This summer has already seen several world-famous artists perform in Estonia, with many more concerts still to come. Large and small music festivals aimed at different audiences are taking place, many featuring impressive lineups.

Even so, attendance at some festivals can be sparse, despite extensive promotion and the presence of both local and international stars. Several festivals have now decided to refund ticket holders and cancel their events.

One example is EFEFEST, the inaugural festival organized by music agency Estonian Funk Embassy. Only a few dozen people had purchased tickets for the August event several months in advance. Alongside well-known acts including Lexsoul Dancemachine, EiK and RETI, Minister of Culture Heidy Purga had also been scheduled to perform as a DJ.

"Interest in tickets has been lower than expected and the risk of jeopardizing the agency's future is simply too high. The main reason is probably that we announced and began marketing the event too late," the agency said on social media.

Poor ticket sales also led to the cancellation of the Suvealguse Festival (Start of Summer Festival), which had been scheduled to take place in Elva in June, and the Samura Festival, which was planned for early August.

The canceled festivals do not, however, mean that public interest in seeing Estonian and international artists is low.

Silvia Käsk, head of Music Estonia's live music division, said Estonians remain highly engaged consumers of culture.

"According to Statistics Estonia's 2023 data, 79 percent of Estonia's population participated in cultural activities and 47.4 percent attended at least one concert. This shows that interest in culture remains strong," she said.

The large number of events means competition is intense.

"Concerts, festivals and other cultural and sporting events are all competing for the public's attention. Not every project can be equally successful and organizers increasingly need to invest in high-quality programming, targeted marketing and creating a great visitor experience," Käsk said.

In Käsk's view, Estonia's market has not yet reached its full potential. At the same time, she pointed to high ticket prices and a difficult economic environment as major challenges.

"A recent Ministry of Culture study of people who do not attend cultural institutions shows that many would like to participate in cultural life more often, but when it comes to concerts, the main obstacles are high ticket prices, additional costs associated with attending, such as transportation and accommodation, lack of time or interest, difficult transportation and the use of alternative options," Käsk said.

She said the findings show there are still segments of the domestic audience that organizers have not reached. In addition to attracting international visitors, it is also important to reduce the barriers that keep people in Estonia from attending cultural events.

"So the question is not so much whether there are too many concerts in Estonia, but whether a sustainable economic environment has been created for organizing them and whether people have the opportunity to take part in cultural life," Käsk said.

Maria Leis, communications manager at Eesti Kontsert, which focuses on classical music, said the latest Eurostat data points to an oversupply in the creative sector, particularly in a country where purchasing power remains below the European Union average.

"That is why we have so many events. The quality of each one varies greatly and every event certainly has its audience. The real question is how large that audience is and whether it is enough to satisfy the organizer," Leis said.

Estonia's concert scene hits European level

Roman Demtšenko, head of concert promotion agency Damn.Loud, said Estonia's concert scene — particularly in Tallinn — has reached a very high European standard in recent years.

"There are plenty of concerts and the range of genres and artists is exceptionally diverse. We have grassroots clubs, collectives and independent promoters operating alongside professional companies that bring world-class artists to Estonia, from leading names in alternative music to genuine superstars," Demtšenko said.

He added that international artists and their booking agencies are increasingly viewing Estonia and the Baltic states as a whole as a serious destination market.

"Interest in performing here has clearly grown. Compared with the situation 10 years ago, the difference is remarkable. Back then, the selection of international concerts was much more limited," he said.

While there is room in the market for individual concerts, the situation is more challenging when it comes to festivals, Demtšenko said.

"During the first few years, losses are often built into the business model because it takes time to earn the public's trust, build name recognition and establish a long-term identity. At the same time, Estonia's summer is very short and most festivals are essentially competing within the same time frame. Weather conditions also have a major impact on results and ultimately our small population sets limits as well," he said.

According to Demtšenko, competition is extremely intense and every new festival must offer a clear reason for audiences to choose it over the alternatives.

Even fully sold-out events can leave organizers with nothing

Demtšenko stressed, however, that from an organizer's perspective, the industry has reached a point where even a highly successful concert may no longer be financially viable.

"Last spring season, I organized several dozen events and only a handful ended with a positive financial result. That doesn't mean audiences aren't there or that interest in concerts has disappeared — quite the opposite. Even a sold-out venue no longer guarantees profitability because, in addition to other rising costs such as artists' fees, production, labor and transportation, Estonian organizers' biggest expenses are the 24 percent value-added tax and the 5 percent fee paid to the Estonian Authors' Society. Together with ticketing platform service fees, organizers in Estonia give up nearly 30 percent of their budgets," Demtšenko said.

