Documentos de Académico
Documentos de Profesional
Documentos de Cultura
Turkey
Turkey
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Contents:
Executive Summary-3
Background-4
History
EU Accession
Geography
Economy
History of Music Business
Recent Trends-11
Music Investments:
Artists
Hip Hop
House
Domestic
Foreign
Performance
Rock n Coke
Radar Live
Efes Pilsen One Love
Phonem
Income Streams-21
Recorded Music
Touring
Ancillary
Other Drivers-27
Economic
Demographic
Technological
Institutional
Competitive
DMC
Pozitif
Legal
Taxation
Immigration
Copyright
Conclusion-38
Bibliography-40
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EXECUTIVE SUMMARY
The Republic of Turkey is a young and emerging nation bridging together the cultures of
become the newest member of the European Union and assimilate into a Western style of
economy and governance. The Republic is experiencing great change, but also great
opportunity.
This report is prepared in essence to take advantage of the climate of positive change and
modernization that permeates the country and is inherently expressed in the artistic forms
emerging from its depths - specifically, music. The music business in Turkey is relatively
under-developed at this stage in time and open to investment from outside sources of
funding. A wide range of topics have been covered in order to analyze the industry as a
whole and identify both opportunities and pitfalls in the course of investment.
Discussed here are political and cultural circumstances that must be considered to start
any type of business in the country - including Turkey's contentious EU bid and
economic fluxuations. Delving more into the meat of the topic is an in-depth analysis of
emerging genre types in the country that have not yet been fully exploited or realized -
hip-hop and house music being of special interest. Other sub-industries such as touring,
festivals, recording, and licensing are investigated to varied conclusions and a core
understanding of the country's legal bounds - in the form of taxation, immigration, and
copyright, all topics of great importance when looking to work from the outside in - is
provided.
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A summary of the findings and a prescription for investment follow.
TURKEY
History
The Republic of Turkey was founded in 1923 by Mustafa Kemal Ataturk after the coup
de grace of the Ottoman Empire and currently claims a population of 73 million people. It
is officially a unitary, secular republic (first free elections held in 1950) but the recent
election's placement of the Islamic-leaning Justice and Development Party (AKP) as the
ruling majority (Abdullah Gul as president and Recep Tayyip Erdogan as prime minister)
has led many to question the continuation of secular policies. Despite suspicions, the
being realized. A NATO member and supporter of the US invasion in Afghanistan, ties
with the US have been seriously strained over disagreements on the invasion of Iraq and
as of 2007 ony 9% of the Turkish Republic view the United States favorably (Pew
Research Center, 2007). Despite these differences, the US supports the Republic's bid for
EU membership, and the two members of NATO, OECD, OSCE, and G-20 continue to
work together on many issues such as nuclear energy and regional stablility.
EU Accession
In 1999, at the European Union summit in Helsinki, Turkey (associate member since
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1963, officially bid in 1987) officially became a candidate for EU membership -
reversing the decision the council had come to just two years prior in Luxembourg.
Official accession negotiations began in 2005, with Ali Babacan, cabinet member with
control of the Treasury and economic policy, as chief negotiator for Turkey. Negotiations
are expected to last until at least 2013 - and Turkey faces two major external hurdles in
the forms of France and Austria who vehemently oppose their membership bid.
Proponents of the accession cite geography, growing ecnomy (discussed below), and
power as major reasons for their consideration. The UK's Queen Elizabeth, upon a 2008
visit to Turkey was quoted as saying: "Turkey is uniquely positioned as a bridge between
the East and West at a crucial time for the European Union and the world in general."
Turkey's position as a bridge between the West and the East would lend the organization
strategic precense in the East as well as gain a position on many areas of contention that
the country borders, promoting peace and stability for the union and its neighbors.
Additionally, Turkey possesses the second largest military force in NATO. The EU's
acquisition of this force would lend it much credence and and build its deterrent force.
Major internal policy issues standing in its way include issues with Cyprus and Greece
(although progress has been made in the month of November and the issue could be
resolved in the next 6-9 months {O'Day, 2008}), human rights, freedom of speech
(particularly article 301 of the penal code which punishes anyone found guilty of
insulting "Turkishness" - translated text: "a person who publicly insults the Turkish
nation, the State of the Republic of Turkey, or the Grand National Assembly of Turkey,
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shall be punishable by imprisonment of between six months and two years"), freedom of
hold until after the 2009 local elections which will represent a challenge for the AKP
when it comes to staying in power - so attention is being focused on more local issues of
public welfare.
Geography
Bordered by Georgia, Armenia, Iran, Iraq, Syria, Greece, Bulgaria, and the Black and
Mediterranean Seas, Turkey has both a beneficial and potentially dangerous position.
First, the bad news. The area it covers represents an intense zone of conflict. Struggles in
the Middle East, the Balkans, and the ex-Soviet republics can all easily spill over Turkish
borders. Should this occur it would most certainly create a new surge of terrorism from
the PKK in attempts to form a Kurdish state amidst the chaos. These fears create a sense
of instability among many businessmen, who often choose to stay away from large parts
Despite security issues, the location is also beneficial in many ways. Turkey serves as a
conversion point between Eastern Asia and Western Europe, the country spans them
both. This unique position allows the country to rely on cultural, linguistic, and
institutional ties on two entirely different planes - vastly expanding the potential scope of
business. It's also worth note that the location gives Turkey a great advantage over the
issue of energy. Oil is easily accessible from the Medditerranean and Caspian areas and
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natural gas is abundant in neighboring Central Asia.
