Small music venues in the UK

How much do we know?

Trevor Locke looks at how small venues are important to the economy.

In previous articles, we have discussed the economy of the Leicester music scene.

This has gone a little way towards identifying the factors that govern the performance of that economy and has enabled some of the factors that influence it to be identified; factors such as

the number of venues
the number of sessions of live music per week
the volume of ticket sales
the number of acts performing
the popularity of those acts
the competition those venues face with alternatives such as festivals

These are examples, not an exhaustive list.

It is one thing to build a model using these factors; but what do we do with such a model? Most model-building in economics is to enable policy analysis and to predict outcomes. We might well be able to come up with policy proposals that could improve the performance of our local music economy, but how could such policies be implemented?

The local music market is unregulated. Local government bye-laws and national legislation notwithstanding, there is nothing to stop anyone setting up a new live music venue. Even though a new venue would need to secure a license, there is no power to control the supply of live music. It just happens. To explore this issue further, a sample of research was examined. The goal of this was to see how much is actually known about the performance of a live music market.

The more we know about the way that markets for live music operate, in econometric terms, the more possible it might be to formulate policies that aim to serve the interests of our local economy. Leicester City Council has attempted to control other commercial markets; examples of this include the control of betting shops, pound shops and brothels; such controls have been met with variable success. Ours is essential a free market economy. Any entrepreneur is free to start any kind of business, within the confines of the national law. So what does the research tell us?

The findings

The report Understanding Small Music Venues (2015) provided a substantial set of insights into the workings of live music at local level. In the report’s Executive Summary, we read that:

It is clear from the evidence captured that the UK’s independent venues represent a diverse sector whose constituents play a vital role in the ecology of both the music industry and broader cultural sector; with positive impact on businesses, communities and economies – both local and national. The report reveals independent music venues to be operating under significant pressures, both financial and regulatory.

This confirmed that the report had recognised the problem, as we see it.

In reporting its findings the report stated that

Beyond the core programming of musical acts, almost all venues (98.17%) hosted other forms of entertainment. These included dance (22.94%), theatre (33.03%), comedy (56.88%), DJs (66.06%) and karaoke (6.42%). Others reported hosting community group activities (this is explored in detail in the analysis of interview data). 44.04% of venues provided rehearsal space in addition to performance space.

The survey results also offered insight into the facilities and resourcing of venues. Almost half (48.62%) of the venues represented in the survey did not have their own back-line, and 34.68% had no disabled access. These findings may hint at the possibility of lack of funding for development, although it must be acknowledged that there are many other possible factors behind such statistics.

This was interesting; a feature of the venues in Leicester is that few of them offer any other forms of artistic activities other than bands and singers. There are some notable exceptions to this, particularly during the Leicester Comedy Festival. Our venues tend to provide only one type of service – live music gigs.

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Competition

The role played by competition was, in our view, a key factor in the way the live music economy operates. In previous articles (Locke, 2010) it has been suggested that the market for live music tickets in Leicester is finite. All of the outlets for live music compete with each other for a share of this market. This suggests that the more outlets there are, the smaller the share available to each one. On a typical Friday or Saturday night, all the venues put on gigs. The available audience then has to decide which one to go to. That audience is of limited quantity. But does that mean that, if there were fewer venues, each one would have a larger attendance? Not necessarily. It is not about venues or gigs it is about line-ups. We have seen Saturday nights where most venues were less than full. Just as we have seen one venue that has attracted the largest proportion of gig-goers because they have put on the line-up that most people want.

We tend to think of rock music fans as an undifferentiated lump. Clearly, this is not the case because metal fans might not want to see a selection of soft acoustic artists and punk fans might not want to go to an evening featuring ambient electro acts. Music choice is driven by genre. This complicates the overall picture. In general terms, fans choose gigs by type of genre. If all the local venues simultaneously put on metal nights, they could still only attracted the segment of fans who like that kind of music. We believe that the nights that see the largest turn out of ticket-buyers are those where there is a wide variety of musical genres or a set of related acts within one type of genre.

