Study puts value of Detroit music industry at $1 billion

Music in Detroit amounts to a billion-dollar industry.

That’s the summation of a study conducted for Crain’s by East Lansing-based Anderson Economic Group LLC, which inventoried the number and types of music businesses and employees in Southeast Michigan, defined as Wayne, Macomb, Oakland, Livingston and Washtenaw counties.

AEG found about 6,000 people employed in the local industry, earning a total $162.5 million in 2012, with the average worker bringing in roughly $27,000 a year. The number of establishments in the industry came out to be 486, with an average of 12 workers per establishment and total sales volume of $1.15 billion.

 It’s a unique study, because solid figures are not well known for Detroit’s music industry.

“As far as I know, this is the only serious study of the music industry, at least in terms of economic impact,” said Patrick Anderson, CEO of AEG.

AEG set clear delineations as to the type of person counted: Items such as businesses selling car radios or workers at a pizza place that happens to have music were excluded, Anderson said.

His team spent three months looking at federal data from various sources such as County Business Patterns data from the U.S. Census Bureau and repackaged federal data from ESRI Inc. They used industry and occupation codes to include portions of other larger industries in their definition of music industry, and compared metro Detroit to cities of similar size, most of them in the Midwest.

The team also looked at bars and restaurants that host live music, award-winning artists with connections to Detroit and music education.


Businesses were split in the study into 11 categories based on employment data.

The biggest business category by employment size was by far the music venue category, with 3,500 workers, dwarfing the next highest category, schools, which had 800 employees. Music supply stores and the artists themselves were other categories with substantial representations.

Anderson said he was a little bit surprised at the $1 billion figure, having guessed it would have been lower. Howard Hertz, known as metro Detroit’s go-to lawyer for music industry matters, said the number sounded right.

“We should shoot to double and triple it,” he said, through more concerted promotion efforts.

Hertz and others said artists aren’t lacking for most of the resources they need — such as studios and talent — in metro Detroit.

“We’ve got probably 10 studios here capable of doing major label recordings as good as anywhere else,” Hertz said.

Agents and major labels are scarce here, though, he said.

As artists start to get established, he encourages them to play in ever-widening geographical circles to build a fan base that eventually reaches Chicago, New York and Los Angeles. At that point, they will have the base they need to get the attention of agents and labels, which are based in those cities in more plentiful numbers.

“There are resources, they’re just not as plentiful as 20-30 years ago,” said Daniel Dennis, president of the Recording Institute of Detroit Inc., a music recording school in Eastpointe started by Dennis’ father, Bob Dennis, in 1974.

Dennis, too, said he was not surprised at the $1 billion figure.

“It’s not obvious to the average person, but there are a lot of music venues in Detroit, a lot of places to play live and a lot of musicians to play live,” Dennis said.

His school still graduates between 50 and 100 people a year, down from its peak of about 200 in the 1980s, but still steady.

The figures in the study are minimums. The actual size of the local music industry is much larger because the study relied on data for full-time work. Much of the activity in music is part-time work, be it the server at a restaurant that isn’t classified as a music venue, the guitarist in a band who has a day job or someone who runs a basement studio on the side.

“It’s an industry that’s easy to undercount because of the number of people involved in it on a part-time basis,” Anderson said. “Most people fixing instruments at the school orchestra are not being counted in this data.”

That is unfortunate because business activity doesn’t stop just because it’s not counted. “Commerce occurred because you went to see your friend play guitar,” he said.

The local industry is larger still, considering the large underground hip-hop scene that wouldn’t make appearances in most federal data, said Tom Gelardi, a marketing and promotions representative for Detroit rap artists.

“The rapper stuff I do, nobody knows anything about,” said Gelardi, who got started in the business in 1957 working for Capitol Records.

The scene supports independent retailers in Detroit such as Shantinique Music and Damon’s Record Center that still do good business even as general music retail business has fallen off, he said.

To get a grip on how much part-time work adds to the mix, the research team called 216 bars and restaurants in metro Detroit to find out how many nights of live music they offer on average. The answer was about three a week, or 25,000 a year.

