© CDC
In early March 2020, with many international governments slow to react to initial levels of COVID-19 infections and seemingly paralysed by uncertainty as to what action, if any to take, a growing number of events cancelled or postponed: SXSW cancelled for the first time in 34 years; Ultra Music Festival In Miami cancelled; Coachella & Stagecoach festivals postponed and initially rescheduled to October 2020; BBC Radio1 cancelled its ‘Big Weekend’ music festival originally scheduled for May; and then the 50th anniversary of Glastonbury Festival was cancelled as a result of the threat of the developing pandemic.
The world’s major live-entertainment companies, combined to announce the formation of an industry task force which included Live Nation CEO and President Michael Rapino, AEG President and CEO Dan Beckerman, AEG Presents Chairman and CEO Jay Marciano, Creative Artists Agency Managing Partner and Head of the Music Division Rob Light, William Morris Endeavor Partner and Head of Music Marc Geiger, Paradigm talent agency founder and Chairman Sam Gores, Paradigm Head of Global Music Marty Diamond and United Talent Agency Global Head of Music David Zedeck.
Together they confirmed the suspension of concerts, festivals and tours, initially until the end of that month (https://variety.com/2020/music/news/live-entertainment-agencies-caa-uta-live-nation-coronavirus-1203532222/) as a precautionary effort ‘in the best interest of artists, fans, staff, and the global community’.
On the 20th March the UK Prime Minister then ordered all cafes, pubs and restaurants to close except for take-away food, whilst all the UK’s nightclubs, theatres, cinemas, gyms and leisure centres were told to close ‘as soon as they reasonably can’.
At that stage there was little appreciation of the likely impact of the pandemic in terms of the eventual tremendous loss of life, societal lockdowns, evolving health protocols and the long COVID-19 interregnum that would restrict any opportunity to re-embrace the spectacle of live music.
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In the market research report ‘Music in the Air: The Show Must Go On’ (Goldman Sachs, Equity Research Report, May 14th 2020) Goldman Sachs forecast that the COVID-19 impact to the global live music sector would be an approximate 75 percent downturn in revenues and declared that 2020 would be a ‘lost year’ for the industry.
Global Live Music Market 2007 (Actual) – 2030 (Estimate)
© Goldman Sachs 2020
The report further noted that whilst live music had been one of the most resilient parts of the music industry for the last two decades, the nature of the crisis meant there was considerable uncertainty over the timing of any return and what that may look like.
Further commentary included the observation that following any relaunch for the initial period revenue per individual event would be lower, with an assumption of only 65% of that previously achieved in 2019. This performance was ‘impacted by potential caps on audience size/density, travel restrictions and general economic weakness weighing on consumers’ discretionary spend’.
More confidently Goldman Sachs did forecast that the long-term growth outlook for live music was intact as it was unclear as to whether livestreaming would replace the live experience. Further the ‘millennial experiential economy’ would continue to drive event demand and sponsorship revenues would return (because of the younger demographic’s continued attraction to live music), and that Artists would remain largely dependent upon touring to supplement their income.
The reality of COVID-19’s actual impact to the industry quickly became apparent within the various Quarterly Reports by public companies operating in the international live music sector, despite language designed to assure investors and the wider market:
Live Nation Entertainment (Live Nation Entertainment Reports Second Quarter 2020 Results – https://www.prnewswire.com/news-releases/live-nation-entertainment-reports-second-quarter-2020-results-301107033.htm 05.08.20);
Eventbrite (Eventbrite Reports Second Quarter 2020 Financial Results – https://www.businesswire.com/news/home/20200806005958/en/ 06.08.20);
Madison Square Garden Entertainment (Madison Square Garden Entertainment Corp. Reports Fourth Quarter & Fiscal 2020 Results – https://s23.q4cdn.com/910947899/files/doc_financials/2020/q4/MSGE-4Q’20-Release-Final-8-14-20.pdf 14.08.20);
CTS Eventim (CTS EVENTIM achieves balanced EBITDA in HY1/2020, in the midst of the coronavirus crisis and thanks to cost-cutting and efficiency-boosting measures – https://corporate.eventim.de/en/news-media/news/detail/News/cts-eventim-achieves-balanced-ebitda-in-hy12020-in-the-midst-of-the-coronavirus-crisis-and-thanks/ 20.08.20); and,
DEAG Deutsche Entertainment AG (DEAG with nearly balanced EBITDA in first half of 2020 despite the COVID-19 crisis – https://irpages2.eqs.com/websites/deag/English/999993/news-detail.html?headline2=&iframe=true&newsID=2023727 28.08.20).
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Then in September 2020 PwC issued its ‘Global Entertainment & Media Outlook 2020-2024’ report which stated that revenues generated by live music ticket sales and sponsorships had already fallen 64% in 2020 with approximately US$18Bn having been wiped off the value of the international concert industry.
Unfortunately, for many in the live music sector the actual decline experienced was substantially worse.
