What, and when, might a return to live music look like?
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That’s the multi-billion dollar question on the lips of everyone who works in the business globally, as festivals, agencies and promoters deal with the fallout of losing what could be an entire year’s worth of income as a result of the coronavirus crisis.
Many are working on booking shows for 2021 on the assumption that gigs and organised mass gatherings won’t be able to safely take place until then.
When they do return, there’s talk of reduced capacity gigs and festivals, as is the case in Spain – where some venues have already been able to open at 30% capacity, and ticket-holders having to provide proof of health.
Whatever happens, there’s no doubt that the live industry is going to take a while to bounce-back to the level of growth it’s been enjoying over recent years.
According to figures from PricewaterhouseCoopers (PwC), global live music turnover from tickets and sponsorship hit $27.9bn in 2019 — a rise of 15.7% in five years. In the UK, the industry rose 10% to hit a record high of £1.1bn in 2018.
This year, with shows postponed (and ticket sales effectively stalled), Live Nation’s Q1 results offer some insight into what’s to come.
In the three months to the end of March, the company’s revenues fell significantly by 20% on a constant currency basis.
Its Concerts quarterly revenues were particularly affected, down 24% YoY to $993.4m. That’s despite the fact that for the majority of the Q1 period, gigs were still taking place.
Still, the company remains confident about a full return to strength in 2021 and beyond.
Live Nation Europe President John Reid is pleased to see that 90% of fans are holding onto tickets for the 80% of postponed shows that his company has been able to reschedule worldwide.
That “gives us confidence that we will see the industry ramp up quickly with attendance and fan engagement back up to par in 2021 and beyond,” he says.
“Until March we were seeing fan demand and artist touring increasing globally year on year. there’s no problem with supply and demand, which is why long term we are confident in the resilience of the live industry.”
John reid, live nation
“Until March we were seeing fan demand and artist touring increasing globally year on year – there’s no problem with supply and demand – which is why long term we are confident in the resilience of the live industry.”
Reid is hopeful of having tickets for 2021’s big tours on sale by the end of the year, which will help boost Live Nation’s liquidity.
In the meantime, whilst everyone is waiting for buildings to reopen to the public, “we are finding new ways to fill the live music gap including drive-in concerts, fan-less concerts from iconic venues, moving on to reduced capacity shows when possible,” he says.
The idea of reduced capacity shows is something many across the business have been discussing, but some raise concerns about how much economic sense it makes.
As Paradigm agent Rob Challice explains: “Maybe a small venue can make sense of [reduced capacity], but not a venue that’s 500 – 5,000 cap.
“If you take an average 1.5k – 2k cap venue and average ticket price, [consider that] production, staffing and marketing costs usually account for at least 50% of the sales income. Most promoters that use medium/large venues have voiced this, and the venues themselves have said the same.”
There’s also the small issue of paying the artist and their team, insurance, ticketing company fees and promoter profit. In other words, a significantly reduced capacity show runs a high risk of running into the red at a time when those who stand to earn can’t afford to cover any level of loss.
“Reduced capacities just don’t work and make no economic sense in any environment.”
stuart galbraith, kilimanjaro live
Kilimanjaro Live CEO Stuart Galbraith says the reduced capacity rule in Spain was brought in without any consultation with the live sector, and that the UK’s discussions with Prime Minister Boris Johnson’s government focus on ensuring “they don’t bring in something or suggest something that is not workable.”
Says Galbraith: “Reduced capacities just don’t work and make no economic sense in any environment — standing or seated. To run a socially distanced theatre gig, for instance, you’ll need to be running at about 30% capacity but that still doesn’t overcome the issues of toilets, bars and foyers.”
Instead, Galbraith predicts that safety measures will happen before customers arrive at gigs. “We are going to have to overcome the same issues at airports, on aircrafts, and railways, and those measures — whether it be testing, tracking, or temperature testing — will be what I see opening our industry again.”
For festivals, Association of Independent Festivals CEO Paul Reed says that it’s “extremely difficult to see how festivals could operate” under social distancing conditions.
He continues: “Festivals have incredibly tight margins to begin with and costs such as infrastructure and artist fees are not going to adjust accordingly, which would immediately make it unfeasible to reduce capacity to allow for social distancing.
“It’s also questionable delivery on an operational level. Festivals are quite sprawling environments so it’s quite different to how you manage a venue and one room. Maintaining and monitoring those conditions around a festival site will be extremely challenging.”
“I think the only safe way for us to have these large scale events would be to have pop up testing stations.”
goc o’callaghan, arctangent festival
Goc O’Callaghan, who runs British rock festival ArcTanGent, points to the introduction of drug-testing at festivals as an example of the kind of health and safety rules that might make more sense.
“I think the only safe way for us to have these large scale events would be to have pop-up testing stations,” she says.
“So people are tested on their way into the festival site and anyone showing any signs of Covid-19 would be turned away and refunded their ticket in the interest of the safety of everybody else. Within the festival grounds, everyone would be tested.”
The extra safety measures will bring increased cost, which “further adds to the stress and financial complications of running an independent festival,” adds O’Callaghan. “I think we are going to be facing significantly higher costs in 2021.”
That extra financial burden adds to non-recoupable / ‘sunk’ costs for cancelled events, which the Association of Independent Festivals this week estimated has already reached an average of £375k per indie UK festival.
At the same time, the trade organisation predicts that the UK festival industry at large could be facing up to £800m in refund requests this year.
When the live industry’s calendar does return to normality, Primary Talent agent Matt Bates warns that over-saturation might result in another financial blow.
“You do worry that there will be another wave of casualty in the live music industry — you’re going to get to a stage where there is a lot happening but not enough people to go around to support it all.”
matt bates, primary talent
“There are going to be so many events trying to happen because people haven’t been earning for the last few months, that you are going to hit saturation point,” he says.
“You do worry, especially when there’s less money going around, that there will be another wave of casualties in the live music industry because you’re going to get to a stage where there is a lot happening but not enough people to go around to support it all.
“It’s going to be a long road for everybody to start seeing recovery in the live music industry.”Music Business Worldwide