The World Market for Music Instruments 2014


Lets get down to business…

What are the implications of the recent global economic effects on the World Market for Music Instruments?

IN 2009 THE GLOBAL ECONOMY SHRANK BY 2.4%, worldwide retail sales of music products declined 13.7% to 15.1 billion – most likely the largest decline since the early 80’s.

The World Trade Organization instituted standardized product codes two decades ago which has made it easier to track the global flow of imports and exports. This has made it easier to pinpoint and draw conclusions on World market behaviours.

The economic decline of 2009 left no part of the globe untouched but differed from country to country. In the United States and the United Kingdom, where home ownership and personal debt levels were highest, the bursting of the housing bubble prompted an immediate contraction, this lead to financially strained consumers stopping to buy musical instruments. By contrast in Europe, where consumers had accumulated more savings, the declines were smaller and more gradual. However in China, India and Brazil who at this stage had witnessed increases in personal income sales were spurred. Though these countries are large and avoided the global economic downturn their music markets are small in absolute terms.

In 2009 music products companies around the globe shared difficult operating environments, but the difference in the size of the markets remained enormous.

U.S. and Canadian citizens topped the charts, spending approx. $19 per capita on music products. Compare this to India, where per capita spending was six cents.

Gross national product per capita & median age – are the two key figures used to assess countries’ spending levels.

GNP per capita, or the size of the economy divided by the population, is a reasonably accurate measure of national prosperity.

The more prosperous a country, the more it typically spends on music products.
The music industry relies on the 12-to-28-year-old demographic for the majority of sales, this makes median age another critical barometer.

The intersection of GNP per capita and median age can be seen clearly when comparing the U.S. and European markets. The U.S. market with a low median age- 36.8 compared to 37.2 worldwide- and a GNP per capita that is 3.5 times the global average enjoys the means to spend on music and a disproportionately large group of younger buyers. Together these forces explain why the U.S. is such a rich market.

Now in 2014 music and music making have broad based appeal, but the industry’s largest number of customers still reside in the under 30-year-old age bracket. These are the primary purchasers of guitars, amps, drums, keyboards, and recording gear. And while the reverberations of the 2008 financial crisis were felt by all, they had a disproportionate effect on those 30 and under. A few key statistics illuminate the problem. According to the U.S. Department of Labor, only 47% of the 18-29-year-old age cohort holds a full time job, an all-time low.

The national unemployment rate stands at 6.8% at this writing, but it is 13% for the under-30 group. At a time when earnings opportunities seem to have declined, financial obligations have also increased. The treasury notes that college related debt has soared, rising 275% since 2003. Although hard to quantify, it’s beyond dispute that the financial stress of a key buying group has retarded industry growth.

The GNP in Europe is about 60% of the U.S. level, yet per capita Europeans spend only a third of what Americans do on music. Much of this can be attributed to demographics. A low birth rate in Europe during the last two decades has resulted in a smaller proportion of the younger population and consequently a reduction in the size of the industry’s prime age group.

Prosperous young people provide the raw material for a strong music market.

However, hard-to-quantify cultural factors also play a critical role. China’s remarkable economic growth during the last decade has created a gigantic middle class and turned the country into the world’s largest auto market. Chinese factories also lead the world in the production of most musical instruments and electronics. Yet, the growth of its domestic music products market has consistently lagged behind its larger economy. The best explanation for this disparity is a lack of music making tradition. For over 30 years after Moa took power, Western music was against the law. It is only now people are starting to turn to music as a source of enjoyment. But there is not a great deal of music teachers and few parents have the experience to guide their children into making music.

Contrast China with Japan, where a strong tradition of music making has countered the effects of unfavourable demographics. Japan has the world’s older population and a shrinking number of children, yet thanks to school music programs and widespread parental encouragement, per-capita music spending is over twice the global average.

Native English speakers represent less than 10% of the world’s population, but they have had a disproportionate impact on the global music scene. English-based rock, pop, country, and other genres are present on iPods around the world. No other popular music culture has a similar global reach. Explanations for this can vary from something to do with the centuries-old English folk music tradition, coupled with the way American pop has been a melting pot for so many other musical traditions. Some view this global popularity of English music with suspicion, as in France where state-run radio stations have strict limits on how much English music they can play, or in the Middle East where it’s considered blasphemous. If purchases are any indication, most seem to welcome it with open arms. The impact of this is best seen in the global popularity of the guitar.

Purchasing levels vary from country to country, but the type of products purchased is remarkably similar. In every country where sales statistics are tracked the guitar is the most popular instrument. National prosperity levels determine the best selling price points, but after that product preferences have become remarkably homogeneous. In any country around the globe, the top five selling brands in any product category are likely to be the same.