UK government slashes VAT on concerts
The British government has announced that value-added tax (VAT) levied on concert and event tickets will be reduced to 5% from next week.
A cut in VAT was one of three main demands of last week’s #LetTheMusicPlay campaign, along with a financial support package and a timeline with reopening music venues without social distancing. Following the announcement of on Sunday of a £1.57 billion aid package for the cultural sector, only the call for a confirmed date for reopening remains unfulfilled.
The VAT cut was announced late yesterday (8 July) by culture minister Oliver Dowden, following a ‘mini-budget’ that afternoon by chancellor of the exchequer Rishi Sunak. According to Dowden, the reduction in VAT from 20% to 5% will apply to concerts, theatre shows, exhibitions, circuses and other “attractions”.
Pleased to confirm VAT cut from 20% to 5% for “attractions” announced by @RishiSunak includes
Shows, Theatres, Circuses, Fairs, Amusement Parks, Concerts, Museums, Zoos, Cinemas & Exhibitions
— Oliver Dowden (@OliverDowden) July 8, 2020
The reduction will last for six months from 15 July, said Sunak.
As for a timetable on reopening, Dowden says the government will “announce further steps on [the] path to reopening shortly”.
In a statement, the Entertainment Agents’ Association welcomed the VAT reduction but said clarification is needed on where the cut-off point will be. “[A]s we can’t open any [venues] at the moment, we need to know if this applies to tickets bought before the end of Jan for events in 2021,” the association says.
Concert Promoters’ Association chair Phil Bowdery comments: “Yesterday’s announcement on the VAT reduction for ticket sales is a significant show of support for our industry from the government and is a sign that they are willing to work with us to find targeted measures to support this vital part of the UK economy. We want to thank the government, and in particular Oliver Dowden and Rishi Sunak, for their support and the confidence they have shown in the iconic UK live music industry.”
“To unlock the potential value this creates, we urgently need some firm commitments to reopening dates”
“We also know there is lots more to do and our industry is not out of the woods yet, and we will continue to work hard with the government to get the support the industry needs over the coming months.”
National Arenas Association chair Lucy Noble adds: “The measures the chancellor announced yesterday include a hugely welcome reduction in VAT from 20% to 5% for various sectors, including tickets for concerts. We are extremely grateful to the chancellor, treasury ministers and DCMS [department for digital, culture, media and sport] for listening to us and for their willingness to consider and implement measures to support the music industry at this critical time.”
“We warmly welcome this sensible intervention into the live music sector, which responds directly to the asks we made of the government for the support we need,” says Mark Davyd, CEO of Music Venue Trust. “To unlock the potential value this creates, we urgently need some firm commitments to reopening dates and some guidelines that would allow us to get tickets on sale and benefit from this tax cut.”
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UK live industry cautiously welcomes £1.57bn aid
British live music industry leaders have said they stand ready to work closely with government on the details of its £1.57 billion culture rescue fund, but cautioned that the whole live music ecosystem must be protected.
The financial aid package of emergency grants and loans must also be complemented by an exemption in VAT for the sector, a government-backed insurance scheme for shows and a conditional date for reopening, they say.
Sunday’s announcement about the support package followed the hugely successful #LetTheMusicPlay day, which saw 1,500 artists write directly to culture secretary Oliver Dowden and tens of millions of fans posting online about the importance of live music, a £4.5bn sector that employs 210,000 people.
The campaign, coordinated by members of the UK Live Music Group and Concert Promoters’ Association (CPA), with additional support from UK Music, trended at No1 globally on Twitter and attracted media coverage around the world.
“Thousands of artists, venues, festivals, managers, agents, promoters and production crew came together for #LetTheMusicPlay, and we must ensure that all of them receive the support that they so desperately need,” says Phil Bowdery, chair of the CPA.
“We stand ready to work closely with the government to ensure that this world-class industry survives”
“We stand ready to work closely with the government to ensure that this world-class industry survives.”
Live music was one of the first industries to close as a result of the coronavirus crisis, and concerts are not expected to return in full force until well into 2021. According to member research compiled by live music associations over the six month period between October 2020 and March 2021, the operating costs of the broader live music sector will be £298.8million. This figure is in addition to the £47m required by grassroots music venues, called for by Music Venue Trust.
