THE MUSIC INDUSTRY OF SPAIN

By: Kennedy Murakami

DECEMBER 6, 2017
MIDDLE TENNESSEE STATE UNIVERSITY
RIM 3890 - International Recording Industry
 History
Music
The start of Spanish music began when the Roman Empire brought the music of ancient Greece.

Later on there was an Arabic influence added during the Renaissance, which contributed to the

development of the Spanish guitar. Then during the rule of King Charles I, musicians began to travel

through the empire, which evolved the music even further with new mixing styles that they collected

during their travels. In the early 20th century, Spain saw a rise of folk music during Franco’s dictatorship

and after Franco’s death the Anglo-American music came back with the help of the “flamenco.” This is

when the rise of music festivals in Spain began. A lot of people think that the main influence on Spanish

music is flamenco, but Spain’s music varies by region. Some other notable influences are the “Jota” in

the northeast and the Irish influence in the north from the Irish instrument, the cornamuse (“Not Only

Flamenco - History of Spanish Music”).

Culture
Spain is known for a lot of cultural aspects such as their nightlife including food and drink as

well as their festivals. Spanish people have interesting cultural dining practices that tend to be much

later than other countries. Dinner can be as late as 9 or 10 at night, which relates directly to the nightlife

in Spain. In fact, a lot of times Spanish families will opt out of eating household dinners and will instead

go out to eat instead (Thyberg).

Although not the only musical influence in Spain, flamenco is one of the most recognizable

musical traits of Spanish culture. Flamenco can be described as a “staccato dancing style and soulful

plucking of classical guitars over mournful vocals.” Spain still hosts a number of flamenco venues that

attract both locals and tourists. Another huge cultural tradition in Spain is bullfighting. These bullfights

developed from gladiator traditions during the Roman Empire, but have remained relevant (Thyberg).

Government / Politics

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 From 1833-1939 Spain mainly had a parliamentary system except for during the first republic,

second republic and the Spanish civil war. Both houses of the legislature almost unanimously approved

the current Spanish constitution in October 1978. The constitution declares that Spain is a constitutional

monarchy. Although the monarch is the head of state and the country’s highest representative in

international affairs, the crown’s power is limited to mostly ceremonial duties. The government is split

into three separate branches: the legislative, the judicial and the executive. The executive branch consists

of the prime minister who acts more as the head of the government. There are also two chambers in the

legislature including the Senate and the Congress of Deputies. By May 1983 the entire country had been

divided into 17 comunidades autónomas with two more added in 1995. The basic political institutions of

each community are similar to those of the country as a whole, but they have their own legislature

consisting of a president and a Council of Government responsible to that legislature. The powers

exercisable by the regional governments are laid out in the country’s constitution. These comunidades

autónomas have control over the organization of institutions, urban planning, public works, housing,

environmental protection, cultural affairs, sports and leisure, tourism, health and social welfare, and the

cultivation of the regional language, etc. (Rodriguez).

Media
Media in Spain has not always been so free. During the dictatorship of Francisco Franco, who

died in 1975, there was an extreme level of press censorship put in place by the government. Since his

reign has ended, media in Spain has much more leniency with free press. However, media in Spain does

not have access to a lot of things that relate with how the government operates. According to Rosario

Gomez, a Spanish journalist, “In Spain, to learn about waiting lists at hospitals is a titanic task, and the

salary of a news anchor on public television is a state secret.” Spain is one of only four out of the

twenty-seven EU countries that still do not have laws that establish the public’s “right to know.”

Without these types of laws in place, investigative journalism is pretty much impossible. There are laws

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currently drafted that are moving through legislature, but nothing is being done with them. Another

limitation is the country’s political connotation associated with most television, radio and newspaper

networks. There is a lot of limitation to the media in Spain even though they haven’t had technical

censorship laws in over 40 years (Schweid).

