Music venues struggle to stay afloat after drastic sales tax hike
Story by Morgan Lawrence
MADRID–On a Thursday night, Madrid rock club Wurlitzer Ballroom boasts a three-band bill, all local rock acts. It’s a small place, nondescript to the point of not having, technically, even a sign out front; just off one of the busiest downtown streets, there’s a steady stream of foot traffic, but passersby don’t give the place a second look.
Its most prominent feature is a bar, bathed in red light and coated with stickers of bands and record labels, that runs the entire length on one side. Tucked in the back is a stage and performance area, a playlist blaring as doors open for the night.
Ricardo Delgado, 37, has been the manager there for nine years. He’s clad in the rock-club casual of shorts and a t-shirt, the sleeve of which half-covers a tattoo on his right arm. His head is shaved, but he boasts a full beard.
As the musicians begin to arrive, he stops in the middle of the room and checks his watch – it’s nearly time for the first band to go on. Hands on his hips, he surveys the nearly empty space that could hold 150. “I said 40 people,” he says, suddenly preoccupied. “If 20 people come tonight …”
After all, at the end of the evening, Delgado will have to figure out how to pay every one of these people and reconcile the venue’s budget – a task that, over the last few years, has become increasingly difficult as Madrid’s live music industry has become harder to navigate and less financially viable.
In the midst of its economic crisis, in September 2012, the Spanish government increased its sales tax (IVA) on entertainment tickets from 8 percent to 21 percent, a move ostensibly intended as a fund-raising austerity measure.
“They’re on us in every respect,” says Delgado. “Instead of bringing music to the people, you have these taxes, these laws … They don’t want you to do it.”
Representatives from Spain’s Ministry of Culture, which is responsible for proposing the tax, did not respond to two written requests for comment.
The city’s music industry has had to adapt to a variety of challenges over the last several years, each seemingly compounding the other. There are regulations, also launched in 2012, against noise pollution, creating Special Acoustically Protected Zones (ZPAE); when the city government deems one area of Madrid a Zone, no new venues, nightclubs or other establishments playing music may be launched there, and current businesses within it will fall under earlier curfews.
There are laws around alcohol consumption – a major revenue stream for bar-slash-venues – that prohibit under-18s from even stepping foot in a venue if drinks will be sold; all-age shows rarely if ever take place. There are royalty fees for any music played in a venue, live or otherwise, payable to the national Society General of Authors and Editors (SGAE). Due to what many promoters claim are unclear licensing policies, governmental intervention at clubs and venues is common, the penalty being either monetary fees or outright closure.
This tax hike, therefore, is seen by many in the field as yet another obstacle, and perhaps the most formidable yet. For bookers and promoters, this has foremost meant the belt-tightening reality being more selective. On a local scale, the tide has turned toward those most likely to sell out a room and make some return on investment rather than taking a risk to give new artists an audience.
“Before it was more, ‘We like this band, we try to make it work,’” says Edu Giradiscos, a promoter and booker for independent Madrid venue Siroco. “Now we have to be more careful. We have to say ‘no’ to a lot of people. We can’t pay the fees.”
Giradiscos notes that Sircoco was at one time open for live music most of the week; in recent years, however, it has stopped putting on shows Sunday and Monday – the crowds just weren’t coming. “If you don’t have a full venue, it’s not a good reason to open,” he says.
This is a frustration on the part of the artists as well, particularly those trying to gain the foothold of an audience within the city.
“They want more of a cookie-cutter sort of thing, they don’t want to take a chance on anything innovative,” says Phillip Stark, lead singer for local rock band Knights of the Long Grass.
Angel Hernandez Tuset, lead singer for Madrid punk band Las Infantas, is critical of the emphasis on money on the local level: “It’s not helping to build a scene or a culture.”
On a larger scale, however, the concern for many is the inability to stand toe-to-toe with other countries, particularly within the EU. Dani Gutierrez, a promoter with international company Doctor Music and representative for The Association of Music Promoters (APM), notes that Spain’s cultural IVA is the highest in the Euro zone: Portugal’s, for example, is 13 percent, Italy and Finland’s 10 percent. When trying to attract stadium-filling international acts such as Beyoncé or U2, this can mean all of the difference.
“It puts us in a position of being way, way less competitive,” says Estanis Figueroa, founder of international booker Hinode Entertainment, which brings foreign tours to Spain. When promoters are able to offer less money, he says, these artists would be less inclined to play as many shows – or at all.
“That’s three shows that we’re not hiring [about] 125 people per show,” he says. “Beyoncé not coming to Spain means literally 400 people not having a job.” Realistically, he says, it is unlikely the current system could sustain itself for even another two years, the number of international acts more likely to fall off steeply or entirely.
With the economic downturn, this has left many promoters and venues across the board with an uncomfortable dilemma: continue to personally take the hit, or try to pass some of the expense on to the consumer and raise ticket prices. “If you have tickets for 10 euro … it’s really hard to make it work,” says Giradiscos. “We want to do it like that, but they make it impossible. “
This is not a decision made easily. Already since the tax was implemented, the APM estimates an 18 percent drop in turnout for live music, resulting in a 30 percent loss of profit for those across the industry.
“The IVA affects the public directly, therefore it affects us as well,” says Gutierrez.
Ultimately, it’s not so much an issue of what consumers are experiencing as what they’re not.
Last month, the APM launched a large-scale demonstration against the measures, urging a repeal as local elections approached. The organization, which represents more than 40 industry professionals, critics and music-minded entrepreneurs, started a campaign on Change.org, urging musicians and companies to participate in Un Dia Sin Musica, which translates to “A Day Without Music,” on May 20.
The objective: silence everything from live performance to live streaming, bars to dance halls, as a form of protest. Gutierrez reports that 95 percent of concerts scheduled in Madrid on that day were canceled, and 98 percent of venues were closed.
In an accompanying open letter to the Ministry of Culture, the APM made specific note of the Spanish Constitution, which states, “The public authorities shall promote and watch over access to culture, to which all are entitled.”
Nearly three years since the tax was passed, the industry’s biggest challenge is not only remaining salient, but balancing financial interests with the ultimate desire to keep art, entertainment and culture accessible to the general public.
“The art is on the stage,” says Stark, “but the door is a business.”