The Music Industry of Israel As An Investment Opportunity

The Music Industry of Israel as an Investment Opportunity
Ilana Broad
November 16, 2010
MUIN 445: International Aspects of the Music Business
Professor (Executive Vice-President for Research and Analysis) Mark Goldstein

Table of Contents:
1: Introduction……………………………………………………………………………....……
3
2: History of the State of Israel…………………………………………………………………
4
A: History……………………………………....…………………………………………4
B: Geography and Location………………………………………......………………..4
C: Government and Legal System………………………………………………....
….5
D: International Relations…………………………………………………………...….6
E: Military……………………………………………………….....……………………..7
3: Current Status of the State of Israel…………………………………………......…………
8
A: Overview…….………………………………………………………………………..8
B: Economy………………………………………………………………………………8
C: Tourism and Immigration…………..………………………………………………
10
D: Population and Lifestyle……………………………………………………………
12
4:Business Environment…….
………………………………………………………………...14
A: Overview…………………………………………………………………………….14
B: Taxes…………………………………………………………..…………………….16
C: Laws……………………………………..…………………………………………..17
5: Entertainment and Media…………………………………………………………………..19
A: Overview…………………………………………………………………………….19
B: Censorship…………..………………………………………………………………19
6: Music
Business……………………………………………………………………………...22
A: Overview…………………………………………………………………………….22
B: Popular Artists……………...……………………………………………………….23
C: Music Companies and Income Generation………...……………………………27
D: Trends………………………………..……………………………………………...29
E: Mobile Music………………………………..
……………………………………….29
F: Live Music………………………………..………………………………………….30
7: Music Law…………………………………………………………………………………...31
A: Overview..…………………………………………………….……………………..31
B: Laws and Treaties..…………………………………...……………………………31
C: Performance Rights………………………………………………………………..36
D: Piracy……………………...…………………………………………………………
37
8: Recommendation and
Conclusions……………………………………………………….40
9: Appendix…….……………………………………………………………………………….43
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10:
Sources……………………………………………………………………………………..46
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1: Introduction
When considering investing in the music business in Israel, there are many
factors to take into consideration. First, one must understand the current socio-political
environment in Israel and the status of the Israeli economy. Second, one must look into
the ability to start a business in Israel and any other factors that may affect how one
does business in the country, such as immigration laws and taxes. Next, one must
understand the importance of various media in determining trends in popular culture,
such as the Israel Broadcast Authority and its control of radio and television, or the level
of censorship in the media, or the telecommunications industry in Israel. Also, it is
important to consider recent trends in the Israeli music business, such as the extreme
level of music piracy in the country, which types of artists have been able to make
money in the country and internationally, and which laws will effect the pursuit of the
exploitation of music.
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2: History of the State of Israel
History
The State of Israel was established on May 14th, 1948, in an extremely tense
political climate. Originally, the land that is now the State of Israel was intended to be
broken up into two countries, one Arab and one Jewish, under the United Nations’
Partition Plan of 1947, but the Arab community rejected the plan. When the economy of
the surrounding Arab nations collapsed a few months later, the Jews of the area saw an
opportunity for independence. The day after Israel formally declared independence, six
Arab countries, Lebanon, Iraq, Syria, Egypt, Saudi Arabia and Yemen, declared war
against the tiny, new nation. After almost a year of fighting, the United Nations formally
accepted Israel as an independent member on May 11 th, 1949 and the war was over. 1, 2
Geography and Location
Israel is located on the Mediterranean Sea, north of Egypt, west of Jordan and
south of Lebanon. The capital is Jerusalem, which is also the largest city in the country
and is centrally located. Other large cities of note are Tel Aviv, which is located in the
northern part of the country along the coast, Haifa, which is further north from Tel Aviv
and also along the coast, and Be’ersheba, which is centrally located but west of
Jerusalem. Also mentioned as major cities are Ramat Gan and Petach Tikva, but both
are very close to Tel Aviv and can be considered cities under one umbrella district.
Error: Reference source not found, 3
1
Central Intelligence Agency World Factbook, U.S.
2
State of Israel, Wikipedia
3
Migdalovitz
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Israel’s climate is what one would expect of a Mediterranean nation, little rainfall
during the summer months and rare snow during the winter. Water in Israel is a scarce
commodity, as most of the water available is too salty for consumption and rain is
infrequent, so Israelis have developed sophisticated water-conserving technology.
Error: Reference source not found, 4
Government and Legal System
Israel’s government is set up as a parliamentary democracy, so Israel is
governed by a 120-member parliament called the “Knesset.” The current President of
Israel is Shimon Peres, although his duties are mainly as a figurehead. The current
Prime Minister is Benjamin Netanyahu. He was elected in March of 2009 as chairman of
the Likud party of the Knesset. Elections in Israel are slated to occur every 4 years, but
the government often breaks apart before that deadline due to scandal, severe
international relations issues, and the strong role of religion in lawmaking. Error:
Reference source not found, Error: Reference source not found
Israel’s legal system is divided into two, independent units: secular and religious
courts. The secular court system operates in three tiers – magistrate courts operate at
the lowest level, district courts are above them, and the highest tier of court if the Israeli
Supreme Court, headed by the President of the Supreme Court and the Minister of
Justice. The five district courts and the Supreme Court operate as appellate courts, but
the district courts can also operate as original trial courts and the Supreme court can
41
2
3
Migdalovitz
Sitton
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operate as the High Court of Justice. Citizens of other countries are tried in Israel as
citizens of Israel are. 5
International Relations
The entire history of the State of Israel has been marked by violence with the
surrounding Arab nations. The two latest major conflicts with the State of Israel,
discounting conflicts with terrorist organizations that aren’t affiliated with a specific
nation, have been the Second Lebanon War of 2006 and the Gaza War of 2008. The
Second Lebanon War began when Hezbollah, a Lebanese Islamist organization,
attacked Israel’s northern border. The Gaza War began when a ceasefire between
Hamas, the Palestinian Islamist Resistance Movement, and Israel disintegrated. Israel
announced a ceasefire after three weeks, and Hamas responded with their own
ceasefire agreement. Hamas continues to launch rockets on Israeli land even today,
and Israeli troops retaliate defensively while attempting to maintain the terms of the
ceasefire. 6, 7
Within Israel itself exist the West Bank and the Gaza Strip, both of which have
been Israeli-occupied territory mainly settled by Palestinian people. The UN Truce
Supervision Organization has had around 350 peacekeepers constantly at work in
Jerusalem to ensure the stability of relations between the Israeli government and the
Palestinians living in and around these territories. Error: Reference source not found
Military
51
The Judicial Authority, Israel
6
U.N. Security Council News & Media Division
7
Ravid
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In Israel, service in the Israeli Defense Force, or IDF, is mandatory for all 18 year
olds for two to three years, depending on gender and area of service. Some people can
be exempted from service for religious reasons or due to physical or mental issues. The
army is divided into three divisions: the Army, the Air Force, and the Navy. Israel
spends over 7% of their annual GDP on defense, and they get money from foreign
contributors for the development of defense technology. The United States, for
example, signed a deal with Israel in 2007 to provide $30 billion over a decade in
military aid. Error: Reference source not found, 8
The IDF spends a great deal of effort deploying soldiers to aid in international
disasters. For example: after the earthquake in Haiti this past January, the IDF sent a
team of medical workers with medical equipment to set up a field hospital for the relief
efforts, and were actually the first international medical relief effort to arrive. Error:
Reference source not found