The degree to which competition among venues exists is further complicated by the fact that not all venues open seven nights a week. The only nights on which we can be sure that nearly every venue will put on a gig are Fridays and Saturdays. Where is this analysis leading? Even if we could come up with incontrovertible proof that there are too many venues, what could we do with that? As argued above, live music is a free and unregulated market. No one would seriously propose a cull of venues. If there are too many venues, then that it how it is and there is nothing that can be done about it. Keynesian economists would argue that some of those businesses will eventually disappear because they cannot sell enough of their products to be sustainable. In fact, we have lost only a very few venues in the past decade. The venues that closed were Lock42 and Sub91, possibly also the Auditorium. The Charlotte was lost but that was more than a decade ago. Few new venues have opened within the past two years.

Those who have contributed to the debate about market competition have frequently argued that the issue is not whether there are too many venues, but that there are not enough fans to sustain them. If only more could be done to attract more people into gigs, then the problem would be solved; this sounds so obvious there could be no credible denial to it. Could there?

The size of the market for live music is limited by a range of social and economic factors. One factor that seems not to affect demand for tickets is the price of those tickets. Even during the height of the recession, music was the only UK market that continue to grow, whilst most of the others declined. Economists call this ‘inelastic demand.’ Previous articles have widened this out – it is not just the price of the gig ticket, it is more the total cost of a night out including expenditure on drink and travel. A typical gig-goer might spend a total of £20 to £50 (per person) going to a £5 gig at a local venue. This factors in such costs as travel to and from the venue, the price of drinks, any food consumed during the evening and any additional expenditure.

In Leicester there is a plentiful supply of free music events, ranging from festivals through to venues that offer unpriced admission to see bands. There is little in the way of hard evidence that the supply of free music opportunities, draws people away from ticketed events, though many would claim that this happens.

If people want a night out, what are their choices? In Leicester, music-lovers could

go to a gig in a small venue
go to a pub and watch covers bands
go to the DMH and see a musical if there is one
go to Curve and see a musical, if there is one
go to a night club and dance to DJs
go to an open-mic night

and several others, no doubt. The music-loving public is spoilt for choice.

As one venue owner once told me

Local bands used to be able to draw much bigger crowds ten or even 20 years ago then they do today. People would come from miles around to see bands playing in Leicester… they still do of course but not in anything like the numbers that used to be the case.

Several commentators have pointed to the inadequate provision of late-night public transport. Getting home from a gig by bus is often difficult; when many buses stop running before 10.30 pm.

The importance of the music economy

As the Music Venue Trust pointed out, live music contributes to the whole economy of a local area. Festivals, in particular, are known to be net contributors to the annual wealth of a city like Leicester. We have pointed out before that Leicester has a catchment of about two million people within the broader East Midlands Region. It could be argued that the main source of competition comes not from the venues within the region but from competitor venues in Nottingham and Birmingham. It is easy for the live music economy to be hidden; too little is known about what it provides to the city; not enough time is taken to collect data from venues; the overall impact of live music on the wider economy is largely unknown.

We could ask a typical question: how many jobs are there in Leicester’s live music sector? We tried to find out but one figures were available. Music is an industry that generates income for sound engineers, rehearsal rooms, recording studios, manufacturers of CD replication, printers, instrument retailers, bar staff, door supervisors and to some extent the bands and singers who actually perform in the venues. Unsigned (‘amateur’) bands and singers seldom get paid for their performances. Those that do are reluctant to share data about their earnings. In Leicester it would be a credible guess to say that there are 40 paid jobs in live music venues on a weekend night. It is a moot point whether bar staff should or should not be counted and that is before we attempt to estimate how many musicians get paid for their work.

In an econometric model we would want to look at the income generated per head of employees. In other words, on any one night, what proportion of ticket-takings end up in wage packets? Compared with the slices that go to pay the rates, electricity, waste disposal, water rates, license fees, cleaners and a raft of miscellaneous overheads that all venue owners have to pay.

Notice I did not include bar staff. It has been argued that the ‘wet side’ of live entertainment should not form part of the model. In permanent music venues, the bar takings do not necessarily form part of the general income of a venue. The bar accounts are frequently separate from the music side of the business. Those who work behind the bars are paid from the bar takings. Only if the bar tills make a surplus can cash be siphoned off by the venue’s general account.