Country Profile
a. Economic development

Spain had an economic crisis in 2008 and has been in a recession ever since. After nearly ten years

of economic uncertainty, Spain is finally grasping onto continual economic growth. At its worst, Spain

had an unemployment rate of 26%. This unemployment rate has decreased 8% to 18% as of July 2017. It

should be noted that 39% of citizens who are unemployed are young adults (Goodman). In many other

countries, young adults are in the majority of music buyers, however in Spain it would not be surprising

to see young adults in the bottom percentages of users who spend money on music due to their low

employment numbers.

b. Sales & Configurations

Spain is the world’s 14th largest music market, but its industry has suffered immensely since the

economic crisis in 2008. 2016 is only the third consecutive year that Spain’s recording industry has seen

growth. Although this growth is small, only up 0.8% from 2014-2015, it is significant in the fact that it

is constant (Dyson 47). For sales and configurations, subscriptions and streaming make up 54.8% of the

total incoming revenue. Of digital sales, inclusive of subscriptions, advertising, internet and mobile

downloads and other small digital revenues, access services accounted for 87.3% of digital trade

income. Spain has eleven subscription services and there has been a major peak in subscription uptake

boosted by the bundling of these subscription services with telecom operators (Dyson 43).

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 Following in second place for revenue income is the physical sale of music, which makes up

35.3% of revenue in Spain. According to Instituto Nacional de Estadistica (INE), retail sales adjusted for

seasonal and calendar effects in August were up 3.4% compared with the same month in 2015 (Dyson

42). A big surprise to many is that downloads make up a very small percentage of overall revenue,

coming in at only 7.6%.

c. Market share of the “players”

As far as market shares go, Universal Music Group has the largest share of Spain’s market at

33.68% (“El Mercado De La Música Grabada En España”). Right behind UMG are the other two majors

Warner Music and Sony Music with 26.73% and 25.23% shares respectively. The largest independent

labels with reputable market shares are Discmedi and Concert Music, which have 3.03% and 2.58%

shares respectively (“El Mercado De La Música Grabada En España”).

d. Repertoire

Spain’s market is consumed by commercially viable music, as it is everywhere else in the world.

In their 2016 top songs, half of the songs were not from Spanish artists, nor were they in the Spanish

language. Of the songs that were by artists of Spanish decent, most of the songs were pop-genre based.

In my opinion, a common theme in Spanish music is the obvious influence of flamenco and reggaetone.

Based on the history of Spain and its musical influences, I wouldn’t expect anything less. On the

opposite side of the spectrum, of the top albums in 2016 for Spain only 3 of 10 were from non-Spaniards

(Global Music Report). Some of the more popular domestic artists in Spain include: Manuel Carrasco,

Melendi, Dani Martín, Malú y Alejandro Sanz. These artists are all either on the Top 10 charts for Spain,

or selling out large venues when touring Spain. Most of these artists fit the pop genre that I have found

is very popular in Spain (Global Music Report).

f. Retail

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 Major retailers in Spain include El Corte Ingles, a private owned chain that accounts for one-

third of CD sales in Spain annually and FNAC, which is a French owned international chain that has 27

stores in Spain and accounts for one-fourth of CD sells in Spain annually (Dyson 43). There are also still

a number of independent companies that sell physical records including Discos La Metralleta, which is

described as a place for “weird people…like the priest who bought the records of Marifé de Triana to

burn them” (Rodríguez). Local record shops such as this one are known locally for their uniqueness and

go as far as making merchandise with the store logo, however they still do not have a majority of

physical record sales.

g. Publishing

Spain’s publishing market is handled by its performing rights organization SGAE. In 2010,

SGAE had a bit of controversy when many senior executives were arrested for fraud and unauthorized

use of funds. There have been many constant changes in the heads of the company since the incident

with the most recent being Fernández Sastrón being appointed to president of the company in April 2016

(Cantor-Navas). Just recently, SGAE is finally returning to a state of stability.

h. Broadcasting

Broadcasting collections are down 8.9% partly due to late payments from TV operators. Overall,

commercial radio was up 12.7%, however TV revenue fell 21.6% and public radio fell 26.5%.

