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BREXIT AND THE MUSIC BUSINESS

11 July 2018

The purpose of this article is to illustrate the consequences for the British music business of the United Kingdom leaving the European Union in the aftermath of the referendum held in June 2016. Personal anecdotal evidence suggests it’s pretty likely that if you work in the music business or you’re a musician, you voted to remain in the European Union (or you didn’t vote), so I probably don’t have to change your mind about the merits or otherwise of Brexit. Dialogue on the subject suggests that the full consequences of leaving are not widely understood, perhaps because our membership of the EU has lasted longer than most musicians’ and executives’ careers, so the benefits we enjoy are taken for granted; they have always been in place and we can’t imagine not having them, even as we charge at full speed towards that new reality.

Nearly everything discussed here will become reality even following the softest of Brexits, reducing our status to that of, say, Moldova, Serbia or Ukraine, with only a diplomatic relationship and a trade treaty of some kind but no say in the criteria for trade we must abide by if we want even moderately favourable trading terms, and no free access to the market for people or goods.

1. TOURING IN EUROPE POST BREXIT

I am sure that it will be possible to visit the European Union for holidays and for business trips without a visa, but that only gets us a meeting with our distributor in Hamburg or a weekend in Ibiza. Setting foot on a stage, even unpaid, counts as work and to do so we will need a work visa. A handful of dates in Germany, a showcase at Eurosonic, a festival in Spain? Prepare to be rounding up passport scans, contracts, insurance documents, bank statements, medical certificates, and fill in pages of paperwork, followed by a long wait in line at an embassy, and factor in travel time to London for those of us outside the capital as well (or put the whole lot including passports in the mail, which may be the one thing that is a worse idea than having to be on a Virgin Train to London at 0548 in the morning to be in line at the German embassy in London by 9). You could pay a broker to do it, which saves time but burns a lot of cash. By the way, with the possible exception of playing in multiple Schengen Treaty member states, this is a process that will have to be repeated for every country we’re planning to play in.

So we’ve got our work permit. But to play, we also need our gear, and presumably a van. As the resident of a nation that will no longer be a member of the European free trade zone, bringing in our own musical equipment will be considered an import. (Anyone who toured Europe in the 1960s will have stories of being stuck at Calais with French customs officials asking for ten grand in French francs because the officials insisted the band were really going to sell their gear in France.) Personal effects – clothes, laptop, a single guitar – are usually exempt, so when we have travelled outside the European Union as a tourist or businessperson, it is unlikely we will have encountered this degree of red tape, because we didn’t take a van and six guitars and five boxes of t-shirts with us when we went on a beach holiday in Thailand. But take a van, gear, merch, you’re going to deal with customs.

So to avoid paying masses of import tax and duty, we will need (as bands did back in those days) a carnet, which is basically a passport for goods instead of people. Getting a carnet is an expensive and time-consuming process for which we generally rely on the help of a broker, much as in the case of a work permit. It involves creating a manifest of virtually everything of value we are travelling with above a certain value and a lot of supporting paperwork (receipts from the time of purchase). Getting a carnet is sufficiently compex that you will need a broker to do it for you. It really is a field of expertise all of its own.

Overlapping in the areas of both live work and physical exports is “merch”. The carnet may prove our gear is staying with us for the return trip, but those five boxes of t-shirts, well, they are to be sold en route. For these we most certainly will have to pay import tax and duty, and sales tax too.

2. PHYSICAL SALES OF RECORDS IN EUROPE POST BREXIT

The other major handbrake on the music business post Brexit will be placed upon physical exports for labels and bands that will soon be in place. Without free market access, sending a box of records to our French distributor will be the same as sending a box of records to Mexico. Customs forms and commercial invoices will need to be filled in, import taxes paid, regular delays at customs endured with a constant risk of our shipments being impounded (we used the wrong harmonisation code; we forgot to include a copy of the commercial invoice in every parcel, a form that states the contents are not immoral/seditious has to be signed and scanned and sent to an obscure office who are only open on Thursdays). “Red tape” was regularly cited by the Brexit camp as a reason to leave the European Union, but it’s not there for the sake of it – harmonisation of regulations is what allows red tape to be done away with, and post-Brexit, you can expect a lot more red tape, not less.

