Taking Note: Another Look at "The Creative Apocalypse," via Alternative Data Sources

By Sunil Iyengar and Bonnie Nichols, NEA Office of Research & Analysis
Exploded sound machine
Photo by A.Kolb, courtesy of flickr user Ars Electronica
Last summer, Steven Johnson (author of Everything Bad is Good for You and Where Good Ideas Come From: The Natural History of Innovation) wrote an article about the career prospects of musicians, filmmakers, and other artists in a post-Napster era. Appearing in The New York Times Magazine, the piece rejected arguments that digital technology (specifically, consumer access to art through increasingly inexpensive media platforms) has eroded artists’ earnings. For example, Johnson analyzed multiple datasets and concluded that not only has the number of musicians grown, but so have their revenues. Despite lost income from record companies in the wake of both music piracy and legitimate streaming services, musicians overall have seen “an increase in revenues from live music,” Johnson asserts. He thus describes songwriters as entrepreneurs who are most likely to thrive when they combine digital fundraising, marketing, and distribution strategies with live performances to enhance their earnings. Johnson writes:

What remains is a more direct relationship between the musicians and their fans. That new relationship has its own demands: the constant touring and self-­promotion, the Kickstarter campaigns that have raised $153 million dollars to date for music-­related projects, the drudgery that inevitably accompanies a life without handlers. But the economic trends suggest that the benefits are outweighing the costs. More people are choosing to make a career as a musician or a songwriter than they did in the glory days of Tower Records.