As an example, he pointed to a recent concert by punk band The Exploited.

"From the outside, everything looked perfect — a legendary band on stage, a packed venue, a happy audience and a great atmosphere. I think you can probably see where I'm going with this," Demtšenko said.

"The question is no longer how to make a profit, but how to continue bringing high-quality international cultural events to Estonia without every season ending in significant losses for organizers," he added.

According to Demtšenko, many of his colleagues have been operating at a loss for quite some time.

"This is no longer a matter of a few unsuccessful projects — it has become the new normal for many. The most difficult part is that concert promoters can't simply 'take a break.' If you suspend operations, your existing obligations, contracts and losses from previous projects remain. As a result, organizers are often forced to keep going in the hope that future events will offset earlier losses. In practice, that means trying to cover one season's shortfall with the hope that the next season will be successful," Demtšenko said.

Sector expects lower VAT on tickets

Last summer, Estonia's value-added tax (VAT) increased to 24 percent. Organizers say the impact has been felt across the business sector, but it has been particularly painful for the cultural sector.

The cultural sector is calling for the VAT on event tickets to be reduced to 9 percent.

Several European countries apply reduced VAT rates to tickets for cultural events. In Finland, for example, the rate is 13.5 percent, in Lithuania it is 12 percent, while Latvia applies a zero-percent VAT rate to events that are strictly cultural in nature.

"With the current 24 percent VAT rate, Estonia ranks among the highest in Europe. Only a handful of countries, such as Hungary, are higher. I think it's worth asking whether that is really the group Estonia wants to be compared with when it comes to cultural policy," Demtšenko said.

According to him, "the numbers don't lie" and reducing the VAT on cultural events is the single most important step the government could take to improve the situation.

"It wouldn't solve every problem overnight, but it would give the sector a chance to operate sustainably again. It would make it possible to keep going," he said.

Music Estonia, the representative organization for Estonia's music industry, has also been actively working on the issue together with other cultural organizations and creative unions. Ahead of the upcoming elections, representatives of the sector have met with all political parties to convey the message that the cultural sector wants the VAT on event tickets reduced.

The issue has also been discussed with the Ministry of Culture and at broader meetings between representatives of the cultural sector and the government.

"The impact of lowering the VAT rate is not just about making tickets a few euros cheaper. It would give organizers greater opportunities to invest in higher-quality programming, take creative risks, keep ticket prices more affordable for audiences and strengthen Estonia's competitiveness in the international market," said Silvia Käsk.

She noted that small and medium-sized concert promoters, which help develop local artists and diversify Estonia's music scene but often have limited access to public funding, would benefit the most from a lower VAT rate.

Käsk said it is important to view concerts in a broader economic context.

"A ticket is not the visitor's only expense. Concerts and festivals generate revenue for accommodation providers, restaurants, transportation companies and other service providers."

"Research shows that tickets account for only a small share of festivalgoers' spending, with most of the money remaining in the local economy. As a result, a lower VAT rate would not necessarily mean less tax revenue for the government. Instead, it could help attract more internationally appealing events to Estonia and boost tourism revenue," Käsk said.

Ministry of Culture not fighting for the tax break

Although tax policy falls under the Ministry of Finance, other ministries can provide input on matters affecting their sectors.

The Ministry of Culture favors other forms of support over a tax cut.

"Given the high level of activity in the concert market and the large number of events, it is understandable that audiences are not sufficient for every event to meet organizers' expectations. This is especially evident during the summer when many cultural and entertainment events take place at the same time. Since organizing music events is open to all organizers who meet the applicable requirements, it is inevitable that audience numbers are determined by the balance between supply and demand," the Ministry of Culture said in response to an inquiry from ERR.

The ministry stressed that it understands the challenges facing the music and concert promotion sector and supports its long-term sustainability primarily through targeted funding.

"The purpose of these support measures is to ensure the development of professional concert promotion, improve public access to music events and expand opportunities for Estonian musicians to present their work. The state also supports the music sector through the Estonian Cultural Endowment, the Estonian Center for Folk Culture and Enterprise Estonia's creative industries programs."

The ministry also emphasized that setting VAT rates is a matter of tax policy and falls primarily under the authority of the Ministry of Finance and the government.

"The Ministry of Culture is working with other ministries to improve the sector's situation, but at present our main approach is direct financial support and other funding measures for the cultural sector," the ministry said.

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