Digital Discourse: Sammy Andrews outlines how AI could revolutionise live music

Regular readers will know that I’ve explored AI here before. However, I recently took part in a panel discussing its potential for the live music industry and, whilst we’re familiar with the challenges the technology poses, there are ways it ...

Centre Stage: Mark Davyd

Music Venue Trust CEO Mark Davyd’s monthly deep dive into live music’s biggest issues… With so many pressures building up on the grassroots music ecosystem, it is sometimes lost how resolvable some of the challenges are. Take, for instance, the issue of inappropriate taxation of the network of venues that play host to new artists.  In 2023, the UK’s grassroots music venues (GMVs) operated on a 0.5% profit margin. Thirty-eight percent of all these venues reported a loss in that year. As business entities, it might therefore be expected that the tax payable within this network would be insignificant – and in terms of taxes payable on profits, that is true.  On a total sector turnover of £501,101,118, just £475,000 made its way to the Treasury in the form of corporation tax, an effective 0.09% tax to turnover cost. But this is far from being the only tax demanded from the sector, with other pre-profit taxes being key elements of the unsustainable financial burden of trying to run a GMV.  The Department For Culture, Media And Sport’s Creative Industries Sector Vision released in June 2023 asserted the position that GMVs are the ‘centres’ of research and development for the UK music industry.  However, whilst R&D is a key element of this government’s policy to deliver growth, attracting multiple tax incentives and breaks to support it (and which provide incentives to invest in the UK’s future prosperity for almost every aspect of the economy), there are no tax breaks actually offered to R&D in live music.  Instead, the government continues to demand pre-profit taxation from venue operators, directly removing cash from the ecosystem that any well-designed tax regime would seek to leave in their hands to boost investment.  The first of these demands arises from the VAT on tickets. UK GMVs pay one of the highest rates of VAT per ticket of any country in Europe. The UK didn’t take the opt-outs from standard VAT rates, which were available to it as a member of the EU prior to Brexit, and has not since identified a reduced cultural VAT rate as one of the rarely seen benefits of Brexit.  Concert attendees pump money into night-time economies. The Mayor of London’s Rescue Plan For London’s Grassroots Music Venues progress report in 2017 identified that for every £10 spent in a GMV, £17 was being spent elsewhere in the economy – in pubs, bars, restaurants and on transport. Other governments have reduced the tax burden on tickets to get people out to more shows, but the UK, even after identifying GMVs as essential R&D, demands that for every £10 spent on a ticket, the Treasury will take £1.67.  After writing off any reclaimable VAT within the operation of the business, VAT in the GMV sector amounts to around £10 million a year.   The second pre-profit tax is part of a wider societal challenge about how the government acts towards the physical economy and the digital economy. Occupying a physical space for business purposes has a long history of taxation: if your business is conducted from bricks and mortar, you will pay a premises-based tax.  Since new economies have emerged, the government has been persuaded to resist any such taxation in the digital space, which has created challenges for GMVs, pubs, bars and shops – just about everyone who has chosen to run their business from a physical location.  By failing to consider the scope of taxation so that it created a balanced system between physical and digital, the government has effectively rewarded businesses who exist in digital spaces, with a tax break that’s unavailable to the occupiers of physical space.  If all GMVs in the UK paid the full business rates demand associated with their premises, it would cost £28 million. Business rates relief in England currently offers a 75% reduction, but in Wales, this was reduced to 40% on April 1 and on mainland Scotland, there is no relief at all. The end result is that in 2024/25, the GMV sector will pay circa £10 million after all reliefs have been received.  Just these two taxes – neither of them related to any profitability in the sector – create a pre-profit tax burden of £20 million in the next financial year.  In the grand scheme of the finances of the music industry, this may seem a relatively trifling amount. In the grassroots sector, eliminating both of these anti-investment and outdated taxes would transform a 0.5% profit margin in 2023 into a 4.4% profit margin in 2024.  That’s still perilously tight and it certainly wouldn’t solve all the problems, but if the government really believes in its own Creative Industries Sector Vision, it has plenty of scope – just in these two taxes – to play its part in improving the financial sustainability of theUK’s grassroots music venues.    

