A parliamentary select committee has set a deadline of September for the UK live music industry to agree some kind of ticket levy on large-scale shows, with proceeds of that levy going to support the grassroots music community. In the new 'Grassroots Music Venues' report, MPs on the UK Parliament’s Culture, Media & Sport Select Committee also urge the government to instigate a temporary VAT cut on tickets and to then scrutinise the impact of the tax break.
Noting that the number of grassroots venues operating in the UK decreased by 13% last year, Committee Chair Caroline Dinenage MP said, “We urgently need a levy on arena and stadium concert tickets to fund financial support for the sector, alongside a VAT cut to help get more shows into venues”, adding that this could help “stem the overwhelming ongoing tide of closures” in the grassroots live sector.
While the new report is based on an inquiry that focused on grassroots music venues in particular, Dinenage notes that the select committee also heard how “those working in the live music sector across the board are under extraordinary strain”, adding that government should bring together “everyone with a stake in the industry’s success, including music fans, to address the long-term challenges and ensure live music can thrive into the future”.
The Music Venue Trust published a stack of depressing stats earlier this year which very much informed the parliamentary inquiry. That included the headline figure that 125 grassroots venues closed down last year, while 38% of those still operating reported a loss despite increased demand for tickets.
At a select committee hearing in March, MVT boss Mark Davyd explained that, as a result of those closures, “30,000 performance opportunities for artists” have disappeared and “about 4000 jobs have come under threat or have been lost”.
The crisis at the grassroots level - and challenges facing artists and promoters staging shows at mid-tier venues - contrast significantly with the upper end of the live sector, which has very much bounced back since the COVID pandemic. Indeed, just last week analysts at Goldman Sachs increased their prediction for growth in the wider music business through to 2030 in part because of “a stronger outlook for the live music segment”.
With the bigger shows, increased demand and increased ticket prices have resulted in a boom. But at the grassroots - and even in the mid-tier - escalating operational and production costs are swallowing up already tight profit margins.
Coupled with the fact that smaller venues and promoters are much more nervous about putting up ticket prices, given the cost of living crisis is already impacting on audience spending, things are looking bleak for the live music sector below the top end of the market.
The contrast between the big venues and the grassroots is why - out of all the potential solutions discussed during the select committee’s inquiry - the proposal for a ticket levy got the most attention. That levy would be applied to tickets for arena and stadium concerts, and the resulting funds would help subsidise grassroots venues and shows.
As part of the select committee inquiry, MPs heard that - while there is support in principle for some kind of levy system across the live sector - different stakeholders have different views on the best way to implement such a scheme. In particular there is disagreement about whether a levy should apply to all high capacity shows or just when an artist chooses to opt in, and whether an industry-led voluntary initiative would suffice or if a mandatory levy in law is required.
In their report, the MPs say that an industry-led voluntary scheme should be prioritised, with September the proposed launch date. They also recommend that the government should undertake an assessment of that voluntary scheme no later than a year after it goes live.
If the voluntary levy “is unable to be agreed by September 2024”, say MPs, or if it “is not collecting the income required to support the grassroots music venue sector”, then “the government should introduce a statutory levy at the earliest subsequent opportunity”.
At last month's select committee hearing, artists and managers told MPs that it is not just grassroots venues that are in crisis, explaining that promoters and artists are also struggling to make shows and tours in those venues viable.
With this in mind, the current proposals for a levy scheme would see artists and promoters, as well as venues, being beneficiaries, most likely via a trust set up by live sector trade group LIVE. In their report, MPs stress that the voluntary levy should benefit the entire grassroots music ecosystem.
Another measure that would benefit the wider industry is a VAT cut on tickets. Music industry trade groups have repeatedly campaigned for a lower VAT rate on concert tickets, similar to the temporary cut in VAT that was instigated during the pandemic. However, to date the government has knocked back those requests.
On VAT, the MPs says that “a targeted and temporary cut to VAT for grassroots music venues on tickets would help to improve the immediate risk-profile of live music for promoters and in-house programmers”.
Therefore, “the government should introduce a temporary cut to VAT, based on venue capacity, to stimulate grassroots music activity and the wider economic benefits to local areas that grassroots music shows provide”. And, concurrent to that, it should “undertake a comprehensive economic analysis” of the impact of the VAT reduction.