Improving venues

Most venues get no funding aid. They are commercial businesses that survive only because they can make ends meet, like any other small business. What hampers the development of small venues is investment. Many of our local venues are exactly the same inside today as they were ten years ago. Whereas other destinations for a night out have changed, venues have not. Restaurants, pubs, theatres, cinemas and other attractions have all benefited from refurbishments and refits. Not music venues. This is often because these other attractions are part of business chains and larger commercial enterprises that can generate investment to upgrade local outlets. None of Leicester’s live music venues are corporately owned (except of course the O2 Academy which is owned by the biggest corporation in the business.) What small, privately owned venues cannot do is to raise investment capital for refurbishments.

Suggestions made in the Music Venue Trust report were many and some clearly cost nothing; as for example

Keeping ‘good customer service is at the core of everything’
Ensuring that promoters, engineers and staff are on time, available and knowledgeable
Assisting bands in loading in and out
Double-checking that sound systems and cables work and microphones are clean
Providing safe places to store equipment
and providing a comfortable backstage area of musicians.

In another section of the report we read

Anecdotal reports from musician delegates at ‘Venues Day’ depicted loveless relationships between bands and venues, in contrast to their experiences of performing outside the UK, where musicians were felt to be valued and respected. Our (the ‘authors’) recent experiences of gigging and touring chime with this perspective.

There is much that could be done to improve Leicester’s music economy. An attempt was made to bring together representatives of the industry into a forum where policy issues and practices could be discussed but this has failed. Many would say that music venues will not and do not co-operate to secure advantages and benefits for the industry as a whole. In Leicester, live music is characterised by competition rather than collaboration.

National news items have recently drawn attention to the fact that small music venues are closing down at an increasing rate. A recent article on the BBC’s Newsbeat page looked at Why the UK’s small music venues are under threat (BBC, 2015.) The article’s headline was ‘It is estimated 40% of music venues in London have closed over the past 10 years – reflecting a similar pattern in the rest of the UK.’ The article went on to say ‘Places like the Sheffield Boardwalk, the Princess Charlotte in Leicester and the Cockpit in Leeds have all shut their doors in recent years. Others like 100 Club on Oxford Street, the Tonbridge Wells Forum, Exeter’s Cavern and The Joiners in Southampton are said to be threatened.’

Ricky Bates of Southampton’s The Joiners, said “Fewer people coming to shows and the financial side of keeping a venue running is a real pain.” He added “They pay £4,000 a month in rent and rates, before paying a single band”. Ricky puts on around 320 shows a year and tickets are, on average, £7 on the door. He says “they can’t charge any more because it will put people off coming. The biggest threat we have is keeping our finances coming in and keeping the property developers off our back.”

As the article very cogently argues, small music venues are vitally important to the national £3.8 billion music economy. Many of the highest revenue-earning bands started their careers in small venues.

David Pollock, writing in The Guardian (Pollock, 2015) commented: ‘The Arches isn’t alone: the Roadhouse in Manchester, the Point and the Barfly in Cardiff, the Picture House in Edinburgh, the Astoria, the Buffalo Bar and Madame Jojo’s in London – all venues that have been lost; many the victims of tough licensing laws, unwelcoming neighbours, aggressive development and an increase in property values.’ The article also states:

The solution doesn’t necessarily require more money from taxpayers. Instead, Davyd (Mark Davyd of the Tunbridge Wells Forum) hopes for relaxed regulations, increased statutory protections and reduced business rates (in line with traditional arts venues). “We should stop calling them ‘toilet venues’ and recognise them as innovation hubs and incubation spaces,” Shapiro (Shain Shapiro of the Sound Diplomacy music consultancy) says. “If you have 25 bands coming through a venue in a month, what you’re actually doing is incubating 25 businesses. Then one of them has a hit song, and that’s an important piece of British IP that’s been beta-tested in these places.”

Jamie Doward (Guardian 2015) has drawn attention to the increasing problem of noise arising from residential developments being built close to live music venues. This has led to proposals that property developers should pay for soundproofing when building near to live music music venues (Bradbury, 2015).
What is clear is that small music venues are important and their role in the economy should be recognised both at local level and nationally.