GMP White Paper

:

Assessmentof the Georgia Music Industry’s Competitive Landscape, Underutilized Assets and GrowthPotential

A White Paper :: January 2015

© Georgia Music Partners :: January 2015 2

TABLE OF CONTENTS

EXECUTIVE SUMMARY 3

THE CURRENT STATE OF GEORGIA’S MUSIC INDUSTRY 4Education 4Private Sector 4

GEORGIA’S DIRECT COMPETITION FOR MUSIC BUSINESS 6

GEORGIA’S MUSIC CENTERS 9

INDUSTRY SECTORS 11The Creative Community 11Media Post-Production Opportunities 12Live Music and Entertainment 14Music High Tech 17

GROWTH OPPORTUNITIES 18Marketing Georgia’s Music Scene 18Advocating for Financial Investment and Business Incentives 20Promoting and Funding Music Education 23

CONCLUSION 24Our Strategy 24


Georgia’s musical legacy is an integral component of its past, present, and future. As the national music landscape has evolved, Georgians have remained at the forefront of creativity and innovation across diverse genres including gospel, blues, R&B, soul, rock and roll, country, hip-hop, indie and Christian music. In 2011, the Georgia music industry had an economic impact of $3.7 billion; generated more than $300 million in tax revenue for state and local governments; and created around 20,000 jobs resulting in more than $888 million in wages, salaries, and benefits, according to a study commissioned by the Georgia Music Partners. Georgia has long been a leading force in growing exceptional music talent with international reach.

However, our fertile ground for songwriters, producers, musicians, etc. is no longer enough. Cities such as Nashville, Austin and New York have surpassed our entire state’s music impact. The reason is simple. These cities see the direct correlation that a creative economy is directly related to building, developing and marketing a musical brand that draws not only tourists but international corporations to their cities. According to a December 16, 2014 article published in the Huffington Post, both Austin and Nashville are among the top 10 growing cities in America. Both ranked as top cities that are driving the future, according to a 2013 study by the Milken Institute. This white paper provides a snapshot of Georgia’s current music ecosystem, analyzes competitive challenges, and identifies opportunities to boost economic impact while building a dynamic brand for Georgia’s music industry.

GMP is the authority that grows and improves the music economy in Georgia.

EXECUTIVE SUMMARY


Georgia’s music industry remains an under-developed and underutilized asset. There is currently an exodus of talented music industry professionals and music business and technology students away from Georgia toward cities with more favorable support systems and opportunities, including Austin, Texas; Baton Rouge and New Orleans, Louisiana; Nashville, Tennessee; and Seattle, Washington. The state is losing valuable talent that should be building the music industry for years to come: Artists, songwriters, producers, venue owners, booking agents, artist managers, lawyers, sound engineers, and other supporting services professionals are leaving. The main reason for this is that Georgia does not offer a competitive business landscape that entices industry professionals to call it home. And this, indeed, is exactly why GMP is advocating for changes.

We believe that the future of the music industry in Georgia is rooted in quality education, followed by providing a solid business platform that helps develop the right areas of growth in the local scene. This is why GMP has made the promotion of music and music business education in Georgia a priority, and why we advocate for specific government and private sector initiatives.

EducationGeorgia has more than 50 post-secondary education programs in music-related disciplines at institutions including Georgia State University,

University of Georgia, Kennesaw State University, Clayton State University and Georgia Institute of Technology. These programs have forged meaningful partnerships within the music industry to create real-world opportunities for students – furthering education, internships and jobs. Georgia Tech’s Center for Music Technology is spearheading the development and deployment of innovative music technologies that transform the ways in which music is created and experienced. However, retaining this young talent in Georgia after graduation remains a challenge. The state may benefit from enhanced music industry education initiatives that are synchronized with post-graduation initiatives in the sector.

Private Sector New technologies are enabling individual musicians to accomplish things unheard of only a few years ago. Composers can use software to experiment and extend talent in new ways. The role of record labels is diminishing as more artists have the capacity to perform most, if not all, aspects of recording from their home studios with their own equipment. “Do it yourself” tools and services have lowered the entry bar for distribution and sale, although the marketing aspect of the business— getting heard and noticed — remains the ultimate challenge (and opportunity) in the business.

THE CURRENT STATE OF GEORGIA’S MUSIC INDUSTRY


New business models have emerged for distribution, including download stores, streaming, and subscription services. Far fewer such high tech enterprises exist in Georgia when compared to its “competitor states,” as noted above. Other

growth opportunities exist in the areas of live performances and post-production work. We will dive deeper into growth opportunities later in this document.

Music Industry Activity 2009

Sector stnemhsilbatsE Employment Labor IncomeHousehold AV Equipment, CD,Tape, and Record Manufacturing 43 1,258 $93,301,837

453,008$ 22 31 gnirutcafunaM tnemurtsnI lacisuMMusical Instrument and Supplies Stores 141 887 $23,598,487

875,245,7$ 663 901 serotS droceR dna ,DC ,epaT dedrocererPRecord production 20 34 $1,550,278Integrated record producti 924,219,3$ 34 81 noitubirtsid/noMusic Publishers 19 74 $9,977,279

104,020,6$ 072,1 303 soidutS gnidroceR dnuoSFine Arts Schools 310 1,371 $18,294,971

128,487,42$ 305 261 stsitrA dna spuorG lacisuMPromoters of Performing Arts with Facilities 33 1,117 $182,494,485Promoters of Performing Arts 436,303,75$ 972 64 seitilicaF tuohtiwAgents 106 170 $9,640,842

465 sremrofreP dna ,sretirW ,stsitrA tnednepednI 1,447 $46,432,049Total 1887 8,842 $485,654,445

Note: NAICS 334310 and 334610 (both manufacturing) are combined to preserve confidentiality