81
2
Erlanger
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3: Current Status of the State of Israel
Overview
As it exists now, the State of Israel is around 8,000 square miles, smaller than
the state of New Jersey, and the census of 2008 yielded a population of around 7.4
million people, 75.5% of whom were Jewish. The country’s official languages are
Hebrew and Arabic. Error: Reference source not found, 9
Economy
Israel’s monetary system operates around the Shekel, which normally hovers
around 3.5 Shekel for $1. The current GDP for the state is $201.3 billion, which has
grown at an average of 3.2% per year for the past 10 years. The rate of unemployment
in Israel has been around 6.2% for the last few years, and inflation hovers around 4.5%.
In the Wall Street Journal and the Heritage Foundation’s 2010 Index of Economic
Freedom, the country’s economic history is explained:
“Having moved away from the socialist economic model in the mid-1980s,
Israel made dramatic free-market gains in the 1990s. The collapse of the 1993
Oslo peace agreement and onset of the “Second Intifada” in 2000 depressed
tourism, discouraged foreign investment, and contributed to economic
recession; the economy rebounded by 2004 as a result of increased foreign
investment, restored tourism, and a greater demand for Israeli exports,
especially high-technology goods and services. Despite the 2006 war against
Hezbollah in Lebanon, the December 2008 war against Hamas in Gaza, and
continued Palestinian terrorism, the economy has grown significantly.”
The State of Israel’s history has had quite an effect on many aspect of its economy, but
10, 11
the country has been able to maintain economic stability despite its issues.

91
World Bank Country Data, Israel

10
Yahoo! Finance, USD/ILS
11
2010 Index of Economic Freedom
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During the current global economic crisis, Israel’s economy has been called the
most durable in the world. The International Institute for Management and Development
(IMD), a Swiss research firm, ranked Israel’s economy 17 th out of 58 (the U.S. is ranked
number 3) in their 2010 World Competitiveness Yearbook. Israel was ranked number
one in the sub-categories of durability in the face of crises, supply of manpower, and
rate of investments in research and development. The Bank of Israel also ranked first
for its efficiency and has been cited as the reason Israel’s economy has remained
12
stable throughout this worldwide economic crisis.
The World Economic Forum ranked Israel’s economy number 24 out of 139 in
their 2010-2011 Global Competitiveness rankings, and ranked the country 19 and 14 for
labor market efficiency and financial market development, respectively. The report
states:
“The country’s main strength remains the excellent - and improving - capacity
for innovation (6th), which rests not only on highly innovative businesses but
also on the availability of high-quality research institutions and is reflected in
a high number of patents. The favorable financial environment (14th) and, in
particular, the availability of venture capital (10th) have further contributed to
making Israel an innovation powerhouse.”
The most problematic factors for doing business in Israel, as ranked by the World
Economic Forum, are the inefficiency of government bureaucracy, the inadequate
supply of infrastructure, and the tax rates. Also, the World Bank ranked Israel’s
economy number 5 out of 183 for their protection of investors. Israel has the largest
number of NASDAQ listed companies outside of North America and the largest number
of start-up companies in the world after the U.S. Error: Reference source not found, 13, 14
12
Viniar
132
Klaus, Sala-i-Martin
14
World Bank Economy Rankings
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Paul Berger who worked for CBS Records in Holon, Israel for 7 years starting in
1977 looks at Israel’s economy as its greatest asset. He explains that, “most
investments in an Israeli company in the past five years have brought profit, just from
the exchange rate, even if there was a flat business model.” When investing in Israel,
the question is no longer whether or not there will be a return on your investments, but
rather becomes how much of a return there will be over what period of time.
Tourism and Immigration
Tourism is a major industry in Israel, mostly for their beaches and for the
religious and archeological locations. In 2009 over 3 million tourists from other countries
came into Israel for leisure purposes, which was down 9.7% from 2008. However, in
2008, the number of tourists entering the country had increased 32.3% from 2007.
Much of Israel’s tourism is dependant on their international relations, specifically if there
is a perceived security risk for travelers. 15, 16
The Ministry of Foreign Affairs and the Minister of the Interior regulate
immigration into Israel. Authorized personnel from either department can grant or refuse
residency to any individual who applies for it and can deport or detain anyone deemed a
security threat. 17
There are many types of visas available to those wishing to go to Israel for
various purposes. The most general and most widely used visa is the B-2 or tourist visa.
This visa can be granted to applicants for up to three months, and people in the country
on a B-2 visa cannot work in Israel during their stay. American citizens with a valid
15
Central Bureau of Statistics, Israel
16
Israel in Figures
1715
Ministry of Foreign Affairs, Israel
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passport are automatically granted a 30-day tourist visa upon arrival to Israel. The next
most commonly used type of visa is the B-1 or business visa, used for business
negotiations and meetings, and issued only if the applicant has confirmation documents
from the Israeli company they intend to visit. Certain people, such as artists, can apply
for this visa without confirmation documents from one particular company, but they
cannot work in Israel with this visa. Error: Reference source not found
Another visa classification of note are the A visas. An A-2, or a student visa, can
be issued to an applicant wishing to study in Israel at any education level with proper
confirmation documents from the institution at which that person has been accepted for
study. An A-2 visa is valid for one year, with a six-month extension available. An A-4
visa can be issued to the family of A-3 visa recipients. All visa applications require the
payment of a one-time fee. 15
If a foreigner is traveling to Israel with the intention of investing in a business or
being employed in any fashion, he/she must apply for a work permit. If that person stays
in Israel longer than the time for which the work permit is assigned for, he/she must
15
apply for a residence permit to continue their work.
Population and Lifestyle
Of the 7.4 million people living in Israel and 2.1 million households, 68.9% have a
computer and 59.3% have Internet access in their homes. This compared to the U.S.,
where over 75% of people have Internet access, is relatively little. However, there are
123 mobile phone subscriptions for every 100 people living in Israel, compared to 89 for
every 100 people in the U.S. This is probably because many Israelis have separate cell
phones for personal and for work or military uses. Also, over 50% of the cell phones in
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Israel have and use Internet access and 100% of the country is covered by a wireless
cellular network. Error: Reference source not found, 18, 19, 20
The lifestyle of the average Israeli is very similar to that of an American. Israelis
are very passionate about their soccer and basketball, watch American films with
Hebrew subtitles and some Israeli films, and broadband Internet is widely available for
social networking and other needs. Israeli culture is thriving; the country has more
museums per capita that any other country, and an internationally renowned orchestra,
the Israel Philharmonic. Error: Reference source not found, Error: Reference source not found
The major cities in Israel have a vibrant nightlife, with European-style clubs that
draw international DJ’s and headphone-parties where everyone dances to music
broadcast to wireless headphones. Since 90% of Israelis live in an urban center (most
of the rest live on rural cooperative settlements), the average Israeli lifestyle is very
urban. Error: Reference source not found
Israeli citizens are extremely environmentally conscious. Over 90% of Israeli
homes use solar powered technology to heat their water. But solar energy isn’t the only
area where Israelis have pioneered the environmental revolution. Shawn Lesser,
president and founder is Sustainable World Capital and writer for Israel Lifestyle, an
online news source, states:
“Relative to its small size, Israel has devoted more resources to the
development of wastewater treatment and reclamation than any other country
in the world. Seventy percent of its wastewater is recycled, three times the
182
15
16
Israel in Figures
17
World Development Indicators database
19
Measuring the Information Society 2010
20
State of Israel Telecommunications Sector
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figure of [the next-highest ranked country]: Spain. Israel is the birthplace and
world leader in drip irrigation, which has literally turned deserts into
farmlands.”
Israel’s ratio of university degrees to population is the highest in the world, and this has
been cited numerous times as the source of their innovation in technological fields
extending beyond those helping the environment. Error: Reference source not found, 21

