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#LetTheMusicPlay

Live Music & Theatre Research (June 2020)

Delighted to have been able to assist Chris Carey (https://www.linkedin.com/in/cjcarey/) noted data scientist, conference organizer, cricket-obsessive and Head of Marketing at TicketSwap (https://www.linkedin.com/company/ticketswap/), in the recent ‘Valuation of the UK Live Entertainment Industries’ research project.


At short notice, we were requested to produce a model of the UK live music and theatre sectors detailing Gross Value Added, Revenues & Employment etc. impacting the UK national economy.

The key findings were then used within the recent #LetTheMusicPlay campaign and also supported the wider live entertainment submission to the DCMS in the campaign for financial support from the UK Government: https://www.gov.uk/government/news/157-billion-investment-to-protect-britains-world-class-cultural-arts-and-heritage-institutions.

  • Live Entertainment and Theatre generates £11.25 Billion in Gross Added Value (GVA) in each year
  • Theatre contributes £4.8 Billion GVA, supporting 290,000 jobs
  • Music contributes £4.5 Billion GVA with £2.74 Billion GVA from Concerts and £1.76 Billion GVA from Festivals
  • Music supports 210,000 FTE jobs with 125,000 through Concerts and 85,000 through Festivals
  • Other Entertainment contributes £1.95 Billion GVA contributing another 100,000 jobs

 

Under the time constraint it was not possible to commission new lengthy assessments, so instead the approach was to take existing published insights combined with sector expertise and private data from various industry sources to best represent the sectors on a consistent basis. 

We attempted to harmonize definitions, avoid any double-counting of revenues by the differing sector service providers (for example, collection agencies and ticketing), whilst modelling additional contributions from organisations representing artists, concert promoters, festivals, and grassroots music venues to produce a coherent structure for sector definition.

We also developed a methodology for defining ancillary services and incremental spend around events, to provide a clear understanding of the total live entertainment activities and economic impact.

The figures for live music were largely built by aggregating various sector reports including UK Music’s (https://www.linkedin.com/company/uk-music-ltd/) long-established ’Music By Numbers’ analysis, the National Arenas Association (NAA) and the Association of Independent Festivals (AIF) annual reports, with other contributions including work by the British Association of Concert Halls (BACH) and the Music Venue Trust (MVT).

For the theatre sector we utilised the invaluable Society of London Theatre / UK Theatre annual reports, as well as data received from the Really Useful Group which utilised pre-existing Arts Council methodology.

We are grateful to all organisations and individuals for their support of this cross industry effort, but especially ILMC (https://www.linkedin.com/company/international-live-music-conference-ilmc-/) / IQ Magazine (https://www.linkedin.com/company/iq-magazine/), Really Useful Group, and UK Music.

Further enquiries regarding the research are directed to: chris@mediainsightconsulting.com

 

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Now to the gangster shit: Ticket fees.

Noted within the Testset (https://testset.io/) article:

Live Nation Canceled Bonnaroo 2020 Today, ACL is Next?
by testset June 25, 2020

…..

Now to the gangster shit: Ticket fees.

Ticketmaster, a wholly owned subsidiary of Live Nation, argues that when they sell you a ticket, they are rendering a service. Hence, all of the fees they add to tickets are non-refundable. This includes service fees, facility fees, taxes, etc. Then, when you go to buy a ticket to the refunded, postponed and now rescheduled event, you pay those fees all over again. This is a comical dance and it’s absurdity is not lost on other commentators. Tim Chambers (https://www.theticketingbusiness.com/2020/05/07/debate-booking-fees-refunded/) an expert on the concert industry and ticketing, does a great job of articulating this problem:

“From the perspective of the disappointed fan, patron or supporter, the response is immediate and clear, if an event is cancelled, they would expect a refund in full i.e. the price they paid. Assuming they bought via a primary source (how would the consumer know any differently?) and after excitedly waiting several months since the OnSale, during which they confirm their identity, contact details, payment and agreement to receiving follow-up marketing messages from the artist / promoter / venue / sponsor / ticket retailer, it’s disappointment enough that the event is not happening. But to add insult to injury ticket retailers then routinely expect that consumers will accept that a partial service has been provided, and therefore only part-refund will take place ‘*as specified in the original (small-print) 30-point Terms & Conditions’. The argument being that as the now invalid tickets (whether physical or digital) have been delivered in advance, and that a part-service has been provided, this must therefore be paid for, by the disappointed ticket-buyer.”

The retailer then typically informs the consumer that refunds for the original ticket face-value may be further delayed whilst they retrieve revenues advanced to the event organiser (as per their internal supply-side agreement) and that it may take up to 30 days to process their refund request – comparing somewhat less favourably from the micro-seconds it took to take payment all those months ago.”