Industry Average Wage and Firm Size Annual Average Wage Average Employees

Per Employee Per Establishment Household AV Equipment, CD,Tape, and Record Manufacturing $74,172 29

2 179,53$ gnirutcafunaM tnemurtsnI lacisuMMusical Instrument and Supplies Stores $26,597 6

3 616,02$ serotS droceR dna ,DC ,epaT dedrocererPRecord Production $45,117 2

2 411,09$ noitubirtsiD/noitcudorP droceR detargetnIMusic Publishers $134,374 4

4 047,4$ soidutS gnidroceR dnuoSFine Arts Schools $13,345 4

3 023,94$ stsitrA dna spuorG lacisuMPromoters of Performing Arts with Facilities $163,379 34Promoters of Performing Arts 6 441,502$ seitilicaF tuohtiw Agents $56,822 2

970,23$ sremrofreP dna ,sretirW ,stsitra tnednepednI 3Total $54,924 5

Georgia Average $41,711 12


GEORGIA’S DIRECT COMPETITION FOR MUSIC BUSINESS

We have identified five other states and cities that have forged an aggressive music business advocacy of the type GMP aspires to, and we consider these locations to be our main U.S. competitors (although California should be included in this list as well):

LouisianaKnown as “The Birthplace of American Music,” the state boasts a rich history in jazz music, highlighted by the Louisiana Music Hall of Fame

in Baton Rouge. Louisiana has made a recent push to promote and improve state-of-the-art facilities across the state including the historic New Orleans-based Saenger Theatre and Civic, Joy, and Carver

Theaters, along with the Shreveport-based Jimmy Buffet’s Paradise Theater. The Tipitina’s Foundation facilities in Baton Rouge, Lafayette, Lake Charles, Monroe, New Orleans and Shreveport support the music community through programs including fundraisers, music workshops, student internships, and co-ops.

Louisiana offers a 10-25 percent tax credit for live performance production expenditures and state certified higher education musical or theatrical infrastructure projects of at least $300,000 that originate in the state. Live performance productions generate a substantial number of

temporary employment opportunities, and an additional 10 percent tax credit is provided for payroll expenditures to Louisiana residents. Additionally, Louisiana offers a 25 percent refundable tax credit on qualified expenditures of at least $15,000 for sound recording productions. For digital interactive media production, Louisiana provides a 25 percent tax credit on qualified production expenditures and a 35 percent tax credit for Louisiana resident labor expenditures.

Furthermore, Louisiana extends industry expertise and opportunities for collaboration with the state’s top educational institutions to the owners, developers, and producers of live performance infrastructure and production projects.

NashvilleNashville, widely recognized as “Music City USA” and home of The Country Music Hall of Fame, is a mecca for music recording and live

music production. The Nashville music industry generates an annual economic impact of $10 billion,

according the Nashville Music Council’s 2013 annual report. The study also revealed that the Nashville area annually creates and sustains more than 56,000 jobs, which is more than any other U.S. city in relation to population and total employment, while producing more than $3.2 billion in labor

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income. Nashville tourism, driven largely by the city’s musical identity, generates more than $4 billion annually. The Nashville Convention and Visitors Corporation has been assertive in promoting and featuring music as a core of the Nashville visitor experience. Nashville possesses the greatest aggregation of catalog holdings in genres including, but not limited to, country music, folk, Celtic, classical, Americana, and Christian. Additionally, there are major rock and pop catalog holdings that are monetary treasures of firms based in Nashville.

Traditionally known for country music, musicians from a wide range of genres are migrating to Nashville to leverage the city’s vast labor resources and music infrastructure. The success of Emmy-nominated ABC program, “Nashville,” filmed on location and featuring original songs recorded by local artists, has brought substantial visibility to the music business and music tourism elements of the city. Over the past decade, Nashville and the state of Tennessee have been very successful in working together with private businesses to further enhance the city’s creative culture.

New YorkA group of music industry figures, worried about the flight of music production and related jobs from New York to states like Texas and Tennessee,

is encouraging the State Legislature to pass a bill to give $60 million in tax breaks each year to studios, record companies and others involved in the creation of music. “The

epicenter of the global music industry was New York, for as long as anyone can remember, and now that’s slipping away,” said Justin Kalifowitz, chief executive of Downtown Music Publishing and a co-founder of New York Is Music, a new coalition supporting the effort. “That’s something we have to stop.”

The plan was based on New York’s $420 million tax credit program for film and television production, which has been cited as an important factor in the growth of those projects in the state over the last decade. According to a 2012 study commissioned by the Motion Picture Association of America (MPAA), in-state spending by film productions that have received the subsidy grew from $600 million in 2004, when the credit was introduced, to $1.5 billion in 2011.

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SeattleSeattle, branded as “The City of Music,” drives a music industry that directly creates over 38,000 jobs, with $4.6 billion in sales and $1.6 billion in

labor income, according to a 2008 study by the Seattle Music Commission. Seattle’s Chamber of Commerce has partnered with the City of Seattle to form the City of Music initiative, an aggressive

B2B economic development campaign seeking to connect artists, content creators and entrepreneurs in interrelated media industries for the year 2020 across three categories: “City of Musicians,” “City of Live Music,” and “City of Music Business.” By identifying innovative new areas for economic action and by leveraging local creative assets to their full potential, the City of Music initiative is aiming to position Seattle as a global leader in digital media creation and distribution.

TexasTexas has established a Texas Music Office under the Governor’s jurisdiction, which acts as a clearinghouse for Texas music industry information

using a “Business Referral Network.” The function of this office includes publicity for the local music industry and liaising services for businesses, talents and events in the state. Their stated goal is to attract new business

to Texas and encourage Texas businesses and individuals to keep music business in-state.