212
17
Lesser
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4: Business Environment
Overview
According to the World Bank’s International Finance Corporation, it takes on
average 34 days to start a business in Israel. The five steps listed for this process, and
the time it takes for each step, are: Obtaining registration documentation certified by an
attorney, three days; file with the Registrar of Companies in the Ministry of Justice, one
day; register for taxes at the Income Department in the Ministry of Finance, fifteen days;
register for taxes with the Tax Authority in the Ministry of Finance, one day; and register
with the National Insurance Institute, fourteen days. All this totals to an average of thirty-
four days to start a business. Error: Reference source not found, 22
The World Bank also ranked Israel in terms of their protection of investors in four
arenas out of a maximum score of 10. For the Extent of Disclosure Index, Israel
received a 7 out of 10. This section is scored based on the requirements for disclosure
of business transactions to the public immediately or annually, the requirements for
disclosure of business transactions to the board of directors, and the requirements for
an external body to audit the report of business transactions. In the categories of Extent
of Director Liability and Ease of Shareholder Suits, Israel received a 9 out of 10. In
terms of contract enforcement, Israel also ranked well with the World Bank. According
to their data, it takes on average 15 days to file a claim, 515 to get through a trial, and
360 days to enforce the final judgment, and costs about 25% of the claim. In the U.S.,

2211
Doing Business in Israel, 2011
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for comparison, it costs on average 14.4% of the claim for attorney, court and
enforcement costs. 2023
In the Wall Street Journal and the Heritage Foundation’s 2010 Index of Economic
Freedom, the State of Israel received a higher score in each of the index’s ten
categories except for in Fiscal Freedom and in Government Spending. The score for
Government Spending should be on the rise in the near future, however, because the
Israeli government has taken particular care to lower public debt. The government has
effectively lowered the public debt from 100% of the country’s GDP in 2003, to 80%
now. Also, the government provides subsidies for agriculture, energy, and technology
companies. In terms of Business Freedom, Israel was judged as having a well-
structured regulatory system to monitor conducting business. The State of Israel had a
1.1% tariff rate on imports, which is relatively low, but there are many trade barriers
instituted by the government in the form of import restrictions and government
bureaucracy. Error: Reference source not found
Of particular interest was Israel’s score in the category of Investment Freedom,
which was almost twice as high as the world average. This is because “regulations on
acquisitions, mergers, and takeovers apply equally to foreign and domestic investors,”
and “commercial law is consistent and standardized, and international arbitration is
binding in dispute settlements with the state.” However, the dense bureaucracy of the
Israeli government prevented the country, yet again, from receiving a higher score than
they had. Israel also received a score of almost double the global average in the
category of Property Rights, due to the country’s effective enforcement on property

23
11
2010 Index of Economic Freedom
20
State of Israel Telecommunications Sector
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rights and contracts, and the clarity of the law. It is noted in the explanation of this index
that expropriation in the State of Israel is a possibility, but “only if property is linked to a
terrorist threat,” or if the seizure of that property is deemed to be in the interest of
national security. The designation of a seizure as in the interest of national security,
however, is extremely vague and requires no explanation by the government authority
responsible. Error: Reference source not found
Taxes
Israeli tax is divided into six sub-categories. The corporate tax rate in Israel is
currently 25%, down from 27% in 2008. The value added tax (VAT) rate is 15.5%, but
certain types of imports are exempted from this tax, including imports of fruits and
vegetables. Also, the Ministry of Finance will refund to certain companies any VAT they
pay to another country’s governments when exporting goods for their business. The
dividend tax rate ranges from 20-25%, depending on the amount of the company owned
by the shareholder. Income tax depends on many things, from type of employment to
amount of income, and can range from 10-49%. The average businessperson in Israel
pays an income tax rate of 46%, down from 47% in 2008. The capital gains tax rate in
Israel ranges from 20-49% for individuals and from 25-31% for companies. Sales taxes
in Israel are levied on real estate at a rate of 2.5%. Error: Reference source not found, 20,
24
Israel also has a social security tax and a national health insurance tax, since all
its citizens have access to health services. For people in the bottom 60% of the
population in terms of salary, the social security and health insurance taxes total up to
11