Manufacturers of physical music and merch are already looking at offering services to British labels and bands whereby they manufacture within the European Union on our behalf and import to the United Kingdom only what we need for the domestic market, and store the rest inside the borders of the European Union for when we need it there (in the case of records), or for when the band next tour there (in the case of merch), so the product doesn’t have to cross a border and incur import taxes and duties en route.

3. GEOGRAPHY IS DESTINY

Brexiters talk in esoteric terms of trading with other parts of the world such as the old British Commonwealth countries, but no one who has ever been at the trade coalface thinks physical trade with a different continent is preferable to trade with an immediate neighbour. Admittedly, the kind of trade where the product can be transmitted down a wire is less hampered by distance and music streaming does meet that criteria, but with two important caveats. Firstly, streaming revenue is already the subject of a great deal of complaint as it generates so little revenue, and secondly, the majority of music consumers are not going to stream your track in decent numbers if you’ve never been to their country to do promo and play shows, so even digital sales are somewhat hampered by a lack of proximity.

No Brexit theoretician can diminish one essential truth: geography is destiny. The United Kingdom is currently a member of the European Union, a quasi-federal state comprising the world’s biggest single market, and in it reside the world’s richest half-a-billion people. Most importantly, it is so close to our own shores that on a clear day other parts of it, both France and Ireland, are visible to the naked eye from our own shores. When you hear a Brexiter say we can trade with Australia, New Zealand, Canada (the Commonwealth option) this is, of course, true and it is something we already do. As a consolation prize for losing access to the European Union, however, it’s a disaster, first and foremost because the cost of getting there is immense.

Even if the funds exist to fly the band long haul, that big ticket trip isn’t the end of it, it’s just the beginning. It takes multiple visits to a territory to make it big – you wouldn’t expect to be famous in Britain after ten shows, so how many times will you need to cross the Atlantic to crack Canada, how many times will you have to traverse half of the entire the planet to make it big Down Under? Five trips? There’s a reason Australia has so many tribute bands (Bjorn Again, The Australian Pink Floyd et al) – it’s too far for the real thing to go in person. Only when Coldplay levels of fame are reached does Australia become realistic, when jumping off from Tokyo to play Big Day Out becomes a possibility.

Crippling opportunity cost aside, even if five trips to Canada or Australia were financially viable (we’re entirely ignoring the environmental cost of such a carbon footprint), who are you going to play to? Australia, New Zealand and Canada’s population (23, 4.5, and 35 million) combined only adds up to Italy (59 million), itself a tenth of the European Union (510 million).

Another misunderstanding about access to Commonwealth countries: just because they have historical ties to the United Kingdom doesn’t mean you won’t need work permits and import licences for your stuff if you want to go and play there. Australia has a very tough immigration policy (indeed it is held up as a model by Brexiters); even Canada with its humane asylum policy, photogenic prime minister and our own Queen on the money requires plenty of time spent on visas and hassles at Pearson airport trying to avoid paying import duty for Hugh Cornwell’s black telecaster (we’re not going to sell it in Canada I promise!).

4. OTHER LONG DISTANCE TRADING PARTNERS CAN’T SAVE US

Brexit theoreticians tell us we can trade with a long list of other non-EU members. However I can’t name one country that isn’t off the list of suitable trading partners for small businesses in the United Kingdom for one or more of the following reasons: 1. It’s far away. 2. No one speaks English. 3. It’s in a vastly different time zone so even a simple phone call involves waking up at 5am or staying at work til 9pm. 4. No intellectual copyright laws. 5. Significant cultural differences that require years-long apprenticeships of misunderstandings and social faux pas. 6. No disposable income. 7. Small local population.