The Texas music industry’s crown jewel is the city of Austin. Austin is branded the “Live Music Capital of the World” and serves as a creative hub for musicians. The city is home to the internationally acclaimed South by Southwest (SXSW) festival and the PBS-televised Austin City Limits Music Festival. Austin’s creative sector contributes just over $4.3 billion annually to the local economy, according to TXP, Inc.’s 2012 creative sector economic impact study. Of that total, nearly $1.7 billion, or 38.1 percent, is from live music and music tourism.

Musician’s wages have remained stagnant as housing costs increase. Initiatives from the Foundation Communities and Housing Opportunities for Musicians and Entertainers offer housing to musicians at reduced, affordable rates, which enables Austin to attract and retain musical talent within the city. Many Austin musicians are often unemployed or underemployed with no access to health insurance or basic health care. The Health Alliance for Austin Musicians and the SIMS Foundation enable thousands of low-income, uninsured working musicians to receive health care to improve their quality of life. More information is available at http://austinmusicpeople.org.

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Georgia’s music landscape is culturally diverse across geographic regions, including Atlanta,

Athens, Macon, Augusta and Savannah. Each region showcases a variety of personalities and specialties. Since these areas are largely isolated from one another, they would all benefit from an overarching, state-wide initiative to promote Georgia’s collective music assets and

history. In other words, GMP promotes state-wide initiatives as opposed to city-specific ones.

AthensOnce named by Rolling Stone magazine as “The #1 College Music Scene in America,” Athens is home to dozens of live music clubs, including the 40 Watt Club. Hundreds of musicians call Athens home as well as several companies that involve talent and working musicians, such as the Georgia outpost for New West Records; Team Clermont, a music public relations, publicity, and radio promotion firm; and Nuçi’s Space, a non-profit organization working to prevent suicide and assist in the emotional, physical and professional well-being of musicians.

For more than 35 years, the 40 Watt Club has been one of the most famous and iconic music venues and has been a home to Athens’ most beloved bands, including R.E.M., the B-52’s, Pylon, Love Tractor, Vic Chesnutt, Olivia Tremor Control, Five Eight, Neutral Milk Hotel, Jucifer, Drive-By Truckers, of Montreal, The Whigs and Maserati. Over the years, many famous artists have made 40 Watt Club a tour fixture including Nirvana, Snoop Dogg, Iggy Pop, The Strokes, Run-DMC, The Killers, John Mayer, Kings of Leon and Kenny Chesney, among many others.

AtlantaThe state’s capital is Georgia’s music nerve center with recording studios that have produced hit singles and albums in every genre; large entertainment venues such as Philips Arena with a capacity of over 17,000; historical venues such as the Fox Theatre; outdoor venues such as the Lakewood Amphitheatre; and small, yet nationally recognized venues such as Eddie’s Attic, with a capacity of about 175. Atlanta also contains a variety of production services companies, including rehearsal studios, and sound and lighting companies, as well as professional services firms, including national artist management agencies and entertainment law practices.

GEORGIA’S MUSIC CENTERS

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AugustaThe town draws on its own heritage with branded performing arts venues, including the James Brown Arena, the Jessye Norman Amphitheatre, and the Lady Antebellum Amphitheatre. The city has been successful in using music to raise money for charitable causes through organizations such as 12 Bands of Christmas, the annual Rock Fore! Dough concert and Friends With Benefits.

MaconThe city’s rich music heritage draws visitors to the Allman Brothers Band Museum at the Big House, the Otis Redding Statute on the Ocmulgee and the Tic Toc Room (named for the original club where Little Richard once performed). Macon was also home to the Georgia Music Hall of Fame from 1996 until 2011 when it closed due to lack of attendance and funding cutbacks.

SavannahThis coastal city is a music instrument manufacturing hub that is home to The Gretsch Company, a fourth generation, internationally known musical instruments manufacturer; Benedetto Guitars, the world’s foremost maker of custom archtop jazz guitars; JodyJazz, a manufacturer of saxophone and clarinet mouthpieces; and Randy Wood Guitars, where one of the country’s most renowned luthiers crafts guitars and mandolins. Savannah also hosts the annual Savannah Music Festival, drawing thousands of visitors and increasing jobs and revenue.

“Georgia should do more to support its diverse music industry. ”

Joel Katz

Atlanta Founding Shareholder Greenberg Traurig


INDUSTRY SECTORS

The Creative CommunityGeorgia’s musicians and creative community boast a rich legacy, going back to music legends like Little Richard, James Brown and The Allman Brothers. In the ‘80s, the alternative scene in the college town of Athens gave birth to pop and alternative music legends such as REM and the B52’s. Atlanta-based record companies flourished while promoting both urban and rock artists. Examples include Ichiban Records’ promotion of Sir Mix-a-Lot, MC Breed’s base music, and early releases by blues diva Francine Reed as well as Capricorn’s promotion of The Georgia Satellites. Other notable acts include Drivin n Cryin, Shawn Mullins, Indigo Girls, Collective Soul and Matchbox 20.

Throughout the ‘90s and into the new millennium, Atlanta solidified its position as a go-to location for breakout artists, as L.A. Reid developed many multi-platinum acts in Atlanta (including Kanye West, Mariah Carey, Justin Bieber, Rihanna, Toni Braxton, Pink, Avril Lavigne, Paula Abdul, and local talents such as Usher, OutKast, and TLC, among others); and Brendan O’Brien set up shop in Atlanta recording the likes of Bruce Springsteen, Pearl Jam, Stone Temple Pilots, Train and more. This creative community was surrounded by many supporting segments of the industry, including producers such as Kenneth “Babyface” Edmonds, Jermaine Dupri, and Matt Still along with studios, managers, and lawyers.