But without a centralised UK live music reporting platform, it is difficult to accurately detail the specific COVID-19 impact to revenues, ongoing employment, organisations that utilised furloughs and/or redundancies, internships and apprenticeships lost due to the lockdown, individuals who may not have qualified for any of the various government business support schemes and/or claims for Universal Credit, or the number of companies that may have applied for loans but fell into financial administration.
However, the August 2020 ONS update (Coronavirus and the economic impacts on the UK: https://www.ons.gov.uk/businessindustryandtrade/business/businessservices/bulletins/coronavirusandtheeconomicimpactsontheuk/27august2020) reported that the arts, entertainment and recreation industry (albeit not an exact match for the live industry but the most similar ONS category) had the largest proportion of the workforce furloughed, at 51 percent (compared with 13 percent across all industries). Additionally, 23 percent of the arts, entertainment and recreation businesses reported their risk of insolvency was severe to moderate (compared with 11 percent across all industries), and also reported the highest percentage of businesses indicating that footfall had decreased, at 76 percent when compared with normal expectations for this time of year.
Arts, Entertainment & Recreation Industry – Risk of Insolvency
© ONS ‘Coronavirus and the economic impacts on the UK’ (27 August 2020)
In addition to staff directly employed across the live music industry there are many freelancers, self-employed and zero-hours employees working across the broader ecosystem of the sector.
For example, for any event production, there is an army of crew who work on site in specialist roles, such as sound engineers, riggers, and lighting engineers. These technical experts are usually freelancers, working job-to-job, or employed week-to-week.
Additionally, at any event there are also large numbers of less specialised support staff who work as stewards, concierge, bar staff and more.
Lastly, there are also highly specialised professionals, including lawyers, accountants, insurers, graphic designers, social media & marketing, as well as press & PR agencies, who typically work on a retainer contract basis, whom will all have experienced a substantive decline in demand for their services from the live music industry.
Their collective situation worsened during 2020 with complete shutdowns triggered across all international markets.
Subsequently two of the largest public companies operating in the global live sector, reported at the end of the year falls in annual revenues substantially worse than previously estimated, with Live Nation revealing an 84% decline (https://www.livenationentertainment.com/2021/02/live-nation-entertainment-reports-fourth-quarter-full-year-2020-results/), whilst CTS Eventim confirmed (https://corporate.eventim.de/en/news-media/news/detail/News/cts-eventim-focused-on-restart-of-live-culture-in-2021-after-a-year-of-coronavirus-crisis/) an 82.2% fall.
Additionally, the Carey & Chambers report for LIVE ‘UK Live Music: At A Cliff Edge’ (https://livemusic.biz/research-publications/) identified an annual revenue fall of 81% for the UK sector when compared with the previous year, with zero revenues for many operators since March 2020.
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Across the global live music sector 2020 revenues therefore fell from the estimated $28Bn (2019) to little more than $5Bn with huge levels of ‘debt’ to consumers in the form of tickets acquired for postponed events. And 2021 did not bring any immediate relief.
Not in Q1.
And then not with any scale or consistency across many international territories (with the exception of Australasia) in Q2.
There was increasingly a sector-wide realisation that any relaunch, whenever it would occur, was beyond the direct control of the industry and so the lobbying of civic and national governments, funding agencies and regulators accelerated.
The key issues were the ongoing fiscal collapse of live event partners (at all levels) caused by a non-existent cashflow directly linked to the legal inability to re-open; the timing and scale of various vaccination programmes and transmission of COVID-19 variants; the limitations on event capacities due to social-distancing measures with associated P&L impact; and event-specific matters such as event insurance (including pandemic-related cancellation, artist & public liability), the logistics of equipment and personnel, improved event hygiene protocols, and the hoped-for consumer desire to return to mass-spectator activities.
Locally, campaigning by the AIF, LIVE, MVT, NTIA and UK Music (amongst others) with the apparent support of the Commons DCMS Select Committee, were however faced by a UK Government that felt unable (or unwilling?) to lend specific sector support.
And then the June 21st timetable for relaxation of the social-distancing restrictions on events, was threatened with a further delay.
As noted by Mark Davyd (MVT) ‘It’s not ‘just 1 more month’. It’s 16 months, not 15 months, of closure. 7% more debt.‘ (https://twitter.com/markdavyd/status/1402514052325199873)
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To be continued …
In Other News: June’21 (1/5) ‘Bread & Circuses’ –https://tjchambers.com/2021/06/10/in-other-news-june21-1-5-bread-circuses
In Other News: June’21 (2/5) ‘How Big Was Big?’ – https://tjchambers.com/2021/06/10/in-other-news-june21-2-5-how-big-was-big/
In Other News: June’21 (3/5) Growth, Consolidation & Hubris – https://tjchambers.com/2021/06/11/in-other-news-june21-3-5-growth-consolidation-hubris/
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