How Leaving the EU Could Change the Vinyl Record Industry
By Michael Greig Thomas
To the great surprise of many, the United Kingdom recently voted, by narrow majority, to approve a referendum to leave the European Union. Almost immediately, the British pound dropped to a 30 year low and global stock markets took a plunge. The abrupt initial impact of Brexit on the economy couldn’t be denied.
Like many sectors, the music industry is likely to feel the effects of this departure, and the vinyl record industry is no exception. The results of this referendum could potentially affect the production and distribution of vinyl records (especially given the great number of labels currently using European vinyl pressing plants, such as Record Industry, to manufacture their records) and it could lead to a change to the British music scene as we know it.
How exactly the effects of Brexit will manifest themselves, no-one either in Brussels or in UK government knows. It simply has never been done before, so we can only speculate as to the effects on the vinyl industry at this point.
We can, however, take a look at what some of these potential effects might be:
Production & Distribution
- Currently we pay no VAT or import taxes when trading with other EU businesses, but this is likely to change. This taxation will lead to increased unit costs, inevitably pushing wholesale prices up at a time when the pound may continue to plummet.
- Brexit will have, both in the short and long term, severe effects on the financial relationships between European pressing plants, UK mastering houses and vinyl brokers, in turn, seriously affecting the record industry.
- Brexit could also have a negative effect on mail order sales to European customers, subjecting their packages to import tax and making the service cost prohibitive, as is the case for Norwegian customers under the current system.
General Effects for the Music Industry
- If touring becomes more difficult due to visa and customs restrictions, then it will become even harder for emerging or niche artists to survive. Will this suppress musical innovation? Will smaller labels begin to disappear, handing yet more power and control to established acts and major labels?
- In a survey carried out by BPI on the British music industry’s views on Brexit, 47% of respondents indicated that at least 25% of the revenues they earn outside the UK come from the EU, 59% believed that leaving the EU could make it more difficult to successfully promote British music and artists in Europe, and 56% believed that withdrawing from the EU would have negative consequences for fans.
The Waiting Game
Whichever way you look at it, the UK’s departure from the EU will, in all likelihood, have some impact on the vinyl record industry. It may not be all doom and gloom though. Perhaps the new taxes, regulations and agreements created by the UK may end up being more beneficial than those in the European Union? Perhaps this will inspire more record labels in the UK to open pressing plants?
The possibilities are endless but, for now, there is no way of knowing and there are no guarantees. It’s an anxious waiting game.
What potential impact do you think Brexit could have on the vinyl record industry?