2420
Starting a Business in Israel
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5.38% and 3.1% of a person’s salary, respectively. For the other 40% of the population,
the taxes total 12.68% and 5%, respectively. Sales tax in Israel is currently 16%. Israel
20, 23, 25
has bilateral duty-free agreements with 44 countries, including the U.S.
Laws
In Israel, the most recent and pertinent law governing business entities,
specifically starting a business and investing in an established business, is the
Companies Law of 1999. This law specifies that, to start a business, an applicant must
submit the proper paperwork to the Registrar of Companies in the Ministry of Finance,
including the proposed name and purpose of the company, the share capital, any
limitations of liability, and provisions detailing the way the company will be managed.
The company must also name a board of directors and must always have in place a
board of directors for liability purposes. This law forces a company to appoint an auditor
every year to go over their annual financial reports before they are released. The
Ministry of Finance has the power to force a company to hire a certain auditor and to
26
force that auditor to look into specific aspects of the company.
The 1999 law also states that a company must give the Ministry of Finance two
weeks’ notice before they are going to go from a public to a private company, or vice
versa, and that any foreign company wishing to do business in Israel must register as
an Israeli company would with the Registrar of Companies. It is interesting to note,
however, that Israeli companies that do business internationally, specifically companies
whose shares are traded internationally, can, at the discretion of the Ministry of Finance,
2520
23
Starting a Business in Israel
IFPI
26
Companies Law 1999
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be exempt from certain requirements under the law, depending on the laws of the other
countries in which that company’s shares trade, but must always report their financial
20
data the same as if they did not do such international business.
 20
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5: Entertainment and Media
Overview
The Israeli Broadcasting Authority, a government controlled organization,
controls most of Israel’s television and Kol Israel, the largest radio conglomerate. The
Second Television and Radio Authority, also a government-run organization, regulates
the two privately owned, commercial television stations and fourteen private radio
broadcasts. For news, most Israelis turn to one of Israel’s daily news sources. The most
popular daily news sources in Israel are Israel HaYom, Ha-Aretz, Ma’Ariv, the
Jerusalem Post, and Yediot Ahronot. Of those, Yediot Ahronot has the highest
27, 28, 29
readership, and Ma’Ariv is a close second.
Censorship
The largest issue facing the entertainment industries of Israel is the freedom of
expression and issues of censorship. In fact, Israel has been under fire recently from
international news organizations for their censorship of reporters. One recent incident
that spiked controversy was the May 31st IDF raid of six ships carrying humanitarian aid
into Gaza. On board were over 60 international journalists, who were detained by Israeli
authorities after the raid. Also on board at least one of the ships, unbeknownst to the
humanitarian activists and journalists, were pro-Palestinian Turkish nationals with
knives and improvised weapons which they broke out when the Israeli Navy boarded
the ship to inspect the cargo in the Port of Ashdod, as was agreed upon before the
ships left Cyprus. As the soldiers boarded the ship, some of the activists attacked them.
27
Israel Broadcasting Authority
28
Facts About Israel, Ministry of Foreign Affairs
29
2009 Country Report on Human Rights Practices
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The Israeli soldiers responded originally using crowd-control tactics, like spraying the
attackers with skin irritants, but resorted to firearms as the violence escalated. After the
IDF gained control of the ship, it was reported that nine passengers had been killed and
30, 31, 32, 33
seven Israeli Naval commandos were injured.
After the incident hit news sources, an international outcry arose for the
immediate release of the journalists on board. The Israeli government responded by
releasing video of the attack taken by journalists and activists on board the ships, and
released the journalists less than two weeks later after an extensive interrogation
process. This incident has become extremely polarizing on many levels, but the U.N.
Human Rights Council released a report analyzing various accounts of what occurred
that day which explains that most of the action taken by Israeli Navy commandos was a
direct response to attacks made by passengers aboard the ship, even though the force
30, 32, 33
with which the commandos responded was excessive.
The major issue in this instance was the censorship of information after the
incident. The Israeli government took everyone who had been on the ships in for
questioning, but released almost all of them within three days of the event. Only the
journalists were held and their media possessions confiscated. The U.N.’s report on the
incident describes the confiscation of journalists’ property as “a deliberate attempt by
the Israeli authorities to suppress or destroy evidence and other information related to
the events of 31 May on the Mavi Marmara [ship where the attacks took place] and
30
Wikipedia, Gaza Flotilla Raid
31
International Freedom of Expression Exchange
32
Amos, Issacharoff, Anshel
33
Edmund
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other vessels of the flotilla.” Error: Reference source not found, Error: Reference source not found, Error:
Reference source not found, 34
The right to freedom of expression is not in Israel’s most basic laws, which
created, among other things, the right to freedom of occupation and the protection of
life, body and dignity. For newspapers specifically, the Ministry of Foreign Affairs
explains,
“In 1948, an agreement signed between the government, the army and the
press determined that censorship would be based on mutual agreement in
order to prevent breaches of state security. Under the agreement, as
subsequently amended [in 1966], the censor supplies to the press a limited list
of topics pertaining mostly to military and security-related issues, but not to
political ones.”
The purpose of the Censorship Agreement is to prevent the publication of national
security information that could lead to the harm of Israeli citizens. Israeli law specifically
allows for the criticism of government and politics, but prohibits hate speech, any
speech in support of terrorist organizations, and any speech that may incite others to
violent action. Error: Reference source not found, 35, 36
3424
IFPI
30
Wikipedia, Gaza Flotilla Raid
31
32
Amos, Issacharoff, Anshel
United Nations, Session 15 Item 1
35
Existing Basic Laws: Summary, Israel
36
Limor
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6: Music Business
Overview
According to Israel’s Central Bureau of Statistics, national spending on “culture,
entertainment and sports” accounts for 5.2% of Israel’s GDP, and 19.7% of that is spent
on “Music and Performances.” Israeli contemporary music spreads across many
genres. Not only is there an abundance of traditional folk-style music and classical
37
composition, there is also a thriving popular music community.
When discussing the Israeli music industry, it’s important to understand that it’s
really broken up into three areas: Israeli pop, international pop, and Israeli indie music.
In 2007, the music industry was worth around $45 million in U.S. dollars, and around 2.5
million CDs were sold. Liberal estimates say that the Israeli music market is actually 3
times more than the numbers portray because of the rampant piracy. The biggest
problem with information about the Israeli music industry is that private companies don’t
release their sales data, so very little information is actually available and even that
information is hard to verify. 38
Until the 1990’s almost all music in Israel had a political agenda and was focused
only on selling to Israelis. Then, music sales dropped dramatically due to extensive
piracy following an upturn in the popularity of cellular phones and other internet-capable
devices; especially after the penetration of cell phones surpassed 100% ownership. As
a result, most of the major music companies that ruled the industry before collapsed,
and cellular and Internet service providers have become the largest players in the music
industry. This led to a dramatic rise in independent artists with their own labels and
37
38
Dice Marketing
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publishing companies, and a rise in 360 deals for artists who did sign to whatever music
companies survived. More and more, independent and signed artists alike are
searching for international opportunities. Error: Reference source not found
Regev and Seroussi in their book, Popular Music and National Culture in Israel,
explain the influence of various media and public organizations on popular music in
Israel:
“Production, distribution, and consumption of popular music are embedded

within an institutional complex. The major organizations acting within this
complex are the music industry, the media, and certain state and public
bodies… The Israeli record industry and the media (especially radio), s well as
the educational system and other public bodies have played a major role in the
attempt to shape the national repertory of local popular music.”
Basically, the music business and radio industry in Israel have served as the greatest
influence on popular music from Israel, which remains the highest earning type of music
in Israel. 39
Popular Artists
The majority of artists that are popular in Israel are international artists. Most
radio websites that list the most popular songs will have separate lists for international
and Israeli or Middle Eastern artists. For example, Media Forest an airplay monitoring
service in Israel, always has two lists for their charts. On their international charts for the
week of October 31st, 2010, sits Rihanna with “Only Girl,” Cee Lo Green with “F*ck
You”, Barbara Streisand with “Duck Sauce,” and Bruno Mars with “Just the Way You
Are.” Other than the occasional occurrence of a Barbara Streisand record, the majority
of Israel’s international music charts reflect European music trends, taking most of their
cues from the U.K. with some U.S. influence. Media Forest also has listed the most

