Cancelled Events, Delayed Releases and Governmental Support – Quick Report on the Economical Status of the Indie Labels
Governmental support, striving after VAT reduction and the estimated deficit of the past five month were the focuse of the new HAIL Survey, that shows how the independent label scene had been affected by the economical crisis of Coronavirus.
In March this year the goal of the fist HAIL Surey was to get a clearer picture and measure up the situatiuon of the Hungarian labels, caused by the COVID-19 pandemic. In this unrepresentative survey HAIL wanted to know what changed in the past five month, what happened after the complete lockdown.
This new survey revealed that except one or two labels, most of them are maximum 5 capita, and almost half of them are KATA kind of self-employed (KATA is a typical self employment tax paying system), therefore it was important to extend the three-month KATA-exemption for them too. Most of them got that, but quarter of them didn’t get any kind of governmental relief or support. An always returning discussion came up again about the pre-payed royalties for Artisjus after the released physical albums. Again 63% of the respondents said it is a severe financial burden for them.
Reduction of cultural VAT, especially on live music event tickets and physical releases were the hottest topic of the past few weeks, even if this subject is lingering on all professional forums for years now. Music Hungary Association ordered an impact assessment on reducing live music event tickets’ VAT, and even if physical releases will be left out of this round, it would still affect the majority of the indie labels as they also do booking and management (82% of this survey’s respondents have live music profiles too). In the meantime 62% said their income after physical releases is still significant, in average around the quarter of their total income. Therefore it would be important to reduce VAT on this segment too. On average the labels had 10-50 cancelled live events (concerts and DJ sets too), but there were a good few who would’ve had more than 50. Two third of them even had to delay or cancel new releases too, at least 1-2, but most of them said even larger numbers.
The above clearly suggest that the labels count on a high drop-out of their income this year compared with 2019. In the March to August period 19% cunted 200.000-500.000 HUF deficit, 25% had 500.000-800.000 HUF, 44% counted more than 1.000.000 HUF loss. We asked them to predict their deficit for the whole year if Autumn brings another lockdown, 50% of them think it’ll be more than 2.000.000 HUF loss.
Almost 70% of the labels didn’t have to terminate employment or break long term contracts in the past five month, however, the majority of them are self-employed anyway and quarter of the respondents are not working full-time on their business, 75% have no other part time job. 61% were living on their reserves and didn’t need to take-on another job, but 31% had to get at least a part time job to make some living. We asked the same question again, if they can continue with their business, in march 57% said that even if they have no reserves most likely they can continue, while now 25% feels the future unstable, also 25% said they still have enough savings to continue, and 44% said they are running out of savings but they can carry on. Fortunately non said they had to close down their label.