“The government’s £1.57bn package for the arts is welcome, but we lack detail of how funding will be allocated for music,” comments Annabella Coldrick, chief executive of the Music Managers Forum. “The thousands who work and perform in our sector desperately require comprehensive support if their jobs and livelihoods are to be sustained.”
Kilimanjaro Live MD Stuart Galbraith, co-chair of the CPA, adds: “We are ready to work on the details of the scheme, and our other requests – a VAT exemption for the sector, a government-backed insurance scheme to allow shows to go ahead, and a timeline for safe reopening without social distancing – at the government’s convenience.
“We look forward to this ongoing discussion shortly.”
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SMA, Prodiss criticise France Billet over refund policy
French industry associations Prodiss and SMA (Syndicat de la filière des musiques actuelles) have issued public criticisms of France’s largest ticketing platform, France Billet, over its handling of coronavirus-related refunds.
The pair, which between them represent 450 live industry companies, state that France Billet and majority owner Fnac Darty “unilaterally took decisions that weakened the relationship of trust between event organisers and the public” following the cancellation of concerts due to Covid-19.
While commending the actions of other ticketing platforms for “quickly start[ing] to issue refunds”, Prodiss and SMA say that France Billet, in which CTS Eventim took a 48% stake last year, eluded to “technical and operational difficulties” and attempted to “get rid” of customers by giving them promoters’ contact details.
Prodiss and SMA believe that the ticketing platform intended to start issuing refunds after shops began to reopen in France in mid-May. Before this time, they claim the ticketer “voluntarily” decided not to respond to questions or complaints from ticketholders.
“Prodiss, SMA and their members therefore intend to shed light on the behaviour of Fnac/France Billet over the coming months”
The industry associations also claim “misleading” information was presented on the cancellations page of the France Billet website, informing fans that the ticketer was awaiting further word from promoters and that delays were beyond its control.
The first refunds, say Prodiss and SMA, were made in the second week of June for cancelled events and have yet to start “in earnest” for postponed events.
“Prodiss, SMA and their members therefore intend to shed light on the behaviour of Fnac/France Billet over the coming months,” reads a statement from the associations. “Fnac/France Billet are, above all, endangering the continuity of the entertainment industry, by treating ticketholders – the fans of the future – in this anomalous way.”
IQ has contacted Fnac/France Billet for comment.
Live Nation, AEG report UK gender pay gap stats
Several UK-based live music businesses have voluntarily reported their most recent gender pay gap (GPG) statistics.
Despite the government ruling early into the Covid-19 pandemic that companies do not have to meet the deadline this year, Live Nation UK, AEG Europe and Ticketmaster UK have shared their pay gap data for the 12 months from 5 April 2019.
From 2017, all companies in mainland Britain with more than 250 employees have been required to report their GPG – defined as the “difference in the average hourly wage of all men and women across a workforce” – for the previous year to the government equalities office.
However, with that requirement on hold amid the coronavirus pandemic, many of the companies which appeared on last year’s list, including SMG/ASM Global, Academy Music Group, NEC Group, DHP Family and PRS for Music, have not reported their statistics this year. Global, meanwhile, is no longer in the festival game, and its successor entities do not hire more than 250 people.
This article will be updated if any of the companies that are missing add their GPG reports at a later date. For now, though, here are pay gap statistics – as well as links to the full reports – for the four companies which voluntarily met the original deadline…
Live Nation (Live Nation (Music) UK Ltd)
Pay gap (mean): 44.5% (-44.3%)
Pay gap (median): 25.7% (+11.7%)
Live Nation UK slashed its mean pay gap (the difference in average hourly wage across the entire company) to 44.5% in 2019–2020 – the lowest figure since GPG reporting began in the UK in 2017. However, its median GPG (the gap between the middle-paid man and middle-paid woman) grew slightly.
Women occupy 36% of the highest-paid jobs and 72% of the lowest-paid jobs, while median bonus pay is 41.2% lower for women.