Economy
Much of the economy is still controlled by the state despite recent liberalizations and
privatizations (mostly encouraged by the IMF, World Bank, and EU). The country has
been known for its high rates of inflation for a long time now due to problems with fiscal
defecits, bank bailouts, and the devaluation of the Turkish lira to remain competitive (the
country is highly dependent on outside oil). However, under current IMF reform
programs, the ruling AKP has managed to begin turning the country around showing real
GDP growth in recent years and a clear decrease in inflation (despite a small setback in
2006 that was largely due to soaring oil prices globally). The IMF program involved a 3-
year stand-by loan in the amount of $4billion (USD) in 1999. In 2001 Turkey
experienced its most massive economic crisis in recent history - mainly due to a huge
consumer boom, exploding oil prices, increasing interest rates, and extremely weak
banking institutions; government debt was at 100% of GDP, the Turkish lira was being
devalued at unprecedented rates, and the country was clearly in the grip of recession. The
IMF offered another $8billion (USC) to help bail the country out, sent in a representative
to help restructure and privatize, and has since then renewed the 3-year plan twice - to
GDP is forecasted to drop in the immediate future from 4.6% in 2007 to just 3% this
year, 1.7% next year, and then begin to pick up again in 2010 (The average for the past 5
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years was 7.4%). Inflation has risen sharply this year but is largely attributed to external
issues (re: world economic crisis) and one-offs like food and energy prices. The rate has
been dropping slowly since August and the trend is expected to continue (from 12.1% in
Currently, the IMF programs have expired (in May 2008) and Turkey has not asked for a
continuation of the package despite recent rises in inflation due to the global economic
crisis, nor has it asked for another precautionary stand-by despite criticism from the
business circle who believe the government has largely ignored the international financial
crisis. The reasons for this lie in the upcoming local elections. Without the program's
appease voters who are more pressed about issues like unemployment, unequal
distribution of income (discussed below), and issues with the PKK in the southeastern
provinces. The AKP is faced with growing dispopularity and the upcoming elections are
crucial.
Because of relatively unstable domestic demand curves, due in large parts to the factors
mentioned above (inflation, fluctuation of the Turkish lira, and additionally price and
trade fluctuations), exports have become a major part of Turkish business. This, in turn,
addition continuation of this trend bodes well for the future of the economy, protecting
against crises that may occur at home, and helps establish Turkey as a legitimate
European force (especially since about half - 56% in 2006 - of all Turkish exports are to
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countries of the European Union).
The country's economic standing is highly variable based on location as well. The
Eastern, rural, and remote southeast of the country averages only 10% of the income per
head as the Westernized and industrialized northwest regions. Much of this is attributed
Even where the government actively tries to promote economic activity in the region they
tend to fail. For example, in 2005 the government approved a package of special
incentives for private investment in 41 southeastern provinces but the policy largely
failed due to continuing violence in that region regarding the PKK and the Kurdish
conflict (recent examples of acts of terrorism include PKK attacks in Hakkari on October
4th and 8th, leaving 36 dead and many more wounded). Many investors avoid this area
Because of its location Turkey's traditional music pulls upon many different cultural
influences, including Central Asian, Persian, Greco-Roman, and Arabic. In the early
years these influences developed into very distinctive classical (gaining the respect and
influence of the likes of Mozart, who featured the style in his Symphony Number 9) and
folk traditions. The use of bells, cymbals, and bass drums in many symphony
compositions can be traced back to the early Turkish use of these instruments.
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More recently, these influences have compiled themselves into a uniquely Turkish genre
called Arabesque - hugely popular beginning in the 1960s, the style still claims a cult-like
following, fiercely devoted to the traditional sound and the cultural space it provides
them. It combines all of the traditional aspects that defined the pre-Republic state and
lends its listeners a paradigm in which to imagine and define themselves and their values.
Arabesque music is defined by many as melancholy. Its focus is very lyrical and uses
that of love - defined as love between two people, soul mates, family love, love of
country, etc... The genre is an expression of the Turkish people's history and of their core
identities.
