How Nashville's music industry really lives up to the hype.
Nashville is having something of a cultural moment. Home to musicians as varied pop-princess Taylor Swift and rocker Jack White, it has developed a powerful hold not just in country, but in folk, rock, pop and other music genres. ABC's Nashville, which is not only set but filmed in the city, has become a critical hit. There's even a new TNT reality show, Nashville Confidential, set to air early next year.
I've written about Nashville on this site frequently before, dubbing it the "Silicon Valley of the Music Business." Nashville's growth as a music center, according to my own accounting, has been explosive; since 1970 it accounts for almost all the growth in the music sector in the United States. Its resiliency and depth have undoubtedly contributed to the region's impressive job growth over the past several years.
But Nashville is not only a booming center for the music industry and musical talent. It's also crafted a long-run economic development strategy for bolstering its music economy and leveraging its many assets to foster a stronger, more innovative economy across the board.
A new report by the Nashville Area Chamber of Commerce and the Music City Music Council, an organization of music industry leaders established by Mayor Karl Dean's office in 2009, documents the key elements of Nashville's music economy and identifies its role in the region's broader economic development. The report [PDF] outlines the strategies the region is undertaking and needs to undertake to cement its powerful niche in the global music industry and develop an even stronger and more robust creative economy. The study provides useful lessons for mayors, economic developers and city-builders on how to leverage local assets, including arts and cultural resources, as a strategy for economic development and job generation.
The report makes clear just how important the music industry is to Nashville’s local economy. Metro-wide, it sustains more than 56,000 jobs, produces more than $3.2 billion of annual labor income and contributes $5.5 billion to the local economy. The industry's total economic impact across the Nashville metro area is nearly $10 billion, a huge chunk of the region's $85 billion total gross product.
The report uses cluster analysis associated with Harvard's Michael Porter to identify how Nashville stacks up against other music centers and to pinpoint the increasingly overlapping sub-industries (record labels, media, songwriters, concerts, technology and innovation, and music-related tourism) that form the city's music complex.
Nashville has the deepest concentration of the music industry in the country. The chart below from the report compares music industry cluster jobs for Nashville and other leading U.S. music centers. Nashville has 7.8 music industry cluster jobs per 1,000 people compared to 2.8 for LA, 2.6 for Austin and 2.0 for New York.
Nashville has an extraordinarily high concentration of both musical talent and industry businesses compared to other leading regions. (The report uses a conventional urban metric called a "location quotient," or LQ for short, to chart Nashville's relative concentrations of business and talent compared to other leading regions). Nashville's LQ for music jobs or talent is 4.2, while the LQ is 4.3 for business establishments. This far outpaces other, much larger entertainment centers; L.A.'s LQ is 1.6 for both, and New York's is roughly 1.1 for both. It has extraordinarily strong concentrations (as measured by LQ) of businesses in music publishing (31.3), integrated record production and distribution (16.3), record production (12.5), musical instrument manufacturing (9.4), and musical groups and artists (5.7).
Nashville’s music workers earn significantly more than their peers in other regions. Only Los Angeles – home to huge numbers of millionaire and billionaire musicians and moguls – ranked higher in terms of overall industry earnings. The chart below compares the relative size of its music industry cluster (based on its overall music LQ) to the wages and earnings it generates. While the costs of real estate may be lower in Nashville, the success of its music industry has not been premised on low wages. Its music cluster generates wages and earnings that are 156 percent of the national average, better than New York's 147 percent, and second only to L.A.'s 175 percent. Nashville groups and artists do especially well, making 232 percent of the national average. According to the report, this reflects the quality of its talent, from the stars to the studio employees and working musicians, who comprise a key element of the city's music infrastructure. Earnings in record production (179 percent), musical instrument manufacturing (135 percent) and recording studios (132 percent) are also substantially higher than the national average. The benefits of Nashville's music cluster are not just concentrated among its hit-making artists but are accruing to those who man its studios and even to the workers who make its instruments.
But to what degree has the region's music cluster contributed to economic development more broadly?
I put this question to Joshua Wright, an analyst with the economic and labor market firm EMSI, who developed much of the data used in the report. In addition to music, Wright pointed out, health care and transportation have also contributed to Nashville's economic growth. Work in full-service restaurants has grown 10 percent since 2009, a "decent chunk" of which can be attributable to the music tourism and entertainment sector. And unlike most American cities, Nashville continues to have a strong manufacturing sector, which saw 15 percent job growth since the economic crisis. But Wright explained that the music industry itself has had significant "multiplier" effects on the wider economy; every ten jobs created in the music industry, Wright pointed out, generate an impressive 52 further positions in the wider economy.
The success of Nashville's music industry also has had a substantial effect on the city's global reputation and "brand," according to the report. It points out that Nashville is both formally and informally recognized as an international 'cultural hearth' for country, folk, gospel, Americana, and other musical traditions. Stars from Keith Urban to The Black Keys help to propel the region's identity across global popular culture. Mayor Karl Dean has called the television show Nashville "an hour-long commercial for Music City that airs every week during prime time."
Music is key to the region's entrepreneurial economy. Forming a band, as I have pointed out many times, is by nature an entrepreneurial act. And former musicians populate many of Nashville's related industries. No wonder the report points out that more than one in five (23 percent) of Nashville workers are self-employed, a level of entrepreneurship well above the national average.
The report suggests several ways the city and region can further bolster its music economy, outlining its potential as a global center for both music industry education and policy development for entertainment and creative media property rights. Most of all, it outlines key steps the region can take to leverage its music industry for broader economic strength, including using the many amenities generated by its music cluster to attract talent in related fields. "The future of Nashville as a creative knowledge city could nowhere be better exemplified than through its global music industry," it notes. "An undisputed international center for decades in music creativity, the emergence of new aspects of that industry as well as the arrival of new broader creative knowledge sectors delivers a major milestone in Nashville’s development." With its unparalleled brand, its density and quality of talent and its well-established infrastructure, the city has all of the ingredients to, as the report explains, turn Nashville into a " twenty-first century hub of deep creativity blended into commercial success."
Most of all, Nashville's music economy is a key case study in our understanding of the evolving, creative knowledge economy. The music industry is unlike traditional heavy industries, which cluster around raw materials and large factory complexes, and differs even from typical high-tech industries, which cluster around great research universities and knowledge institutions. In our current age of the internet, social media and recording technology, musicians have little reason to cluster and good reasons to fly apart geographically. If anything, one would expect musicians to cluster around the big markets markets offered by the largest cities and metros. But Nashville has shown the persistent ability to nurture and grow it music economy, even in the face of ferocious competition by much bigger cities and regions like New York and L.A.. The city has now developed a strategy to extend the music industry's assets and benefits more widely, leveraging it for further growth. For these reasons, Nashville provides a growth model that everyone concerned with economic development and job generation needs to better understand.
Top image: Taylor Swift performs at Madison Square Gardens in New York on December 7, 2012. (Carlo Allegri/Reuters).