***

For further details: https://testset.io/2020/06/25/live-nation-canceled-bonnaroo-2020-today-acl-is-next/

And thanks to Testset.

 

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Examining COVID-19’s Impact on Britain’s Live and Recorded Music Industries

Delighted to have been able to assist noted economist Will Page (https://www.linkedin.com/in/wpage/) in his examination of the impact COVID-19 has on the UK Live and Recorded Music industries.

(c) Will Page / Billboard / PRS / ERA 

For further details please review:

https://www.billboard.com/articles/business/9407455/covid-19-impact-britain-live-recorded-music-industries


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Point de vue

Via Printzblog https://printzblog.com/

With thanks to Patrick Printz

 

30th May 2020

Point de vue: Le coronavirus représente une menace existentielle pour le modèle économique établi de l’industrie du spectacle

De T.J. Chambers sur son blog (en anglais): https://tjchambers.com/2020/05/21/clear-and-present-danger/

Le carnage économique et culturel de la pandémie de coronavirus, avec l’annulation de concerts et de festivals, la fermeture de sites, les permissions de sortie des agences d’artistes, des promoteurs/producteurs et le report d’événements jusqu’à je ne sais quand, marque une période de repli fondamental pour l’industrie du spectacle vivant telle qu’elle se présente actuellement.

La suspension des événements et des divertissements en présence d’un public n’est pas due à un changement dans le désir fondamental d’une expérience commune et partagée des performances culturelles, mais plutôt aux restrictions globales de sécurité sanitaire et de bien-être social concernant la sécurité des rassemblements et des voyages publics.

Toutefois, le verrouillage a révélé de manière flagrante la fragilité du modèle économique actuel du secteur du spectacle vivant (Artiste > Promoteur > Lieu > Sponsor > Billetterie > Consommateur), qui repose essentiellement sur le consommateur final pour financer à l’avance les opérations du secteur.

For further details: https://printzblog.com/2020/05/30/point-de-vue-le-coronavirus-represente-une-menace-existentielle-pour-le-modele-economique-etabli-de-lindustrie-du-spectacle-vivant/

***

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Should #Ticket Sellers Refund Booking Fees If Events Are Cancelled?

Via Ticketing Business: https://www.theticketingbusiness.com/

Debate: Should booking fees be refunded?

7th May 2020

 

With TJChambers, Jonathan Brown, Chief Executive, Society of Ticket Agents and Retailers (STAR), and Steve Lee, President, Fair Ticketing Alliance

‘The issue, which has vexed ticketholders and left them out of pocket, has been hotly debated on social media and fans have taken to Twitter and other platforms to complain: Should ticket sellers refund booking fees if events are cancelled?

For further details:

https://www.theticketingbusiness.com/2020/05/07/debate-booking-fees-refunded/

 

 

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#GeorgeFloydWasMurdered

Because there isn’t already enough to deal with amidst the global COVID-19 pandemic, in the US cops continue to kill black men with impunity.

The community quickly responded with marches and impassioned pleas for arrests of the peace officers and the ending of institutional racism.  But the mood of protest quickly got uglier when the President Donald J. Trump violated Twitter Rules for glorifying violence.

When revealed the Tweet reads:

(c) Twitter

 

As noted by the New York Times (https://www.nytimes.com/2020/05/29/technology/trump-twitter-minneapolis-george-floyd.html) this phrase appears to quote Walter E. Headley, the Miami police chief whose aggressive policies historically caused unrest in the black community.  At a news conference in December 1967, as tensions simmered in response to months of police brutality, Headley threatened violent reprisals if the situation escalated: “We haven’t had any serious problems with civil uprising and looting, because I’ve let the word filter down that when the looting starts, the shooting starts.”

In August, the following year as Richard Nixon was addressing the GOP convention across the city, a three-day riot erupted during which the Miami police using shotguns and dogs killing three people and left 18 wounded.

 

 

In 2020 the Minneapolis demonstrations and others in major US cities, have splintered when the public assemblies were met with pepper spray, teargas, batons and police armoured vehicles driven into the crowds.

Journalists and media observers also found themselves targeted victims of police abuse, rubber bullets and false arrest, arguably a by-product of the multi-year ‘fake news’ and ‘enemy of the people’ MAGA campaign.

In the ensuing chaos when opportunistic looting, graffiti, damage to various buildings or the burning of vehicles inevitably occurred, these incidents were met with an increasingly aggressive police and state troopers in riot gear: helmets, face masks, body armour, arm & knee pads etc. (No shortage of PPE for riot police unlike front line health workers battling Coronavirus.) 