Post-Arabesque there has been a distinctive move in the Western direction - especially
amongst younger demographics. The import of a more modern and Western sound has
led to a fledgling pop and rock (Antalyan Rock, as it is called by some) dynasty and, in
reaction, an export of those creations. "For about a decade, there had been no mistaking
that Turkey has a lively pop music industry, as singers such as Tarkan, Sezen Aksu, and
Sertap Erener herself have won a growing reputation across continental Europe and made
some inroads into even the Anglo-Saxon world" (Barchard, 2003). Most artists in these
genres can be found residing on the recording labels at Dogan Music Company and
Besides these two behemeths, there are 51 different music industry companies operating
in Turkey - all banded in union by MU-YAP (Union of Turkish Music Makers) (Barchard
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2003). Sony, DMC, and, additionally, Pozitif, are the three largest companies operating in
the Turkish Republic and the two domestic companies (DMC and Pozitif) are profiled
RECENT TRENDS
Music Investment
Artists
Genre
The following represents a close analysis on the two burgeoning genres of music that
Hip Hop
percentage of the repertoire is being recorded and distributed without help from any
recording label or company (an example of the exception would be Germany's Hammer
Muzik's Hipnetic Productions label - a very minor Turkish company that mainly imports
Western heavy metal and hardcore). The term yeralti in hip hop signifies more than
simply functioning outside of the corporate realm - it also indicates a style of lyric that
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often operates outside of what is formally allowed by the government, participation in
illegal activities, particularly the act of creating graffiti, a definitive distinction from
popular and mainstream music, and, most importantly, an authenticity of being dedicated
to the art regardless of financial benefits. In all, it is very similar to the American ideal of
musical underground scenes (the most significant difference being that yeralti in Turkey
does not gain credibility from any ethnic or socio-economic classification of its
participants). However, it's important to note that while the underground's opposite, the
("come out to the surface"), is spoken about with pride as many yeralti hip-hop artists
desire to have their music picked up and developed by major recording companies
(Solomon, 2006).
Hip-hop is also presenting itself as a financially reliable genre as well. The environment
in many of the urban centers in Turkey closely resemble the political and social
circumstances that were present in New York at hip-hop's birth. A major factor that
helped birth the US hip hop craze was the decline in the then-current popular music
embodied in funk, disco, etc... Right now the same condition holds true in Turkey.
Arabesk (as discussed in the History of Music Business section of this document),
Turkey's home-developed genre, was immensely popular in the 1980s and 1990s but is
beginning to lose ground to Western music. Once the country's musical voice it is less
and less relevant and has begun to lose its position on the forefront (Barchard, 2003). Hip
hop and its deep politicalization and nature of social consciousness in the country is in a
position to fill the gap that Arabesk has left in its wake. It fulfills the duel need of cultural
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identity/place and of modernization which the people of Turkey seem actively seek out.
Additionally, hip hop is a relatively inexpensive genre of music when it comes to creation
at the grassroots level. As exampled by the American birth all thats needed is a power
There is already a small pool of minorly successful Turkish hip-hop artists. That list
includes Nefret (including Ceza and Dr. Fuchs), DJ Mic Check (of Silahsiz Kuvvet and
Sagopa Kajmer), and Turbo (real name Tunc Dindas of group Statik). Most influential
(and successful) of these names is Ceza (real name Bilgin Ozcalkan, in Turkish ceza
means punishment). Ceza is creditted with being the pioneer in transforming hip hop into
a unique Turkish experience. He is cited as being the artist who took hip hop and threw
out the traditional American samples and replaced them with Turkish arabesk samples -
reaching out not just to music-enthusiasts in Turkey, but also greatly affecting the
conscious when it comes to his lyrics - one who may sound good (indeed, many who
have listened to his body of work feel comfortable proclaiming him to be the best rapper
in Turkey, and maybe even the world {Aktay, 2008}) but is more interested in the
message he is sending - his music is not for the sake of entertainment. In this sense Ceza
very much appeals not only to the youth generation, who prefer Western styles of music,
but also the more traditional listeners whose cult-like following of Arabesk is being
called to.
Ceza's social conscious and mutation of the genre has been commercially successful too.
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After two albums with Nefret, which fared well but weren't stellar sellers, he began a
collection of solo albums. The second of these, Rapstar, produced by DJ Mic Check, is
the most financially succesful rap album in the country, selling almost 150,000 CDs -
House
Turkey is not immune to the wide-spread phenomenon of the musical mash-up either.
This is most evidently captured in the country's embrace of traditional Arabesk songs
being mixed with modern house beats. For example, in 1998 Cuneyt Ortan began to
dissect old Turkish pop songs and getting his friends in London at Sperm Records to mix
them in with acid-house beats for club tracks. Once released on the airwaves Turkish
audiences responded positively in great numbers and Mr. Ortan, now heading his own
production company called Kiss Music, had a dozen new artists signed up for the
The club/house scene thrives in Turkey just as much as it does everywhere in Europe.
from electro sounds in the western part of the country with a slop towards trace in the
eastern sections (Aktay, 2008). The most noticeable artists from Turkey in this market are
Erol Alkan (who is more based out of Germany than Turkey) and Murat Uncuoglu.
Alkan is an example of a great Turkish artist who has tamed the international audience -
his remixes are in demand everywhere, he even has a clear presence here in the United
States.
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Uncuolgu is titled as the most renowned DJ in Turkey. He began his music career
electronica, and came back to DJ at the top two Istanbul clubs and found Radio 2019.
