ensure policy coherence government and build consensus amongst external stakeholders.
Provide clients with a clear understanding of the strategic interventions and priorities with
export promotion and development.
Provide clients with a clear understanding of the service offerings available to exporters and
prospective exporters.

The critical interventions include:

The formation of export council and the identification of a range of prioritised sectors with
Customised Sector Programmes (CSPs) informing development.
A dedicated and well resourced export promotion unit.
The development of a National Trade Information System.
The services offered by the Department of Trade and Industry are outlined as follows:

Source: The DTI (www.thedti.gov.za)
4. Export Strategy for South African Music

7 South African Music Export Strategy (2)

4.1 Vision

To create the opportunities for economic growth through a vibrant export culture in music that
promotes innovation, creativity, access, wealth generation, equity and development.
4.2 Objectives

The objectives of the strategy are to:
Provide support services to exporting businesses.
Generate data and disseminate information to exporters regarding market trends and
opportunities.
Assist businesses gain exposure to new markets and formulation of business relationships
that may lead to short and long-term opportunities for SA music businesses.
Develop a consistent South African presence at key music focused events, festivals and trade
shows.
Assist businesses in exploiting opportunities in related sectors, e.g. tourism.
Lobby on the sector's behalf to reduce international trade barriers and enhance trade.
Provide opportunities to grow small and micro black owned music enterprises
To contribute to the youth economic empowerment strategy through programmes that
supports this strategy and partnering with appropriate stakeholders to do so.


4.3 Strategic Approach

The strategy is based on the following core approach:


8 South African Music Export Strategy (2)

In identifying these strategic interventions, the strategy notes the importance of development in the
context of South Africas history and development trajectory. As such, it is essential to view the
strategy as part of broader development initiatives in the sector. Looking at each music enterprise
with a view to identifying those that are export ready, this strategy and its development partners will
ensure success by:
Focusing in exporting and export ready businesses.
Identify specific markets for development and targeting.
Engaging in consistent market development exercises linked to all aspects of trade and
cultural promotion currently undertaken by government.


4.4 Interventions

4.4.1 Attaining National Goals and Objectives

Rationale: The music sector presents significant opportunities to contribute to the Medium
Term Strategic Framework for 2009 2014. These specifically include contributing to
the growth of the economy by improving the ability of the sector to compete
regionally and internationally along with other creative industries. In addition, the
music sector is comprised largely of small businesses creating significant
opportunities for Broad-Based Black Economic Empowerment and involvement of
young people.
9 South African Music Export Strategy (2)


Objective Measures Targets
6
Initiatives
Improving the BBBE
profile of the sector
Increased number of
BBBEE firms benefiting
from export
opportunities
10% increase per annum. Targeted programmes in
support of BBBEE
Development of a music
industry charter
Creating opportunities
for youth owned
enterprises
Increased number of
youth-owned firms
benefitting from export
opportunities
20% increase per annum Development of a music
industry charter
Improving trade with
SADC and Africa
Increased in trade with
SADC and rest of Africa
5% increase per annum Formalisation of relations
with BEMA & development
of continental export
programme
Development of Moshito into
a Pan African music market
Engagement in trade
facilitation with countries
Promotion of music services
such as music videos and
rights administration on the
continent.

4.4.2 Improving Competitiveness

Rationale: With the notable exception of regular attendance at international trade shows such
as MIDEM and WOMEX the general export approach has been characterised by a
high degree of ad hoc interventions and very little integration between cultural and
trade agendas.
Objective Measures Targets Initiatives
Integrating cultural &
trade activities
Trade activities included
cultural engagement
agendas
20% of identified
cultural
engagements have a
trade programme
attached
Development of an annual
programme of trade &
cultural engagements
Building the capacity of
foreign and trade offices to
support music export
activities
Regular & consistent
attendance at major
music markets
Increased trade in music
goods in identified
markets
5% increase per
annum
MIDEM pavilion
WOMEX Pavilion
SXSW Pavilion

Development of annual
music touring
programmes in major
music markets
Increase sales of music in
identified markets
Live event ticket sales
10% increase in
music sales in
identified areas
Increase in radio play
in identified areas
Identification of possible tour
programme
Creation of partnerships with
locations, funders &
sponsors.