It is noticeable that where protesters have been met with SWAT, American cities have burned, but where there was dialogue between the communities and officials there is more typically a calm.  And despite the counter-reaction by some police forces, peaceful protests continue to spread across America, with solidarity demonstrations also taking place in many international cities.

However, rather then statesmanlike appeals for calm from the US leadership, instead we have found wise counsel from Killer Mike (https://twitter.com/KillerMike): https://www.youtube.com/watch?v=Vy9io6VEt58, with agitprop reportage from numerous citizen-journalists as well as Don Winslow (https://twitter.com/donwinslow) and John Cusack (https://twitter.com/johncusack).

Amerika in 2020, is like some weird feverish alt-reality that is ‘The Watchmen’, TV Series II (not yet broadcast), except real-life is stranger.

 

Postscript:

Words fail ….

 

31.05.20

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Clear and Present Danger

Coronavirus poses an existential threat to the established economic model of the live entertainment industry

The economic and cultural carnage of the Coronavirus pandemic with concert and festival cancellations, venue shutdowns, furloughs at Artist agencies, Promoters / Producers, and event postponements until who-knows-when, marks a period of fundamental retrenchment for the live entertainment industry as currently configured.

The suspension of events and entertainments in the presence of an audience is not due to a change in the fundamental desire for a communal shared experience of cultural performance, rather it is because of the global health security and social welfare restrictions over safe public assembly and travel.

However, the lockdown has starkly revealed the fragile fiscal underpinning of the current economic model of the live entertainment industry (Artist > Promoter > Venue > Sponsor > Ticketing > Consumer) with its fundamental reliance upon the end-consumer to advance-fund the sector’s operations.

 

As previously noted (https://tjchambers.com/2020/04/03/refunds-cashflow-live-entertainment-ma/) the live industry has responded to the enforced shutdown and the cessation of its consumer-fuelled cashflow with the wholesale suspension of operations and layoffs to save on expenses, and for those larger scale corporations able to borrow, the taking on of new debt-financing: 

Live Nation Announces Credit Agreement Amendment, Additional Revolving Credit Facility And Cost Reduction Program: https://www.prnewswire.com/news-releases/live-nation-announces-credit-agreement-amendment-additional-revolving-credit-facility-and-cost-reduction-program-301039214.html

Endeavor Sets $260 Million Loan Amid Coronavirus Revenue Crisis: https://variety.com/2020/biz/news/endeavor-260-million-loan-ufc-wme-coronavirus-1234603358/

Eventbrite Announces Financing with Francisco Partners: https://www.businesswire.com/news/home/20200511005832/en/

Live Nation Entertainment Announces Pricing And Upsize Of Private Senior Secured Notes Offering: https://www.prnewswire.com/news-releases/live-nation-entertainment-announces-pricing-and-upsize-of-private-senior-secured-notes-offering-301058991.html

 

The key disadvantage of this form of financing i.e. borrowing against future earnings is that businesses are obligated to pay back, on a regular schedule, the principal borrowed with interest – in the case of the Live Nation 13th May offering which closed 20th May, $1.2Bn at 6.5% annual interest. 

Normally companies would consider this type of financing when targeting growth or expansion opportunities (utilising the increased revenues, cost-savings and synergies of the acquisition to pay back the debt), so organisations already suffering from cash flow problems may have a more difficult time repaying the interest let alone the principal.

A company typically raises capital via the sale of equity (with dividend payments to the shareholders) and/or via the acquisition of debt (with interest payments to the creditors), with the sum of equity and debt financing referred to as the cost of capital.

In normal times a company would decide upon which new projects and operations where the return on investment generated a greater amount than the cost of capital deployed.  If returns on its capital expenditure are below its cost of capital, then the firm is not generating positive earnings for its investors.  In this case, the company may need to re-evaluate and re-balance its capital structure.

In the current circumstances with the urgent short-term need for increased financing – to assist in the refunding of cancelled events, maintenance of a reduced level of corporate management and operations, and the effective rescheduling of postponed events – has led to some negative market sentiment with several live entertainment stocks now being downgraded: 

Disney downgraded in a grim appraisal of its coronavirus pain and future prospects: https://www.fastcompany.com/90500601/disney-downgraded-in-a-grim-appraisal-of-its-coronavirus-pain-and-future-prospects

Creative Artists Agency’s Debt Gets Downgraded: https://www.forbes.com/sites/mikeozanian/2020/05/04/creative-artists-agency-debt-gets-downgraded/

Endeavor’s Credit Rating Gets Downgraded on Live Events Exposure: https://www.hollywoodreporter.com/news/endeavors-credit-rating-gets-downgraded-live-events-exposure-1290092

Live Nation Gets Credit Rating Downgrade at S&P Globalhttps://www.hollywoodreporter.com/news/live-nation-gets-credit-rating-downgrade-at-s-p-global-1294438

 

Disclaimer:

Nothing published within this post constitutes a professional investment recommendation in any way whatsoever, nor should any content presented, or opinion expressed be relied upon for any investment activities.  Readers are strongly urged to seek their own independent investment advice and/or speak with a qualified investment professional before taking any investment decision. 