Beyond levies and VAT, the MPs make a number of other recommendations, including that the government and Arts Council should make it easier for the live music sector to apply for public funding. In addition there is support for the Featured Artists Coalition’s 100% Venues campaign, which criticises venues that charge a commission on merchandise sales at shows.
“We support the Featured Artists’ Coalition’s campaign for an end to punitive fees", the report states, endorsing FAC’s stated principles on merch commissions. “We call on all venues and trade bodies in the live music sector to follow the FAC’s merchandise principles”.
It remains to be seen to what extent the new report puts additional pressure on the bigger venues - and the promoters of the bigger tours and shows - to more proactively support artists, promoters and venues at the grassroots. What measures the upper end of the live sector now seeks to support will partly depend on how the government responds to the report.
When the same committee made recommendations about the economics of music streaming in 2021, the government did instigate various initiatives that put pressure on the major record companies and music publishers to implement solutions to the various issues MPs had raised. Although, even with that work, getting actual change has proven to be slow going.
Unlike with the streaming inquiry, this report also calls on the government itself to step up its support, primarily through the VAT cut. However, as noted, ministers have proven very good at ignoring previous requests for that kind of tax break, and it will be interesting to see if parliamentary pressure now makes any difference in that domain.
Industry responses to the Grassroots Music Venues report
Mark Davyd, CEO at Music Venue Trust: “Music Venue Trust warmly welcomes the Culture, Media & Sport Select Committee’s report into the challenges facing grassroots music venues. We want to thank the committee MPs and the CMS team for their excellent work in understanding and considering these challenges, and the clear recommendations they have created to address them.
These recommendations provide a clear pathway forward to a positive future for the UK’s grassroots music venues, a set of actions that are deliverable, affordable and will genuinely have a positive impact on live music in communities right across the country. We look forward to working with the music industry and with the government to deliver on these recommendations as swiftly as possible.
We would like to thank all the thousands of music fans that have supported our work across the last ten years. It has taken much longer than any of us would have liked to get the positive change we all wanted to see, but we could not have achieved this fantastic outcome without your continued support for your local live music venue”.
David Martin, CEO at Featured Artists Coalition and Annabella Coldrick, CEO at Music Managers Forum: “As the organisations representing artists and managers, we wholeheartedly endorse all the committee’s recommendations.
Most important is their recognition of the ‘cost of touring crisis’, and that the benefits of a ticket levy must flow down to artists, managers and independent promoters - as well as to grassroots music venues. The entire ecosystem needs support. While we still believe this mechanism should be mandatory, the clock is now ticking to get a process in place before September 2024.
We are also delighted to see the committee endorse the 100% Venues campaign, and hope this will trigger action from the UK’s largest live music venues to overhaul outdated practices on merchandise commissions. The sale of t-shirts, vinyl and other physical products represent a crucial income stream for artists. It is only fair that they should retain the bulk of that revenue”.
Jon Collins, CEO at LIVE: “LIVE welcomes this considered, knowledgeable and wide-ranging report. It’s clear that the committee has recognised the many challenges faced by venues, promoters, events and artists at the grassroots level, and the steps required to address them.
LIVE set out to the committee the actions we believe that the government needs to take to help unleash the economic potential of the sector, such as a reduction in the damaging and uncompetitive rate of VAT on tickets, as well as the actions that sit with us as an industry, notably the creation of a charitable arm, the LIVE Trust.
We are pleased that the committee’s report addresses both of these matters positively and has entrusted our sector to implement the industry-led solution of a voluntary levy on arena and stadium tickets, gathering and distributing funding that will benefit the whole grassroots music ecosystem. We look forward to working with government on the review of VAT and regularly updating on our progress on the LIVE Trust”.
Tom Kiehl, Interim CEO at UK Music: “Grassroots music venues are a crucial part of the music industry’s ecosystem and have been faced with a series of unprecedented threats for a number of years. We welcome the House Of Commons CMS Committee taking the opportunity to consider the challenges these venues and the artists that tour in them face.
We hope that many of the committee’s recommendations, which echo UK Music’s ‘A Manifesto For Music’ and campaigns such as the FAC’s 100% Venues, lead to positive interventions from government, as well as building on previous steps it has taken to protect this fragile part of the music sector”.
