I'm surprised to find myself agreeing (more or less) with pdq, given his recent contributions on the overtly political threads, but - you should have just smiled and given them their money back in the first place, and said, "Hope you enjoy the next concert a little more". Now you've gotten yourself into a silly contest of wills, where everyone's pride is at stake, and everyone's competing to see who can be the most self-righteous. If you let this go on, there could be a whole lot of ridiculous publicity, and a whole lot of posturing, and the two sides will line up and throw stones at each other, and you will have done your own little part to add to the polarization of the political life of your society. Furthermore, some busybody may discover that you've been breaking some obscure bylaw with your house concerts ...

If you're really concerned about saving face, just give them half the money back, since they were there for half the concert. It'll be a lame, partial victory for both parties ...