Ticketmaster (Ticketmaster UK Ltd)
Pay gap (mean): 25.9% (-41.1%)
Pay gap (median): 28.9% (+25.7%)
At Ticketmaster, it’s a similar picture to parent company Live Nation, with a drastic reduction in the mean GPG but a slight widening of the median gap. At 25.9%, the pay gap across the entire organisation is also the narrowest it’s ever been.
Women occupy 21% of the highest-paid and 43% of the lowest-paid jobs; on average, women’s bonus pay is 32% lower than men’s (on a median basis).
Pay gap (mean): 34.5% (-20.9%)
Pay gap (median): 39% (+6%)
In the most recent 12-month epriod, AEG Europe had a mean pay gap of 34.5% (down 20.9% on 2018’s 43.6%), meaning the UK’s big two live entertainment companies both reported their lowest average GPGs since reporting began.
At AEG UK, women occupy 34% of the best-paid jobs and 59% of the lowest-paid jobs, while women’s median bonuses are 15.6% lower.
PPL PRS (PPL PRS Limited)
Pay gap (mean): -9.6%
Pay gap (median): -16.8%
Performance rights organisation PPL PRS Ltd, a joint venture between PRS for Music and PPL, had a negative gender pay gap – or a GPG in favour of women – in 2019/20.
Women occupy 49.1% of the highest-paid jobs and 27.3% of the lowest-paid, while a bonus gap of 0% means men and women take home the same average bonus pay.
TM Germany: 98% of fans ready to go back to shows
An overwhelming majority of German music fans want to attend live events again, despite the ongoing coronavirus outbreak, according to new research by Ticketmaster Germany.
Of some 80,000 people surveyed, 98% of Ticketmaster customers said they still want to go to shows, with 65% of those surveyed saying they miss live events “particularly badly”.
While 94% of people expect ticket prices to rise post-pandemic, live events are the activity respondents are most looking forward to returning to, with 82% saying live entertainment is their top priority, ahead of travelling (78%) and eating out (67%).
The survey also suggests that fans will continue to pay for live streams and other virtual concerts when venues have reopened, tallying with previous research by Bandsintown. According to Ticketmaster, fans “enjoy the convenience of streams they can enjoy from the comfort of their own home”, with two thirds saying they have paid, or would pay in future, for exclusive online content from artists.
Live events are the activity respondents are most looking forward to returning to
Industry groups have criticised Germany’s scattershot approach to ending lockdown restrictions on live music, with umbrella body BDKV saying earlier this week that the country’s federal structure – with different sets of regulations in all 16 states – makes touring “impossible” at present.
“Even if there were a promoter who would be willing to organise a tour at a loss, or financed by public subsidies, the 16 different, contradictory and contradicting regional directives do not allow for the consistent organisation of touring events,” says BDKV president Jens Michow.
#LetTheMusicPlay: UK biz mobilises to call for aid
The leading lights of Britain’s live music industry – including some of its biggest touring talent – have today (2 July) issued an urgent plea for government aid to the sector, warning that a lack of support and continued uncertainty around reopening is having a “devastating” impact in one of the world’s biggest live music markets.
The appeal is centred on a letter to the UK’s culture secretary, Oliver Dowden, signed by 1,500 artists and bands, including Ed Sheeran, the Rolling Stones, Dua Lipa, Sir Paul McCartney, Skepta, Rita Ora, Coldplay, Eric Clapton, Annie Lennox, Sir Rod Stewart, Liam Gallagher, Florence and the Machine, Depeche Mode, Iron Maiden, Lewis Capaldi and Little Mix.
In the joint letter, the artists say: “UK live music has been one of the UK’s biggest social, cultural, and economic successes of the past decade. But, with no end to social distancing in sight or financial support from government yet agreed, the future for concerts and festivals and the hundreds of thousands of people who work in them looks bleak.
“Until these businesses can operate again, which is likely to be 2021 at the earliest, government support will be crucial to prevent mass insolvencies and the end of this world-leading industry.”
New research shows the live music sector added £4.5 billion to Britain’s economy in 2019, and supports 210,000 jobs. While the UK is the fourth-largest music market in the world by value of ticket sales – and the second-biggest per capita – the appeal notes that state support for live music lags behind other countries, with other European governments such as France and Germany using public money to kickstart their concert industries post-Covid-19.