6
Please note that these targets are conservative estimates off an unknown baseline. The KPMG benchmarking
study currently underway will facilitate more accurate targeting in future from a recent statistical baseline.
10 South African Music Export Strategy (2)

Objective Measures Targets Initiatives
Launch of touring
programmes
Improving exports to key
music markets
Increase sales of music in
identified markets

10% increase in
music sales in
identified areas
Increase in radio play
in identified areas
Export programme for key
music markets including USA,
Japan and Australia
Expanding promotion
platforms for SA music
Downloads / hit on the
website/channel
20% increase per
annum
Development of live events
streaming channel on the
internet via YouTube or
similar platform
Building Moshito into a
Pan African music
market
Increased trade at
Moshito

5% increase per
annum
Improving trade platforms at
Moshito
Support for African
participants at Moshito
Stronger linkages to tourism
and cultural activities
Promotion of SA music
services
Increased trade in
services
5% increase per
annum
Development of service
export strategy
Identification of key markets
With regard to the music
video services , the
development of a specific
category for incentivising
these activities in the current
film rebate

4.4.3 Building Exporters

Rationale: Export ready companies are essential to meeting the demand that increased
competitiveness will create and in meeting national strategic objectives. The focus
of these efforts will be on independent music labels and artists who have
demonstrable will and capacity to engage in export markets.
Objective Measures Targets Initiatives
Improving trade &
market information
Regular trade and market
research reports drafted
and disseminated
Annual trade report
Annual market
updates in key
territories
Ensuring that NATIS collects
goods and service data
Market research in identified
markets
Consumer research in key
markets
Supporting emerging
exporters
Number of emerging
exporters entering into
export markets
5% per annum Development of specific
platform at Moshito
Promotion of emerging
exporters in cultural and
trade programmes
Development of specific
promotional channel on
YouTube or similar platform

11 South African Music Export Strategy (2)


4.4.4 Building Institutional Mechanisms

Rationale: All successful music exporting markets studied have clear export support
programmes and institutional infrastructure to support these. In some cases these
are programmatic in nature as part of broader export support institutions and in
others specific export development agencies are established. In South Africa, the
NES allows for the establishment of Export Councils which are an internationally
recognised mechanism for export promotion.
In SAMEX, an organisational framework exists for the development of a targeted and
tailor-made entity to support music exports. SAMEX will develop this framework in
partnership with Moshito and other appropriate stakeholders such as the
Department of Arts and Culture, the Department of Trade and Industry as well as
international partnership such as Embassies, international music markets, and other
trade organisations (BEMA, European Music Office, and Export Offices from various
countries). The capacity, expertise and institutional knowledge of these stakeholders
are a vital component of the success of this export strategy. These partnerships
allow SAMEX to remain as a neutral platform. International best practice suggests
that the lack of coordination between agencies and ministries is a key impediment
to the success of a music export strategy. Institutional strengthening and technical
assistance between these partners will ensure both a quality service to the music
industry as well as improved exporting results from the sector.
Objective Measures Targets Initiatives
Creating a strategic
framework for music
development and
exports
The existence of an
approved CSP
CSP drafted and
approved by 31
March 2010
Drafting and approval of a
CSP
Transforming SAMEX
into a fully fledged
export council
Funded and registered
organisation
Approved by 31
March 2010
Approval of SAMEX business
plan
Development of 5 year
funding model in
collaboration with major
sponsors
Launch of SAMEX as an
Export Council
Developing fully fledged
partnerships with local
and international
stakeholders
Memorandum of
Agreement for
Partnership with
respective stakeholders
Memorandum of
Agreements
approved and signed
by June 2010 with
MOSHITO, DTI, DAC,
BEMA, EUROPEAN
MUSIC OFFICE,
SPECIFIC EMBASSIES
and EXPORT OFFICES
Drafting and approval of
specific MOUs
Develop specific programmes
for partnership collaboration
Hold regular (quarterly, half-
yearly or yearly) joint
sessions with partners as
provided in the MOUs

12 South African Music Export Strategy (2)

4.5 Target Markets & Market Platforms



Region Country Sector Market Product /service
offered
Instruments
required
Publicity
North America US Music South by
South West
(SXSW)
Festival

EMIA Brochures
Business cards
South America Brazil Music Porto
Musicale
February
2010
Festival
Conference

EMIA Brochures
Business cards
Australia Australia Music Big Sound
Brisbane
Sept 7 to
11
Festival
Music Expo
EMIA Brochures
Business Cards
Sample CDs
Africa
Tanzania,
Zanzibar
Music ZIFF
Festival
Festival of
the Dhow
27th June
to 4th July
2009

Festival
Conference
Music Expo

Mini
Pavilion
EMIA
assistance
to
participate
Directories
Brochures
Business cards
South
Africa
Music Moshito
September
2009
Conference
Music Expo

Inward
buying
mission
Directories
Brochures
Business cards

Europe France,
Cannes,
Reed

Music MIDEM
24th to
27th
January
2010
Tradeshow
Conference/
Workshops
Awards
Ceremonies
National
Pavilion
EMIA
assistance
to
participate
Directories
Brochures
Business cards
Germany Music POPKOMM
16-18
September
Exhibition
Festival
Conference

Mini
Pavilion
EMIA
assistance
to
participate
Directories
Brochures
Business cards
Womex WOMEX
28th to
31st
October
2009

Trade
Fair/Exhibition
stands
Conference
Showcase
Awards
Ceremony

Mini
Pavilion
EMIA
assistance
to
participate
Directories
Brochures
Business cards
13 South African Music Export Strategy (2)

