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The Genesis and Evolution of the Stockholm Music Cluster

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New Directions in Regional Economic Development

Part of the book series: Advances in Spatial Science ((ADVSPATIAL))

Abstract

Why do superstars like and Bon Jovi, Britney Spears, Maddona and Ricky Martin, to an increasing extent choose Swedish composers and producers in an industry characterized by extremely fierce international competition? Bergen, Copenhagen, Dublin, London, Los Angeles, Manchester, New York, Paris and Seattle are some of the more prominent competitors to the Swedish – particularly Stockholm – music clusters. What triggered this evolution and which dynamic forces have been decisive in the creation of the Stockholm cluster? Despite the impressive research presented on spatial issues in the last decade, we know surprisingly little about the forces initiating the creation of clusters. Economic geography models originating in the international trade theory literature, view agglomeration as a function of linkages (pecuniary and non-pecuniary), trade costs and scale economies (Krugman 1991; Venables 1996; Fuijita et al. 1996; Braunerhjelm et al. 2000a,b). Still, the focus is rather on the re-location of already existing economic activities than the emergence of new clusters. New constellations of existing clusters that appear as altered trade costs (e.g. due to an integration process) induce a re-shuffling of firms and factors of production, leading to a new pattern of spatial distribution of economic activities. Notwithstanding that these models constitute a true contribution to our understanding of the spatial dimensions of economic activities. Empirical observations also suggest that clusters emerge for quite different reasons, such as exogenous shocks attributed to technological breakthroughs, locational specific factors, historically random events, deregulation, market structure and down-sizing of the government, or the disinvestment of a dominating firm (David 1985; Scott and Storper 1986; Arthur et al. 1987; Arthur 1989; Krugman 1991; Feldman and Francis 2002; Scott 2003; Braunerhjelm and Feldman 2006).

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Notes

  1. 1.

    Kai R. Lofthus, reporter in the international music magazine Billboard, interviewed by the Swedish newspaper Expressen, March 16, 2002 (Lofthus 2002).

  2. 2.

    See Porter (1990, 2000), Fuijita et al. (1999); Fujita and Thisse (2002); Braunerhjelm and Feldman (2006).

  3. 3.

    Martin and Ottaviano (1999), 2001???); Fujita and Thisse (2002); Maggioni (2006).

  4. 4.

    Hallencreutz et al. (2002) also include a fifth category Equipment, machines and related services (producers and suppliers of studio equipment, instruments, video producers, etc.) which is disregarded in the present study.

  5. 5.

    In the last few years, interviews have increasingly come to be considered as an important complement to statistical/econometric methods in empirical studies. See, e.g., The NBER project on industrial technology and productivity (http://www.nber.org), Borenstein and Farrell (1998) and Scherer’s (1986) earlier criticism of the skepticism of economists’ to use interviews as a complementary method.

  6. 6.

    For a more detailed description of the Swedish music industry, see Hallencreutz (2002), Lundequist (2002) and Hallencreutz et al. (2004).

  7. 7.

    Note the difference between number of firms and employees in the Finnish case. This underlines the data problems and calls for a cautious interpretation.

  8. 8.

    If, as indicated above, a more realistic measure of the number of firms in the Swedish music industry is 1,500, then the share of firms in the music industry declines to 0.20. Assuming that similar measurement problems accrue to the other countries, we stick to the figure of 15,000 firms.

  9. 9.

    For instance, DVDs are now included in the export figures which however mainly reflect exports of films.

  10. 10.

    The presence of “superstars” has been shown to be decisive for other, more research intensive industries, such as biotechnology (Zucker and Darby 1996 ???).

  11. 11.

    For instance, Sahara Hotnights was ranked among the top ten best released records in 2002 by Washington Post.

  12. 12.

    The Cheiron collective was dissolved in August 2000 and the members preferred to continue on an individual basis. Its founding father, Dennis Pop, was instrumental in developing this line of the Swedish music industry.

  13. 13.

    According to the “Culture School”, the costs have not increased, nor has the availability decreased. This is, however, contradicted by both the respondents and earlier studies (Forss 1999).

  14. 14.

    See Hui and Png (2003) and Varian (2000).

  15. 15.

    The protection for originators is now regulated through the recent law on Elektronisk handel (Electronic Trade) (Government bill 2002) and through the EU framework directive On the Harmonisation of Certain Aspects of Copyright and Related Rights in the Information Society (EU 2001).

  16. 16.

    As music production become less profitable, there has been a tendency for an increase in price of live concerts tickets. Krueger (2002) claims that the price has doubled between 1995 and 2001. A similar tendency can be observed in Sweden, judging from income data from concert organizers, which is estimated to have increased throughout the period 1996–2002 (Forss 2003).

  17. 17.

    This is also claimed to be the case for Ireland (Clancy and Twomey 1997).

  18. 18.

    An example is Max Martin (Martin Sandberg), one of the most successful Swedish agents. He has composed/produced music for artists such as Britney Spears and Backstreet Boys.

  19. 19.

    At the same time, Stockholm is naturally not exempt from rivalry and conflicts among agents. This is, however, considered to be less widespread than in many other places.

  20. 20.