3937
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played artists on terrestrial radio and television. Topping the international list for popular
artists on radio are Rihanna, the Beatles, Bruno Mars, David Guetta and the Black Eyed
Peas. For television, the most played list includes Far East Movement, Bruno Mars,
40
Rihanna, Katy Perry and Eminem.
Even with major international influence, Israelis are still extremely proud of their
own artists. In fact, it is rare that international artists reach the gold level of record sales
in Israel, but for Israeli artists it is not uncommon. As is the case abroad, there are many
Israeli artists performing and recording at any given time in Israel, but there are a few
popular artists which exemplify the tastes of the Israeli public, including Hadag Nahash,
Idan Raichel, Mashina, Shlomo Artzi, and others. Error: Reference source not found
Hadag Nahash is an Israeli hip-hop group known for the expression of their
strong political opinions in their lyrics and their fusion of funk, jazz, electronic and Middle
Eastern elements into a westernized style of hip-hop. Popular tracks from this artist
include “Hine Ani Ba”, or “Here I Come”, which is featured in You Don’t Mess With the
Zohan, and “Shirat Hasticker”, or the “Sticker Song”, which is a compilation of popular
Israeli bumper stickers into a rap song. Another hit of theirs of note is “Teraga”, or “Calm
Down”, which was directed at another popular Israeli hip-hop artist, Subliminal, as a
critique of how he acts in public and how the music industry in Israel is organized. To
date, Hadag Nahash has released five albums and won many awards, including Album
41
of the Decade 1998-2009 by Yediot Ahronot, a daily Israeli Newspaper.
4038
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Week Charts, Media Forest
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Hadag Nahash
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The Idan Raichel Project is a musical group that fuses Ethiopian music, Middle
Eastern music, and electronic music with traditional, Hebrew texts. Idan Raichel, the
composer for the group, plays numerous instruments and has been known to employ
over fifteen musicians in his live performances. Popular releases by the Idan Raichel
Project include “Im Telech,” or “If You Go”, and “Mi’ma’amakim,” or “From the Depths.”
Their self-titled 2002 album and their 2005 album titled after their second single,
42
Mi’ma’amakim, both went three times platinum in Israel, selling over 120,000 units.
Mashina is an Israeli pop/rock bank that reactivated after an eight-year hiatus in
2003. Before their hiatus, the band released eight albums, five of which went platinum
or higher. Mashina originally formed as an alternative-rock band, but their success and
recognition made their genre of releases considered more pop/rock. Since 2003,
Mashina has released three albums, two of which have gone gold in Israel. While their
style has changed over the years, it can most accurately be described as a mix of
reggae and punk rock, with Middle Eastern influences. Their new releases almost
always top the request charts for radio listed by Media Forest. Error: Reference source
not found, 43
Shlomo Artzi is a folk/rock solo artist, and arguably Israel’s most successful male
solo artists. Each of his twelve albums have reached the platinum sales level in Israel,
most of them have reached double platinum, and all within weeks of their release. Artzi
is consistently one of the top ten most requested artists for terrestrial radio listed by
Media Forest. Artzi’s career is marked by two, distinct phases of style: the first is
associated with his time as a musician in the Naval Ensemble and his nationalist
42
Idan Raichel Project
43
Mashina
BROAD 26
releases then, and the second came after his first independent release, when he began
44
being associated with the emerging rock trend in Israel.
Aviv Geffen, another Israeli male solo artist, is a rock singer/songwriter and
multitalented musician. He is arguably the most influential pop/rock musician of the last
2 decades. Aviv Geffen’s followers are called the “Moonlight Children,” and have
become a youth movement for leftist politics. Since 1992, Geffen has released thirteen
solo albums, four radio singles, and two albums with his side-project, Blackfield, an art-
rock band. While Geffen calls himself a folk artist, he makes most of his money on the
popular music scene from remixes of his songs done by popular Israeli and international
DJs. He is best known for his flamboyant performance tactics and his achievement of
platinum or gold status with almost all of his numerous releases. Error: Reference
source not found, 45
David Broza is an internationally renowned singer/songwriter and outspoken
Israeli peace activist whose main instrument is guitar. He has released twenty-seven
albums in Hebrew, English and Spanish since 1977 and has collaborated with such
musicians as Paul Simon, Bob Dylan, Van Morrison, Al Dimeola, and more. Also
popular in Israel is Mizrahi music, a Middle-Eastern style of Israeli music whose rise to
popularity began in the ‘90’s. Popular artists of this style include Zehava Ben, one of
4439
Shlomo Artzi
45
Wikipedia, Aviv Geffen
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Israel’s most popular female solo artist, Teapacks, a multi-platinum selling rock-fusion
46, 47, 48, 49
band, and Knesiyat Hasekhel, also a rock-fusion band.
Music Companies and Income Generation
In the first few decades after the establishment of the State of Israel, Hed Artzi
dominated the recording industry and record sales were dominated by their releases of
Israeli nationalist music. Since the company didn’t own a recording studio, and
independent studios were scarce and poorly organized, most of the recordings releases
until the late 1960’s were done in Kol Israel studios, a radio company run by the Israel
Broadcasting Authority. In 1966, a CBS Records was established in Israel and the
industry changes dramatically. CBS Records signed and developed Israeli acts, and
also introduced international acts to the country. Radio charts were now being divided
into international and Israeli artists. The biggest changes they made were the attempt to
develop Israeli artists internationally by having them release singles in various
languages and styles, and the introduction of Barbara Streisand to the Israeli
community. Labels in Israel from then on tried to maintain a national and international
catalog simultaneously. Error: Reference source not found
After the 1970’s Israeli tastes developed with more westernized influences, and
the public called for more pop/rock music with greater production quality. Thus, Kolinor
and Triton, the two largest production studios in Israel, were established. With this,
production costs increased, and Israeli music companies repeatedly began turning to
international music companies to work together. CBS Records maintained their spot as
4638
Regev and Seroussi
David Broza
47
Teapacks
48
Zehava Ben
49
Wikipedia, Knesiyat Hasekhel
BROAD 28
the international company with the largest investment in the Israeli music industry, even
after they were bought out by Sony Music in the 1990’s and even after EMI established
their Middle Eastern branch. Hed Artzi was only able to maintain its position as the top
firm in Israel because they exclusively controlled the distribution of Warner and BMG’s
music catalog. This set-up began to change when CBS Records broke off from their
international parent company and became NMC Records. When this occurred, they
maintained control of the majority of CBS’s artists’ distribution in the country, except for
the catalog of Virgin records, which was controlled by the newly established and
increasingly powerful Helicon Records. Error: Reference source not found
Small, purely Israeli record labels do exist in Israel, and have been able to
maintain profitability through their distribution of legacy acts and techno-trance music,
which is extremely popular with young Israelis. Also, a few independent Mizrahi music
companies thrive in Israel. Because of this extreme difference, the companies of the
music industry in Israel can be divided into three, distinct categories: public and
educational organizations, Mizrahi music companies, and pop/rock music companies.
The pop/rock category has seen the most growth in recent years and has developed
along with the media of the country, like the radio networks and television stations.
Error: Reference source not found
Along with the growth of pop/rock came the development and popularity of rock
music festivals and rave-like dance festivals. Dance clubs in Tel Aviv and Jerusalem
emerged as the place to hear up-and-coming artists, and music festivals in Tel Aviv
started an international trend recognizing the city as a major artistic powerhouse, often
considered the New York of Israel. The 1990’s established Israel as a driving force in
 38
Regev and Seroussi
BROAD 29
trance music. Contemporary orchestrated music even gets recognition at live music
festivals in Israel, with two major festivals for that purpose each year: the International
Biennial of Contemporary Music in Tel Aviv, the IBA’s Israeli Music Celebration in
Jerusalem. Error: Reference source not found, 50, 51, 52
Trends
The largest trend for Israeli music companies in the past 5 years, however
unsuccessful, has been an attempt to popularize their artists abroad. The few artists
who have reached any level of international success have only done so with the help of
an international media conglomerate, like Sony BMG or EMI. The majority of record
labels and music companies in Israel are small, independent record labels with
individual ties to local radio and television stations. The two largest of these companies
are Helicon Records and NMC Records. Record stores aren’t as uncommon as they
53, 54
have become elsewhere, although digital music is more popular.
Mobile Music
Another trend in the music industry in the last 5 years has been for
telecommunications companies to release music download stores for mobile devices.
Cellcom, Partner Communications, and Pelephone, the three largest cellular
telecommunications companies in Israel, have had their own music download storefront
for mobile devices since 2009. Partner Communications released their download
service first, in mid-2008, called Orangetime. Orangetime offers many more services
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Rosenthal, Szerlip, and Watson
51
Chamish
52
Miller
53
Sukenik
54
Christman
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than just music downloading, such as video on demand. They also have a subscription
service to download unlimited music for 29.80 shekels a month, or a little over $8, and a
section of the site for Ringtone downloads for 5.5 shekels per Ringtone, or around $1.5.
55, 56
Live Music
With the major changes in the music industry of Israel since the 1990’s, live
music has become more and more of a focus for artists and record companies. Much
like the rest of the world, most of the biggest concerts that sell the most expensive
tickets include legacy acts. As is the case with music sales, the highest earning live
music events in Israel are often associated with Israeli acts, although the largest
concerts are often for major international acts. The fact that more money is made by
Israeli artists probably has more to do with the fact that international artists spend more
money touring than Israeli artists do. Error: Reference source not found
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Ziv
56
Orangetime
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7: Music Law
Overview
Israel’s music industry has been facing a major problem in recent years with
piracy. Recent laws have attempted to put forth the government’s official stance on
copyright infringement, and the Ministry of Justice has backed up the law with court
rulings, but the issue still exists. Because high-speed Internet and mobile
communication have been around for much longer than the modern copyright law, this
issue should take a few more years to resolve. Until then, Israeli piracy rates for music
piracy will continue to hover over the 50% mark, which is more than three times the
global average. 57
Laws and Treaties
The Patent Authority under the Ministry of Justice regulates intellectual property
in Israel. The Patent Authority defines intellectual property as non-tangible assets and
rights that are the fruit of the work of man, including, but not limited to, inventions,
designs, and more. It breaks up intellectual property rights into six categories: patents,
for the protection of technological inventions, trademarks, for the protection of symbols,
figures or sounds that indicate the source of a good or service, designs, for the
protection of industrial designs, copyright, for the protection of literary, dramatic, musical
or artistic works, protection against unfair competition, and protection of performers’ and
broadcasters’’ rights. 58
The most important and most recent copyright law enacted in Israel is the 2007
Copyright Act. This law defines the term “copyright” as:
57
2010 Special 301 Report on Copyright Protection and Enforcement
58
Patent Authority, Israel
BROAD 32
“…[T]he exclusive right to do with the work, or a substantial part thereof, one
or more of the [following] acts, in accordance with the kind of work:
reproduction... with respect to all categories of works; publication…; public
performance… in respect of a literary work, dramatic work, musical work and
sound recording; broadcasting…; making a work available to the public…;
making a derivative work…; rental... in respect of a sound recording,
cinematographic work and computer program.”
The law specifies that it is applicable only to the expression of an idea, procedure,
mathematical concept, data or news, but isn’t applicable to the actual item. It also
specifies that copyright law only subsists for “original works… fixed in any form,” and for
“sound recordings,” provided that the sound recording complies with all other
regulations set forth in the law. 28, 59, 60
Fair use, or the limitation of the exclusive rights of the copyright holder, is
acceptable according to this law for educational and journalistic purposes. The law also
specifies that a music work in a sound recording can be reproduced without the consent
of the copyright holder if:
“The musical work had been previously recorded, with the consent of the
copyright owner, in a sound recording that was published for commercial
purposes…; the musical work was reproduced in its entirety, except for
modifications necessary for adaptation [and making] of the reproduction…;
the person who makes the copy has so informed the copyright owner prior to
the making of the copy; the person making the copy has paid equitable
royalties… as decided by the Court; the copies are neither used, nor intended
for use in commercial advertising.”
Of particular note is the specification at the end of this section that reproductions of
60
copyrighted musical works cannot be used in commercial advertising.
This law also sets forth an interesting perspective on how to determine who owns
copyrighted materials, especially in instances of commissioned works. As in the U.S.,
the author of a work is the owner of its copyright. Unlike in the U.S., the author owns the
5928
2009 Country Report on Human Rights Practices
WIPO Lexicon
60
2007 Copyright Act, Israel
BROAD 33
rights to a commissioned work, unless the work in question is a family portrait. Also
unique to this law compared to its U.S. counterpart is the specification that the producer
of a sound recording owns the copyright, where producer is defined as “the person
60
responsible for the arrangements necessary for the making of the… sound recording.”
The general duration of copyright set forth in this act is the life of the author or
copyright owner, plus 70 years. For joint works, this applies to the lifespan of the longest
living author. For anonymously published works, the copyright lasts for 70 years from
the works initial publication. For sound recordings, the general copyright duration rules
do not apply. Instead, the copyright lasts 50 years from the creation of the work. 6061
Israeli copyright law, pursuant to the Berne Convention to which the country is a
signatory as of 1950, also includes a provision for the moral rights of the author of a
work. It specifies that moral rights are personal rights that are not transferable, and are
“available to the author even if said author does not have a copyright in the work of if he
has assigned the copyright in the work, partly or wholly, to another person.” The law
defines a moral right as the right of the author to:
“…Have his name identified with the work… [and] that no distortion shall be
made of his work, nor mutilation or other modification or any other derogatory
act in relation to the work, where any aforesaid act would be prejudicial to his
honor or reputation.”
Provisions are also set forth in this law for public performances of copyrighted
works in an educational institution, for permission to use copyrighted works in