Broadcasting was still the greatest overall income for the industry at 39.1% of total revenue. It is said

that Spain’s radio sector is completely dependent on advertisement income. Of the radio stations in

Spain, Cadena SER is the largest. This station is owned by Prisa and had 4.4 million listeners in 2016,

which totals to 37% of total general radio listeners. Coming in second place for radio broadcasting was

Altresmedia Radio which attracted 1.9 million average listeners (Dyson 52).

i. Concerts and other live performances

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 Revenue from nightclubs and cinemas saw a 4.55% increase with collections from nightclubs

specifically accounting for 58.1% of general licensing income. This could be due to Spain’s large focus

on night-life. In May 2014, Spain’s Supreme Court ruled that SGAE was charging too high of a rate at

10% of box-office receipts to concert promoters (Chapple). When SGAE tried to appeal the court order

the Supreme Court scrapped the appeal. After this court case, live music revenue increased 12.1% in

2015. Alejandro Sanz is the performer who attracts the largest local crowd in Spain, averaging 10,806

attendees per show. There is thought that the live sector is still struggling due to many factors, one of

which being that there is still a high VAT rate which was increased to 21% in 2012. Although there is

growth in the live sector of Spain’s music industry, it still hasn’t re-obtained its financial peak that was

obtained prior to the 2008 financial crash. One live event that is doing particularly well is Arenal Sound,

the largest music festival currently held in Spain. This festival is a six day festival held in Burriana,

Spain that pulled in 300,000 visitors during its 2015 run. Notable artists that have played this festival

include Steve Aoki, Two Door Cinema Club, Martin Garrix, Clean Bandit and Bastille. Other notable

festivals include Rototom Sunsplash, Vina Rock and Primavera Sound.

k. Piracy

I previously discussed the overwhelmingly low digital download numbers in the Spanish market.

This is directly correlated with the piracy problem that Spain has always encountered. Only 37% of

digital content downloaded in Spain is legal, which is down from 41% in 2014. This means that Spain’s

piracy problem is getting worse, not better. Unauthorized content has increased to 63% including 4.31

billion unauthorized downloads in 2015, which is a retail value of about 24.1 billion euros or 28.1 billion

USD. A survey conducted by GfK found that 62% of people who downloaded unlicensed content said

that the original content was too expensive, 29% of people who downloaded unlicensed content also said

that they were not harming anyone and another and another 26% of people said that there were no legal

consequences for those who pirate (Dyson 47).

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 Market Analysis

Through the information previously presented, I believe that Spain has an emerging market.

Although they see small growth numbers, the growth is becoming constant. In spite of have an economic

crisis only nine years ago, Spain’s music industry is still somehow seeing growth at a constant rate. I

think that the difference that needs to be recognized in this market against others is the demographic of

those able to buy music. It is believed that a large percentage of people who are still unemployed in the

country are young adults. In most other markets, young adults make up a large majority of revenue

creators, so this changes the target demographic of Spain. As discussed, the piracy problem is also a

large reason behind why Spain’s market isn’t making as much revenue as it could be. I would guess that

a large percent of those who pirate music in Spain are young adults. This can directly relate to the fact

that 62% of people that pirate music say that they do it because the original content is too expensive. I

think this is also why Spain is seeing an incline in subscription services. Subscription services, although

not the best for performers and songwriters, seem to be more popular with consumers due to their little

to no cost. Since nightlife is a huge part of Spanish culture I think that if you were going to try and break

into the Spanish market, a club level tour would be the best bet. Over half of the general licensing

income comes from nightclubs, so I believe that putting an artist there would be a sure way of

generating both income and buzz.

As you’ll find in most major markets, the three major labels make up the largest majority of

revenue shares. In Spain’s case, Universal, Warner and Sony make up a combined 85.64% of the

market. This leaves little room for independent Spanish label income. If looking at a sub-publishing deal

or an international record deal, I think that teaming with one of the majors would be in the best interest

of the songwriter or artist. Some say that choosing a small independent company that knows the market

in a specific area is sometimes the better choice. In Spain’s market I think that the support of a major

label and publisher is very important due to the economic restraints that Spain has been experiencing.
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Overall, I think that Spain definitely saw a major decline in their music industry when they had their

financial crash in 2008. I believe that a lot of people really overlook the area due to these negative

connotations associated with it, but I believe that this area is going to make a dent in the overall market

again in the future. Latin flavored music is once again seeing a rise with Justin Bieber’s “Despacito”

breaking records and charting in more than thirty different countries along with many other Spanish

songs riding its coattail (Trust). This is not to say that Spain is going to break the top ten markets in the

world soon, but I do see it becoming a larger market than it is today as Spain’s economy grows back to

what it once was.

