Over a week ago, I wrote about the fallout from a collapsed music festival industry in Australia. This time around, it's about the ensuing collapse of the small music venues in Australia. Particularly, Melbourne.

The live music industry is in quite a crisis, but as of this writing, it seems things are moving in a positive direction. 

Popular Venues Caving In

Many venues are caving in and closing due to the high costs of insurance premiums levied for liability coverage by insurance companies.  A burden guaranteed to wipe out most small venues.

So in its wake, club venues are dying like The Bendigo Hotel Collinwood, 14 years in service and an obscene increase in Public Liability insurance gave it the five-finger death punch sending its premiums through the roof, from $35,000 to over $100,000 a year!

Then there is The Old Bar Fitzroy, where their premiums got jacked to going from $9,000 to $50,000 and were told the venue was ‘high risk’, where "dancing" is considered a liability by the insurers. What's next? No head banging while seated?

Another venue is The Night Cat, a stone's throw from The Old Bar on Johnston Street.

Impact of The Global Economic Fallout

Global insurers around the world have their underwriting schemes when it comes to public liability insurance for live performance venues. These kinds of insurance policies are held by only a fist-full of companies globally, and the premiums are affected by the fickle fiscal trends rippling around the world.

Because of the global economic downward trends, given the recent pandemic and its nasty aftermath, insurance companies were left with less money to feed their coffers. This led to a situation where they were strained and left monetarily vulnerable to more risks. Given this insurance companies are more averse to those risks.

A report published by the Australian Prudential Regulation Authority (APRA) claimed that the payout costs due to injuries have gone through the roof exponentially. Add to this, that the insurance companies don’t share their data on how many claims they settle for each year. Anecdotally speaking, they say “There aren’t that many”.

When taking all of this in, the costs of running the many shows and acts are quite high, and with the various common overheads of running a business like a club or venue, these costs have gone up some 20% - 30% leaving many venues barely breaking even. Adding insult to injury the insurance premiums have been jacked up to 50% - 800%!

One of the reasons premiums have skyrocketed is how claims are handled. Case in point, one story is of an inebriated patron, doing ‘stupid drunken antics’ that caused horrible personal injury to self. In the aftermath of said ‘stupid drunken antics’, the patron declined help only to return days later with a lawyer filing a claim against the venue. The insurance company defends the venue, pays out the claim, and in turn, ‘shafts’ the venue with a crazy higher premium, i.e. from an $8,000 annual to a $98,000 annual premium! No courtesy of Vaseline applied for this one.

Reforms Please

It seems that in New Zealand, they have it right. They had reforms to put ‘caps’ on claims. This protected businesses from outrageous costs and penalties stemming from claims for compensation for injured parties seeking larger payouts. Over time, these reforms will bring down insurance premiums for businesses.

A Little Help from My Friends

Things are looking up for the little guys. Australia would like to follow the UK as they have lobbied their government to place a £1 levy on big arena ticket sales that will be used to subsidize the smaller venues. And in another move to help stymie the crisis, the NSW, state government cut liquor license fees by 80%. Venues in other states are seeking similar moves to be made by their state and federal representatives.

In Conclusion

The skyrocketing insurance premiums and the global economic fallout have presented significant challenges to the live music industry in Australia, particularly in Melbourne. With increasing financial burdens looming over these small venues, many have been forced to close their doors. Nevertheless, hope is rising on the horizon. New Zealand's example of setting caps on claims has created a possible blueprint for other countries, and Australia to follow suit. Also, with initiatives like the proposed levy on big arena ticket sales and reduced liquor license fees, things are moving in a better direction. The live music scene in Australia can be revitalized and preserved through a continued base of support and strategic reforms, which over time, will help ensure a vibrant culture for many generations to come.

J.Á.H. is set to release a brand-new single soon!

While specific details about the song’s title and theme are still under wraps, it’s expected to showcase his signature style and unique sound which promises to be a fresh addition to his already impressive discography.

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