Under a variety of aliases he has remixed the songs of some of Turkey's top popular
artists. Part of the reason he is so successful is his understanding of the unique needs of
the Turkish market. In a country where tradition and identity are so important (as
discussed above) Uncuoglu has made sure, in his electronica, not to lose site of what it is
that moves Turkish music audiences. In an interview with Soundplanets.com he noted the
following: "Because we have our own traditional music that is highly graded... it makes
them dig through the style and find the best and compare the qualities. The important
thing is they care about the melodies and vocals in electronic music and I think it
originally comes from their sight of traditional origins, which is why I believe in using
Domestic
National laws have been passed to help boost the domestic music industry. In the 1990s a
national TV law was passed that evicted MTV from the millions of households it had
found a home in. The results of this policy made it so that Turkey has, essentially, 30
national TV channels and five of them are, more or less, the Turkish version of MTV.
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These channels, it is worth noting, are not limitted to the nation. They are also widely
viewed in the Middle East, southeastern Europe and are available in Western countries as
well (Barchard 2003). They additionally are designed to service the recording industry in
that air time is given only sparingly to international artists and programming tends to
repetoires are discussed is that "domestic" does not necessarily mean "sell domestic." The
Turkish diaspora is numerically strong and still closely tied with Turkish culture in many
aspects. "With a population of more than 70 million, there's considerable room for
expansion of international repertoire sales in Turkey and, with an estimated 1.8 million
people of Turkish descent in Germany alone, there are also opportunities for trade in the
It's also not sufficient to assume that a domestic repetoire would only appeal to those
living in the country or with close ties. Live, international touring is most definitely an
option for large Turkish pop and rock bands. It is not uncommon for them to headline
their own tours throughout the world, even in the United States, many do not need the
help of a festival or other assortment of acts in order to draw large crowds and make a
Foreign
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It's important to remember that Turkey's domestic repetoire has, since the beginning of
Arabesque, widely depended on modern international music. Ziya Gokalp, a leader in the
Arabesque movement summarizes the sentiment nicely: "We have seen that Eastern
music is both morbid and non-national. Since folk music is the music of our national
culture and Western music is the music of our new civilization, neither should be foreign
to us... If we collect [our folk music] and rearrange them in accordance with the Western
musical style, we shall have a music that is both national and European" (Ziya Gokalp,
The post-Arabesque imitation of Western pop and rock could not have happened without
their import into the country. Acts from these parts that travel to perform in the country
and market their records here see a lot of success: artists such as Roger Waters and Sting
easily see crowds of 17,000 when they perform in Turkey, Metallica sold out an entire
arena (twice), the headliners of major festivals (discussed below in detail) are almost
always international stars and perform in front of tens of thousands of eager fans.
Additionally, a quick perusal of Billboard's Turkey edition clearly shows the dominance
of international acts over local ones when it comes to sales. A few Turkish talents are
occsaionally sprinkled into the Top 20 but the cake clearly goes to the Britney Spears' of
the world - proving the demand is clearly there, the supply just doesn't happen to stop by
Performance
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Now, more than ever, is a time to become curious in Turkey's performance industry. At
this year's Popkomm conference, held in Berlin at the international music festival of the
same name - Turkey was the partnering country and was largely focused on in rounds of
discussion as well as featured in many of the clubs and venues during the week's
festivities.
Festivals are fast becoming a very prominent source of income and of the distribution of
musical wealth and knowledge. Below are listed a number of the more prominent
festivals held in the country's borders with performances by both local and international
talents.
of the biggest music festivals in Europe. Previously the event has featured Franz
Ferdinand, the Smashing Pumpkins, Erol Alkan, Muse, Gogol Bordello, The Cure, Korn,
The Offspring, and 50 Cent. This year the festival did not go on - officials cite the
unavailability of appropriate artists as their reason for not installing the 6th segment.
Realistically, the cancellation was due to a decrease in ticket demand experienced last
This actually may not be a negative indication. Rock n Coke's birth triggered a small, but
powerful, movement within the Turkish rock music industry. Many rock fans did not
believe that big corporate sponsorship and rock music should mingle so casually and
actively protested the Coca Cola sponsored festival by creating their own. Barisarock
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(which translates into Rock for Peace) is that festival and it is scheduled every year to be
at the same time as Rock n Coke and is a FREE festival. Since 2003 (both its and Rock n
Coke's birth year) the audience attendence level has been increasing. Which means the
audience for rock festivals is not disappearing, it's just gone someplace else. For those
few days in the summer the choice is to either pay for a festival featuring a few
international acts amidst local talent (the headliners have been widely regarded as
becoming less prominent over the years) or attend a free festival packed full of local
Radar Live, presented by Dinamo FM, features over 100 acts per festival and is held at
Kiyos Solar Beach in Istanbul. Last year, its second year, it featured Marilyn Manson,
Kelis, The Rapture, CSS, Peter Bjorn & John, The Rakes, and The Horrors on three
different stages over the course of three different days. That's a major increase of
production over its first year's 1-day 1-stage gig which featured only a few relatively
unknown UK acts as the international fare. The entire event was covered by MTV Turkey
Efes Pilsen One Love Festival is another Pozitif production. Now in its seventh year, the
festival featured performances by Gogol Bordello, Hot Chip, and Yelle as the
international attractions to rave about. The term "rave" here was used intentionally as it's
important to consider the festival's obvious move to more of an Electronica festival (as
indicated above, electronica and its various subgenres are spreading widely across the
country). Unlike its label-mate's performance - the turn out at One Love was very
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encouraging. This is due to a number of factors including the prestige of the headliners
and their status as young and up-comers instead of established repeat performers, the
more unique genre of music and the culture that type of event tends to attract, and the fact
Phonem, presented by Miller with Istanbul Foundation for Culture and Arts (IKSV), is
another electronica festival. It takes more of the form of a city festival as its performances
are spread out over a number of venues in Istanbul rather than at a consolidated and
concert-goers to pick and choose their performances more consistently and only pay (at
the door) for those they really want to see. It seems to be working - the festival certainly
had a large outpouring in 2008. This year it came in the fall rather than the summer and
featured performances by British Sea Power, Annie, Digital Playground, and Robots in
Disguise.