5. Budget


Pleas see attached spreadsheet of the 3 year budget per intervention. The summarised version is
below:
Indicative Implementation Budget
Intervention 1 Sub Total 2 800 000 4 450 000 6 000 000
Intervention 2 Sub Total 9 850 000 12 510 000 17 070 000
Intervention 3 Sub Total 2 900 000 4 250 000 5 600 000
Intervention 4 Sub Total 1 985 000 2 200 000 2 435 000
Total Budget 17 535 000 23 410 000 31 105 000

14 South African Music Export Strategy (2)


6. Implementation chart


July -
Sept
Oct -
Dec
Jan -
March
April -
June
July -
Sept
Oct -
Dec
Jan -
March
April -
June
July -
Sept
Oct -
Dec
Jan -
March
2009-2010 2010-2011 2011-2012
Interventions 2 3 4 1 2 3 4 1 2 3 4
Targeted programmes in support of BEE
- Needs analysis of identified BEE exporters
- Programme design & development
- Pilot programme initiation
- Evaluation & programme design
- Roll out of programme
Development of a music industry charter
- Initiation of consultations with key players
- Drafting of charter
- Presentation for ratification at Moshito
Formalisation of relations with BEMA
- Development of Memorandum of Understanding
- Signing of Memorandum
- Development & implementation of 3 year programme
Development of continental export programme
- Identification of major markets
- Identification of export facilitators and partners
- Launch of export strategy at ZIFF
Development of Moshito into a Pan-African Music market
- Identification of major markets
- Identification of participants
- Direct marketing to identified participants
- Facilitation of attendance at Moshito
- Development of country platforms at Moshito
15 South African Music Export Strategy (2)

Engagement in trade facilitation in countries
- Initiation of engagements with identified partners
- Development of formal ties with key partners
Promotion of music services
- Identification of major markets
- Development of marketing platforms
- Development of export strategy at ZIFF
Participation at ZIFF
- Identification of participants
- Facilitation of EMIA access
- Development of programme
- Attendance at event

Development of annual programme of trade & cultural engagements
- Identification of potential engagements
- Liaison with DAC & other stakeholders
- Development & launch of annual programme
- Development & initiation of fundraising strategy
- Participation in key events identified
Building capacity of foreign and trade offices
- Identification of critical offices
- Engagement with DAC & Foreign Affairs
- Engagement during major festivals and events
- Development of capacity building programme
- Implementation of programme
Midem
- Identification of participants
- Facilitation of EMIA access
- Development of programme
- Attendance at event
WOMEX
- Identification of participants
- Facilitation of EMIA access
- Development of programme
- Attendance at event
16 South African Music Export Strategy (2)

SXSW
- Identification of participants
- Facilitation of EMIA access
- Development of programme
- Attendance at event
Porto Musicale
- Identification of participants
- Facilitation of EMIA access
- Development of programme
- Attendance at event
Big Sound
- Identification of participants
- Facilitation of EMIA access
- Development of programme
- Attendance at event
POPKOMM
- Identification of participants
- Facilitation of EMIA access
- Development of programme
- Attendance at event
Development of 3 year tour programme
- Identification of potential engagements aligned to annual programme
- Facilitation of partnerships in support of tour programme
- Launch of annual programme at Moshito
- Implementation & review of programme
Export programme for key music markets
- Based on market research development of targeted programmes
- Launch of export programmes at Moshito
- Implementation of programme at key events & through facilitation
Website development & Live events streaming
- Development of concept & detailed proposal
- Costing of proposal
- Identification of content & engagement with content holders
- Launch of website
- Ongoing maintenance
17 South African Music Export Strategy (2)

Improving trade platforms at Moshito
- Benchmarking against other major music expos
- Developing support measures for African participants
- Initiation of inward buying missions
- Improved marketing of the event
Stronger links to tourism & cultural activities
- Hosting of summit to discuss music, tourism & export
- Identification of critical partners
- Development of programme linked to tourism activities
Development of a service export strategy
- Based on market research identification of key markets
- Initiation of discussion with DT regarding Incentivising music video
services
- Identification of key partners
- Launch of service export strategy

Building exporters
- Identification of existing and emerging exporters
- Conducting of needs analysis linked to KPMG benchmark
- Development of customised export support programme
- Piloting of programme
- Review of pilot programme
- Roll out of programme
- Development of an emerging exporters platform at Moshito
Engaging with NATIS programme
- Initiation of discussion with DTI regarding NATIS programme
- Inclusion of music products in data collection & reporting
Consumer & Market research in identified markets
- Identification of priority markets
- Development of terms of reference
- Initiation of research
- Publication of research findings

Drafting of CSP
- Engagements with DTI regarding the CSP process & support
18 South African Music Export Strategy (2)

- CSP development
- Submission of CSP to DTI for approval
- Launch of CSP
Approval of SAMEX building plan
- Alignment of SAMEX Plan to CSP
- Development of 5 year business model
- Submission to DTI for approval
- Launch of SAMEX as an export council at Moshito
Demotes a major event