Atlanta-based law firm Katz, Smith & Cohen emerged over the decade as one of the top music law firms in the country, eventually merging into Greenberg Traurig. Founder Joel Katz sponsored the Music & Entertainment Business Program at Kennesaw State University, which bears his name.

Today, Georgia continues to serve as a hotbed for new talent in multiple genres, such as LaCrae’s Christian hip-hop, Sharon Jones’ Motown-style soul music, Deerhunter’s and Manchester Orchestra’s alternative musings, country stars such as Lady Antebellum, Sugarland, Third Day, and Zac Brown, and rock acts such as Mastodon and Civil War History.

However, many such artists end up leaving town for other cities, or engaging in business with managers, record companies, and agents in other cities. Most Georgia-based record companies have disappeared over the past decade, and many top producers have left for Nashville, LA and NYC. Atlanta lacks a unified music business center akin to Nashville’s “Music Row” or Los Angeles’ Hollywood, where artists can manage the entire lifecycle of their career within the local community. This challenge is one of the opportunities GMP intends to tackle.


Media Post-Production OpportunitiesThe Georgia Entertainment Industry Incentive Act provides up to 30 percent in transferable tax credits for production expenditures, which includes post-production and original music scoring (excluding development costs, promotion, marketing, license fees, and story right fees), for qualified productions including feature films, television projects, music videos, advertising, interactive entertainment, and animated projects.

ADRAutomated dialogue replacement (ADR) is a process of re-recording dialogue in the studio in synchronization with film. Atlanta is home to many music and sound design studios that have received post-production ADR credits and recorded production music for large films, television shows, video games, advertisements, and other sources of media – and yet most of this work for films shot in Georgia is still being outsourced to other cities. Most of this work currently takes place in either Los Angeles or New York where a 30 percent tax credit exists for production inside the five boroughs, as well as a 35 percent tax credit for production outside the five boroughs.

Production MusicProduction music companies produce recorded music that can be licensed to customers for use in such media as radio and television broadcasts, commercials and jingles, as well as scores and soundtracks for motion pictures and video games. Production music library owners include many of the major music publishers in Los Angeles, New York, and London. Fees are paid upfront to

the library for permission to use the music. In the U.S., the libraries determine their own licensing fees. In the U.K., licensing fees are standardized by the Mechanical-Copyright Protection Society. Broadcasters pay these fees to performing rights organizations such as the American Society of Composers, Authors and Publishers, Broadcast Music, Inc., and the Society of European Stage Authors and Composers, who then pay their members. The music library and the composer typically split the performance income 50/50.

An original score from a composer enables greater flexibility and creativity than licensed production music. However, without proper soundstages and convertible recording space for film scoring, Georgia is unable to perform this work for projects that are currently being filmed within the state and throughout the southeastern United States.

Traditionally, most media scoring has taken place in Los Angeles and New York where the major film studios and broadcast television networks are headquartered. Media scoring opportunities have grown tremendously throughout other regions of the country and cities, such as New Orleans and Shreveport, Louisiana; Nashville, and Seattle have capitalized by building sufficient soundstages and recruiting the right talent to complete projects at lower costs than Los Angeles and New York-based facilities.

In Louisiana, media scoring is quickly becoming an important part of the statewide music production mix. Esplanade Studios of New Orleans was opened in 2013 as the state’s largest recording studio. BLADE Studios in Shreveport offers a state-of-the-art recording space for film scoring and ADR. Incentives for recording at BLADE Studios


include a 25 percent cash rebate of all expenses, including all travel and equipment, as well as a 35 percent tax credit of all expenses toward completing a film’s audio post-production at BLADE Studios.

Media scoring in these competing cities is closely tied to higher education programs at local colleges and universities, including the following: NYU Steinhardt School of Music – master’s degree and undergraduate non-degree programs (New York City); Berklee College of Music – master’s and undergraduate degree programs (Boston); Seattle Film Institute/Pacific Northwest Film Scoring Program – master’s degree and professional certificate programs; UCLA Herb Albert School of Music – graduate certificate program (Los Angeles); USC Thorton School of Music – graduate certificate program (Los Angeles); and University of Texas School of Music – media scoring graduate courses (Austin).

What’s happening in Georgia? Much of the talent needed for media scoring already exists within Georgia. The state is rife with professional musicians and orchestras, which include the Albany Symphony Orchestra, Atlanta Symphony Orchestra, Atlanta Philharmonic Orchestra, Atlanta Pops Orchestra, Augusta Symphony Orchestra, Columbus Symphony Orchestra, Georgia Philharmonic, Georgia Symphony Orchestra, LaGrange Symphony Orchestra, Macon Symphony Orchestra, Macon Pops Orchestra, New Trinity Baroque, Ocmulgee Symphony Orchestra, Rome Symphony Orchestra, Savannah Philharmonic Orchestra, and Valdosta Symphony Orchestra.

With sufficient media scoring infrastructure, and the backing of financial incentives, local businesses should be able to escalate growth. Emulating what competing cities and states are offering businesses is critical in becoming competitive in this space. In addition, Georgia could partner with statewide film festivals and begin hosting media scoring seminars and workshops to promote creative and technological advancement while showcasing local media scoring assets to lure new business activity. Much of this is currently taking place in other parts of the country. Georgia Music Partners, Georgia Production Partnership, and Georgia Game Developers Association have the opportunity to join forces and promote this homegrown business as well as promote national and international opportunities in media post-production.


LIVE MUSIC AND ENTERTAINMENTFestivals significantly impact local and state economies by driving tourism and generating substantial revenue for local businesses while creating a large number of jobs. They bring together various creative industries to provide professionals, local residents, and visitors the opportunity to engage in art, technology, and commerce.

The National Landscape

The nation’s largest festivals generate international media coverage that brands host cities as premier breeding grounds for innovative and creative exchange.

