At the end of a year, especially in the usually quiet(er) moments between Xmas and New Year’s Eve, there is some opportunity for those within live entertainment and ticketing to reflect upon what occurred and what lies ahead.
The backward glance, or annual review, typically notes memorable experiences and occurrences, and oft attempts to codify or systematically arrange the evolving chaos of what was, into something that suggests a theme or what could-have-been. (Or ‘Praxis’ as Anthony H. Wilson was fond of misquoting.)
Anyway, 2022 the year that was, and 2023 soon-come.
For those who survived the Covid-interregnum (global deaths from COVID-19 as of 23.12.22: 6,656,601 https://covid19.who.int/) the ‘relaunch’ of live music during 2022 has been unequal.
Without ready access to capital, whether via debt financing, fund-raising, government grants or savings, artists, promoters, venues, and ticketing service providers alike have all struggled.
And even for those able to refinance, the impact of sector-specific inflation (talent, crew, production costs, fuel, and logistics etc.) and the general cost-of-living crisis has already impacted the industry, with 2023 likely to further highlight the difference between the highly consolidated international congloms, the extremely fragmented long-tail of more localised D-I-Y operators, and the economically depressed middle-market of performing arts, theatres and regional venues often more reliant upon civic funding partnerships and grants.
In the UK there has been a series of high-profile on-sales (Coldplay, Arctic Monkeys, Harry Styles, Peter Kay etc.) and festivals (Glastonbury) that continue to advance retail spectacularly well. But the mid-market is struggling to recapture the audience levels and engagement of 2019, and for the grassroots sector margins, which were never robust, have been further eroded.
And even those operators that have been able to relaunch (proclaiming record quarterly results), they are privately assuming that the ongoing event congestion – caused by the international backlog of pandemic-postponed events working through the calendar, as well as new on-sales from artists & attractions eager to get back on tour and earn – alongside the declining macro-economic conditions, will mean that in 2023 whilst the overall live music sector will likely continue to grow in gross revenue terms, individual events competing for the diminishing consumer wallet will increasingly struggle to reach breakeven let alone profitability.
For the major operators, it’s not entirely clear that there is a great deal of new, creative strategy or business practises, other than the implementation of dynamic pricing (all too often merely a strategy of squeezing-the-pips) and/or the digitisation of ticketing – enabling the contactless bundling of identity, access control, and wallet with the resultant capturing of incremental upsell margins and data.
There are however a few noteworthy trends that became apparent during 2022 and that will extend into 2023.
The identification of a live music industry
The COVID-19 enforced sector shutdown strengthened recognition of the need to work collaboratively in order to speak authoritatively to governments, regulatory authorities, taxation and/or funding organisations, and the need to accurately identify the scale, diversity and robustness of the sector.
This realisation directly led in the UK to the formation of LIVE (https://livemusic.biz/) which now represents a membership of fourteen trade associations, which initially worked on identifying sector revenues, GVA, and employment entering (https://69b459a1413e40d20dd5.b-cdn.net/wp-content/uploads/2020/10/Valuing-Live-Entertainment-July-2020.pdf ), during (https://69b459a1413e40d20dd5.b-cdn.net/wp-content/uploads/2021/04/REPORT_UK-Live-Music-at-a-Cliff-Edge.pdf), and then emerging from the pandemic, and is now proactively coordinating the lobbying for the re-introduction of a 5% VAT rate on tickets; the re-establishment of freedom of movement around the EU for people, vehicles and merchandise; and for the UK Government to formalise a Music Export Office.
Other noteworthy organisations, dynamically and creatively re-imaging a new live entertainment business include:
Attitude Is Everything (https://attitudeiseverything.org.uk/)
Nimbus Disability (https://www.nimbusdisability.com/) & the Access Card (https://www.accesscard.online/)
Safe Gigs For Women (https://sgfw.org.uk/), Women In CTRL (https://www.womeninctrl.com/) & the Keychange Initiative (https://www.keychange.eu/)
Music Venue Trust (https://www.musicvenuetrust.com/) (with the indefatigable Mark Davyd), and The NTIA (https://www.ntia.co.uk/)
Ongoing sector consolidation & fragmentation
The big vertically aligned international consolidators (typically combining artist management, concert, festival & tour promotions, venue operations, ticketing, advertising & sponsorship etc.) were historically North American, but there are now other congloms within Europe, South America, the Pacific Rim & Australasia, whom will continue to opportunistically grow, taking advantage of their scale, continued access to capital, and their ability to sustain event inventory supplier advances, commissions, incentives and rebates.