    See, e.g. Maskell et al. (1998) and Maskell and Malmberg (1999) for a description of local mechanisms for the diffusion of knowledge.

  21. 21.

    Note that there is an interesting parallel to other industries, e.g. the pharmaceutical industry where “big pharma” (the large companies) co-exist and complement smaller – often “drug discovery” – firms.

  22. 22.

    Another sign is the increased use of artist and repertoire (A&R) staff by record companies, responsible for the image, activities and career development of the artist. A&R is claimed to correspond to R&D in other industries (Clancy and Twomey 1997).

  23. 23.

    In particular, this seems to be the case with Maratone, The Location and A-Side (ex-members of Cheiron) as well as composers and producers connected with, e.g. the music houses Murlyn Songs AB and Tom Bone Music.

  24. 24.

    Preferences seem roughly to be in line with the price iTune (Apple) – which has roughly 70% of the market charge for downloading music, i.e. US $0.99. Competition is however increasing; Loudeye (works with Microsoft), MusicMatch, Napster and Real Networks are other actors. Still, even though iTune is limited in geographical scope, only 14 million songs were downloaded in a year as compared to the free access website Kaaza from which 700 million songs where downloaded. Total on-line sales is estimated to be 1% of the market, but expected to increase to 20–25% in 4–5 years (Financial Times 2003b). Music industry is estimated to have lost about US $3.4 billion due to illegal copying in 2002. The major record producing companies are therefore involved in restructuring, vertical integration, introducing online sales through various means, etc. (Financial Times 2003a).

  25. 25.

    For example, about 175,000 adult education music circles are formed each year.

  26. 26.

    Stig Andersson, Abba’s former manager, played a vital role in the group’s commercial success. Later on he initiated the well-known Polar prize, also referred to as the “Nobel” prize in music.

  27. 27.

    The distribution is quite skewed within the group of 25 companies. One firm accounts for 26% of turnover and 39% of profits (Veckans affärer 2003).

  28. 28.

    The failure rate is much higher in the music industry than in most other industries (Negus 1992).

  29. 29.

    Södra Latins Musikgymnasium and Rytmus Musikgymnasium are senior high schools in Stockholm, specializing in musical studies.

  30. 30.

    The difference between record companies and music houses is that the former own the rights to the recordings while the latter own the rights to the works. This means that record companies sell and market transmitters of sound (CD, vinyl, DVD, etc.), while music houses own and administer the original works/copyrights and license these to record companies, film companies, advertising agencies, etc. Music houses also take care of the originators’ copyrights for existing works that are sold on transmitters, when the work is recorded live, broadcasted on TV, played on the radio, filmed, when music is sold or when texts are printed, etc.

  31. 31.

    Pelle Lidell represents about 40 Swedish composers/producers through the music house Murlyn Songs AB. Ben Malén (previously under the stage name Ben Marlene) represents about 50 Swedish composers/producers at the music house Tom Bone Music.

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Acknowledgements

Constructive comments from David Audretsch, Magnus Henrekson and participants at a seminar held at Indiana University, have helped to improve the manuscript. Financial support from Vinnova is gratefully acknowledged.

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Authors and Affiliations

  1. Department of Economics, Royal Institute of Technology, Drottning Kristinas Väg 30, 100 44, Stockholm, Sweden

    Pontus Braunerhjelm

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  1. Pontus Braunerhjelm
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Correspondence to Pontus Braunerhjelm .

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Editors and Affiliations

  1. Jönköping Int. Business School, Jönköping University, Jönköping, 551 11, Sweden

    Charlie Karlsson

  2. Jönköping Int. Business School, Jönköping University, Jönköping, 551 11, Sweden

    Ake E. Andersson

  3. Dept. Geography & Environment, London School of Economics, Houghton Street, London, WC2A 2AE, United Kingdom

    Paul C. Cheshire

  4. School of Public Policy, George Mason University, University Drive 4400, Fairfax, 22030, U.S.A.

    Roger R. Stough

Appendix

Appendix

Interviews categorized by sectors and individuals:

  • Educational institutions – Principal Gunilla von Bahr at the Royal College of Music, Stockholm (KMH), Deputy Rectors Marie Linde and Gunnar Andersson, in charge of musical studies at Södra Latins Musikgymnasium (public high school), Principal Johanna Österling at Rytmus Musikgymnasium (private high school) 29 Footnote 29 and the head of the cultural schools (primary and secondary level), Hans Skoglund at Stockholms Stads Kulturskola.

  • Composers/producers and music houses 30 Footnote 30 – Andreas Grill, Christian Sandqvist, Andreas Claeson, Peter Hallström, Martin von Schmalensee, Mattias Håkansson, Ben Malén and Pelle Lidell. 31 Footnote 31

  • Record companies – President Niklas Nyman at Music Network (MNW), Vice President Eric Hasselqvist at Stockholm Records and President Per Sundin at Sony Music Nordic.

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Braunerhjelm, P. (2009). The Genesis and Evolution of the Stockholm Music Cluster. In: Karlsson, C., Andersson, A., Cheshire, P., Stough, R. (eds) New Directions in Regional Economic Development. Advances in Spatial Science. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-01017-0_21

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