Istanbul Foundation for Culture and Arts (IKSV) manages many international events
including two festivals and hundreds of concerts, reaching a yearly audience of 100,000
people. Gorgun Taner, its Chairman, notes that most problems with the festival and live
music industry in Turkey deal mainly with infrastructure problems that come hand in
hand with the country's relatively new position in the spotlight. Additional consideration,
he believes, for any problems deals with the diversification of artists performing. While
the number of headling acts that travel to perform in Turkey have seen a sharp upturn,
with over 100 performing yearly, many of these acts are not considered to be "up and
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coming" and are repeat visitors. An initiative that would send rising stars to perform at
the country's top festivals and headline arena concerts (which seem to be coming back
into vogue as per the 2008 sold out Metallica arena concert) could revitalize the sector
INCOME STREAMS
Recorded Music
Turkey can be considered somewhat behind the times as the transition away from
cassettes is still a relatively new thing for the country. It was only in 2000 that Turkey
started making definite strides away from the cassette and towards the CD. However, this
move also coincided with the first waves of digital files and piracy. CDs in Turkey are
generally priced around $21.79 (representing 8.21% of the average amount of monthly
disposable income in the country)(EIU, 2008). Definitive numbers were not extractable
from Turkish companies at the time of this report, but the bandrol numbers presented by
MU-YAP, the Turkish organization that monitors copyright issues, are as follows:
International CD Domestic CD
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Bandrol
small notice identifying manufacturer (and ensuring they have paid all necessary taxes)
required on all commercially sold music products and are issued by the Turkish Ministry
of Culture. Without this sticker the product cannot legally be sold. Tight controls by the
Ministry effectively eliminate all music that is not favored by the government, including,
but certainly not limitted to, any lyrical content that encourages a perception of the
government that is not popular within the party, that incites violence, or uses swear
words. As was briefly touched upon in History of Turkey section of this paper, recent
political trends indicate that these control will only continue to be tightened - the country
is perceived by many, both in and out of the country, to be heading to non-secular Islam-
centered governance... which only spells trouble for artists wishing to express themselves
outside of the religious guidelines put forth by the ruling Justice and Development Party
(AKP).
However, with time such stringent limitations on freedom of expression may be lifted. It
is no secret, as has been discussed, that Turkey strongly hopes to become the next full
member of the European Union. The AKP is in line with this sentiment - in fact it
considers it one of its two main purposes, the other being economic stabliity (EIU 2007).
In that regard, censorship must be rolled back at some time in the near future as
guaranteeing the freedom of expression to all citizens is at the core of EU policy. The EU
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takes no back seat in continuing to pressure Turkey to lift its bandrol standards as is
evident in their 2006 report on Turkey's accession which stresses the importance of
eliminating these barriers (Eurling, 2006). Although recent trends report the country
moving in a direction parallel to the EU commands (Jenkins, 2008), it must be noted that
Touring
The country has a well-developed road system with 1,900 km of motorway around major
cities - the longest of which stretches from Istanbul to Ankara. Rail transport is not
suggested due to decrepid rail lines and inconvenient routing. Air travel has increased
rapidly in the last few years and there are 40 aiports in the country with a number of
Festivals
Tourism averages about 5% of Turkish GDP (and a major source of foreign currency on
the invisible balance). Many of these tourists are "package holidaymakers" who come to
the coasts during summer for vacation. A second large group are the 8.2 million (in 2006)
people who represent part of the Turkish diaspora (mainly living in Germany) who come
to visit the country for holiday or family reasons. In recent years, due to this trend, many
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companies involved in tourism (ie: airlines, hotels, restaurants in highly trafficked areas,
tourist attraction owners, etc...) have consolidated efforts to maximize revenues and new
sources of business in this sector are popping up all over the place. Concern over the
global financial crisis need not be an issues when considering the tourism industry either
- indeed, all research informs the country benefitted from the credit crunch earlier this
year and the crisis has only stregnthened this position. In October 747,000 people visited
the country - a 21% increase from last year. Ibrahim Acar, the country's Culture and
Tourism Directorate director is quoted as saying: "Although the economic crisis has hit
various industries across the world, that is not the case for tourism in Turkey’s
with the number of tourists already amounting to nine million" (Hurriyet, 2008).
Combined with a strenghening festival scene, in 2007 hitting the $150million mark - with
expected revenue of $1billion in the next ten years (Tuncay, 2007) - this is the perfect
setting for a festival package. Indeed, Yonca Temizocak, Marketing Manager at Dinamo
FM, notes that for the 2007 Radar Live Festival, over 1,000 tickets were sold to people
coming from abroad and represents a major tourism opportunity (Tuncay, 2007).
