Music tariff could cost UK bars and pubs more than £49m

The UK’s hospitality sector could face a collective bill of more than £49 million (US$64.6m) following the introduction of a new recorded music tariff, which the trade has warned could put pubs, bars and nightclubs out of business.

A new tariff on music events at UK venues could put bars and pubs out of business

UK-based music licensing company Phonographic Performance Limited (PPL) published details on its new Specially Featured Entertainment (SFE) tariff yesterday (19 March).

The new tariff, which will come into effect on 1 July 2019, relates to the playing of recorded music in public at events such as discos and DJ nights and applies to nightclubs, pubs, bars, cafes, restaurants and hotels.

The introduction of the tariffs comes following a period of consultation between July and October 2018.

Supported by economic analysis, the PPL believes that the current fees “are too low to be to be an appropriate reflection of the value to businesses of using recorded music at SFE events”.

The new SFE tariff will also be made clearer and fairer, the PPL said.

Changes to the tariff fee include increases in direct proportion to the size of the audience (measured in bands of 25 persons) to ensure “SFE events with different audiences are treated fairly and consistently”.

Two new smaller tariff bands will also be introduced for SFE events with attendances of 1-25 and 26-50 individuals to guarantee that licensees with small events will initially pay less for such events than they are paying under the current SFE tariff.

It will also include the phased introduction of increased fees over a five-year period from July 2019, based on an initial rate of 4p per person per hour (up slightly from the current average of 3.9p per person per hour). This will move to fees based on a rate of 9p per person per hour by 2023 (subject to annual indexation), which will provide licensees with time to adapt to the increases.

PPL chief executive officer Peter Leathem said: “Recorded music forms a very significant part of SFE events and we believe that the new SFE tariff delivers a fairer return for our members who create that music. We look forward to working with our licensees and their representatives to ensure as smooth a transition as possible to the new SFE tariff.”

‘Potentially devastating’ 

However, hospitality trade association UK Hospitality has warned that the tariff “could be the final straw for the UK’s hard-pressed music venues”.

UK Hospitality chief executive Kate Nicholls said: “The decision to introduce a new tax for music venues could be potentially devastating. This new tax will see venues hit with an average 130% increase which we estimate will cost the hospitality sector upwards of £49 million.

“Hospitality businesses are already being bombarded with constantly-increasing costs and only today a government report highlighted the pressures being faced by music venues. The report stated that increasing costs were a major factor in the closure of venues. This additional massive cost is not going to help; it is only going to force more and more venues out of business.

“It is not just nightclubs and large venues that will be hit, either. Village pubs that host weekly discos will be strangled by the charge and there is every chance that such events, upon which many pubs might rely, will be forced out altogether.

“UKHospitality has been in discussions with PPL and repeatedly highlighted the problems this new tariff would lead to. We had some success in avoiding proposed structural changes but it is disappointing to see them ignore our warnings and push ahead with a hike. Unless PPL rethinks this charge then they are only going to put the businesses they want to charge out of business.”

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