Music Originals as Capital Assets

In 2007, I estimate that musicians and recording studios created original songs, including recorded performances, with an estimated value of $7.8 billion. These songs were sold on CDs in 2008 and will be played on the radio, on television and at live concerts for decades to come. Because of their long working life, the international guidelines for national accounts recommends that countries classify production of music and other entertainment, literary and artistic originals as an investment activity and then depreciate those songs over time. However, BEA did not capitalize this category of intangible assets until the July 2013 benchmark revision. In order to change the national accounts, I collected data on music production from 1900 to 2010. I then calculated how GDP statistics change when songs are classified as capital assets.

To preview, my empirical results are:

1. In 2007, musicians and studios created recorded music worth $4.3 billion and non-recorded music worth $3.5 billion. Together, these musicians and record studios created original music with a nominal value of $7.8 billion producing recorded music, approximately 0.056% of nominal GDP;
2. Nominal music investment has grown much slower than overall GDP. Between 2000 and 2010, music investment fell from 0.083% of GDP to 0.053%.
3. Original music remains valuable for decades after it is first produced. I calculate that the aggregate capital value of all original music was $30 billion in 2007.