Are music venues as valuable as houses – and can we prove it?

An economic powerhouse? The George Tavern in London's East End. Image: Dan Kitwood/Getty.

It is well documented that London has lost over a third of its grassroots music venues since 2007. One of the reasons given for this phenomenon is that, in our current economic climate and planning framework, venues are market failures.

What that means is that the value of a venue in London simply isn't comparable to that of the flats that could be built on its site. A venue worth £300,000 could be converted into 6 or 8 flats, each worth as much as the venue itself.

For a landowner in these circumstances, it is difficult to provide an economic argument to retain the venue (or art gallery, or rehearsal space, or comedy club, or...). And with our planning system prioritising housing over everything else, those flats are easy to develop, sell and profit from.


And yet, our councils, government and property developers all know that the cultural value of a grassroots music venue – or independent theatre, or cinema, or art gallery for that matter – can make an area desirable. One of the key reasons Hackney is one of London's fastest growing boroughs is its night time offer.

We can take this argument further. What if a venue was as valuable to the landowner as the aforementioned flats? What if, when a venue was supported, those businesses and residences around it would benefit economically? Land value would increase; more traders would open.

To argue this case, over a few cups of coffee a colleague of mine and I dissected his venue in Dalston.  Here’s our take.

Running the numbers

This venue sees 234 people go through its doors each day, each spending an average of £10 per head on entry fees, alcohol and food. It’s open seven days a week, and has a capacity of 250.

Let’s argue that, of these people, 60 per cent live locally. Half of those walked or cycled, while the other half took public transport to get to and from this venue, at a cost of £2.30 each way. The other 40 per cent commuted from other parts of the city. Of these, we estimate that 80 per cent took the tube and 20 per cent took taxis at a cost of £15 per ride.

Let's assume that one-third of these 234 people ate out, either before or after visiting this venue, each spending another £15 per head. On top of this, this venue contributes £64,000 each year in PAYE, alcohol duty, license costs and business rates to the exchequer. In addition, it pays £5,000 per month rent to the landowner, or £60,000 per year.

Using our iPhone calculators, we tallied up that his venue contributes £694,000 to the local economy each year, outside of its independent takings as a business. Include those, and the amount rises to £1.3m.

Furthermore, this venue employs 12 people at the London living wage. In total, this venue is worth, theoretically speaking, as much as £2m a year to the local and national economy.

And this is one venue. On Kingsland High Street in Dalston, there are half a dozen of these. Across Hackney, there are dozens.

Let’s compare this with the value of one flat in a local development in Dalston. A two-bed is retailing at £450,000, a price the developer will earn once. Council taxes and other fees on such a property, on average, add a further £2,500 to £4,000 to the local economy, not to mention another £4,000 to £6,000 in ancillary costs like utilities and other services.


The space this venue inhabits could accommodate perhaps four new properties, which would net a developer around £2m on the sales. That, though, is a one off return, not something that will be pumped into the economy year after year.

Our calculations are inevitably rough – but they merit further investigation. What they show is that the term "value" has different definitions, depending on the party doing the valuing. To a developer, building and then exiting a project is of more value that renting out equal space to a leaser to open a venue, regardless of art form.

But what if this venue, or all six on the High Street, closed? We would lose secondary and tertiary value: the service providers supporting the venue, its rate and PAYE bill, the value of the music (or art, or theatre) being incubated and of course, the space’s cultural value. What's more, the saleability of the flats would be impacted, because there would be fewer things to do in Dalston.

And with business rates returning to councils now, it is in local authorities’ best interests to understand and capitalise on the economies businesses create, both inside and outside their doors.

So when we look at that value of our grassroots music venues, our nightclubs – our music incubators, as they should be referred to – let’s value them both culturally and economically. If we measure their value properly, they are worth their weight in pounds and pence.

Dr Shain Shapiro is the managing director of Sound Diplomacy, a consultancy specialising in music cities and market development. 

 
 
 
 

How spurious imperial science affected the layout of African cities

Freetown, Sierra Leone. Image: David Hond/Freetown From The Air/Wikimedia Commons.

As the European powers spread across the world, systematically colonising it as they went, one of the deadliest enemies they faced was disease. In 1850s India, one in twenty British soldiers were dying from such diseases – on a par with British Empire casualty rates during World War II.

When Europeans started dropping dead the minute they got off the boat, the scientists of the day rushed to provide their own, at times fairly dodgy, solutions. This era coincided with a key period of city planning in the African colonies – meaning that there is still visible evidence of this shoddy science in the cityscape of many modern African cities.
For a long time altitude was considered a protection against disease, on the grounds that it was far from the lowland heat associated with putrefaction. British officials in India retreated to the ‘hill stations’ during the warm season; this practice continued in the African colonies established by all sorts of European powers in the late 19th century.

So it was that one bunch of imperialists established the capital of German Kamerun at Buea, high on the side of Mount Cameroon. The city still has a population of 90,000 today. Evidence of this height fetish can still be found in the ‘Plateau’ districts of Brazzaville, Dakar and Abidjan as well as the ‘Ridge’ district of Accra.


Malaria, particularly, was an ever present fear in the colonies, and it did much to shape the colonial cities. It’s a sign of the extent to which 19th century medical science misunderstood how the disease was spread that its name comes from the French for ‘bad air’. By the late 19th century, knowledge had managed to progress far enough to identify mosquitoes as the culprits – but views still wildly diverged about the appropriate response.

One solution popular in many empires was segregation. The Europeans had incorrectly identified Africans as the main carriers of the disease; African children under five were believed to be the main source of malaria so they were to be kept far away from the colonists at all times.

And so, many powers decided that the European settlers should be housed in their own separate areas. (Of course, this wrong headed but at least rational response wasn’t the whole explanation: often, sanitary concerns were used to veil simple racial chauvinism.)

The affluent Hill Station – a name reminiscent of the Indian colonies – in Freetown, Sierra Leone was built as a segregated suburb so Europeans could keep well clear of the local children. Today, it’s where the home of the president can be found. Yet despite all this expensive shuffling of Freetown’s urban landscape, inhabitants of Hill Station came down with malaria at about the same as those who lived elsewhere.

 

The Uganda Golf Course, Kampala. Image: Google Maps.

In Kampala, Uganga, a golf course now occupies the land designated by the British powers to protect the European neighbourhood from the African. A similar appropriation can be seen in Kinshasa, Democratic Republic of The Congo, where a zoo, botanical garden and another golf course can be found the land earmarked for protecting colonial officials and their families.

All this urban juggling was the privilege of immensely powerful colonial officials, backed up by the military might of the imperial powers. The indigenous peoples could do little but watch as their cities were bulldozed and rebuilt based on the whims of the day. Yet the scars are still visible in the fabric of many modern African cities today.