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Brexit and the music industry

As the dust settles on the historic EU referendum vote on Thursday 23 June 2016, there are some immediate issues to contend with in the UK economy and political system.

At the time of writing the following economic indicators are starting to move:

All of this is worrying for the general UK economy, but how will Brexit affect record shops, musicians and the music industry?

Record shops

Any contraction of the economy means that people will have less spare cash to spend on (supposed) non-essentials such as records. Therefore there might be tougher times ahead but people always find a way of buying music.

Many British record shops sell to customers in EU countries and CDs and Vinyl records are pressed in France and the Czech Republic. Brexit could see import duty on mail order sales and export tariffs imposed on wholesale prices for records.

A volatile pound falling in value against the Dollar and Euro at the time of writing could also cut profits further.

Patrick Ryder, England, Manager, Piccadilly Records – Manchester’s leading record store

“If Britain leaves the EU, the immediate consequence for us would be an almost instant rise in prices. Records from European distributors would be subject to export tariffs, pushing wholesale prices up at a time when the pound will probably plummet. When you consider that most of the records distributed by UK companies are manufactured in France or the Czech Republic, then it quickly becomes clear that this will affect almost everything on the shelves. It could also have a negative effect on mail order sales to European customers, subjecting their packages to import tax and making the service cost prohibitive, as is the case for Norwegian customers under the current system.”

Nathon Raine, England, Director, Norman Records – UK-based online record shop

“Given that the referendum debate has been heavy on conjecture but light on actual information, it’s impossible to say for sure what impact Brexit might have on Norman Records.

But it is a huge worry for us. Nearly a quarter of our trade comes from the EU, including some of our most loyal customers. What might Brexit do to this market? Some of the busiest pressing plants are in Europe: if it becomes more difficult for labels and artists to get vinyl pressed up then will vinyl prices increase? If it becomes more difficult simply to ship parcels out of the UK to European destinations, will our shipping prices increase? If Brexit does end up harming the British economy then will our domestic customers tighten their belts?”

Frank Merritt, England, The Carvery – Vinyl mastering and dubplate specialists

“I grew up in Brussels in the 1980s where my parents were posted as journalists, working as political commentators on European issues. Far from being an expert I do have a fairly balanced impression of both the problems we face in staying in Europe and the dangers we face leaving. Clearly, neither is ideal.

One thing that we can be sure of however, is that a Brexit would have both in the short and long term severe affects on the financial relationships between European pressing plants, UK mastering houses and vinyl brokers, in turn, seriously affecting record labels both large and small. In the short term, the Pound is expected to crash but is expected to recover relatively quickly as city investors buy short to sell long. In the long term, things will change on a seismic level. Currently we pay no VAT or import taxes when trading with other EU businesses, this is set to change. A weak Pound and increased unit costs through taxation are sure to hit hard on all sections of the industry, in many cases irrecoverably. How exactly these changes will manifest themselves, no-one either in Brussels or in UK government truly knows. It simply has never been done before. This for many sitting on the European fence has been one of the most frustrating things as we search for concrete information to help make a balanced decision.”

Touring musiciansRecord shops

The main concern is whether there might be unresolved issues around Visa requirements, work permits and issues transporting equipment across borders. The band Chvrches commented:

Lauren Mayberry: “I think the nature of touring is going to change massively. The summer we’re looking at right now is just hopping from country to country within Europe and in order to do that when we’re not part of the European Union, we would presumably need to go to a different embassy for every different country and apply for a visa for us and everybody in our crew.”

Martin Doherty: “We also employ mainland Europeans within our crew, and they will struggle to get work permits and continue under the employ of our band. It’s all very complicated.”

The classical music world relies on the free movement of people for live performances and recording

Stephen Maddock, Chief Executive, City of Birmingham Symphony Orchestra

“As things stand today, I see no specific grounds for optimism. I don’t see anything that looks easier as a result of this…

“We are very, very good at adapting and surviving. I am absolutely convinced that the British music scene will put its best foot forward and come out of this in the best possible state. But that’s not the same thing as saying, ‘It’s all fine for everyone’.

Record labels

Gennaro Castaldo, UK, BPI Spokesperson – Music industry watchdog

When the BPI consulted its UK record label members on the subject of the EU referendum, they expressed a real concern that withdrawal of the UK’s membership of the European Union will result in economic uncertainty that could damage business prospects and, in turn, undermine the current success of British music – not just in Europe, but potentially across the rest of the world also. Another important issue for labels is to continue to enjoy unrestricted access to European music markets, including for UK artists, their support teams and equipment, as they tour across the continent or when they engage in promotional activity, while working with European partners through the EU legislative process to protect and promote copyright is also considered essential.

Time will tell, and Article 50, which dissolves our relationship with the EU, has not been triggered. This is not ideal but it creates doubts and uncertainty – no one really knows what is going to happen.

Further reading

http://www.bbc.co.uk/news/entertainment-arts-36633997

http://www.classicfm.com/music-news/brexit-eu-referendum-consequences/

http://www.thevinylfactory.com/vinyl-factory-releases/brexit-record-industry/

http://consequenceofsound.net/2016/06/heres-how-the-uks-brexit-from-the-european-union-could-affect-the-music-and-film-industries/

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