And wholly back on the subject of music, 8. outside the European Union, North America and Australia, the rest of the world’s populations have their own constellations of stars who sing in the local language. The British music business regularly falls into the trap of thinking the exceptions are the rule. Just because Cradle Of Filth do decent box office in Colombia doesn’t mean you have a chance of being famous there. “Big In Japan” is mostly a myth. (Before you commit to breaking your band to Japan, ask yourself when you last listened to pop music sung in Japanese? But you expect Japan to fall in love with music in an equally foreign language?)

One more Brexit false hope, which is the United States. It may have the population (318 million) that other export targets lack, a degree of stability, they speak English (kind of), and show quite a bit of interest in British music (most notably in the early 1980s, when one in three records sold in the United States was by a British act; right now it’s about one in eight, albeit highly concentrated in the hands of Adele, Ed Sheeran, Sam Smith and Rod Stewart’s Great American Songbook vol. XVII). Lest we forget, President Trump was elected pretty much on a single-issue platform of protectionism so literal that it includes walling themselves off from a neighbour and attempting to ban Muslims. As anyone who has aspired to as little as a SXSW showcase will tell you, getting work visas for the United States has long been famously problematic and eye-wateringly expensive. Our politicians and Brexit campaigners may bleat about the Special Relationship but besides a fairly closely aligned military, there is simply no such thing. (Plus even the United States is still an expensive seven hour flight away, unless you’re going to California, in which case it’s ten hours.)

Disclaimer – I’m not a snob. I’ve been to 65 countries, and the more of the above categories a particular place falls into (far away, no English spoken, no intellectual property rights etc), the more I’ve enjoyed visiting, with Iran, Bangladesh, Lebanon, and North Korea being particular highlights. Being poor doesn’t make Sri Lanka a bad country, and not speaking English doesn’t make Peru bad either. What’s up for discussion is how these countries compare to the European Union as trade partners.

5. BREXIT

So what we are looking at as a country and as an industry is no easy access to local markets, and distant markets that are equally walled off plus high opportunity cost because of travel for personnel and shipping for product plus problems with language, culture, and/or the small size of their markets. Meanwhile we have the world’s biggest market right on our doorstep, in which we currently have completely unrestricted access to work, trade, live, enjoy protection under the law and receive free health care as citizens; all a band need is a van and a ferry ticket, all an exporting label need is a customer. Because of a small margin of votes in a Tory party leadership contest disguised as a referendum on a very complex issue in a campaign fraught with lies, we are soon to lose all of those rights. As is surely obvious from this piece, the effect on the British music industry will be devasting.

Societies and whole civilisations can choose the wrong path. History doesn’t care, God doesn’t care. Currency devaluations, failing industries, shortages, national unrest – it’s a familiar narrative, but only from newspaper headlines, happening exclusively to other people. Venezuela, the Soviet Union, Iran, Lebanon (to name just four) all enjoyed reasonably long periods of great wealth and stability that ultimately proved to be unsustainable because of structural weaknesses that could not be papered over, and/or the bad decisions of their leaders, and/or the bad decisions of their otherwise highly educated and rational citizens. The example of our musical acts not understanding that post-Brexit they will need a French work visa to go on stage at a gig at MIDEM is a useful if trivial metaphor – as a society we’ve had it good enough just long enough that we can’t imagine anything else and we’re under the illusion of thinking ourselves collectively immune to the consequences of taking the wrong fork in the road, and that in the instance of Brexit we will merely exchange one form of stability and prosperity for another, and that exclusion, irrelevance, failure and catastrophe can’t happen to us. I don’t know what to do to stop this madness, but understanding how much it will cost us is a start.

Charles Kennedy is the founder and managing director of London-based indie label Invisible Hands Music, and has worked with Tangerine Dream, Hugh Cornwell of the Stranglers, [From] The Jam, Thomas Dolby, Animotion, Miranda Lee Richards of the Brian Jonestown Massacre and Mishka Shubaly.

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