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Entertainment is big business in America

I used to think there were just three essential needs in life: food, clothing and shelter. There’s actually a fourth: entertainment. I wrote about this idea once before, but watching Ken Burn’s new mini-series on country music reminded me how much Americans spend on entertainment.

Housing costs eat up a massive chunk of Traverse City workers’ paychecks. Food gobbles up plenty of money, too. Clothing is a more variable household cost — it’s possible to spend very little on clothing by browsing at resale shops.

Then there’s entertainment, which eats up its own big piece of our paychecks.

My definition of entertainment is quite broad. Things like movies, television, board and video games, books, flying discs and backyard playground structures are entertainment. So are spectator sports events, concerts, casinos, boat rentals, trips to the beach, skiing, conversation and people-watching.

Once you set aside food, clothing and shelter — almost everything else we spend money on could be viewed as entertainment. Well, except for things people do to help others. Volunteering and philanthropy, perhaps, are a fifth category of essential use of time and cash.

Entertainers can make good money. A continuing theme in Burn’s documentary mini-series is that many music industry decisions are driven by profit. Country music is a business — for everyone involved, from the artists to the producers to the distributors. Employers and employees working in non-creative roles in the entertainment industry depend on the money-making ability of songs.

Research firm PwC (PriceWaterhouseCoopers) anticipates that annual revenue from media and entertainment will reach an estimated $2.2 trillion by 2021, according to a recent release. PwC research concentrates on the two major powerhouses in the modern entertainment industry — music and movies.

  • The music industry earned $43 billion in revenue in 2017. Headlining musicians themselves received 12 percent of that total, according to PwC. The other 88 percent went to company owners, executives, sales staffs, distributors, promoters, attorneys, clerical workers, drivers, studio technicians and other laborers in the massive music machine.

More than 70 percent of the music industry market revenue share is split between three major companies — Universal, Sony, and Warner. Today’s technology lets corporations sell access to music without actually selling the music. Less than 15 percent of music listened to in 2017 was owned by the listener — the rest was rented (streamed).

U.S. music royalties reached a record level of $7.3 billion in 2017. New artists typically collect somewhere between 13 and 16 percent of the published price of their music. The average price paid to an artist per stream on Spotify is $0.0043. On Apple Music, it’s $0.0078. On YouTube the average per-stream rate is $0.00074 — notice the extra zero in that figure — which translates to about 7/100 of a cent.

PwC also noted that music tends to remain within national borders, despite the global internet. In the U.S, 93 percent of music consumption is from U.S. artists. In Japan, 87 percent of music consumption is from Japanese artists.

  • Movie theater admissions in the U.S. and Canada hit a 10-year low last year, dipping 6 percent from the previous year, PwC said. Even so, the U.S. film industry generated $43.4 billion in revenue. Wages accounted for 18 percent of the total.

Sales and rentals of films in physical formats (mostly DVD) in the U.S fell from $25 billion in 2005 to $12 billion in 2016.

Seven major studios control at least 80 percent of the film industry’s revenue, led by Disney (18.2 percent), NBCUniversal (16.4 percent), Time Warner (16.2 percent); 21st Century Fox (12.9 percent) and Sony (12.1 percent). PwC said 54.1 percent of all films produced last year were action and adventure flicks.

Some people want to be entertained, but don’t want to pay. The most pirated film of all time — Avatar — has been illegally downloaded more than 21 million times, according to PwC.

Entertainment is big business. Successful entertainers — musicians, actors, professional athletes — collect big paychecks.

The buying public must prioritize food, clothing and shelter. But we need our entertainment, too — and most of us are willing to pay for it.

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