60
libraries and archives, and regulating the assignment or license of copyright.
Many of the rules set out by the 2007 Copyright Law were put in place in the
country’s 1984 Performers’ and Broadcasters’ Rights law. Similar rights of the copyright
61 60
BROAD 34
owner are laid out in this law, including the exclusive right to record the copyrighted
work, the exclusive right to copy the work, and the exclusive right to sell, distribute,
import or rent the work for commercial purposes. Also, the 1984 law gives to the owner
of a copyright the exclusive right to broadcast a performance, except if that performance
is broadcast by the government’s Broadcasting Authority, by an educational television
station, or by the army’s broadcasting station, Galei Zahal. The 1984 law specified that
the period during which the copyright owner has the exclusive right to perform the work
ends 25 years after the initial performance of the work. It also includes a provision for
the moral rights of the copyright owner and specifications for performers who are
62
employed by the Israeli police or are soldiers in the Israeli Army.
There are two significant treaties to which the State of Israel is a signatory
concerning music law: the Berne convention, and the World Intellectual Property
Organization (WIPO) convention and its subsequent WIPO Copyright treaty. Israel
signed the Berne Convention in 1950, two years after the revision conference in
Brussels, Belgium. This treaty forces Israel to recognize copyrights of works from other
signatory countries as it would a work from Israel, but not for more time than is specified
by the copyright laws of the country of origin. The treaty also specifies that Israel may
not require formal registration of a work for copyright to vest, and requires that Israel
63, 64
allow for fair use in their copyright law, as set forth by the WIPO Copyright treaty.
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1984 Performer’s and Broadcasters’ Rights Law, Israel
6331
58
Patent Authority, Israel
WIPO Lexicon
64
Berne Convention for the Protection of Literary and Artistic Work
BROAD 35
The WIPO convention was signed by Israel is 1970. This convention established
the WIPO as an international organization to “promote the protection of intellectual
property,” to offer legal and technical assistance to member states concerning
intellectual property, and uses terms set forth by the International Bureau of Intellectual
Property, by the Berne Convention of 1886, and by the Paris Convention of 1883. It
defines for its signatory states the term intellectual property as: “rights relating to:
literary, artistic and scientific works; performances of performing arts, phonograms and
broadcasts; inventions in all fields of human endeavor; scientific discoveries; industrial
designs; trademarks, service marks and commercial names and designations;
protections against unfair competition; and all other rights resulting from intellectual
31, Error: Reference source not found, 65
activity in the industrial, scientific, literary or artistic fields.”
The WIPO Copyright treaty, which was originally created in 1996 and signed by
Israel in 1997, specifies that copyright protection specifically covers expressions and not
“ideas, procedures, methods of operation or mathematical concepts as such.” It also
specifies that signatory countries must include in their copyright laws provisions
explaining the enforcement of rights. The terms of fair use set forth in this agreement
references by the Berne convention specify only that signatory countries can “provide
for limitations of or exceptions to the rights granted to authors of literary and artistic
works under… in certain special cases that do not conflict with a normal exploitation of
the work and do not unreasonably prejudice the legitimate interests of the author.”
Basically, all fair use laws can be reviewed by the WIPO and judged based on their
66
infringement on the rights originally given to the author.
65
Convention Establishing the World Intellectual Property Organization
66
WIPO Copyright Treaty
BROAD 36
Performance Rights
The State of Israel has two performance rights organizations: ACUM and
Eshkolot. ACUM’s main functions are issuing licenses, and collecting and distributing
royalties to its members, so it functions as both a performance rights organization and
as a mechanical rights organization. ACUM is a member of two international
organizations for collective representation: CISAC and BIEM. CISAC, or the
International Confederation of Societies of Authors and Composers, is a performance
rights organization that represents over 200 societies in 117 other nations, including
American organizations such as ASCAP, BMI and SESAC. CISAC’s main function,
specifically in relation to ACUM, is the coordination of performance rights societies. For
ACUM, their inclusion in CISAC mostly means that they have to monitor, collect on, and
distribute royalties for members of other included performance rights organization.
BIEM, or the International Bureau of Societies Administering the Rights of Mechanical
Recording and Reproduction, represents many different mechanical rights societies
from over 40 countries outside of Israel, including the Harry Fox Agency, and functions
67, 68, 69, 70
to coordinate statutory licenses amongst the various nations.
Eshkolot is a much smaller company than ACUM, both in terms of people
employed and in terms of members. It functions similarly to ACUM in that it both issues
licenses and collects and distributes royalties. Also, Eshkolot is a member of a small
umbrella organization to protect the intellectual property rights of members of other
performance rights organizations in Israel, called the Umbrella Organization of Creators