Market Forecast

a. Overall market growth

Overall, I believe that Spain’s market will see growth as their economy returns to a state of

stability. The country’s industry has seen three consecutive years of growth and although this growth is

not substantial, the consistency of it leads me to believe that Spain will continue to grow. After having a

huge economic crisis only nine years ago, Spain still stands as the music industry’s fourteenth largest

market. The fact that Spain is already gaining some sort of momentum so quickly after an economic

crisis shows that Spain’s music industry has the potential to grow and generate more revenue.

b. Configurations

Via IFPI’s Global Music Report 2017, Spain’s current music revenue configurations are as

follows: 46% digital revenue, 26% performance rights, 27% physical revenue and 1% synch rights. My

prediction is that with the right push of marketing, digital revenue will soon hit well over 50% of

revenue income due to the rise of streaming in Spain. This sector of the market will widen its lead from

the others in the market. The sector that is the most apt for expansion is publishing through

synchronization fees. I believe that with such a large focus on entertainment through television,
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specifically telenovelas that this income could grow if the right strategies were put into place. I think

that as other markets have seen, the physical sales of music will decrease in the upcoming years.

Although they saw a slight increase, up 3.4% when adjusted in a year, I think that physical formats are

beginning to be viewed as too expensive, especially by upcoming generations. The faster that the music

industry accepts the fact that it is moving away from physical formats, the better off all of the markets

will be. I think in Spain specifically, focus should be taken off of the physical sale of music in order to

exploit the other markets that they have available to them.

c. Repertoire

Spain’s repertoire currently consists of a lot of non-Spanish speaking international artists.

However, with the growth of Hispanic and Spanish-spoken music I believe that the charts in Spain will

soon switch to a more domestic repertoire. As the world embraces Hispanic music and the Spanish

language, I believe that Spain’s charts will begin to fall in line with the trend. As I said before, Spain’s

charts mainly reflect commercially viable music from international artists. Since the charts in other

countries are now introducing Spanish music in the Top 10, Spain will adopt these trends due to their

commercial viability and the fact that it is also in their native language. For Spain’s market to do well, I

think that they need to exploit their domestic artists to not only the people in Spain, but also around the

world. There are bands that excel in Spain and could help boost the music industry there if they were

exploited in other countries as well.

e. Market demand

The demand in Spain’s market is for affordable music. As of now, for sales and configurations,

subscriptions and streaming make up 54.8% of the total incoming revenue and 87.3% of digital revenue.

I believe that as the market rises, the streaming services are going to continue to be over half of the

income for the market. In fact, I think that if the industry in Spain could market streaming services

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correctly to the young generation in the country that are the root of piracy due to their lack of jobs, the

market would go up tremendously due to streaming’s access with affordability. Due to the large

percentage of the younger generation being unemployed, I think in order to maximize income from the

market the industry needs to market streaming services as the affordable and legal option. This would

also result in a decline in piracy. On the other hand, physical sales of music should be marketed to an

older audience. Spain would definitely see an increase in revenue if marketing strategies for physical

records were focused on an older age demographic since that demographic is going to have more

expendable money.

e. Retail outlets

As physical sales of music decline, retail outlets are also going to slowly diminish. There will

always be some sort of physical product around for the niche market left that wants it and therefore there

will be some sort of outlet left. I think that as physical formats die out, the major retailers will actually

be the ones to quit selling physical product first. I say this because of their business models. The larger

companies want to make money. Yes the smaller, locally owned record stores want and need to make

money also, but they also care about the format. To many of these people, there is something emotional

connected with a physical album through its album art and the ability one has to hold the art in their

hands. A locally owned shop that appreciates the artistry of physical albums will try to continue selling

them as the market declines while larger companies will move on to what is going to bring in the most

income.

g. Publishing

In my opinion, publishing is the area to maximize income in Spain. Although there may be a lack

of music downloads being paid for, or even a lack of people wanting to pay for music at all there are still

companies, movies, television shows, festivals, and more that could bring in a lot of money through

