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IMPALA propose new ways of financing the music industry
By CMU Editorial | Published on Wednesday 27 January 2010
Pan-European indie label trade body IMPALA has issued a slightly optimistic set of proposals for an overhaul of the way the record industry works financially, and in particular how the wider music community and society at large could and should invest in new talent, and those who discover and nurture new artists.
The new “financial blueprint for music” would involve quite a lot of give on the part of the major record companies, as well as some give on the part of government and tax payers. The indie label community would, obviously, be the beneficiaries of some of that give.
The plan has ten points to it, as follows:
1. A 5% compensation fee to be paid to smaller labels on all future revenues of artists developed at said labels and then signed by a major.
2. A revenue sharing system where a percentage of revenues is re-allocated within the sector on a solidarity basis to fund new music and help small-to-medium-enterprises (SMEs) compete.
3. New international accounting standards to ensure proper valuation of copyright as an intangible asset.
4. 1.5bn euros of European Commission investment for culture per annum, with a new cultural industry EC programme especially for SMEs.
5. The formation of a ‘virtual creative industries bank’ by remoulding European Investment Bank and European Investment Fund instruments, in particular to provide support through the ‘digital shift’.
6. A Europe-wide zero VAT rate for culture online to match the USA, and allow governments to boost access to culture by reducing VAT rates for culture offline.
7. At least one public/private option for cultural SMEs to get their loans guaranteed in each country.
8. National SME-friendly growth finance to be delivered by opening up Research & Development and other tax schemes to music and cultural industries, and adopting specific fiscal incentives such as music tax credits.
9. A pan-European ‘experts working group’ to bridge the gap between investors and cultural SMEs in terms of communication and expertise.
10. EC intervention to resolve ‘double taxation’ and withholding tax problems.
Make of all that what you will. Point one is basically proposing the adoption by the music industry of the sort of talent transfer system that works in the football sector, through which the big clubs support the little clubs if and when they find the next big thing in terms of players.
Commenting on the proposals, IMPALA Exec Chair Helen Smith told CMU: “This is a call for action, not only to European and national decision makers but also to the music sector itself. Football and other sports compensate small clubs for two reasons. First, to help them compete because of the huge gap with the big clubs. Second, to reward them for their investment in discovering and developing talent. It’s a perfect model for music”.