Any number of combinations are imagineable. An already existing festival could partner
destination for music lovers in the region and around the world. The present represents a
perfect time for this opportunity as well. Turkey was the partnering country at Popkomm
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in Germany this year - with two major conference sessions focused on their music
industry - representing a large international interest in what the country has to offer.
Some entities to be aware of include Antalya (the region of Turkey where most festivals
take place), Aspendos Theatre (the most tourist frequented concert venue according to
attraction).
Ancillary
While Turkey may be considered by some to be behind the times when it comes to
computers and internet technology, there is definitely one area that the country has
Consider the following: The penetration rate of cell phones into households is currently at
95% and it expected to go over 100% by the end of 2010 for a total of 81.7 million
mobile phones active in the country according to Research Markets' "Turkey Mobile
Forecast, 2008-2010" (Turkey Sectors and Companies Today, 2008). Also, the market in
Turkey is not yet considered to be saturated like the rest of Europe. The reasoning behind
this is that the average age for mobile users in Turkey is dropping (12 years old now)
creating new customers and many Turkish citizens also purchase more than one mobile
phone - sometimes as a replacement for "land lines" (whose rates are generally not as
competitive) - and that these trends will continue and will help growth (Euromonitor).
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Top mobile operators in the country are Turkcell, Vodaphone, and Avea (57%, 25%, and
18% respectively). All three offer competitive rates and right now are competing to get
their services on the most up to date phones. As newer models of mobile phones are
introduced, with more capabilities and 3G technologies, the Turkish customer base is, on
average, buying new phones every 1-1 1/2 years - with the introduction of music
capabilities being a major motivational factor. Imfred de Jong, the chief of Nokia's
Turkish branch, notes that: "Turkish customers mainly prefer models with music and
demand radio functioned into the device, and increasingly request MP3 players, Jong
informed" (Oguz, 2008). With this information in mind it is only a matter of time before
licensing deals are struck with these companies, which could represent a lucrative stream
In addition to cell phones that play music - applications and ringtones/ringbacks make up
a significant pool of income as well. Music application downloads for cell phones in
Turkey has reached 1 million a month, and 1.5 million per month on the internet as of
2008 (Das, 2008). Also, over seven million ringback tones were sold to the more than 61
million mobile subscribers in 2007 alone (Koranteng, 2008). With the number of cell
phone subscribers increasing in leaps and bounds - even past one per person as cited
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OTHER DRIVERS
Economic
Turkey is considered to have one of the most liberal policies for foreign direct investment
in the OECD due to their view of FDI being vital to their emerging economy (which is
not to say the process is easy - in fact it's often challenging due to political climates and
economic instability discussed earlier in this paper - but things are looking more positive
Demographic
Turkey has a unique market make-up in Europe - primarily due to the young age of its
population:
"The Turkish market is potentially enormous with 40m people aged less than 25, but at
the more affluent end of the market, many young Turks prefer mainstream western pop
and rock, while in rural Anatolia and the lower income sections of large cities, traditional
Turkish music holds sway, along with a brand of sentimental modern Middle Eastern
"Behind the growing impact of Turkish pop music lie a number of factors. They include a
strong and varied musical culture; Europe's largest population of under 25 year olds; and
the rise of satellite TV, private sector FM radio, and, to a lesser extent, the internet."
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(Barchard, 2003)
Technological
Many entertainment companies in the music business are actively involved in electronic
TV channels).
As the number of internet users increased from 200,000 in 2004 to 5 million in 2007, the
number of CD sales dropped by half - from 43 million to 21 million (Das, 2008). Some of
this
Institutional
Recently, many of the limitations placed on non-Turkish business entities have been
lifted in favor of encouraging international investment and interest in the area and more
requirement, and are now capable of forming any type of partnership in Turkey instead of
only limited or joint stock companies and are treated equally with local companies.
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Importers do not need a license or a bank authorization to import anymore - only a tax
number.
Turkey has signed free trade agreements with the EFTA, is a leading member of the
(ECO) with Pakistan and Iran, and a founding member of the Southern Europe
While US investors retain full access to Turkish courts in any matters of disputes it is
worth noting that the judicial system is notoriously overwhelmed with cases and is
therefore slow in making decisions. It has also been warned by the UCS that judges in
Turkey may be swayed by outside forces and seem to generally side against the foreign
investor.
Competitive
DMC
The Dogan Music Company is owned by the Dogan Holding (DYH - $1.6billion in
annual sales), known as the largest of all media groups in Turkey. This is the company's
main edge on the industry as it is connected through Dogan Holding to all aspects of the
entertainment industry and additionally to all advantages the company is utilizing in the
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area of technological and digital revolution.