“Government support will be crucial to prevent mass insolvencies and the end of this world-leading industry”
To coincide with the letter, hundreds of artists will today begin posting films and photos of their last live show using the hashtag #LetTheMusicPlay. Fans will also be encouraged to post about the last gig they went to, in a mass show of support for the UK’s on-pause live business.
“It’s incredibly important for artists like myself to speak up and support the live music industry in the UK,” says Dua Lipa. “From the very start, playing live concerts up and down the country has been a cornerstone for my own career. I am proud to have had the chance to play through all the levels: small clubs, then theatres and ballrooms, and into arenas, and, of course, festivals in between each touring cycle.
“But the possibility for other emerging British artists to take the same path is in danger if the industry doesn’t receive much-needed government support in the interim period before all the various venues, festivals and promoters are ready and able to operate independently again.”
The UK live music industry is asking for:
- A clear, conditional timeline for reopening venues without social distancing
- A comprehensive business and employment support package and access to finance
- Full VAT exemption on ticket sales
The business and employment support package should include, they say, a government-backed insurance scheme to allow shows to go ahead; an extension of the furlough scheme and help for the self-employed to prevent mass redundancies; rent breaks for venues to allow them to reopen; an extension of business-rate relief to the entire live music supply chain; rolling over fees for single-premises event licences for festivals; and financial support for lost box-office income.
“Every day, literally, I hear of another friend in music losing their job, shutting up shop or switching careers. This pandemic has affected everyone; it has taken many lives and forever changed many more,” says Ben Lovett of Mumford & Sons and Venue Group. “Live entertainment has not been the headline, nor do I believe it should’ve been – at least until now.
“We really have to pay some attention to what our cultural landscape is going to look like on the other side of this, and we’re hoping that #LetTheMusicPlay will pull some of this into focus for a minute.”
“If the government doesn’t step up and support the British arts, we really could lose vital aspects of our culture forever”
Other artists to have signed the letter to Dowden include Take That, the Stone Roses, Foals, James Bay, Genesis, the Chemical Brothers, Johnny Marr, Slade, Biffy Clyro, Bastille, Muse, Sir Tom Jones and Manic Street Preachers.
“The UK’s venues, festivals, performers and crew bring so much to this country’s culture and economy, but they are now facing desperate financial challenges,” says Emily Eavis, organiser of Glastonbury Festival. “If the government doesn’t step up and support the British arts, we really could lose vital aspects of our culture forever.”
“July would normally see the UK embarking on a world-famous summer of live music, but this year the lights are switched off and the microphones unplugged,” adds Phil Bowdery, chairman of the Concert Promoters’ Association. “Live music has sought to play its role in helping tackle coronavirus, with many artists providing entertainment for people from their homes. But our shutdown is likely to go on for much longer than most, with many concerts and festivals unable to operate until 2021 at the earliest.
“Without rapid government support, the long-term impact will be devastating, with the loss of hundreds of thousands of highly-skilled jobs and billions of pounds from the UK economy.”
StubHub UK managers move to ticketing startup Tickitto
Two former members of the StubHub UK team have joined ticketing software startup Tickitto, as StubHub faces continuing scrutiny in the UK over its merger with fellow secondary ticketer Viagogo.
Nick Harford and Harriet Clayton, join Tickitto from StubHub UK, they had worked on developing the company’s primary ticketing business. The pair, who left StubHub in May 2019, take on the roles of head of business development and partnerships and head of partnerships activation respectively.
StubHub’s acquisition by fellow secondary ticketing giant Viagogo has been at the scrutiny of the UK’s Competition and Markets Authority (CMA) since December. The watchdog recently referred the merger for an in-depth investigation, warning that it could result in “a substantial lessening of competition”.
“We are committed to acquiring the very best talent and expertise in the industry”
“My experience working with major rights holders, promoters, ticketing platforms venues and software providers, as well as navigating the complexities of the entertainment world lends itself well to support the expansion of Tickitto across its key markets,” comments Harford.
Dana Lattouf, CEO of Tickitto, adds: “We are committed to acquiring the very best talent and expertise in the industry. I am excited to welcome Harry and Nick into the team and look forward to unlocking the world’s best-ticketed experiences and forging strong relationships with our partners.
