Published
Fri, Feb 24, 2023, 09:00
- The founders of three labels–Optimo Music, Balkan Vinyl and 12th Isle–explained why trading with the EU has become a minefield.
Brexit has been derided for damaging trade links between the UK and the European Union. What impact has this had on record labels?
In the run-up to the Brexit referendum in 2016, one of the primary arguments for leaving the EU centred around the vague notion of breaking free from "Brussels bureaucracy." EU regulation, according to then-Secretary of State Michael Gove, was strangling UK business to the tune of £350 million a week (a strongly contested figure,) and only Brexit could unravel the web of red tape.
Seven years later, many UK businesses are finding the replacement framework far more debilitating. Take the situation faced by record labels, summed up in a recent tweet from Posthuman's Josh Doherty.
Speaking to Resident Advisor, Doherty–who runs the Balkan Vinyl and I Love Acid labels–described a Kafka-esque scenario that has resulted in his European sales dropping by more than half.
"When you used to ship to Europe, there was a flat price for the EU and you just sent the records away with an address on," he said. "The issues started when we left the Customs Union. Because we haven't sorted any kind of proper deals in terms of customs and tax collection, when you send something to Europe, the person receiving it gets charged money. The charge is supposed to be collected and documented by local post offices and then sent back to the UK for the seller to pay the VAT. It's really fucking convoluted."
In 2021, a new VAT system known as the Import One-Stop-Shop (IOSS) was implemented in an attempt to simplify things. The idea is that the seller pays the tax in advance. But, Doherty said, this has come with its own set of problems.
"Half the time, the postal services in Europe don't know what to do with them," he said, referring to items sent with IOSS documentation attached. "I think a lot of them just don't want the hassle of filling out more paperwork, so they just ditch it and send it back. Why would you bother with all this extra admin just because some other country has decided to leave the EU?"
The result of this, according to Doherty, is European customers no longer willing to purchase records from UK outlets. "It's so expensive, you might get charged extra, it might not turn up because the post office doesn't want to do the extra paperwork–people just don't want to buy from UK labels anymore," he said.
Balkan Vinyl and I Love Acid aren't the only labels experiencing these issues. "That tweet about one refund killing the profit of ten sales sounds spot on," Fergus Clark, cofounder of Glasgow-based label 12th Isle, told RA. "Reading that illuminated the situation in an even more fucked way."
In the early years of 12th Isle, which launched in 2016, Clark said that marking an item as a "low-value gift" on the customs form was a way of bypassing potential charges. However, these days, "it seems like a shot in the dark in terms of what will get flagged for import duties at the customer's end."
Optimo's JD Twitch described the situation as "a perfect storm." He added: "the cost of manufacturing vinyl has escalated wildly over the last two years. Partly due to inflation but also because of a sharp rise in demand. That, combined with the Brexit issues, I think will make a lot of labels pivot away from vinyl. It's becoming more of an elitist pursuit."
JD Twitch is in the unique position of having experienced these problems from both sides. His main label, Optimo Music, is distributed by the Cologne-based Kompakt, while he also runs a compilation label, Cease & Desist, from his home in Glasgow.
"This has been a reverse issue for us," he said. "For example, [Optimo Music] released a record from Glasgow band Pleasure Pool on December 6th. On that date, you could buy their album in the EU, but copies didn't make it to the UK until the start of February. I've been fortunate that other releases haven't had these problems, but with this one UK customs just sent it back–we still don't really know why."
He continued: "With Cease & Desist, the first release came out before the full impact of Brexit hit, and around 50 percent of its sales were in the EU. The second release, which came out last year, had zero sales in the EU. The cost for shops in the EU to stock it was prohibitive–they would've had to sell it for about €45. I had so many people from EU countries getting in touch desperately trying to get this compilation but they weren't able to because it was just too expensive."
All three label owners agreed that cassette tapes have made for a satisfactory stopgap. "We'll continue to put stuff out on vinyl," said Clark. "But tape releases are a good way of getting things that feel really fresh to us out there fast."
Doherty insisted that cassettes fulfil the need for a physical item. "If you're the kind of person that still buys and actually pays for music, you want something physical," he said. "It's why people buy books rather than just audio books. There's a desire to add to a collection–plus they're cheaper to manufacture and post."
Despite all of its flaws, an enduring demand for vinyl is what drives these labels on through this undeniably tumultuous period. "At the end of the day, people want records," Doherty added. "But I do think that vinyl needs to be viewed a bit differently now, maybe more along the lines of merchandise."