Dogan Holding has a licensing agreement with Bertelsmann Music International Service
allowing it utilize international music and also make domestic repetoire available
worldwide and an agreement with Universal Music. Dogan Holding also owns Dream TV
which, in a word, can be descibed as the Turkish version of MTV. It commands a 15%
market share in music and 20% in GSM and internet channels. Additionally DYH owns
Kanal D, Star TV, and CNN Turk channels on traditional television broadcast and D-
radio it owns four channels: Radyo D, CNN Turk Radyo, Slow Turk and Radyo Moda. A
Turkish Daily News, Radikal, Posta, Fanatik, and Vatan), a news agency (DHA), and a
few magazines as well (Dogan Burda Dergi and Dogan Egmont). D&R is DYH's book
and music retail stores that take advantage of both physical marketing and an advanced
digital portal store. It is the market leader in the sector and in 2005 expanded its number
It also owns Dogan Online which has the largest Internet infrastructre in all of Turkey. It
holds 25% of the dial-up market and its advertising branch, Medyanet, has 50% of the
Pozitif
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Pozitif Muzik is an all-encompassing independent music industry entity. The company
has five main areas of the industry in which it performs. First, as discussed earlier in the
research, Pozitif runs a competitve Live Concert and Festival branch. Besides Rock n
Coke and Efes Pilsen One Love Festival, it runs a blues festival (Efes Pilsen Blues
Festival) and a jazz festival (International Akbank Jazz Festival) in their 18th and 17th
year respectively. This section of the business was founded at the beginning of Pozitif's
life in 1989 and appears, in most respects, to have a very strong marketshare.
The company also runs a small venue called Babylon in the heart of Istanbul. It opened
its doors in 1999 and has held over 1,500 concerts in that time. Babylon is a much
smaller venue than large US companies are used to working in - its standing capacity is a
mere 450 people. However, the tight limit has not prevented major acts from performing
there including Patti Smith, Of Montreal, and Norah Jones. Additionally, Pozitif has just
last year opened up a lounge (Babylon Lounge) to enhance the services provided by its
venue. The lounge mainly serves as an attached eatery to entertain concert-goers both
before and after shows next door. However, it also features a small private second floor
(capacity: 80) for private events and small primarily DJed shows.
Pozitif incorporate two recording labels as well. The first is the very successful
Doublemoon Records operating out of, and being inspired by, Istanbul. The label is
known for its efforts in fusing together international and traditional styles of music to
create new genres and sounds that are unique to Istanbul. The label carries a very
impressive repetoire including Mercan Dede, Taksim Trio, and Replikas and was
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recognized as a Top 5 (#4) World Music Record Label by WOMEX in 2008 as well as
having the #1 World Music Record (Dede's "800") for the year. In many respects it is not
out of the question to call Doublemoon partly a lifestyle brand - as it tries to incorporate
the entire city into its music. The second label is called Voltaj and is still in its infancy.
However, its focus is rock music. This is a bit of a departure from the non-mainstream
route Pozitif had been taking with Doublemoon and its other investments - so it is yet to
In connection with its recording labels, Pozitif has an in-house artist management
Finally, Pozitif Edisyon is the publishing branch of the main company. The Edisyon is a
full service company representing the rights of domestic and interntional artists. It also
participates actively in the following areas of the publishing world in order to represent
its catalogue adequately: music production, consulting, clearance, record label support,
Legal
Taxation
When it comes to performances of foreign artists in the United States or Turkey the two
countries have operated under a bilateral tax treaty since 1996 that follows all three
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paragraphs of the OECD Article 17 suggestion (the artiste clause). That is to say when a
US musician (among other things) travels to Turkey and receives income derived from
his or her trade that income is taxable in Turkey regardless of where the employer is
based. However, the US-Turkey agreement follows the limitted approach to the second
paragraph and does not allow Turkey to tax the income of employees who consider the
artiste their employer nor does it allow the income of those employees to be added onto
the artiste's tax liability. Additionally, were a US resident artist to travel to Turkey to
perform and be "wholly or mainly supported by public funds" from either country then
the US would get to tax that income generated by the artist in Turkey.
When it comes to establishing any sort of business in Turkey there are other taxation
issues to keep in mind - especially when deciding what type of business entity best suits
your venture. Operations as a Limited or Joint Stock Company incur tax liability on
worldwide income while operations as a branch would only be liable for income sourced
inside of Turkey. Also, in 2006 the corporate rate of taxation was lowered from 30% to
20% and the withholding rate was lowered to 15%. Additional withholding taxes of 10%
are charged for all royalty, license, and service fees paid to non-residents (defined in
Article 3 and 4 of the tax law to be those who do not have a permanent residence in
Turkey and do not stay continuously for more than six months in a calander year). Other
pertinent withholding rates for those wishing to involve themselves in the music business
in Turkey include: Copyright payments to limited liability tax payers (25%), sale,
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In general, Under the Bilateral Investment Treaty (BIT) effective in 1990 with the US,
the countries are to treat each other as a "most-favored nation." That includes, but is not
profits, fees, and royalties are guaranteed to have free transfer status at market-clearing
rates, and investors from one country have the right to utilize the other country's courts to
the same degree as nationals should a dispute arise from investment there. An additional
treaty guarantees freedom from double taxation between the two countries.
Other taxation issues to be aware of while conducting business in the country are as
follows: Turkey is a GATT member and follows all guidelines prescribed by the group;
Local production is the route to go for any product sales - as there is a mandatory
customs duty on all US imports while European imports face none - however, due to the
political aim of joining the EU, Turkey has adopted the group's common external tariff
which has dropped the duty rate from 10% to 5%; a VAT is imposed on all foreign and
domestic goods (with a 26% ceiling however most intellectual music products are
charged 8%).