“I am confident that their combined expertise will aid our growth as we embark on the next stage of our journey.”
Launched in 2017, Tickitto provides an easy-to-use application programming interface (API) for the integration of ticket selling software onto any platform, allowing partners to access inventory, pricing and availability in one place. The company recently received US$700,000 in a pre-seed investment round from Seedcamp.
Could vouchers become a trap for promoters?
Live music markets in Europe have looked to vouchers as a cure for their coronavirus-inflicted crises. The effect of this type of medicine seems to be based upon a presumption that ticket owners will hold on to their rolled-over tickets, or use vouchers for another show instead, or wait for cash refund until late 2021.
Well, what if they don’t?
Voucher schemes have turned millions of ticketholders into promoters’ creditors. They can be divided into three sub-groups: Those who can afford it; those who can’t really but were not given a choice; and those whose present ambivalence may well turn into anger with passing time.
So far, the economic prognosis is that the effect of the corona crisis has not yet fully revealed itself and it will not be until three to six months from now when it will really hit hard, once various government support and help programmes are over.
Everything points to this crisis being the strongest in decades. The natural reaction is a great deal of uncertainty and, in this situation, the live music industry in countries using voucher schemes has sent a very clear message – if worse comes to worst, it will be the customers who will bear the load.
Ticketholders might be facing situations where they need access to at least some part of the cash spent on tickets to cover their daily needs. As their chance to get an immediate, full refund from promoters is either restricted or made temporarily impossible, then they might be tempted to offload what they have in the only way possible – on the secondary ticketing market.
Voucher schemes have turned millions of ticketholders into promoters’ creditors
Desperate times call for desperate measures and ticketholders might have to give away their tickets as quickly – and therefore cheaply – as possible. If this happens to a significant extent, then it could affect the sales of the postponed events in question, as well as newly announced gigs.
Nowadays, promoters postpone their shows hoping for the best. Now, if it is a sold-out show, then one might worry only about lowering the profit margin, but if there is still some way to go to break even, then the promoter has every reason to worry.
Postponed shows were negotiated at the peak of the conjecture cycle with ticket prices reflecting both the expected buying power projected into selected capacities, as well as accordingly set fees and subsequent other costs.
The upcoming 2021 season will be tough. Experts’ projections quoted in media see a decline in revenue of more than 50% for the leisure sector next year in some markets. Better than the current drop of 80-90%, but hardly a full recovery. By the nature of things, it can be reasonably expected that the lost revenue will be distributed in an uneven manner, show-per-show.
The highest risk lies with events that have not yet reached breakeven and that have found themselves in a 2020 position that they probably aim to roll over to 2021. If an event, traditionally a festival, has tickets scaled from an early-bird rate to an on-the-door price and is now somewhere in the middle, then promoters will probably follow up the sales from the point an price that they stopped on prior to coronavirus, and offer a similar or identical line-up (value) in return.
In cases where the contracts were not renegotiated for a lower guarantee, then promoters will have both prices and costs set on 2020 expectations for the next season, which might deliver lower revenue. Maybe upwards of 50% lower.
It is not lowered income that breaks promoters’ neck, it’s the unpayable bills accumulated from previous commitments that do it
Additionally, we need to account for the risk of cheap tickets on the secondary ticketing market. If tickets are available for less that than the official presale on these sites, either for the very same event, a similar event or event in the same time period, or a better event, then it will likely redirect the cash flow from official presales and further lower the promoter’s future revenue.
If a market revenue goes down by 50 % and the remaining potential half is further affected by cheap resales, how much can reasonably be expected to be left over? If such a scenario becomes reality, then the expectations of future turnover might not (sufficiently) materialise, leaving the promoter with obligations to fulfil with insufficient funds.
Not to mention, that standard competition will continue, and new shows will have the advantage of a wow-effect over postponed and rolled-over events. Also, corporations in some countries are likely to come out of the crisis with loaded cash-flow from temporarily non-refunded tickets for cancelled arena shows with a limited time to reinvest it.
In this light, it might seem that the intention to lower artist guarantees by 20 % in 2021 is merely cosmetics.