SXSWAustin, Texas is home to the SXSW festival, the world’s premier film, music, and interactive conferences and trade shows event. It began in

1987, and has continued to grow in both size and scope every year. In 2013, the event lasted nine days and included a 4-day trade show, a 6-night music festival featuring more

than 2,200 bands, and a 9-day film festival with more than 400 screenings. The festival attracted more than 300,000 people from around the world and produced over $218 million in annual impact, according to a report by Greyhill Advisors. The annual Austin City Limits Music Festival, which celebrates its fourteenth year in 2014, generates over $100 million in economic impact for the city, according to festival organizers.

The Coachella Valley Music and Arts FestivalThis Indio, Calif. festival signed a 17-year deal in 2013 with its venue. The festival spans back-to-back weekends with many attendees staying

throughout the entire week. An estimated $254 million in local

impact and $500 million in global impact is created along with over 30,000 jobs. In 2014, over the nine-day period, the festival recorded 579,000 attendees and $78,332,000 in gross revenue, according to a presentation by the Development Management Group, Inc. The weekend following Coachella, Goldenvoice produced the Stagecoach country music festival, which drew a total attendance of 190,200 and $18,615,000 in gross revenue.

LollapaloozaThis is an annual music festival hosted by Chicago featuring popular alternative rock, punk rock, heavy metal, hip-hop, dance, and comedy

performances. In 2012, Lollapalooza had an economic impact of $120

million and brought more than 300,000 attendees, according to the Chicago Mayor’s Office. The festival is also a tremendous tourism driver. In 2012, 80 percent of total attendees were visitors from outside Chicago; 59 percent of total attendees were from outside of Illinois; and 11 percent of total attendees were from outside the United States. That year, Lollapalooza generated an estimated $85 million in local spending at hotels, restaurants, and clubs.


The Bonnaroo Music FestivalTaking place in Manchester, Tennessee, this is a four-day camping festival, which generated over $51 million into the state and local economy in

2012. The festival drew attendees from all 50 states as well

as thousands of international visitors. Co-produced by Knoxville-based AC Entertainment and Superfly Productions, the festival had direct expenditures from attendees of $36 million and an additional $15 million in indirect and induced economic activity, including increased sales, income, and jobs. Attendees spent an average of $86 per day during the festival, according to a report from Greyhill Advisors.

The New Orleans Jazz and Heritage FestivalThis event is a celebration of local New Orleans and Louisiana music culture. The festival drew

an estimated 435,000 attendees in 2014. In 2013, the festival created an economic impact greater than $300 million, according to jazzfestandheritage.org. The festival is held on Friday through

Sunday of the last weekend in April, and Thursday through Sunday of the first weekend in May.

Georgia’s Music Festival Market Segment Currently, more than 40 statewide music festivals occur annually in Georgia. As travelers visit cities to attend music-related performances, festivals, attractions, and landmarks, both the music and tourism industries benefit communities statewide. Georgia can utilize its existing assets, create new assets, and retain talent through the continued development of large-scale festivals.

TomorrowWorldThis electronic music festival is held annually in Chattahoochee Hills. In 2013, the festival generated $85 million in economic impact, $70

million of which was in greater Atlanta. This is the same amount brought in by the 2013 NCAA Final Four basketball tournament. At the 2013 festival, 70 countries were represented as 12 percent

of attendees came from outside the U.S. while every U.S. state was also represented. The festival employed the equivalent of 749 full-time jobs. An estimated $4.3 million in tax revenue went to the state and local governments as a result of event-related spending. Roughly 22.5 percent of TomorrowWorld attendees spent several additional days in the Atlanta area, adding $28.7 million into the local economy, according to a study by Beacon Economics.

Music MidtownThis large music festival in Atlanta returned in 2011

after a six-year hiatus. At its peak, the festival had an economic impact of $23 million.


CounterpointA three-day electronic music and arts festival held at Kingston Downs in Rome, Georgia. In

2014, the festival generated $3.5 million in economic impact to grocery stores, restaurants, gas, and hotels to the Bartow-Floyd County

Line area with an estimated 65,000 attendees over the course of three days.

The Savannah Music FestivalThis even lasts 17 days and is Georgia’s largest music festival as nearly 500 artists from around

the world participate. In 2014, the festival attracted more than 37,000 attendees, 37 percent of which came from more than 200 miles away, stayed an average of 4.5 days, and spent $465 per day in Savannah. The festival organizers host writers from key Georgia

tourism markets, which include the U.K., Germany, France, and Canada. The festival generated nearly $1 million in local tax revenues, representing a 10-to-1 return on public investment. Ticket sales from the annual festival amount to only 40 percent of the festival’s annual $3.5 million budget. As a non-profit arts organization, the festival must raise the remaining 60 percent of the budget each year in order to produce the event along with year-round music education programs.

A3CA3C is one of the largest hip-hop events in the world with performances from well over 500 artists. The five-day festival encompasses all aspects of hip-hop culture, including music, art, film, style, and education. During the day

attendees are able to connect with and learn from tastemakers, icons, organizations, brands, and industry leaders, while evenings are filled with special events, parties, and performances from some of the

hip-hop industry’s most famous artists.

It is clear that the live music scene is a growth area for the music industry in general and for the State of Georgia specifically, and GMP is intent on advocating with government and businesses to promote and fund more growth opportunities in this sector.

Live Tour Rehearsal Market

Competitive regions, including Nashville and Louisiana, have engaged the live tour rehearsal market. Georgia would benefit from doing the same.

Prior to embarking on world tours, international touring acts need up to a month or more to set up stages, design, choreograph, and rehearse shows. Typically, these touring operations cost $300,000-800,000 per artist for four weeks of rehearsal and create an average of at least 100 temporary jobs.

The 2009 report “Using Arts and Culture to Stimulate State Economic Development” notes, “Companies’ decisions about where to locate their businesses are often influenced by factors such as the availability of a creative workforce and the quality of life available to employees.”

