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What could Brexit mean for the UK Music Biz?

What could Brexit mean for the UK Music Biz?

Culture secretary John Whittingdale has no doubt what Britain leaving the EU would mean for the UK’s music industry: absolutely nothing.

“We are the most extraordinarily creative nation on the planet,” he told a mix of music biz executives and politicians at a UK Music reception at the House Of Commons last week, “And that has nothing to do with whether or not we are in the European Union. The world may or may not be different [after the result]. But the one thing which I’m absolutely certain about is that British music will go on continuing to thrive.”

Not many music people in the room seemed to agree – and, indeed, his comments later prompted no less towering a political figure than Stuart Braithwaite of Mogwai to brand him a “fucking moron” on social media.

More empirically, Music Week’s Twitter poll on whether a vote to Leave would be good or bad for the UK music industry came back with a resounding 91% saying it would be bad news.

Of course, the shocking death of pro-Remain MP Jo Cox puts any music-based issues into perspective. But, with the polls suggesting an Out victory is a distinct possibility, Music Week decided to take a cool, clear look at the actual implications of going it alone…

The most obvious area that could be affected is the live business. Any executive who was involved in the sector before Great Britain joined what was then the Common Market in 1973 has horror stories to tell of touring through Europe in the days before freedom of movement.

Back then, touring acts were required to carry a ‘carnet’ – a document listing their every piece of equipment that would be rigorously checked at each border – and visas were required to enter most European territories.

“Happy days,” sighs Rob Hallett, CEO of Robomagic. “Or were they? Anyone who has ever tried to go from the EU into Russia to perform will be having nightmares about six-hour border crossings with additional, expensive days off between shows in order to allow for possible delays.”

Whether that actually became the norm for UK artists would very much depend on the type of deal the UK government struck with the EU after its exit. Some in the live business privately believe it’s highly unlikely that anything would actually change, at least in the short term, but others warn that things could rapidly become very different.

“I think the live industry would be hit hard by the travel restrictions that will inevitably come with an EU exit,” says Hallett, who believes the current visa-free touring schedule would be replaced by the need to apply for a Schengen Visa, a document that allows you to enter most EU nations, that’s currently used by most US and non-European touring acts.

“This will hurt young developing acts the most,” he adds. “The extra paperwork and costs involved will be an obstacle that some simply won’t be able to transverse. For example, they will need to show proof of funds where fees are often cash on the night, or they rely on the T-shirt sales to get them through.

Will promoters in Europe even bother to book UK talent when there are great new acts locally that can be booked without the additional hassle?”

“For established artists it would simply add to their costs, but I doubt very much it would prevent them from touring,” agrees Tim Clark, director of IE:Music and manager of Robbie Williams, Passenger and many others. “Of course Robbie Williams can tour there, because he’s vastly and hugely popular.

But for many, many artists that are basically making a small amount of money or breaking even, the chances are that this would be the thing that finally pulls the plug on their live careers.”

And that’s just the start of the possible problems. Artists could be required to file tax returns in multiple countries when they play there, while VAT and excise duty might become due on the merchandise bands take into each country. And that’s before you factor in potentially soaring travel costs once the UK is free from EU economic regulation and if the pound – as seems likely – plummets against the Euro.

Then there’s the festival market: both for UK bands playing in Europe, and for European fans keen to visit our legendary events such as Glastonbury and Reading & Leeds.

“The festival market has developed as a truly European market and that is a great strength,” says Paul Reed, general manager of the Association Of Independent Festivals, “Especially when you consider the incredible festivals that have emerged aimed at Europe-wide audiences.

There is an argument that if Britain votes to leave the EU, it’s going to become more complicated to work across borders. We could also potentially see a reduction in music tourism, which generated £3.7bn for the UK economy in 2015, with a year-on-year increase of 16% in overseas tourists attending music events.”

Finding a music industry voice to speak publically in favour of Brexit is nigh-on impossible. But to play devil’s advocate: most of those restrictions and worse are in place in the US, and yet British music is thriving there.

Why would post-Brexit Europe be any different?

“British music is successful in America in spite of the barriers,” stresses Paul Pacifico, CEO of the Featured Artists Coalition. “Those barriers are a real problem, particularly to young artists. The thousands of pounds that have to be spent on visas and the difficulty of touring in the US is a nightmare.

“We were successful in Europe before being part of it, but again [it was] in spite of the barriers. Plus, the barriers only seem to be one way. It costs thousands of dollars to get a US visa. It costs £20 to bring a US artist into Britain.

Are we saying we want to have a world like that with Europe?”

But if live music would face huge challenges after we left our European cousins, surely recorded music would be OK? Here, again, UK artists are thriving: labels body the BPI says that British music accounts for 17.4% of album sales in Europe’s six biggest markets after our own (Germany, France, Sweden, Italy, the Netherlands and Spain).

In an increasingly digital, borderless world, there’s surely nothing the Vote Leave brigade can do to scupper that, right?

Wrong, as it turns out. All our current copyright law has come from Europe and, with the EU currently reviewing its regulations in the light of the European Digital Single Market, an exit could either leave us out of step with new legislation or ending up bound by it without having been fully involved in the negotiations.

“Ninety per cent of our members said that we need to be around the table when those rules are agreed,” says Geoff Taylor, chief executive of the BPI. “And we need to be able to influence them because otherwise we may end up with a set of rules which effectively exclude British labels in some way from free access to the European market. That would be a real concern.”

Of course, the UK government could draw up its own copyright legislation that would be hugely favourable to rights-holders. But detractors point out that European governments in general – and
French/German ones in particular – have always been keener to stand up to technology giants such as Google and Apple than our own decision-makers.

Meanwhile, industry sources privately concede that pan-European licensing – finally getting off the ground with initiatives such as PRS For Music/GEMA/STIM joint venture ICE – could go back to square one if UK copyright rules fall out of step with the rest of Europe. Taylor, meanwhile, raises the spectre of old fashioned trade barriers hitting British music exports.

“It’s possible we’d end up with tariffs on our exports,” he says. “And there could be other restrictions, such as cultural quotas on the amount of European music that needs to be played on radio stations or other services that could hold back our exports. There would be a greater incentive for protectionist behaviour against British music from Brussels and European countries if we’re not part of the single market.”

So far, so doomsday scenario. But, surely, there must be some positives to the UK leaving the EU? The wider business community certainly seems much more split than the music industry, with many smaller and entrepreneurial-type companies talking up the possibilities of less rigid taxation and less red tape.

“Flexibility on VAT could clear the way for the UK to reduce VAT on music as cultural goods, like books,” concedes Taylor. “But we don’t even know that’s what our government wants to do and, generally speaking, it hasn’t been in the business of reducing taxes on consumer consumption, because it wants the revenue.

Decisions might go against us just as much as they might go for us.”

And ultimately, that may be what has swayed the music industry so firmly behind Remain. With British music booming in Europe like rarely before, there is too much risk – and not enough opportunity – in changing for the music industry to ever see leaving Europe as a serious option.

“British music is succeeding tremendously well across the world,” concludes Taylor. “Now is not the time to take a risk with the economic background to that success. British labels create music for the whole world to enjoy and we don’t believe cutting ourselves off from our biggest export market makes any sense.

There’s a huge opportunity for continued growth in the digital era and we don’t want any barriers put in the way of that future growth.”

Monkey

June 24th, 2016

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