How Brexit Affects the US and Music Business
Brexit is the most important political movement of 2016. While America had been fully preoccupied with the presidential race, now narrowed down to Donald Trump and Hillary Clinton, Britain was feverously debating whether or not to exit the European Union. On June 23, by a thin margin of just a few percentage points, Britain’s campaign to leave (coined ‘Brexit’) won, a decision surprising a majority of the country. This means a great deal of change for the country – with many possibilities for failure. Although the actual change won’t occur until 2018 due to a two-year notice rule set up by the EU, the UK’s economic disruption will send shockwaves around the world. But what does that mean for the US, and more specifically, the music business industry?
The European Union is far different than our US government. It is essentially a single market, allowing free trade of many goods between its countries. Britain’s exit from the EU is both good and bad for the US. Britain’s currency will initially decrease in value as stocks plunge from citizens’ fears of economic crisis. With the pound lowering in value, it will be cheaper for foreign countries to purchase goods from Britain as prices drop. However, as Britain’s economy struggles, they will invest less in foreign markets and foreign spending will decrease. Now let’s narrow it down to the music industry. The UK is one the largest consumers and producers of music in the world (hello Adele). With their weakened pound, citizens will spend less on goods that aren’t necessities. While spending on food might stay the same, music will surely be an area of frugality. This means artists, especially those in the UK, will not only have to struggle with increased expenses in producing music, but also with their primary consumers purchasing less of their music.
In the US, the music industry will suffer in a variety of smaller areas. Less UK citizens purchasing music from American artists might not be as significant as the blow to British artists, but limits international growth for their own exposure. Music has been fighting a long battle over royalties, with Spotify and other streaming services sweeping the music-consuming market, leaving artists scrambling for ways to make a solid income. Touring is now one of the most important methods of money-making for artists, but international touring through the UK could seriously dent their profits if ticket purchasing decreases, which it most likely will. With the UK being one of the largest players in the music industry, it is unavoidable that their weakened economy will, in turn, weaken the music industry.
However, not all hope is lost. The UK has two years to wait before they can officially leave the EU. As long as Britain does not exit before the two-year period is completed, there can still be trade agreements and governmental agreements, making the separation not as impactful. If Britain manages to raise the value of the pound through new governmental strategies, this will increase consumer spending on music. The music industry always manages to recover from change, whether it be vinyl to CD, CD to mp3, or mp3 to streaming. Although Brexit’s initial impact will negatively affect American artists and the music industry, there is plenty of room for industry growth once the dust settles.