If it is the case and all options are still on the table then, in some ways, it is not a bad option to leave in 2020 what belongs in 2020: ask agents to return paid advances, refund ticketholders or press on with substitute events and enter the next year without a ball and chain.
Generally speaking, it is not lowered income that breaks promoters’ neck, it’s the unpayable bills accumulated from previous commitments that do it.
Borek Jirik has worked as a show and festival promoter and arranged technical production for various arena and stadia tours. He now consults for live events, focusing on quality management, safety plans, studies, publishing and research. He was an initiator and editor of the Comprehensive Guide for Event Production and Organisation in the Czech Republic, 2018.
CMA refers Viagogo/Stubhub merger for further investigation
The UK’s Competition and Markets Authority (CMA) has referred the merger of secondary ticketing giants Viagogo and StubHub for an in-depth investigation, warning that the deal could result in “a substantial lessening of competition”.
The watchdog began its investigation into Viagogo’s US$4 billion all-cash acquisition of StubHub in December, following pressure from anti-ticket touting groups.
Earlier this month, the CMA stated that the deal, which would see both companies brought back under the control of founder Eric Baker, “could lead to customers losing out through higher prices, less innovation and a lack of real choice.”
The organisation is now advising that the merger be investigated further, after giving Viagogo five days to respond to its initial concerns.
Adam Webb, campaign manager of anti-touting group FanFair Alliance “welcomes” the CMA’s decision.
“We remain committed to our belief that the combination of the two companies is a good move for customers worldwide”
“Over recent years, there have been major steps forward in the UK to eradicate the bad practices of sites like Viagogo and StubHub and those of the large-scale ticket touts who dominate their supply chain,” says Webb.
“Even in the midst of the Covid-19 crisis, the thought of such a business monopolising “for profit” secondary ticketing remains highly problematic.
“Viagogo’s predatory marketing practices and business model continue to endanger audiences, and its $4.05bn acquisition of StubHub raises acute competition concerns, particularly in the UK.”
A Viagogo spokesperson says that the company “will continue to work diligently with the CMA” during the second phase of their review.
“We remain committed to our belief that the combination of the two companies is a good move for customers worldwide.”
Sweden rules vouchers are not valid form of compensation
Sweden’s National Board for Consumer Disputes (Allmänna reklamationsnämnden, ARN) has declared that ticketholders are entitled to a cash refund for any events cancelled or postponed due to Covid-19.
The government agency has declared that organisers that have been forced to cancel or move events due to coronavirus-related restrictions cannot “avoid having to repay [the] money” unless a contractual condition states otherwise.
The principle of force majeure, says the ARN, does not exempt companies from the obligation to repay the cost of the service that has not been delivered, but rather applies to limiting liability.
“Anyone who does not get the agreed output, e.g. the opportunity to participate in an activity or to go to a concert, is therefore basically not obligated to pay for it,” comments ARN chairman and CEO Marcus Isgren.
In many countries in Europe, including Germany, Portugal and Italy, concert organisers are being allowed to offer ticket vouchers (ie credit) in lieu of cash refunds for cancelled events, as promoters warn that mass refunds may well lead to bankruptcies.
“Anyone who does not get the agreed output is therefore not obligated to pay for it”
However, ARN states that offering customers a voucher to attend the same event on a different date is not a valid form of reimbursement, as the chosen date “is usually crucial” to the consumer’s decision to buy the ticket.
“It is therefore not possible for the organiser to compel [the consumer] without their consent to accept that the tickets will be valid for a corresponding event another day,” says Isgren.
Despite ARN’s announcement, Joppe Pihlgren, head of Swedish live music association Svensk Live, says many fans “want to support concerts and organisers” and would rather wait until they can attend the event, than get their money back.
“As an industry we need the information on how and when we can restart,” Pihlgren tells Swedish publication Västerbottens-Kuriren. “I understand it is difficult, bu we need to know so we can plan ahead. This is essential for our operations.”
Unlike the vast majority of European countries, Sweden has kept some of its economy, such as restaurants, bars and shops, open throughout the coronavirus crisis. The government has placed a capacity limit of 50 on live events, leading to the cancellation of Way Out West, Lollapalooza Stockholm and Sweden Rock.