Britain goes to the polls today to decide whether we Leave or Remain part of the European Union. As revealed by Music Week, much of the music industry is solidly in favour of an in vote. But with many voters still undecided, we quizzed the BPI’s Geoff Taylor on the case for staying…
Where does the BPI stand on the referendum?
We surveyed our membership to ascertain their views and the BPI position is that the music industry, particularly the recorded music industry, has a strong interest in remaining in the European Union.
Probably the most important [reason] is that, for recorded music, our whole business is founded on copyright. Europe is our largest export market. So, in those circumstances, what those copyright rules are is fundamental to our future success and how much we can invest into new artists in the UK. The EU is right now doing a review of its copyright rules and 90% of our members said that we need to be around the table when those rules are agreed. 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 – and that would be a real concern.
But if we left wouldn’t the UK just draw up its own copyright rules?
We would – the UK government would then legislate for copyright in the UK. But the government would have no influence on the rules that apply across the other member states and that is a major concern. One of our key issues at the moment is that European legislation has an artificial distortion in it which benefits user generated content services and allows them to pay royalties that are massively below the market rate. That’s a big distortion in the growth of our business as we enter the streaming era. We don’t believe it’s in the interest of UK labels to not be round the table pressing for reform on such an important issue.
Well, the EU may or may not sort that out – but surely UK legislation could actually take a much firmer stand against YouTube et al?
We would hope the UK government would do that in the UK, but it’s difficult – in what is increasingly a globalised business – to apply a policy on a purely domestic basis. All of our licenses are stuck on a pan-European or global basis with digital service providers. One country can try and do its best and we would hope the UK government would take a strong stance but, actually, in many cases we’ve seen the French and German governments taking a stronger pro-copyright line than we’ve seen the UK government take. Now that’s a disappointment to us and we believe our government should understand the creative industries are a fundamental engine of growth for the UK economy. Therefore the UK government should take a much stronger line on issues like the value gap. They are supporting us on it, but we’ve often seen the French and the Germans get behind their creative industries to a greater degree. We’d have to fight that battle and win it.
Where would a Brexit leave pan-European licensing?
Initially, multi-territory licensing would absolutely remain in place because our copyright rules wouldn’t change overnight. But, if the government changed copyright in the UK to differ substantially from the harmonised copyright rules across the rest of Europe, would multi-territory licenses still be able to accommodate that? It’s exactly that sort of uncertainty which is unhelpful for the future of our business. We want a growing UK economy, we need consumers to have money in their pockets to spend on entertainment and then, within the copyright world, we need rules that facilitate our licensing business. The uncertainty around what impact there could be is one of the reasons that our members feel strongly that we should remain.
What about touring?
There are serious difficulties for British musicians in getting visas to tour America. No one knows what the position would be if we left the single market. We don’t know if there would be greater bureaucracy for British musicians travelling in Europe. One of the reasons we’re so successful is that labels help with tour support to get artists touring overseas markets, as does the BPI with the Music Export Growth Scheme. If that process becomes more difficult and becomes more like the US process of having to get visas, there’s no doubt that that holds back our ability to export British music.
Would the MEGS scheme be able to help in that scenario?
The whole problem is, we don’t know what those additional costs might be. There might be a call for more support, but it’s very important the government back British talent going overseas. It’s a global business now, it’s not enough to break an artist just in the UK, it’s vital to break an artist in a whole range of territories so the project becomes a success and you earn money that you reinvest in the next artist. We don’t look at our businesses as just UK businesses any more. In a digital era, the business trying to move back just to focus on the UK would be a step in he entirely wrong direction.
Is there a possibility of trade tariffs on music if we’re outside the EU?
Yes, it’s a possibility. No one knows what kind of trade agreement the UK would strike with the EU, nor how long that would take. It’s possible we’d end up with tariffs on our exports to Europe and there could be other restrictions, 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.
Some UK businesses say Brexit would mean less red tape, greater tax flexibility and so on. Wouldn’t that apply to music businesses as well?
We don’t know to what extent leaving the EU would result in less red tape. It’s far form clear that lots of regulations would be swept away or how that would benefit business. That case has been long on general arguments and short on specifics. It could be that flexibility on VAT could clear the way for the UK to reduce VAT on music as cultural goods, like books. But we don’t even know that’s what our government wants to do and, generally speaking, our government 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.
But all these restrictions and more apply in America, and British music is booming there. Why would a post-Brexit Europe be any different?
We don’t know. If one tried to look 10 years ahead in a post-Brexit scenario, we don’t know which restrictions might be put in place. At the moment we have unimpeded access to that European market. In America, we have a common language and that helps us to sell British music in America. We don’t have a common language with most European markets, so we have to work harder to sell British music into Europe. The fact we achieve a similar share, despite the lack of a common language, shows how well we’re doing. Outside of the single market, I don’t take for granted that we’d be able to maintain that level of success, particularly with the risk that restrictions might be put in place. British music is succeeding tremendously well across Europe and the world and 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.