Made In Germany: A Passport to Releasing Music in Deutschland

Made In Germany: A Passport to Releasing Music in Deutschland

Presented by Music Passport/AIR

Germany is the #1 market in Europe, the beachhead for accessing the European marketplace and ranks #4 worldwide for recorded music (after UK, Japan and the USA). Many independent companies have succeeded in establishing themselves within Germany and this panel aims to shed some light on what is a huge and very unique landscape.

Thursday 23rd November 2:30pm to 3:30pm at NGV Theatre

Glenn Dickie – Sounds Australia (Moderator)

Michael Pohl – Kontor New Media

Michael Schuster – Cargo Records

If you are considering Europe as destination to do music business, then German is the perfect gateway to those territories. When Australian musicians consider Europe as a place to conduct business they naturally think of the UK. Time to reconsider because the UK only accounts for approx. 2% of world sales. The population of Germany 82.67 million compared to the population of Australia’s 24.13 million with the UK’s population at 65.64 million people. Germany has 80 cities with more than 100,000 inhabitants and 13 metropolitan areas with more than 500,000 people. Germany is still ahead of the UK in retail value terms, the British recorded music market earned £1.108 billion ($1.73bn) in 2016. Germany’s recorded music business turned over €1.54bn, the first time industry income had surpassed the €1.5bn barrier since 2009. Despite the challenging economic environment within the European Union, Germany continues to be one of the world’s most powerful and dynamic economies. Business freedom and investment freedom are strong. Long-term competitiveness and entrepreneurial growth are supported by openness to global commerce, well-protected property rights, and a sound business regulatory environment. The German economy has gradually emerged from the effects of the global financial crisis, which had an acute negative impact both on Germany’s public finances and on its economic growth. Actions required to hold the Eurozone together have taken a toll, and the more recent migrant crisis has had huge political, economic, and societal impacts within the country.

Online sales of physical formats are predominately via the international online retailer Amazon and digital downloads have not fully cornered the market as yet. In Germany’s approximately 150 brick and mortar music shops, which is not huge especially when compared to Melbourne’s 80, is the highest in the world. Record shops are declining in Germany, as in virtually all other territories, but they are still important. Germans still prefer physical formats such as compact disc and vinyl. CDs are the biggest selling format in Germany. A total of 112 million digital and physical albums were sold in 2016. Even within the digital branch, the album is considered a complete work of art. Of the 112 million albums sold, 17.5 million were downloaded digitally. This translates into every sixth album sold being digital. Over one hundred million singles were dropped in Germany in 2016, of which 97.1 million were single downloads.

Though there is a very healthy local music scene in Germany, the country is predominately an importer of music products. Of the 25 best-selling albums in Germany last year, local acts only accounted for 2 of the 25 most frequently played individual tracks on German radio. CDs still sell well within this market and can generate more profit then any other physical or digital format. Australian acts/bands/artists considering selling recorded music in German should make sure that they have CDs for sale or have licensed the rights to a German record label that understand the retail market. If you are playing shows then make sure that you have CDs for sale at your merchandise point-of-sale (merchandise table). In terms of physical sales CDs account for approx. 44% and vinyl 6%, making a total of 50% of all music sales in Germany.  Traditionally Germans are “collectors and like to put items on their shelves” which could explain the high number of physical sales within Germany. There is no such thing as the traditional album cycle any more sales are now ongoing, a manifestation of Chris Anderson’s ‘the long tail’. Amazon works on a global basis to their and their consumers benefit e.g. Amazon sources music products from the cheapest source and ships internationally. Acts/artists/bands should try to secure European deals or press and distribution (P&D) deals rather then trying to ship product from Australia. It’s essential that you don’t cannibalize your price in different territories, because consumers will buy via Amazon to save even a few Euros. Consider how the Euro is performing against the Pound and Australian dollar because that could make a difference between turning a loss into a profit. In the long term it is envisaged the international streaming will harm your German physical sales.

Amazon is currently signing authors directly and it is expected music producers and artists will follow in the very near future. In order to survive, local stores need exclusive products to ensure they have a competitive edge. This can be turned into a real advantage for touring Australian acts, e.g. play in store, do a signing or issue limited edition ‘collector’ pieces. Remember that CDs still sell well in this market so play that to your advantage. As with almost all other territories it only needs a small amount of success to get the ball rolling and over a sustained period of time markets can be grown quite significantly. Touring should back up and be a large part of your marketing mix and possibly the backbone of your marketing campaign? As discussed in, Autobahn: roadmap to touring and performing in Germany, touring in Germany can be very cost effective and an income generator in its own right.  With streaming you need to beware of geo blocking, e.g. does your streaming originate in Australia?  Due to the mechanicals of streaming, outside content is often blocked in Germany. If you want to sell in Germany, you need to be visible on social media such YouTube (check for geo blocking), Facebook, Instagram, etc. as these can be great promotion platforms. Due to the falling average price of vinyl over the last few years, selling vinyl could be classed as a promotion device and used as leverage at those all important in-store events.

The big key take-away from this panel is that physical formats perform incredibly well and are essential in the German market.

Written by Tim Dalton