Conversely as these international empires consolidate, the process of aggregation and then post-transaction identification of cost-savings and synergies inevitably leads to the creation of a new generation of start-ups and independent operators – albeit typically without the same level of technical or service offering.
Their individual smaller scale and tighter margins also means they tend to be early supporters of grassroots and emerging music’s or the fringe art forms, and organisationally early and eager adopters of new ‘disruptive’ business technologies whether crowdsourcing, livestreaming, digital lanyards, blockchain-distributed ledgers, NFT’s, or developers of ‘middleware’ API solutions which have massively extended the reach of ticketing bundles and packages, and also enabled single authentication and identification of audiences at event point-of-entry.
Differential Pricing
As previously mentioned, yield management tools have now become commonplace for many in the industry to maximise return from the relatively limited number of events from an individual artist or attraction.
Traditional ticketing platforms typically cannot react ‘dynamically’ to demand and so the pricing tends to be differentiated by product offering: location – stalls, balcony, or festival ‘golden circle’ etc.; timing of purchase – pre-sale, on-sale, walk-up; and the bundling of ticket+ experiences: artist ‘Meet & Greets’, VIP & premium hospitality, and/or ‘Official’ hotel packaging etc.
Dynamic pricing also implies that lower demand should equate to lower ticket prices but the contractual economics of live music with pre-determined guarantees and ticket revenue splits, limit that freemarket fluidity.
However, the re-pricing of high-demand ticketing e.g., front-row seats etc. by the artist, promoter and other event Rights Owners has re-captured much of the arbitrage margin historically exploited by the secondary marketplaces, and the migration towards a single marketplace for ticketing with inventory always available, albeit at seemingly ever-increasing prices will continue to dominate short-termism event-specific strategies.
This pricing-practise however has implications for current and future audience engagement with live music, as forewarned by John Lennon in 1963 at the Royal Variety Performance ‘For our last number I’d like to ask your help. Would the people in the cheaper seats clap your hands? And the rest of you, if you’ll just rattle your jewellery.’
Additionally, the recent Bruce Springsteen and then Taylor Swift debates about ticket retail pricing, marketing, and distribution by apparently dominant, and allegedly ‘anti-competitive’ operators clearly illustrate the frustration and anger felt by many consumers, opportunistic media and regulators at upward-only pricing policies.
Unnecessary Financial Risks
Another key issue for the live music industry concerns the widescale intermingling of operational funds and escrow accounts by all organisations whether promoter/producers, venue operators and ticketing service providers.
It should be clear to all that advance ticket revenues are not theirs to spend, or even to transfer onwards to ticket inventory providers before the event occurs, unless suitable contractual Reps & Warranties and/or banking guarantees ensure the consumer has immediate access to a refund if the event(s) are under-delivered, postponed and/or cancelled.
Ticket revenues should be held within escrow accounts on behalf do the consumer until event maturity.
Recent high profile fiscal collapses by various live entertainment corporations are merely a foretaste of the widespread and arguably fraudulent use of advance ticket funds to ease the day-to-day operations of the sector.
It’s time for this malpractice to end before other organisations fail and the various regulatory authorities are forced to intervene. Or is this an opportunity for the sector equivalent of an ABTA / ATOL protection scheme?
Health & Safety
Lastly, as the year ended, the heart wrenching and tragic Asake concert at the O2 Academy Brixton has highlighted the need for event promoters, venues, licencing authorities and the police to work together with communities to ensure safe access to concerts and festivals, and for FOMO to never again lead to a reckless and unthinking threat to the wellbeing and life of those attending or working at events.
Comments are welcomed, and do have a good 2023.
tjchambers.com 