Centre Stage: Mark Davyd

Music Venue Trust CEO Mark Davyd’s monthly deep dive into live music’s biggest issues… One thing I am often asked about, or challenged with, is the idea that the downturn in the grassroots music venue circuit is representative of changes in how people are choosing to consume live music. There’s no need to have all these venues across our towns and cities, runs the argument, because these days people only encounter new music through social media and streaming platforms, not through live gigs. In January, the BPI published statistics about, and commented positively on, another successful year for the British music industry. The statistics that were released are an interesting insight into where music comes from and where it ends up.  Firstly, the very positive: whilst there is still a lot of work to be done, there is great progress being made in the representation of, and success for, female artists. Women spent 31 weeks at the top of the UK singles chart, accounted for seven of the year’s 10 biggest singles and more than half of the Top 20. Plus, 48.5% of songs that reached the Top 10 were by women, representing female artists’ highest annual share of Top 10 hits this century. The general picture for the UK music industry in 2023 was very positive overall. It was the ninth year of growth, sales and streams increased by 10% and streaming hit a new high of 179.6 billion streams – up 12.8% on the previous year, and almost double that of 2018. The first thing that might trouble us, however, is what the BPI means by the phrase ‘British music industry’.   Of the top 10 albums of 2023, only four were made by British acts: Elton John, Fleetwood Mac, Harry Styles and Arctic Monkeys. None of these albums was recorded in 2023 and two of them were Greatest Hits releases by legacy acts. Despite this, news was slightly better for UK acts in the vinyl chart, where five of the top 10 selling albums were released by British acts: Blur, Lewis Capaldi, Fleetwood Mac, Pink Floyd and the Rolling Stones. Three of those were also released in 2023.    There are certainly lots of profits being generated from the ongoing fad for ‘retromania’ – consumers buying albums from the distant past as well as supporting the latest works from artists 20, 30 0r 40 years into their careers. However, there is also a second element to these chart results that challenges the idea or suggestion that grassroots venues are closing because they simply aren’t needed any more.  What is absent from these statistics is evidence of artists being able to build sustainable careers exclusively from the array of new online platforms that have emerged in the last 20 years. This is not to say that TikTok, YouTube, Spotify, Deezer and Instagram – among others – do not have an important role to play in marketing and promoting artists. Indeed, platforms like these feature strongly in movements on the singles charts. But these platforms alone might not necessarily be developing album-shifting artists from the first release up.  Meanwhile, we must ask, what about the acts that emerged from the grassroots music venue sector? With the exception of Harry Styles, who, despite an early outing with his first band, hasn’t dropped into the Hull Adelphi too much (although he has played shows at such venues as London’s Garage and Electric Ballroom), every single British artist making an appearance in the Top 40 selling albums and the Top 40 selling vinyl albums launched their careers in the UK’s grassroots circuit.  You might wish to imagine that this is just a historical legacy and, of course, the Rolling Stones, Fleetwood Mac and Pink Floyd are all good examples of that history. But it’s not just a legacy; it’s an active part of the current success of British artists. And that applies whether it’s Lewis Capaldi, Dua Lipa, Ellie Goulding or Ed Sheeran.     The UK music industry has ready access to an incredible research and development department literally on the doorsteps of fledgling artists up and down the country. That grassroots network of independent venues has an incredible track record of producing world-conquering British artists, and yet our industry is letting that proven testing ground rot away while it puts time, money and effort into other methods of development.  These two things, the grassroots live sector and online platforms, act very well in tandem. But that relationship is only going to succeed if grassroots music venues exist so that social media platforms can amplify what artists are doing in them.  In summary, here is a top tip: put your phone down. The next big British act who will fill the album charts for decades to come isn’t just making a 30-second viral video. They might have also booked themselves a 15-date tour across the country in all the grassroots music venues that their heroes played, and they are building a real audience. Don’t let them do it without you.  

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