AudioMedia - Audio Media International

Geo Focus: Italy

Geo Focus: Italy
Matthew Fellows

Business

18 February 2015: By Matthew Fellows

Matt Fellows explores how the economic downturn has affected the homeland of many distinguished pro-audio brands.

Italy is home to a host of distinguished names in the pro-audio industry. But how has it held up in the recent turbulent climate? Matt Fellows investigates.

With one of the world’s largest economies and a prodigious cultural presence, Italy would be among the first countries you would imagine to have its head held high, resolute against the eroding waves of fiscal infirmity. But it looks like we have to continue relying on our imaginations for such a valiant image, because in reality it seems no one has escaped the grasp of the global downturn.

“Generally speaking Italy is currently still suffering from the global economic crunch,” says Giorgio Biffi, CEO of Italian loudspeaker manufacturer Outline, painting the grim picture that is corroborated by professionals across the industry and beyond.

Val Kolton, CEO of headphone maker V-Moda, echoes the same sentiment on his country’s financial standing: “Italy’s overall economic environment is not good. The unemployment rate is rising on a monthly basis while GDP is steadily decreasing.” But he is quick to note that this is not necessarily indicative of the status of the country’s residents. ”The fact is that Italians are not poor. They are only afraid of the future and therefore spend less.”

But while the global recession has shown little regard for geography or sector, the source of the Italian pro-audio slump is no mystery, with industry personnel agreeing unanimously. “Basically the problems come from the budgets,” says Stefano Amerio, chief sound engineer and producer at Artesuono Recording Studios.

“In the last five years the size of the pro-audio market in Italy has reduced dramatically with low levels of investment, particularly from the public sector,” agrees Luca Giorgi, sales director at Powersoft. “This lack of investment has resulted in excessively aggressive competition that has also produced a drastic reduction in the quality of delivered services and installations.”

Andrea Guerranti, technical manager at distributor Sisme, says the same, arguing that this problem has arisen directly from the greater economic downturn: “GDP has decreased, and a high unemployment rate and high taxation, combined with the strong credit reduction of the banks, has caused a reduction in public and private investments, and therefore sales.

“The professional audio market has always been financially very weak because it is made up of many small companies which have grown up thanks to the low margins and credit offered by the suppliers and by the banks. It was obvious that this system would start to have problems as soon as sales and financial support decreased.”

View from the studio

These slashed investments are only exacerbated when you delve into the issues faced by specific sectors of the industry. Amerio explains: “The studio market isn’t good like it was years ago. Most of the well-known studios suffer because artists in the last few years built their own recording spaces due to the reduced budget of productions and the global change with the download market. Commercial studios are having problems surviving, especially big ones.”

Roberta Ferrari of Forum Music Village concurs: “The Italian market for studios is in a bad position nowadays. Huge and legendary studios, like Forum Music Village, are having a critical period in economic terms. Even top artists are not investing in big productions anymore. The music business has lost its power, with a huge fall in sales and low interest in underground, small or large artists and labels.”  

And this situation all comes down to progressing technologies and their effect on the sector’s status quo. “Labels don’t invest money because of less and less income from downloads. No royalties, no investments, no productions start, so no work for studios and for the related companies,” Amerio adds.

Ferrari expands: “Ten years ago a soundtrack production lasted two weeks minimum, covering recording, editing and mixing. Today I can confirm that even the most famous composer of all time will only book studios for six to seven days at most.”

Crossing borders

The situation may be none too bright for studios, but what about the rental, install and manufacturing sectors? Biffi puts it simply: “In the domestic rental industry the situation is pretty bad, while for the private install market it’s slightly better.”

Elaborating on the situation, Giorgi explains: “The Italian market is characterised by the presence of a lot of audio manufacturers, with several industry leaders, but as is the case with other industries, the Italian market is keen on importing foreign brands rather than using local products.”

This reinforces the sentiment that many Italian companies vocalise, of Italy’s problematic economic sustainability when taken in isolation from the rest of the world.

Guerranti is one of many who echo this, stating: “Industry developments are highly influenced by the size of the market and a lot of Italian companies have been forced to look for business outside of our borders for growth, or, in some cases, to survive.”

Rules and regulations

Another frequently cited obstacle standing ominously in this sector is not strictly financial, but regulatory.

“EN54 is one of the latest regulations that has affected our industry, even if in Italy the lack of investments has not created many projects where this change could have been applied,” explains Giorgi. Biffi agrees: “As far as the fixed install market, in my opinion the EN54 rules are significantly affecting the jobs.”

EN54 is a mandatory safety standard implemented across the European Union relating to fire detection and alarm system compliance. With this new set of requirements that installations must now adhere to, many Italian companies are struggling to follow a safety code that was hardly constructed with the pro-audio industry in mind.

Guerranti explains: “The introduction of EN54 has generated a price increase in the realisation of systems and projects, from equipment and assembling through to testing, modifying market demand and directing more and more clients towards certified products.”

Survival

A common theme that arises through discourse with Italian industry professionals is that of survival, which in itself gives a vivid sense of the industry landscape. And when the landscape is harsh and unforgiving, you have to be resourceful if you are to survive.

Giorgi attests that the key to prosperity in the Italian market lies outside its borders. “Powersoft has historically worked more abroad than in the internal market and this has guaranteed the growth path of the company in the past 10 years. Only recently has our domestic market begun to produce significant results.”

However, Amerio argues that quality of service is what has enabled them to remain an industry competitor: “Artesuono Recording Studios survives because we offer high quality at reasonable rates. My idea is to offer the best quality at every stage along with good equipment. Quality and knowledge make a big difference.”

Biffi shares this view, even going as far as to assert that quality of product is the very reason why Outline does not look beyond Italy’s borders from a manufacturing point of view. “We have never indulged in considering our products to be manufactured in full or in part in those countries that enjoy and offer cheaper costs or reduced taxations because we could not guarantee our usual high quality standard,” he explains.

Despite these beliefs, the future still looks uncertain, making it difficult for anyone to forge a solid game plan.

“In the current economic and political situation, making a plan for the future is a gamble. Moreover, the Italian economic situation has been showing no signs of improvement,” says Giorgi.

In the current climate, patience may be a virtue and a cautious strategy the way forward, says Kolton: “Italy’s time to change is always longer than countries like the US,” suggesting the situation cannot be compared to other markets under similar duress. After all, there may be hope yet for the conditions for recovery and growth to bloom. As Biffi remarks: “The political situation looks promising as well as stable, so we are confident.”