6757
ACUM
68
Wikipedia, List of CISAC Members
69
BIEM
70
CISAC
BROAD 37
and Performers in Israel. The organizations included in this umbrella are Eshkolot,
ACUM, and five others whose scope of protections range from performance rights in
71
music to performance rights for union actors.
Piracy
The Recording Industry Association of America has repeatedly named Israel a
country to watch in their reports identifying international piracy problems, and has even
placed them on their priority watch list. The reports explain that, while recent copyright
law enactments have made for a better government approach to piracy, it is still a major
problem in the country. 72, 73
The International Intellectual Property Alliance, whose reports are the basis for
the RIAA’s watch list, estimated that, in 2009, the music industry lost over $55 million to
piracy, with a piracy rate of over 50%. The rate of piracy in recorded music has been on
this rise since 2004, when the level of piracy had dropped to 40% from 63% in 2003.
The Knesset released a detailed report in 2009 showing that 45% of Internet users in
Israel use file-sharing programs, the fifth highest rate in the world. Also problematic is
the current lack of minimum statutory damages in Israeli copyright law. However, the
Israeli government’s reactions to reports of piracy have been supportive of the push to
eliminate piracy. The IIPA explains:
“In 2009, the local branch of the International Federation of Phonographic

Industries (IFPI) reported reaching major legal settlements with ten copyright
infringing online services.16 IFPI Israel had filed court proceedings against the
services which illegally provided links to unlicensed local and international
repertoire hosted on cyberlockers. The settlement reached with the operators
of the sites was unprecedented in its scope, with Israeli courts issuing broad
permanent injunctions prohibiting the individuals involved from copying,
71
Eshkolot
72
RIAA News Room
73
Levy
BROAD 38
distributing, linking or ripping onto MP3 or other formats any copyright infringing
repertoire. The settlement also involves the payment of around US$50,000 in
compensation… In one other case, the local recording industry group also
reports a January 2009 decision in which a court ordered Google and a local
service provider to disclose information on online infringers. The case sets a
positive precedent for right holders, since the required showing for disclosure to
be ordered is that the plaintiff can demonstrate a ‘real reason to suspect that an
infringement of an IP right is taking place.’”
If Israel’s courts continue to prosecute as they have in the recent past, and if a few
amendments are made to their copyright law concerning minimum statutory damages,
Israel should be off the RIAA’s watch list in the next few years. Neil Turkewitz,
Executive Vice President of the RIAA, said, “Israel should have to show enforcement
progress before being removed from the Priority Watch List,” and that they must prove
that, “they are serious about cracking down on pirates and that the government has
devised a plan of action.” The next biggest step towards lowering the impact of piracy
on the music industry, other than government enforcement of intellectual property
protection legislation, is in the hands of Internet and cellular service providers in the
country. This part of the case against music piracy is mostly out of the hands of the
57
government, outside of prosecution on cases brought before the courts.
 57
BROAD 39
8: Recommendation and Conclusion
My recommendation to those considering investing in the music industry in Israel
is, first and foremost, to not consider investing. While investments in
telecommunications and defense technology have proven highly profitable in recent
times, and even though the exchange rate has operated in favor of foreign investors,
the music industry in Israel is not developed enough to generate profits necessary to
provoke a positive recommendation. While spending on Recorded Music and CDs in
Israel has increased every year for the past five years, it is increasing at a decreasing
rate. This trend is visible in almost every sector of the entertainment industry in Israel,
including Video Games, Newspapers, and Magazines. Music piracy is the largest factor
to take into consideration when looking into which areas of the music industry in Israel
could be profitable. The current amount of music piracy in Israel makes artist
development and the funding of music production a poor choice for investment, as
57, 74
record sales will only bring in about half of their potential profits.
On the other hand, because Israel is so technologically advanced and has such a
problem with piracy, they are probably going to be one of the first countries to develop
effective anti-piracy technology. For example, it was an Israeli company, Midbar, that
originally developed a secure CD for the music market with copy-protection enabled.
Also, if they abide by the IIPA recommendations and continue to work on expanding
and altering the reach of their intellectual property laws, they could quickly become the

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2009 Israel Economic and Product Market Databook
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country with the strongest intellectual property protection. Error: Reference source not
found, 75
If one were to go into artist development and production funding, a.k.a.
establishing a record label in Israel, it could not be done in the same way as it is done in
the U.S. or even in the U.K. It would be important to focus on developing the act in
Israel and internationally. In order to do this, it is important that the act release Israeli
records in Hebrew, dance remixes of those Hebrew songs, and English records in
conjunction with other international artists. Breaking the international barrier with an
Israeli artist would be a major development in their music industry, as it has yet to
effectively be done. Also, it is important to focus on making money outside of record
sales, such as in mobile streams and Ringtones, to name a few, and to make sure your
artist maintains a political stance, since the majority of modern popular acts in Israel are
extremely vocal about their political ideals.
There are, however, a few areas of the music industry that, individually, could
yield a high enough profit to warrant foreign investments. The two sectors of the
industry that have the most potential for profitability are live music and mobile music
downloads. Israelis love to go out on the weekends, and love having events to go to.
Music events are major moneymakers and, depending on the demographics being
targeting, could range from a small concert to a large “silent” dance party complete with
wireless headphones connected to the DJ’s music. Many artists in Israel market
themselves as musicians and as DJs, releasing songs along with dance remixes, like
Aviv Geffen with his top hits, “It’s Alright,” “It Was Meant to Be a Love Song,” and “Black

