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The Ark pulls tax trick with music magazine

Paul O'Mahony · 19 Apr 2010, 18:12

Published: 19 Apr 2010 18:12 GMT+02:00

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The innovative scheme was cooked up the band's manager, Jon Gray, who identified several clear advantages to enclosing the new release in a magazine featuring articles about the band and lyrics to songs on the new album, 'In Full Regalia'.

First off, distribution channels for magazines offer a far wider network than that offered by Sweden's dwindling selection of record stores.

"There are around 80 specialised record outlets and a lot of towns don't have a record store any more. Instead, we'll now have 600 sales outlets, so on Monday April 26th hardly anyone will be more than 500 metres from an Ark CD," Gray told the Svenska Dagbladet daily.

The Ark's flamboyant frontman Ola Salo admitted to some initial scepticism. But eventually he was won over by the managerial masterplan, which involved circumventing a 25 percent sales tax on music. Books and magazines instead qualify for a 6 percent rate.

"Thanks to adverts and the fact that we're only paying the VAT rate for magazines, we're able to set the price of the CD and magazine combined at just 99 kronor ($14). More content at a lower price. In fact, it's half the price of a normal CD," Salo told tabloid Expressen.

The sale of ads in the magazine also meant that the band was able to record its new album without the backing of a record label.

Story continues below…

"Recorded music is free these days. It's hard to make enough money from record sales for stage outfits, music videos and a homepage. Maybe we just need to accept that and emphasize new values instead," said Gray.

With 100,000 copies of the album hitting the shelves via 'Artistmagasinet' next week, the band is hoping to rediscover some of the enormous popularity it enjoyed in the previous decade, when all four of its albums topped the Swedish charts.

Paul O'Mahony (paul.omahony@thelocal.com)

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Your comments about this article

18:56 April 19, 2010 by Nemesis
Looks like I am buying via Artistmagasinet next week.
19:16 April 19, 2010 by Beavis
Smart move.. altrhough its only a matter of time before the monsters at the record companies complain that somehow they are due royalties on this.
21:40 April 19, 2010 by Never Forget
This was the same group that made fun of the victims of 9/11 at the inauguration of the new Swedish Embassy in Washington, DC. Not surprising they are ripping off their own country now.
08:24 April 20, 2010 by Luckystrike
I think this is extremely cheeky and rude. The bottom line is, they get a lot more profit and pay very little tax, that could otherwise be spent on roads, hospitals, local communities...etc

There's little difference between this and benefits fraud.
08:40 April 20, 2010 by calebian22

How is this cheeky and rude? They have reduced the sales cost significantly. They are not selling the CD and magazine for the average cost of a CD in Sweden. When was the last time you got a magazine AND a new release CD from a known band for 99SEK?
11:09 April 20, 2010 by mysticbumwipe
What a brilliant wheeze!

Full marks for innovation and initiative. :-])
11:19 April 20, 2010 by Luckystrike
I'm all for artists finding new ways to get their music out, but when you start dodging tax, then us normal tax payers will inevitably have to "pick up" that tab.

FYI, the magazine is the "next to nothing", low sales, "underground" kind of Mag which is not worth more than a few kronor and in this edition be ONLY about the ark. An average CD does not sell for much more than 100 Kronor, and then it's a top international band.So...

Oh well
12:17 April 20, 2010 by calebian22

CDON.se main page proves you wrong, unless you consider 129, 139 and 149Kr "not much more than" 99 kr. The price is reduced considerably, so obviously the ARK is not being greedy and increasing their profits. 99 kr, is about 25 percent less than 129.

Hmm, what is the MOMS percentage in Sweden?

Don't worry, the tax authority will close this "dodge"(which means illegal, which this is not) quickly, and everything will make sense in your world again. Everyone will be the same, no one will stand out from the crowd, fist in the pocket, etc. etc., etc.....
12:42 April 20, 2010 by Luckystrike
Actually, now that i've worked out the numbers, there is not much difference in profits after tax between selling as an extra to a magazine 99k - 6% tax and selling as a CD at 129k - 25%tax.

Check the numbers yourself. Both in the 9m region.

So the real point of the ark doing this is to avoid the record labels from taking half their profits, in which case i withdraw all previous comments and laugh at the record labels.
18:36 April 20, 2010 by sissygirl
Wow! A cd is 129k?! I've never bought one in Sweden. I do think there will eventually be a way for the tax dudes to stop this especially if it becomes a popular cd.
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