Immigation
Visiting Turkey, often, is a crucial step to doing business in the country. A high value is
placed on personal face-to-face relationships amongst the Turkish people. In that regard,
less than 6 months in the country) wish to work in the country must obtain both a work
34
permit from the Turkish Ministry of Labor and Social Security and work visa from the
Turkish Embassy in the US. However, if the non-resident remains under the payroll of a
foreign company need not apply for permits as long as they do not plan to stay in Turkey
permanently.
There are two types of visas available to those wishing to travel to Turkey. There is the
entry visa, allowing for one or more entrances into the country over a 3 month period and
the transit visa meant for those just passing through on their way to a non-Turkish
destination. The former is the one required for those wishing to business in the country
with a few additions. Applications for a work visa must be done at least six weeks in
photo, and permit letter from the Undersecretariat of the Treasury, General Directorate of
personnel employed in special direct foreign investments must submit a petition, four
copies of form, passport and diploma copies translated into Turkish, and curriculum
vitae. The employing company must submit a petition, approved balance sheet, and Trade
Registry Gazette. In order to extend a work permit, petition must be made within 15 days
of expiration and include the following: form, last payroll, original permit copy, notarized
passport pages copy, and documentation that there is no debt outstanding from the Tax
Copyright
35
Under Turkish law musical works and all types of musical compositions with or without
words, artistic works of aesthetic, and cinematographic works will benefit from copyright
broadcasting, and moral rights (communicate the work in public, on intellectual and
mechanical rights society and MU-YAP is the Turkish performance rights society (and
IFPI representative).
The IIPA considers piracy of intellectual works in Turkey to be rampant and increasing
due to the always ballooning numbers of internet users (now at 21% penetration). Their
current research estimates that piracy cost the Records and Music business $22million in
2007 (IIPI, 2008) - a hefty figure when you consider the industry is only a
$500million/year sector. (Note: digital piracy is only part of the problem - the other lies
in both street sales and the use of burning technology by establishments and the
Turkish parliament passed amendments to the copyright law in 2001 to strengthen and
enforce policies in line with WTO and TRIPS standards. However, in practice enforment
was less than par, with the proliferation of piracy, lack of anti-circumvention laws, and
lack of serious criminal penalties for infringers cited (which led, of course, to many
repeat offenders), and the US placed Turkey on its Priority Watch List in 2004. As of
2008, however, the US moved them off the Priority Watch List and onto the Watch List
36
actions include public awareness campaigns, proactiv raids against pirates, increased
penalties by the courts for violators, and seizure of violating material. It has been noted
by copyright authorities that Turkey is "beginning to reap benefits in the market in terms
A number of different areas where progress must still be made in terms of copyright have
been pointed out. The courts must take more responsibility and pursue policy more
vigorously including making timely decisions, editting of procedural rules on the issue of
search warrant obtaining, and demanding less burden on the copyright owner to prove
right in case (on a positive note, in 2007 six new special IP courts were created in 2007
specifically to deal with these issues and some owners have found solace in them). The
bandrol system must be revamped and held to be more accountable including decreasing
the supply as the country moves into a more digital world, more careful monitoring of
existing bandrol stickers, and the administration of issuing these stickers should move
from the hands of the government to the rights organizations themselves to create a more
efficient system. Finally, it is highly suggested by the IIPA that Turkey takes measure to
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CONCLUSION
1. Sufficient funds should be provided for fostering the growth of Turkish hip-hop music.
capable music industry entity for the purposes of A&R, recording, marketing, and live
promotion. All trends indicate that there would be little to no backlash amongst Turkish
hip-hop performers or their fans were the genre to be made into a more mainstream
phenomenon. Possible backlash may occur should the investment involve too much of a
foreign presence in the form of tight international control and decision-making. Instead,
artistic direction and other such considerations should be left to employees inside the
country - hip-hop will be successful as long as it continues to evoke the self and state
pride. Efforts should also be undertaken to ensure distribution to the wide diaspora of
2. Immediate investment into the creation of mobile musical devices on phones should be
a top priority. As Turkey rapidly catches up the most advanced nations in this respect
there is a golden opportunity reserve rights and licenses to a variety of products and
establish a brand name as the first in the game. Mobile phone sales, especially those with
music capabilities, show no real signs of slowing down in the near future and with
additional content provided by your investment the cycle can only intensify.
38
investment. The Turkish people have proven that they will come out in large numbers to
see the foreign stars and acts that dominate their Billboard charts. The number of Turkish
people who attend festivals, especially in the summer months, has grown at a steadily
increasing rate and has piqued the curiousity of its neighbors as well. Special attention
should be paid to the following categories: a) Type of artist and status as up-and-coming
or established (the former may garner more income as the country remains young as a
people and eager for that which is new - not that which is old); b) Packaging of any
packages, etc...; and c) avoidance of any highly unstable areas - such as the southeast of
the country - which may be less welcoming to foreigners and a dangerous place to
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