In response to this article, the Future of Music Coalition (FMC)—a D.C.-based nonprofit group championing musicians and their rights to fair compensation—posted an extensive critique, faulting Johnson’s article on several points. In particular, FMC objects that, by using the U.S. Bureau of Labor Statistics’ Occupational Employment Statistics (OES) to support his conclusion about the rise of musicians in the U.S., Johnson overlooked key limitations and definitional issues associated with the dataset. Similarly, FMC maintains that his findings about musicians’ incomes do not reveal how those incomes are distributed, and how the distribution pattern has changed over time. Both the Johnson and FMC pieces (and a further clarifying article by Johnson and, yes, another by FMC) deserve careful reading by people interested in learning how artists’ livelihoods might have been affected by the so-called digital economy. They are also good case examples of how different data sources can be used to confront pragmatic research questions about the arts, how the data often will be inadequate or incomplete, but how, nonetheless, such data can spark a vital exchange of information and opinions among researchers and arts organizations. Periodic debates, such as the one between FMC and Steven Johnson, are to be lauded for raising our stature as cultural policy researchers and practitioners. (Disclosure: FMC is the recipient of an NEA Research: Art Works grant, currently being used to update a 2010-2011 survey of musicians’ and composers’ revenue streams.) With that elaborate preface, we’re in a better position to consider the following. Inspired by the Johnson/FMC articles, we turned to two different data sources not featured by Johnson and not discussed by FMC. The results are far from comprehensive, and they certainly can’t be applied to all artists or musicians, but they offer yet another window onto the research questions that Johnson initially raised.
1) Using data from the U.S. Census Bureau’s Current Population Survey (CPS), we find no long-term growth in the number of musicians, measured as a percentage of all U.S. workers. In addition, the Great Recession (2007-2009) took its toll on both the share of musicians in the labor force, and their earnings, which remain less than the earnings of U.S. workers as a whole. We do, however, find growth in musicians’ real earnings (that is, adjusted for inflation). 2) Using data from the U.S. Bureau of Economic Analysis—namely, from the new Arts & Cultural Production Satellite Account—we find that creative industries such as film, sound recording, and the performing arts have fared well in recent years, despite the fallout of the recession. As a share of U.S. GDP, however, publishing has remained flat, while year-over-year investment in new musical compositions has been in long-term decline.
Now here’s how we arrived at these findings. First, we examined statistics from the CPS, a joint data-collection effort of the U.S. Census Bureau and the U.S. Bureau of Labor Statistics. As a household survey, the CPS captures data on self-employed workers, a considerable advantage given that 43 percent of “musicians, singers, and related workers” (including music directors and composers) are self-employed. In 2014, the U.S. labor market included 206,000 musicians (including singers, instrumentalists, music directors, and composers)—this figure was up from 193,000 musicians reported by the CPS in 1999. As noted in FMC’s response to the Times article, however, long-term trend analysis of the number of musicians can be difficult to examine, due partly to changes in survey methods and occupational definitions. While the definition of “musicians, singers, and related workers” has not changed over the years, the CPS’ population base has done so. For that reason, trends in the number of musicians over time are better represented as a percentage of the U.S. labor force. This measure also controls for increases in counts of musicians due simply to larger U.S. populations over time. CPS data show that musicians, as a share of the U.S. labor force, exhibit strong business cycle fluctuations. But these fluctuations aside, musicians generally compose 0.13-0.14 percent of all workers in the U.S. labor force. For example, in 2005, an economic boom year, musicians as a percentage of all U.S. workers climbed to 0.15 percent. But in 2009, during the Great Recession, that share slipped to less than 0.12 percent. In the years that followed, however, musicians returned to what appears to be a steady state.
To examine musician earnings, including earnings from self-employment, we turn to a specific CPS supplement: the Annual Social and Economic Supplement to the CPS (ASEC). But here we need to apply additional data to control for inflation. For this analysis, the personal consumption expenditure (PCE) index (excluding consumption of food and energy) is applied. (Note: The PCE index is computed by the U.S. Bureau of Economic Analysis and is used by the Federal Reserve Board to measure inflation.) Average total earnings (including self-employment earnings, and controlled for inflation) by musicians, while volatile, have generally increased over time. Between 1995 and 2014, inflation-adjusted (“real”) earnings by musicians increased by 95.3 percent, far outpacing the growth rate of the PCE index (excluding food and energy) during that time period—37.9 percent. Among all workers in the U.S. labor force, average total earnings grew by 35.4 percent, which suggests that U.S. workers as a whole have not realized real gains in earnings. In fact, the PCE index shows that U.S. workers lost ground to inflation over that period. Even though their earnings have grown, musicians still earn less on average than all U.S. workers as a group. (Technical note: Although earnings reported by the ASEC are top-coded—$9,999,999 since 2011—and “swapped” among top-coded respondents, the earnings data reported here are calculated as mean total person earnings, which are not strongly distorted by high-earnings outliers.) This is noteworthy because nearly half of all musicians hold a bachelor’s degree or higher level of education. By contrast, 31 percent of all U.S. workers hold college degrees. 
The arguments made in the Times article (and FMC’s response to the article) may also be examined in light of the Arts and Cultural Production Satellite Account (ACPSA), a new product of the U.S. Bureau of Economic Analysis (BEA) in partnership with the NEA’s Office of Research & Analysis. Because ACPSA does not presently account for inflation, trends in production by selected creative industries can be examined as a percentage of total U.S. GDP. To illustrate, ACPSA shows that the motion picture industry, while displaying business cycle fluctuations, is producing increasingly larger shares of total U.S. GDP. In 2000, value added by motion picture industries composed 0.474 percent of GDP. In 2010-2012, that share rose to approximately 0.6 percent. On the other hand, as a share of total U.S. GDP, ACPSA value added by the publishing industry has largely been flat, even declining in recent years. (This category includes the publication of books, periodicals, newspapers, and arts-related software.) In 2012, ACPSA publishing made up 0.482 percent of GDP. That share was down from a high of 0.558 percent in 2004. Also relevant to the Times article are sound-recording and performing-arts industries. As a share of total U.S. GDP, value added by sound-recording industries was fairly flat until 2006, when it rose from 0.06 percent to 0.101 percent in 2012. Thus, in recent years, sound-recording industries have done well. (Aside: Returning to Steven Johnson’s query about how recorded-music revenue fared after digital streaming took hold, one now can consult a new paper released by the National Bureau of Economic Research. What are the effects of Spotify on recorded-music revenue? Little if any, the paper finds.) Value added by the performing arts industries was also either flat or declining until after the Great Recession. In 2007, for example, as a share of total GDP, value added by the performing arts hit a low of 0.073 percent. But then it began rising, reaching approximately 0.10 in 2010-2012. In aggregate, and business cycles aside, the performing-arts industry also appears to be thriving.
That performing-arts and sound-recording industries are doing well, as measured by their contributions to U.S. GDP, does not translate into more new musical compositions being produced under copyright. In fact, annual real investment in new music (that is, adjusted for inflation) is in decline. In recent years, the BEA has begun to include the production of new entertainment and artistic originals in its account of capital investments. Many theatrical movies, television programs, books, and music continue to generate revenue far after they have been produced, thereby generating a capital asset, or investment. BEA data show that investment in new movies has generally increased, while production of new television programs has strongly increased. The production of new books, alternatively, has been flat.
As for investment in new music, that has been in decline throughout the time period over which BEA reports real investment in entertainment and artistic originals.
It’s worth stating here again that the data sources cited above do not by themselves permit an in-depth understanding of how arts creators have flourished or weakened as a result of digital technology and new media platforms for consumers. Rather, our hope is that this brief analysis complements the findings of Johnson and FMC and encourages similar dialogue.