For Georgia’s music industry to retain existing labor resources, attract new opportunities, and grow its competitive position, an emphasis must be placed on the value propositions being delivered to music artists and music industry service professionals across the state. Steps must be taken


to fully develop and utilize the state’s existing and prospective music assets as well as leverage all of Georgia’s entertainment sectors while creating a collective brand identity that represents Georgia’s proud music past and its ambitious future.

Music High TechAs technological advances continue to drive the digital consumption of music, technology entrepreneurship is emerging in the Atlanta area creating opportunities in production music licensing, digital distribution, music promotion, and live music production. In 2013, Atlanta ranked 14th nationally among the top-20 metro areas in high-tech job growth, according to CBRE’s U.S. Tech-Twenty: Measuring Office Market Impact research report. Also, Georgia is second in the nation as having the largest increase in entrepreneurial activity during the past decade, according to the Kauffman Index of Entrepreneurial Activity.

Recent Atlanta-based technology-enabled entertainment start-ups include production music licensing platforms Affix Music and Placement Music; ticketing company TicketAlternative; music gamification apps such as Zooz and Songster; social marketing firm Free All Media; and digital distribution and promotion platform Neurotic Media. Additionally, large local corporations have engaged the digital music space, such as The Coca-Cola Company’s activation of a global music department; Cox Communications’ investment in music start-ups, and the music licensing and production activity of multiple Turner Broadcasting assets, including CNN and Adult Swim.

With technology being the new “star” for the Y generation, music has become part of a bigger entertainment plain in the past decade. The fastest growing segment of the music industry at large is the high tech section, fueled by the rise of Apple’s iTunes, Amazon MP3 store, Google Play, Microsoft’s X-Box, and in the most recent years, Spotify, Pandora, XM Sirius and iHeart Radio. The latest RIAA statistics show that music distribution is divided into three almost even parts as of mid-2014: Physical (CDs and vinyl, with CDs constantly shrinking); downloads which represent pay-to-own (with this year being the first to show their growth slowing and for some actually starting to shrink); and streaming which represents pay-to-access (which is in fast growth mode).

While traditional brick and mortar chains are shrinking their music product footprint in stores every year this past decade, the growth of digital delivery is constantly increasing as a portion of the music industry’s product sales business. Shoppers have embarked on a paradigm shift in consumption, shifting culturally from “ownership” to “access” as the preferred business model. With the overall model still in constant flux, there are growing opportunities for music business entrepreneurs to build scalable, sustainable music businesses. Interestingly, many of the founders and managers of today’s top digital music companies boast a music-oriented background such as musician, producer, or business manager. In other words, the technology-enabled side of the music business is, to a large extent, driven by music industry people.


In our research and competitive analysis of strong music industry communities, we found a number of areas to focus our efforts. Georgia Music Partners will continue to focus on public private partnerships to strengthen Georgia’s music economy alongside Georgia Department of Economic Development’s Music Office, Georgia Lawmakers, educational institutions, and the Georgia music industry community.

These recommendations could help move Georgia towards attracting more Music Industry Technology companies, retain homegrown talent as well as support music entrepreneurs in partnering with existing Georgia businesses.

The following are preliminary ideas about initiatives that GMP considers to be its key advocacy segments:

Marketing Georgia’s Music Scene Georgia Tourism Tourism is Georgia’s second biggest business (surpassed only by Agriculture), and the state ranks eight in the nation in tourism economy with a total annual impact of more than $53 billion (supporting more than 10 percent of all payroll employment in Georgia, according to the Georgia Department of Economic Development).

However, according to the Georgia Chamber of Commerce, “Every Southeastern state that directly competes with Georgia invests 40 percent to

400 percent more than Georgia in state-funded advertising and promotion…Studies project that additional investment in Georgia tourism could generate up to $1 billion in additional revenue for Georgia and maintain/grow the state’s competitive position.”

In 2012, Atlanta generated $11.6 billion in direct visitor spending compared with Nashville – $4.61 billion and Austin – $4.3 billion, according to the U.S. Travel Association. It is reasonable to assert that a much larger share of Nashville and Austin’s tourism is driven by the music industry than that of Atlanta. Thus, growth in the Georgia music industry’s tourism elements, as previously mentioned, will directly expand Georgia’s overall tourism industry.

For Georgia’s entertainment industry to reach its full potential from a branding and revenue-generating standpoint, each sector (film, music, and digital/interactive/gaming) must cross-promote and leverage one another’s resources. The Georgia film industry generated an economic impact of $5.1 billion during Fiscal Year 2014 and created $3.8 billion in total wages from almost 78,000 jobs. Also, the 158 feature film and television productions shot in Georgia spent $1.4 billion during that time, according to the Motion Picture Association of America. The Georgia video game and digital entertainment industry generated an estimated $1.9 billion in 2013, according to

GROWTH OPPORTUNITIES

For Georgia’s entertainment industry to reach its full potential from a branding and revenue-generating standpoint, each sector (film, music, and digital/ interactive/gaming) must cross-promote and leverage one another’s resources.


The Georgia Game Developers Association in conjunction with Georgia-based tax, accounting and business consulting firm Habif, Arogeti & Wynne, LLP.

Establish a dedicated music marketing budget as recommended by the Georgia House Music Study Committee (report released January 2014) There is currently zero financial allocation to market Georgia’s music tourism elements, including concerts, festivals, and award shows. GMP will work to change this. Austin, Texas currently employs four full-time staff in their music division. New York, Nashville and Austin each have a cohesive music commission comprised of organizations, institutions, large and small businesses, artists and state and local government agencies which work closely together on music specific targeted marketing efforts. Building awareness of Georgia’s vastly talented music community and world-class recording facilities will help strengthen the film, television and gaming industries, moving Georgia closer to becoming as a fully functional global entertainment epicenter.