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synchronization, performance and master use licenses. For example, telenovelas are big in Spain as well

as many other Spanish-speaking countries. These Spanish soap operas contain music, which needs to be

licensed. Companies that have any products in the market also need music for their commercials to help

sell the product. All of these things can bring in large amounts of income if exploited correctly. The

interesting thing about the music industry is its ability to tap into other markets besides the general

consumers to make income. Publishing is the area where income can come from tapping into the

revenues of other markets, so in Spain I could see the publishing sector of the industry growing in

upcoming years. I also keep referring back to the rise of Latin and Hispanic music all over the world. A

lot of artists are now trying to ride the coattails of these Spanish-speaking song successes and Spain

could use that to grow their industry. If songwriters in Spain began pitching their songs to international

artists this could also bring in a good amount of money through the publishing stream.

h. Media consumption and structure

TV revenue is currently down in Spain, but this is correlated with late payments from TV

providers. I think that TV revenue is definitely something that could grow throughout the next few years

through appropriate licenses. Going back to publishing income, if the music industry would exploit their

catalogs more for domestic televisions and advertisements both TV revenue would increase as well as

help increase other sectors of the industry. Broadcasting is also a market that could see potential growth.

Since Spain’s radio sector is completely dependent on advertisement income, if someone could synch

their music with advertisements then there would be a large income from both the synch rights as well as

more broadcast income.

i. International trade

Spain is the seventeenth largest export economy in the world with its main exports including

cars, vehicle parts, refined petroleum, packaged medicaments and delivery trucks to countries including

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France, Germany, the UK and Portugal. As of 2016 Spain had a negative trade balance of 23.5B in net

imports meaning that they import more than they export (“Spain”). As stated before, I think that the

focus in Spain’ music industry should not be on physical product, so I don’t believe that their

international trade should affect the future market as much as it may have in the past.

j. Technological innovations

Spain is at the top in a number of sectors regarding information and communications with one of

their major achievements being in employing a single broadcasting network for digital television. Spain

was also one of the first countries in the EU to switch to electronic identity cards in 2008. These early

advances in Spain’s technology led to advances in other areas such as information processing and

security systems. I think that Spain could possibly be headed in the same direction as China when it

comes to digitalizing everything and becoming a paperless society. Another notable technological

advance is that Spain is at the top of the other European countries when it comes to smartphone

ownership, which again could connect back to the rise of streaming music (Kennedy). I predict that the

music industry in Spain is going to continue to grow and I believe that it will flourish in upcoming years

and show how valuable of a market it is.

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 Works Cited
Cantor-Navas, Judy. “SGAE Elects New President.” Billboard, Billboard, 22 Apr. 2016.

Chapple, Jon. “Supreme Court Sides with Promoters on 10% Tariff.” IQ Magazine, International Live

Music Conference Ltd, 4 May 2016.

Dyson, Simon. “Spain Music Industry Report.” Ovum, Informa PLC, 7 Nov. 2016.

Global Music Report. Global Music Report 2017: Data and Analysis Spain. IFPI, 2017.

Kennedy, Kathleen D. “Spain: Innovations and International Successes.” Technology Review, 2017, pp.

S7–S8.

“Not Only Flamenco - History of Spanish Music.” European Youth Portal, An Initiative of the European

Union, 6 Feb. 2015.

“El Mercado De La Música Grabada En España.” Promusicae, Promusicae, 19 Sep. 2017.

Rodríguez, Andrés. “Por Qué La Metralleta Es La Mejor Tienda De Discos.” El Español, El Español, 3

June 2016.

Rodriguez, Vicente, and Joseph F. O'Callaghan. “Government and Society.” Encyclopædia Britannica,

Encyclopædia Britannica, Inc., 2 Nov. 2017.

Schweid, Richard. “Spain's Not-So-Free Press.” Columbia Journalism Review, Columbia Journalism

Review, 2011.

“Spain.” OEC - Spain (ESP) Exports, Imports, and Trade Partners, Macro Connections

Thyberg, David. “Spain & Its Culture.” USA Today, Gannett Satellite Information Network.

Trust, Gary. “'Despacito Is Second Song Ever to Lead Hot 100 for at Least 15 Weeks.” Billboard,

Billboard, 21 Aug. 2017.

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