7557
Sinnreich
BROAD 41
and White”. Also, since the country is so small and relatively population-dense, one
event can draw participants from many nearby cities, and a countrywide tour wouldn’t
take as much funding as it would in other countries.
Since the telecommunications industry in Israel is highly advanced, there is
money to be made in mobile music streaming and downloads. Also, everyone living in
Israel has access to a mobile network, making the potential market for mobile music
consumption the same as the entire population of the State of Israel.
BROAD 42
9: Appendix
Exhibit 1:
(National Expenditure on Culture, Entertainment and Sport by Type of Expenditure and

Activity)
BROAD 43
Exhibit 2:
(National Expenditure on Culture, Entertainment and Sport by Type of Expenditure and

Activity and by Financing Sector and Operating Sector)
Exhibit 3:
(The World Economic Forum Global Competitiveness Report 2010-2011, Israel

Economy Profile)
BROAD 44
Exhibit 4:
Text: “For the second consecutive year, IPRI decreased in Israel. The LP score only
underwent a modest negative change. However, the sub-component score for Judicial
Independence and Political Stability each decreased approximately 0.4 points. This
change was offset to some degree by slight improvements to Rule of Law and Control
of Corruption. The PPR score has fallen dramatically since 2008. Both the Protection of
Physical Property Rights and Access to Loans sub-components decreased 1.1 points
the past two years. The IPR score presents a complicated picture. Protection of
Intellectual Property Rights has decreased about one point since 2009. Because of a
lack of data for piracy of records and music in 2010, the copyright protection score
increased. Thus, the overall IPR score decreased only 0.1 points. Despite problems
with intellectual property protections, Israel’s IPR score remains the highest in the
Middle East and North Africa.”
(2010 International Property Rights Index Country Profile, Israel)
BROAD 45
10: Sources
1. Viniar, Olga. "Israel's economy most durable in face of crises." Y Net News
05/20/2010: Web. 25 Oct 2010. <http://www.ynetnews.com/articles/0,7340,L-
3891801,00.html>.
2. "Middle East: Israel." Central Intelligence Agency World Factbook. CIA,
10/19/2010. Web. 25 Oct 2010. <https://www.cia.gov/library/publications/the-
world-factbook/geos/is.html>.
3. Parker, Philip M. "2009 Israel Economic and Product Market Databook." ICON
Group International, Inc., 2009.
4. Parker, Philip M. "2009 Report on Downloadable Music: World Market
Segmentation by City." ICON Group International, Inc., 2008.
5. Parker, Philip M. "2009 Report on Mobile Music: World Market Segmentation by
City." ICON Group International, Inc., 2008.
6. Parker, Philip M. "2009 Report on Recorded Music: World Market Segmentation
by City." ICON Group International, Inc., 2008.
7. IBISWorld, Inc., "Global Music Production and Distribution." IBISWorld Industry
Report, January 2010.
8. State of Israel. Central Bureau of Statistics. <http://cbs.gov.il/reader/?
MIval=cw_usr_view_Folder&ID=141>.
9. "Country Data: United States." International Property Rights Index 2010 Report.
IPRI, 2010. Web. 24 Oct 2010.
<http://www.internationalpropertyrightsindex.org/united-states-c120>.
10. "Country Data: Israel." International Property Rights Index 2010 Report. IPRI,
2010. Web. 24 Oct 2010. <http://www.internationalpropertyrightsindex.org/israel-
c53>.
11. State of Israel. “National Expenditure on Culture, Entertainment and Sport by
Type of Expenditure and Activity.” CBS, 2010.
12. State of Israel. “National Expenditure on Culture, Entertainment and Sport by
Type of Expenditure and Activity and by Financing Sector and Operating Sector.”
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The Music Industry of Israel As An Investment Opportunity - FINAL EDIT

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November 16, 2010

MUIN 445: International Aspects of the Music Business

Professor (Executive Vice-President for Research and Analysis) Mark Goldstein

understand the importance of various media in determining trends in popular culture,

of censorship in the media, or the telecommunications industry in Israel. Also, it is

Geography and Location

Error: Reference source not found, 3

infrequent, so Israelis have developed sophisticated water-conserving technology.

Error: Reference source not found, 4

Government and Legal System

Israel’s government is set up as a parliamentary democracy, so Israel is

governed by a 120-member parliament called the “Knesset.” The current President of

Prime Minister is Benjamin Netanyahu. He was elected in March of 2009 as chairman of

Reference source not found, Error: Reference source not found

citizens of Israel are. 5

Second Lebanon War began when Hezbollah, a Lebanese Islamist organization,

been Israeli-occupied territory mainly settled by Palestinian people. The UN Truce

Supervision Organization has had around 350 peacekeepers constantly at work in

military aid. Error: Reference source not found, 8

Reference source not found

Central Intelligence Agency World Factbook, U.S.

Hebrew and Arabic. Error: Reference source not found, 9

Freedom, the country’s economic history is explained:

Central Intelligence Agency World Factbook, U.S.

World Bank Country Data, Israel

Economic Forum, are the inefficiency of government bureaucracy, the inadequate

Tourism and Immigration

Much of Israel’s tourism is dependant on their international relations, specifically if there

is a perceived security risk for travelers. 15, 16

payment of a one-time fee. 15

If a foreigner is traveling to Israel with the intention of investing in a business or

Population and Lifestyle

cellular network. Error: Reference source not found, 18, 19, 20

draw international DJ’s and headphone-parties where everyone dances to music

urban. Error: Reference source not found

Israeli citizens are extremely environmentally conscious. Over 90% of Israeli

online news source, states:

State of Israel, Wikipedia

According to the World Bank’s International Finance Corporation, it takes on

four days to start a business. Error: Reference source not found, 22

of business transactions to the public immediately or annually, the requirements for

2010 Index of Economic Freedom

Doing Business in Israel, 2011

enforcement costs. 2023

companies. In terms of Business Freedom, Israel was judged as having a well-

instituted by the government in the form of import restrictions and government

bureaucracy. Error: Reference source not found

Of particular interest was Israel’s score in the category of Investment Freedom,

and “commercial law is consistent and standardized, and international arbitration is

category of Property Rights, due to the country’s effective enforcement on property

terrorist threat,” or if the seizure of that property is deemed to be in the interest of

national security. The designation of a seizure as in the interest of national security,

however, is extremely vague and requires no explanation by the government authority

responsible. Error: Reference source not found

Doing Business in Israel, 2011

Starting a Business in Israel

specifically starting a business and investing in an established business, is the

an Israeli company would with the Registrar of Companies. It is interesting to note,

however, that Israeli companies that do business internationally, specifically companies

The Israeli Broadcasting Authority, a government controlled organization,

Second Television and Radio Authority, also a government-run organization, regulates