By creating a synergistic working relationship with other entertainment sectors, each sector may prosper beyond what they are capable of otherwise.

Music Award Shows Music award shows generate tourism revenue similar to that of sports events such as Atlanta’s NCAA Men’s Final Four and the SEC Championship football game. The 2010 Country Music Awards in Nashville generated over $3 million in direct visitor spending, according to the Convention and Visitors Bureau. The 2014 MTV Video Music Awards generated an estimated $50 million for Los

Angeles County, according to a study by economic research firm Micronomics.

n Atlanta has successfully hosted the BET Hip Hop Awards the past nine consecutive years. The Hip Hop Awards highlight Atlanta as an urban music epicenter and feature many of Georgia’s homegrown artists. However, Georgia does not host any other music award show and there is no current initiative to attract more. Hotel rooms, eating and drinking in local restaurants, and transportation all contribute to the local economies during award events. Therefore, GMP considers this an opportunity, as well, and is keen on working with local businesses and legislators to promote such an initiative.

Collateral Materials Creating a cohesive brand and to market Georgia’s music scene uniformly through several assets can go a long way in driving measurable results:

Logo: One of the ideas GMP is exploring is creating a local music industry logo which can be used by any music business within the state – tagging concerts, recorded media, and any related physical and digital materials. This would be akin to the state logos one often sees in films that are shot in Georgia, Louisiana, and some of our other competitive states (as well as Australia, Canada etc.). A “music made in GA” sort of logo.

Website: You’re on it. GMP is investing in growing its infrastructure not only in order to inform the world of what music people are doing in Georgia, but also to create an internal network for the state. Please sign up to our


email list to receive our free newsletters; join our meet-ups and mixers; and join us to help make a difference. We are also working on an archival page on the site where local businesses can create profiles, resulting in a music business directory of sorts, which can help both local and out-of-state parties identify the right music person or business for any music–related task.

Live Tour and Rehearsal Incentive Live tours on the scale of Garth Brooks, Beyonce, Dave Mathews, and Kenny Chesney are large operations. The band and crew set up shop often up to a month to build/design sets and rehearse (similar to TV productions). The average pre-tour production spend on shows of this magnitude ranges $300,000 - $800,000. Louisiana the State works with the music industry and private companies to attract and bring in more music focused businesses, such as these. *In 2014, Pinewood UK hosted the Foo Fighters at one of their sound stages for their pre-tour rehearsals.

Industry Trade Missions: GMP believes there is a lot to learn from other states and cities that have produced successful music industry platforms using incentives. We also believe that Georgia’s music industry needs to advocate its case at leading industry markets. To that end, GMP plans to advocate for a budget (state, city, and private sector) to be allocated to an industry trade mission to Los Angeles to meet with key industry executives to raise awareness of Georgia’s current tax incentive and explore other initiatives that we can add to our advocacy roadmap.

Advocating for financial investment and business incentivesWe believe there are two main levers to consider in this section:

n Tax Incentives

n Investment Incentives

Tax Incentives Tax incentives may prove a strong tool that helps increase funding for music education and music businesses alike. Such incentives have proven to work well at competing states, as well as in Georgia with respect to the film industry, which is a good model to review and emulate.

n In 2008, Georgia implemented one of the country’s most aggressive film tax incentive programs. The economic impact of this program in 2012 is estimated at more than $3.1 billion, according to the Georgia Film, Music and Digital Entertainment Office. The industry provides an estimated 25,000 jobs, of which 11,000 are full time.

n This film industry incentive allows for up to 30% of a studio or business’ production expenditures to become transferable tax credits. The program is available for qualifying projects, including feature films, television series, commercials, music videos, animation and game development.

While this benefit may impact music video productions and music pre and post production for movies, those sections represent but a small portion of Georgia’s music industry, which means the majority of music industry activity in Georgia is not enjoying the benefits of this tax credit.


While the film, TV, and gaming industry sectors are booming in Georgia, the music is lagging behind and bleeding talent to other states. GMP believes we need dedicated assistance in order to bring the music industry in Georgia up to par with the other entertainment sectors. Georgia has an opportunity to make a significant, positive impact for its music industry by creating a similar, measured incentive for music people to that created for film. Such a program should emulate the strong points of the film program, and implement best-practices that drive the strongest value for both music people and the state.

GMP seeks for such new incentives to create enhanced opportunities to record music not only for film projects being shot here, but also for the wider music community that seeks to record in Georgia; practice live shows in Georgia; or run a music business of any kind within the state.

In order to compete with other states, GMP recommends reviewing the following options:

n Revise the existing “Sales Tax Holiday” to include musical instruments, musical instrument accessories, and music software/hardware.

n Extend Sales and Use tax exemptions to recording studios and producers similar to Texas’ current exemptions.

n Standalone Musical and Theatrical Production Tax Incentive. Louisiana offers between 10-

30% incentive to musical tours that originate and rehearse in their market. New York State also encourages pre-tour activities with a 24% credit.

Investment Incentives As the number of high-tech start-ups in Georgia continues to grow, early-stage funding remains an obvious challenge. There are only a handful of early-stage funding resources for such companies in Georgia – such as the Atlanta Technology Angels (ATA), Seraph Group, and many individual investors, also called “Angel Investors”1 which fulfill the early need of entrepreneurs, normally up to $1 million in funding. Music industry start-ups have leveraged resources both inside and outside the state to fund their growth and success, although while as the saying goes, “everybody loves music” and it is a sexy business to partake in, most local angel investors do not hold strong industry-specific knowledge and are not comfortable investing in music. As a result, Georgia struggles to deliver the same scope of funding opportunities as those found in Nashville, California, New York, and Boston for music companies.