Most musicians who play these nights aren’t doing it full time, and there’s definitely more of them than the 434 “musical groups and artists” or 304 “independent artists, writers and performers” found through the federal employment codes.

“Somebody is playing those 25,000 nights of music and, by and large, it’s not the 300 people the government cited,” Anderson said.

AEG estimates that there are 400 such venues in the region that wouldn’t fall into the government music industry statistics and about 2,000 performers who play at them. Roughly half of those performers could be added to the 6,000 total employment figure for the regional music industry, on the reasoning that the other half of those performers probably have music industry jobs represented in the statistics, said Alex Rosaen, director of public policy and economic analysis at Anderson.

Part-time workers at those venues would not be counted as they would fall into other categories such as alcohol sales, but the venues and its workers do benefit from the draw that live music brings, he said.

One person who might not show up in the numbers is John Spurrier, a singer in Ferndale-based psychedelic rock band Blue Black Hours. He works a day job as a window washer and said most of the people he knows in other bands also carry day jobs.

Whatever they write down on their income tax forms for occupation, it isn’t music-related, he said. Yet the work of being in a band takes up quite a bit of time. Spurrier said his band, and most bands he knows, rehearses a few times a week. That’s two to four hours each meeting. Then there’s the personal time taking to write songs, as well as promotion work and actually playing the shows, which his band does once a month.

“We’re all pretty much in the same boat, even the bigger bands,” he said.

Omar Ajluni is someone who would show up in the federal data. He runs his own business, Salvadoria LLC, based on the full-time composing and production work he does for commercial clients, such as NikeGoldman Sachs and Deloitte.

The Bloomfield Hills native worked out of New York before setting up in Detroit a year and a half ago. He can work from his downtown loft just as readily as he could in New York, while putting money into new technology for his business instead of into New York’s cost of living.

However, the differences that make Detroit attractive compared to New York also make it harder to do business, at least locally, and illustrate that it’s still a small market.

While any resources Ajluni might need — musicians, high-end studios — are available here, the amount of available local work is limited.

Local producers have asked Ajluni to do projects for $300 that he normally would charge $12,000 to do.

Samantha Corbit is another one of those people who doesn’t show up in the official tallies.

Corbit is an active figure in Detroit’s techno and house music scene, throwing parties at venues such as MotorCity Wine and The Works. This is a task that involves bringing in DJs from out of town — often Europe — hiring sound and security when needed, setting door prices and promoting the events.

None of that shows up in the official records. Her day job as a project manager at Organic Inc. in Troy does. She estimates most of the people in the scene also have a day job.

“I don’t know anyone able to make a living off music full time, other than the obvious,” she said referring to longtime techno heavyweights such as Derrick May.

Corbit, who plans to move to Berlin where several music business offers await her, also said there’s a lack of understanding here as to what it takes to do business.

She throws parties because she enjoys it and wants to bring interesting artists to Detroit crowds, paying for the parties out of her checking account and hoping the door fees pay her back.

Anderson said the value of the industry is also driven by the value of the area’s brand — something that’s easy to forget about.

“Music is part of Detroit’s brand. It’s easy for us here in Michigan to forget, but if you go to Europe or Asia and have a Detroit D on your shirt, they have a recognition that’s sometimes deeper than we have.”


Detroit’s music industry was at the top of the rankings for business share of total area earnings compared with the other cities studied — Indianapolis, Minneapolis, Kansas City, Cleveland, Pittsburgh and Dallas — with 0.20 percent, tied with Minneapolis and ahead of Indianapolis at 0.17 percent.

By share of total area employment, Detroit came in second at 0.37 percent, behind Minneapolis at 0.52 percent, with Pittsburgh practically tied with Detroit at 0.36 percent.


$162.5 MILLION

Amount earned by local music industry workes in 2012. The average worker made about $27,000 a year.


People employed in the music industry locally


Total sales generated by the 486 establishments in the local music industry, with an average of 12 workers per establishment

Aug. 30, 2013 | Crain’s Detroit Business