How lucrative is Georgia’s renowned musical moxie?

Moderated by Rick Badie

Georgia’s film’s industry has become an economic blockbuster with an impact of $3.3 billion in 2013, according to the the Georgia Film, Music & Digital Entertainment Office. Could the state’s renowned musical moxie — a palette of hip-hop, country and rock — prove just as lucrative? That’s the subject for today.

Market Georgia music

By Ben Harbin

Last fall, the House music industry study committee and I set out to examine the music industry in Georgia and explore strategies to grow it. We knew the names of many Georgia artists, and a 2011 study showed the industry had a $3.77 billion economic impact and supported 20,000 jobs. But until we visited Athens, Atlanta, Augusta, Macon and Savannah and heard testimony from more than 100 individuals, we had no idea how expansive “Georgia music” really is.

The committee heard from artists, composers and producers who create content that is performed,streamed and licensed for use in movies, television, games and advertisements. We heard from business owners who support the production, distribution and marketing of content. Individuals who operate venues, promote concerts and sell tickets participated, while festival producers and visitors bureaus discussed the growing music tourism market. We met manufacturers and craftsmen producing instruments and equipment sold around the world.

We listened to educators share research extolling the benefits of music as a critical learning tool. Speakers shared challenges, from the shifting business models brought about by digital technology to an ongoing talent drain to larger markets. Some discussed a lack of funding for k-12 and after-school music programs and limited access to venture capital for music technology-related projects.

For decades, Georgia’s music industry has been lucrative and influential. On the film and television side, the Georgia Entertainment Industry Investment Act has been instrumental in spurring economic impact from $244 million in 2007 to more than $3.3 billion in 2013. While location shooting has contributed to that explosive growth, there is also significant capital investment going into major new studios, expanding an infrastructure like Turner Broadcasting and Tyler Perry Studios.

Georgia is strategically positioned to continue its rise as an entertainment and media powerhouse. Music is essential to that mix. The state encourages business development in numerous ways. However, the music committee believes it is prudent to seek a comprehensive economic analysis and continue to solicit input from representatives of various segments of the industry before considering any specific incentive. Further, the committee recommends marketing the state’s current music assets, including the provision of the film tax credit that approves the costs associated with sound recordings and music composition for qualified projects.

Georgia’s content creators, its diverse music businesses, and its schools and educators generate significant economic, educational and cultural benefits. As a quality-of-life factor and recruitment tool for other industries, our musical landscape provides a valuable sense of identity and distinguishes the state from competitors. The committee firmly believes that by identifying a shared vision and facilitating public-private collaborations, Georgia music is poised for 21st-century growth and expansion.

State Rep. Ben Harbin, R-Evans, represents the 122nd District.

Tax credit good for Georgia music

By David Barbe

The prospect of a music industry tax incentive is exciting for Georgia’s music community. I have worked in this industry for the last 27 years, the last four with the University of Georgia Music Certificate Program. Its grads are making their way in the entertainment industry. They work with major music labels, publishers, talent agencies, management companies, independent boutique firms and entrepreneurs.

The common thread among our graduates is that most of them leave the state to pursue careers, Los Angeles, Nashville and New York. We are extremely proud to have our graduate network expanding to these key music centers, but what about Georgia?

Georgia is known as a net exporter of music. The amount of successful talent produced here is impressive, covering a broad array of musical styles that include Outkast, R.E.M., Widespread Panic, Deerhunter, Drive-By Truckers, Cee Lo Green, Jason Aldean, Zac Brown and many others. This wealth of talent is not only artists, but songwriters and producers like Dallas Davidson, Jermaine Dupri, John Keane and Ben Allen, who may not be known to the casual fan. They are vital to the creative process.

How is it that we are a net exporter?

Talented individuals choose to conduct business in the epicenters of the entertainment industry for obvious reasons. While combating that may seem unrealistic on the surface, the same could have been said a few years ago of the film industry,now booming in Georgia thanks to a tax incentive.

What would make more music recording projects come to Georgia?

The basics are the same as many industries: talent, facilities and infrastructure. We have the talent base. We also have many excellent production facilities and ancillary service providers. I believe these would grow in number and stature if we had a unique identifier that set us apart as a destination for recording projects.

A tax credit for recording projects could help accomplish that, but it would look different than one for motion pictures. While $1 million is a modest budget for a motion picture, it is extraordinarily high for a recording project. A large sector of studio production budgets for commercial releases are in the range of $10,000 to $150,000. Setting a reachable threshold for a tax credit could spur an influx of mid-level recording projects.

Clearly, this would be attractive to larger-budget productions. Beyond direct support of our music industry, there are peripheral benefits. Visiting artists, producers and crew would patronize our equipment suppliers, rental companies, restaurants and hotels.

State Rep. Ben Harbin’s attempts to explore music as an economic tool for the state is a progressive idea that could yield far-reaching benefits. His proposal deserves strong consideration.

David Barbe is director of the Music Certificate Program at the University of Georgia.

Analyze tax credits

By Wesley Tharpe

A while back, my wife and I got word that Scarlett Johansson and Ryan Reynolds were taking a break from filming to eat at an Atlanta restaurant near our home. We ran out the door to try and get a better look. It was a thrill.

So I can understand why Georgians love the sights and sounds of Hollywood that have come to our state in the past few years. But lawmakers can’t afford to make decisions with stars in their eyes.

Filmmakers and other companies doing business in Georgia claim hundreds of millions each year in special tax breaks, yet the state does very little to measure what we get in return. Before adding new business tax breaks, such as one for the music industry, lawmakers should ensure taxpayers are getting a good value for those already on the books.

Georgia’s six largest business tax breaks cost the state about $600 million each year. The income tax credit for film producers is perhaps the state’s most popular business tax subsidy. It’s also one of the most expensive.

The program is set to drain about $163 million from the state treasury in the 2015 budget year, a figure likely to grow in coming years. Now, some in the General Assembly are proposing similar credits for music producers.

Some tax breaks are probably good public policy; others are likely ineffective. Knowing which is which requires periodic analysis. A thorough analysis of the film tax credit in Massachusetts, for example, found budget cuts required to pay for the program cost about as many jobs as the credit created.

Georgia’s tax credits might be better designed and more effective than those in other states. But we don’t have a solid way to know that. Lawmakers do very little to determine if tax subsidies work as intended. There is no independent, objective review process to answer questions: How many jobs are the tax breaks creating? Would the money used for tax credits deliver better bang for the buck invested in something else, such as improving transportation or training a quality workforce?

In Oregon, all tax breaks are scheduled to expire every six years, which gives lawmakers and auditors a chance to review them. The North Carolina General Assembly recently partnered with state universities for an in-depth review of tax break programs. The Pew Center on the States helped Rhode Island spearhead an effort to make that state a national model; the state revenue agency now produces reports every three years detailing the benefit and cost of each subsidy, including its impact on the state’s overall budget and economy.

Before Georgia rolls out the tax-break welcome mat for a new category of entertainers, let’s make sure what we have works. That’s the best way to get good value for taxpayers.

Wesley Tharpe is a tax and economic policy analyst with the Georgia Budget and Policy Institute.

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