When it comes to the next, larger funding stage of companies (normally a $1 million to $15 million range), Georgia has just a handful of Venture Capital (VC) firms, none of which specialize in entertainment as their market segment. As a result, companies must venture out of state for such funding needs. This is true for any music related

1 Angel investors are high-net-worth individuals who invest smaller amounts such as $25,000 or $100,000 in early-stage companies each (and by aggregating several such funding sources, new companies can amass nec-essary seed money to launch their business). There are several angel organizations in Georgia, as noted above; as well as several related networking events and resource centers for entrepreneurs – such as ATDC, Venture Atlanta, Atlanta Tech Village, and Angel Lounge.


start-up business, as well as artists – many artists would pursue sponsors in Nashville, LA or NY, for example. With major VC firms preferring to invest “close to home” (Palo Alto, NY, Boston, Chicago, etc.), Georgia entrepreneurs are at a disadvantage when competing for potential funding sources nationally.

Nonetheless, progress has been made. In 2013, the amount of venture capital invested in Georgia companies was the highest since 2008. Local companies secured a total of $411.8 million in venture capital, up from $262.8 million the prior year, according to the MoneyTree Report, published by PricewaterhouseCoopers LLP and the National Venture Capital Association, and based on data from Thomson Reuters.

It is important to note that while high tech companies are seen as hot investment opportunities, they are not the only such investment opportunities in Georgia when it comes to music. Other, more traditional music entities need such funding in multiple phases of their growth curve, including live show promoters, recording studios, and of course, artists themselves. In Nashville, for example, the music community tends to re-invest in itself often, funding artists, studios, and both traditional and new high tech businesses. With so many successful music entrepreneurs leaving Georgia over time to NY, LA, Nashville and elsewhere, Georgia is yet to develop a similar music business community that re-invests in itself.

Importantly, the state has several programs in place that help promote the growth of smaller companies. We encourage music people to take advantage of these opportunities.2

GMP is interested in promoting the following initiatives to increase investment in Georgia’s music industry:

State participation in funding Opportunities exist for the state to directly profit from start-up investment by participating directly in such activities. For example, for the state to participate 50/50 with each and every investment made into a music-related venture will send a strong signal to the investment community that their money is less at risk in Georgia, and that they have a strong and motivated partner in Georgia. This would not only further induce investors to open local offices and invest in Georgia music people and businesses, but also enable the state to profit as these startups reach exit. This will lead to a win-win situation for the taxpayers. Such investment can be made in new media companies, individual artists, traditional and non-traditional music businesses, and live entertainment productions. The state could set aside a yearly budget for this program, invite local businesses to participate, and perhaps invite individual tax payers to participate in similar fashion to how individuals can direct their Georgia tax payments toward certain schools.

2 These programs are primarily tailored for small and start-up businesses of all kinds (not specific to music), and seem competitive with what many other states offer as well – including (i) Small Business Tax Relief, (ii) Angel investor tax credits, and (iii) financing of up to $250,000 through the Entrepreneurial and Small Business Devel-opment Loan Guarantee Program. More information is available about these tools at www.Georgia.org.


Tax incentives for out-of-state VCs Opportunities exist to create a competitive platform for funding sources from outside the state. If a program existed which offered an advantageous tax profile for investors who move their funds into Georgia banks and who invest (or re-invest) in music companies. For example, introduce a reduced tax profile at a liquidity event for such investors; then Georgia would benefit financially in similar fashion to how the local film industry has enjoyed growth in recent years due to its tax credits.

Education: Preparing the next generation of Georgia’s music workforce We believe there is an ideal opportunity to enhance higher education for music people by offering strong and cohesive music and music business grants and scholarships in desired fields of music industry growth. GMP works with individuals, businesses, educators, and legislators to create

more opportunities for students seeking a career in music. We believe there is an opportunity to create music-specific programming in Georgia that will focus on both musicians and music business students, with the latter focusing specifically on areas of growth such as new music business models, live music business, post-production and other silos that may be identified over time. Our goal is to gain involvement and support from both the government and private sector. Specifically, Georgia’s current “High Demand Career Initiative” should include music to better prepare students for jobs that currently exist, particularly jobs that will continue to support growth in film, television and interactive media.

“ If we, as the creators, producers, engineers, promoters, distributors, consumers and fans of Georgia music, can come together as a community and find a single voice to rally behind, we have the opportunity to turn Atlanta into a true music capital. We can fuel an economic engine built on tourism, creative services and, above all, some great music.”

Brandon Bush

music publisher, Songs of The Architect; music director, Sugarland; songwriter, John Mayer, Train.


CONCLUSION

We have an impressive history to commemorate and preserve, and we are proud to tell it; and we have stiff competition ahead, and challenges to convert into opportunities; we are excited about the road ahead, and hope that you will join us in making a difference.

Our strategyGMP engages local and state government, schools, companies, and musicians to identify, develop and exploit opportunities to retain talent in the state. We seek to increase opportunities for both start-up and existing businesses and music people by leveraging statewide strengths and escalating revenue growth. The programs we seek to develop and promote start at the education stage and continue through the life cycle of a music person and a music company’s career. High level, three focus areas emerge:

1 Create and Market Brand Awareness for Georgia Music

2 Promote Growth In Georgia’s Music Economy

3 Advocate For Improved Partnership Between Education and Current Industry Needs

Please become a member and make a donation if you can, and at bare minimum, please stay involved by joining our free mailing list and continuing to spread the word about our advocacy work and about Georgia’s talented music people.

Visit www.georgiamusicpartners.org for more information and to get involved.

GMP would like to thank the following for their contributions to this report:Matt Daniels and Scott Mills, William Mills Agency Shachar Oren, Neurotic Media Jim Benson, BauerHaus Creative

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