The independent music industry in Covid-19 times

Spanish version

The consequences of the global recession caused by Covid-19 are devastating for the music industry but can also lead to positive and transformative effects.

Music is one of the sectors that has first been affected by the Covid-19 crisis, and it will also be one of the last to emerge from it. The closure of record stores, the cancellation of concerts, tours and festivals, and the impact of lockdown measures on public performance rights have blocked the main revenue channels of musicians and artists, independent music companies, and all the professionals and technicians who work with them.

The pandemic is showing contradictions, such as the fact that society has been able to benefit from the contents produced altruistically by many artists during confinement, helping the well-being and mental health of citizens, whilst many of their jobs were put at risk.

Music has tremendous social, economic and political value, and is a sector that, like research and science, contributes much more to countries than it receives in public budgets. Governments have an inalienable duty to promote and develop culture so that citizens can fully enjoy their cultural rights, such as the right to learn, create, and listen to music. Therefore, their political and financial response to the Covid-19 crisis is very important.

WIN and IMPALA, the organisations that bring together independent music trade associations in the world and Europe, respectively, have been mapping since the beginning of the crisis the main measures adopted to mitigate its negative effects.

Some examples of measures promoted by public administrations are tax incentives, flexibility in tax payments, social protection measures for workers, support for companies to carry out temporary layoffs with the state covering payrolls, soft loans, and subsidies or direct economic aid.

Too many governments have focused on promoting liquidity through loans on very favourable terms – even without interest – or through loan guarantees. But these tools are hardly used by independent labels, much less in a situation of total uncertainty about the real impact of the crisis on their future income, and with most of their billing channels diminished by the lockdown measures. The measures to defer payment of taxes or social contributions of workers and employers have been somewhat more useful to the sector, alleviating the burden of expenses in the short term.

In some countries, non-reimbursable aid has been approved for workers, with uneven amounts and effects (from US $1,500 per month in Canada to US $145 in Argentina). In Germany, the government has supported SMEs and cultural organizations with a one-time payment of 15,000 € (9,000 € for self-employed professionals). However, in many other cases the relief funds have been insufficient or have not been applied correctly. All independent music trade associations continue to lobby their governments to improve the stimulus packages already approved and those that will be needed for the economic reconstruction of the sector and the country.

Despite our members’ calls for governments to approve specific plans for culture in general, and for music in particular, the response has been uneven. While in Latin America there are hardly any examples of concrete aid for the sector, in France the National Music Center has obtained a grant of 1 million euros from the Ministry of Culture to support record stores, distributors and phonographic producers, with amounts of 1,500 €, 35,000 € and 10,000 € respectively, and complementary to the ordinary support mechanisms implemented by the State.

Beyond making application, execution and justification deadlines for projects funded by public subsidies more flexible, there has not been much support for the music organizations themselves. We can highlight the Emergency Support Fund for Cultural, Heritage and Sport Organizations, a Canadian government’s initiative to guarantee the viability of associations during the crisis. Organisations may request up to 25% of the grants they have been receiving from the general arts and culture programs, with a minimum of CA $5,000.

WIN and IMPALA have also been monitoring the initiatives carried out by private entities such as digital service providers, collecting societies, and other groups and associations.

Streaming platforms and other digital service providers (DSPs) have launched a series of initiatives to support the creative community. Relief funds in collaboration with local organisations and advances of royalty payments to creators have emerged as a direct way of providing financial support to the music industry. Among the initiatives with a more direct and positive impact for the independents, it is worth highlighting Bandcamp’s campaign to give up its profit margin in favour of labels and artists once a month, and Apple advances to independent labels that meet a series of criteria. Tools aimed at helping artists with monetization have also been released or powered up.

As for the physical sector, #LoveRecordStores, Love Record Stores Day and #HoyMeComproUnDisco are examples of campaigns promoted by associations and private companies. Artists, fans and many others have posted messages of support on social media to encourage buying records from music stores during the crisis, and to highlight their vital role in the community.

Various associations have called on the media to promote local artists and music produced by local independent labels on their stations. This is the case of Argentina, where more than 60 organizations from all over the country joined the proposal. Thanks to this, Unísono has been launched, an independent music program produced by the National Institute of Music with weekly broadcasts on public television.

Some collecting societies have set up emergency funds to grant non-reimbursable aid to their most disadvantaged members. Other forms of support include advancing the payment of the distributions scheduled for the coming months to provide immediate liquidity to members, advances on future payments and interest-free loans. While these measures that can alleviate the immediate need for cash, it should be noted that prepayments and repayable loans can reduce future liquidity capacity, if the crisis continues over time.

WIN member associations themselves have gone the extra mile to try to mitigate the effects of this crisis and provide resources to their members and partners in the music industry. Many have created their own dedicated Covid-19 sites where they compile the measures adopted by governments and private entities, give health and safety advice, and provide any other useful information for companies and professionals in the sector. Newsletters, social media, and webinars have also served as useful tools for sharing information during the crisis. Some associations have even launched their own relief funds. This is the case in the United Kingdom, where AIM has devised and manages its own fund for freelancers and contractors in the music sector.

If there is a positive angle to this crisis, it is that it has demonstrated the value of working together and partnering to have a common voice and a direct dialogue with governments and other entities to demand adequate aid and measures for the sector. Lobbying work has multiplied, and existing independent label associations have joined in platforms or federations with the rest of the music industry subsectors to work together, in some cases for the first time since their establishment. In countries where there are still no formalized trade associations, companies have initiated contacts to work together and set common goals. WIN is supporting these initiatives, with special emphasis on the Latin American region through the WIN LatAm Network working group.

Although governments in many countries are already beginning to encourage a return to the new normal, entertainment venues, concert halls, bars, clubs, and especially festivals, will not open until there are sufficient guarantees. And even so, it will take months to regain the public’s trust and go back to previous audience numbers, no matter how many security measures are put in place.

The only regular flow of income that artists and their record labels could theoretically have at the moment, which is the remuneration for the use of their songs on online content platforms, has suffered from a structural precariousness since its inception. The main pitfall is the digital value gap, whereby a large part of the income generated by making music content available to the public remains in the hands of the large technology companies that control streaming platforms such as YouTube or Facebook. The consequence is that neither the artists perceive enough revenue for their ‘plays’, nor their labels to be able to invest in new releases and artistic careers, especially from emerging talents.

Although some steps have been taken to tackle this problem, such as the approval last year of the European copyright directive, we are still far from seeing its end. This directive has not yet been transposed into national legislation, only in France, even though it could contribute to increasing the income of the entire value chain of recorded music at these critical moments. In other territories, the laws do not protect creators or the use of their works on the Internet, or even protect tech companies with mechanisms of safe harbour.

As an organisation that represents thousands of independent music companies and professionals around the world, our main goal is to continue fighting so that neither culture nor its actors are left behind and that, in this increasingly globalized world, local artists and creators, the diversity of music production, and the indispensable role of independent music SMEs are now valued more than ever. We must continue working on the challenges facing our sector, strengthening its financing and revenue mechanisms, demanding cultural and business development policies, and promoting the formalization and training of cultural professionals. And thus, lay the foundations for a lasting recovery, beyond the current crisis.

June 9, 2020

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