After years of watching its income dwindle as it transitioned into the digital age the New Zealand music industry has turned a significant corner.

Recorded Music New Zealand CEO Damian Vaughan is cock-a-hoop that the wallets of the artists and labels he represents are looking a lot fatter.

The doom and gloom that had hung over the industry as it underwent its forced evolution from selling a physical to a digital product has lifted. The way New Zealand fans engage with music has changed, probably for the better.

Music consumption has settled into a pattern of streaming with a bit of the physical product on the side and the stormy seas of music piracy have calmed. Meanwhile the industry body has also figured out a way of measuring revenue from sychronisation, an important secondary income stream for artists whose work is used in advertising, film, television and gaming.

The future’s looking so bright that New Zealand musos can probably afford designer shades.

The Spinoff spoke to Damian Vaughan.

Hit us with the numbers – where are earnings at?

Last year was the local recorded music industry’s fourth straight year of revenue growth – up nearly eight percent to $108 million. This has come after 15 years of decline.

The year 2000 was the peak from a revenue perspective, at around $125 million. It was a vastly different type of industry, we were all selling CDs. Since that time we hit the bottom, and started to bounce back about 2014 when we got to $66m. We’re now back to around where we were in 2005, which was $111m.

Over that time certainly the sale of CDs declined and then digital downloads came to the fore, although they never really became the number one form of music consumption. And then we had this kind of double transition of the physical product, digital downloads and streaming happening on top of each other. That confounded matters, plus all through that period between 2000 and 2014 digital piracy was quite a big issue for our industry. It still remains an issue but it’s a different issue, I suppose. In some ways the forms of music consumption have alleviated that to a degree.

So in real terms we’ve got a way to go to get back to where we were?

That’s right, and if you adjust for inflation and so forth over that time it’s worse. It’s the same sort of scenario in print media, and in the broadcasting space, radio and television are going through the same difficulties and challenges. It’s an interesting beast. But the trajectory’s good. The last four years have been optimistic and positive and we’re certainly feeling that way, and there’s a lot more investment going on, especially in the local industry.

So streaming is where it’s at now?

Now our recorded music part of the business is 70 percent streaming, and five years ago was next to nothing.

It’s amazing how much it’s changed in such a short period of time.

It really is. I use Spotify three to four hours a day easy, and that translates to revenue returning to the industry. Every single stream is tracked and the value assigned.

And the physical product outsells digital downloads now?

That’s happened for the last few years. Digital downloads, while they still have a place, are pretty much just iTunes in New Zealand. They have a streaming product themselves with Apple Music so they’re operating in both spaces. iTunes is almost a legacy-style of format.

So this is people who don’t want to pay for a streaming service and just buy individual pieces of music?

Yes. Anecdotally I’ve heard of other reasons why people still use downloads. One big one is data issues. While Spotify does have offline capability, with a digital download you’re not subject to data use at all. Then another one which I thought was quite interesting is people who use products like Serato, the DJ software. They use downloads of digital files for that, they don’t use streaming technology. So there’s still a market there, clearly declining and diminishing rapidly, but I think it’s still probably got a few years to go until some of the tech sorts itself out and those two particular things are no longer an issue.

(Serato DJ software writes to say it now has streaming available.)

And sales of vinyl continue to rise?

Yes, vinyl’s been growing for the last six or seven years. Because the physical product in general is only 10 percent of the market, that vinyl portion has grown enormously, so it’s 20 percent of all physical product sales. It’s pretty cool, and we’re finding from our record company members and local artists that they like to do limited runs, they like to have special versions with extra songs, the packaging and so forth. It’s stuff they can sell at gigs, and has that little bit of novelty factor. For some of the older artists and older consumers there’s a nostalgia element as well. And you can charge whatever you like, typically they’d be $40 or $50 easy. It’s a premium product, absolutely.

What does this new environment mean for up-and-coming artists?

Mostly positive, but there are certainly challenges. The hardest thing is probably being able to cut through. You make your music available on a platform like Spotify where there’s 40 million songs available, and there’s no individual consumption going on any more, as a user you just have access to everything. So the ability to cut through has become maybe more difficult.

In saying that the opportunities are probably larger because those services are global, there’s a chance for Kiwis to enter the world stage. It’s actually easier than it’s ever been to expose themselves to a bigger audience.

What is more apparent is it’s difficult to sustain a living from recorded music if your audience is still New Zealand. You have to have a range of things going on with live performances and touring, radio, television and so forth. With this digital age and streaming platforms the goal is to export yourself. That’s always been the case for New Zealand artists, but in this age the barriers are lowered.

How would you characterise life for the music industry veterans?

Their music is being enjoyed by more people who are revisiting their catalogue, because they can. With a subscription streaming service you’re paying for access to the world’s music. Then that has also translated into the growth of vinyl, bizarrely. People have revisited content digitally and think, ‘oh yeah’, and they’ll go buy it physically. It’s a good thing for the legacy artists.

Tell us about synchronisation.

Synchronisation is not a new concept. It’s just this is the first time we’ve included it in our figures. We’ve retroactively applied it to the last two years. It’s when a piece of music is synced into something like an advertisement, tv programme, film or video game, and serves as the backdrop or a featured piece in that content. Advertising is the most lucrative part of that area, a major brand could pay a lot of money. Video games can be lucrative, but it would have to be an international one. Film can also be lucrative but generally only a big Hollywood film. And then tv is probably on the lower end of the spectrum. Those are all negotiated terms between the parties, there’s no set rate.

What is interesting is it actually grew a little bit last year, although it’s still a small part of the business. It’s a good bonus for artists if they can get it, and it can certainly expose their music to a whole different audience. One good example is Gin Wigmore who had one of her songs synced into a Heineken ad that was paired with the James Bond film Skyfall with their campaign globally. She would have gained a lot out of that.

Why have you not included that revenue before?

It was the collection of the data from local industry, it wasn’t always the best. We’ve improved that and are satisfied we can present a number that is reflective. We as an organisation don’t collect that information, we survey our membership for what’s been happening in that space. The rest of the metric, the streaming, physical product sales and so on is reported to us on a regular basis.

What’s a good example of a local artist who is thriving in this environment?

Six60 have got a great number of plays on streaming platforms, they’re getting good radio play.

They have another stream of income with their live performances – clearly being the first Kiwi artist to sell out Western Springs they’re doing very well.

Consumers are spoilt for choice and they rely on recommendations of what to listen to. What role does the music media play now?

Curation and recommendation have always been the way. It’s interesting when we do surveys on ‘how do you find out about new music?’ the traditional methods are still very popular, like radio. But streaming and the curated playlists that they are pushing to you is also another way. The other big one is social media obviously. Word of mouth and friends have always been important for music recommendations, but more recently it’s been the ease by which that can be shared by social media. Those are the three big platforms.