© If-I-was-that-clever-I’d-have-a-proper-job.

***

 

 

‘Corona-Ticketing’

As the COVID-19 pandemic stretches into an extended period of no new events, with a massively restricted level of new entertainment media or associated leisure service revenues, e.g. advertising, sponsorship or ticketing, the pressure on highly leveraged event promotion companies, some now carrying billions in debt, will increase.

Aside from the freezing of executive pay, expenses and bonuses, ever-larger furloughs and layoffs, or the acquisition of yet more expensive debt, the immediate response of the live entertainment sector and their associated ticketing service platforms has been to utilise ‘Postponement-As-A-Strategy’.

Because the advance ticket revenues collected by the retail agencies and box offices have typically been transferred (as per their contractual commitments) to the inventory suppliers –  many of whom have already spent the money on Artist deposits, production service retainers, venue hire, event marketing & advertising, and day-to-day business operational expenses – there may be little cash to refund to consumers.

 

Some organisations and their finance departments had calculated risk and exposure from advancing funds on a regular basis within the structure of an overall ticketing services agreement with associated promissory notes, formal Reps & Warranties, or inclusion within Event Cancellation Insurance policies, all formulated on a basic understanding of ‘containment’ as part of a fiscal ‘Domino Theory’

But no-one had modelled for the immediate and complete cessation of all events, full stop.

Which is why many consumers now cannot get a refund for tickets purchased months ago for an event originally scheduled for this summer, but now postponed until 2021.

Or are requested to donate part, or all, of their ticket refund to the apparently deserving but struggling arts organisation or venue neatly ignoring the disappointed and cash-restricted consumers, a growing number of whom are unemployed (22 million Americans have filed for unemployment benefits in the last four weeks – https://edition.cnn.com/2020/04/16/economy/unemployment-benefits-coronavirus/index.html), and many of whom want their money back. Please.

 

In the last few days the growing consumer frustration over refunds for postponed events spilled out in two letters published by Billboard magazine – Reps. Pascrell and Porter: Ticketmaster Needs to Do More to Refund Fans – https://www.billboard.com/articles/business/9376746/pascrell-porter-letter-ticketmaster-refunds with the immediate counterpoint industry response – Ticketmaster President: Reps. Pascrell & Porter Are Wrong, Company Has Processed More Than $600M in Refunds – https://www.billboard.com/articles/business/touring/9377374/ticketmaster-response-reps-pascrell-porter-refunds-letter.

Ticketmaster also posted the following graphic which claims to show that they were already providing the best customer service when compared to other U.S. sites, and stressed that more tickets would be refunded as soon as the clients returned their previously advanced monies.

© Ticketmaster

 

In the UK the Competition and Markets Authority has launched a Taskforce (https://www.gov.uk/government/publications/covid-19-cma-taskforce) to scrutinise market developments, identify harmful sales and pricing practices as they emerge and take enforcement action if there is evidence firms may have breached competition or consumer protection law. The TicketingBusiness news site noted that 4-out-of-5 COVID-19 complaints related to cancellation and refund issues, albeit not just within live entertainment: UK watchdog sees 4 out 5 COVID-19-related complaints from cancellation and refund issues – https://www.theticketingbusiness.com/2020/04/30/uk-watchdog-sees-4-5-covid-19-related-complaints-cancellation-refund-issues/.

Additionally, there has also been a growing number of media reports relating to the practise by some retail ticket agencies, in particular Eventim, SeeTickets and ATGTickets, that where refunds are offered companies retain part or all of the ticket processing fees with the argument that those services have previously been provided and as an agent for the event Promoter / Producer they are entitled to claim back those expenses. (World’s second largest ticket seller Eventim holding back millions in refunds from canceled events during coronavirus crisis – https://www.marketwatch.com/story/worlds-second-largest-ticket-seller-eventim-holding-back-millions-in-refunds-from-canceled-events-during-coronavirus-crisis-2020-05-08 + See Tickets – event cancelled but not entitled to full refund – https://forums.moneysavingexpert.com/discussion/2567989/see-tickets-event-cancelled-but-not-entitled-to-full-refund + Refund scandal could tarnish the reputation of the theatre industry – https://www.artsprofessional.co.uk/news/refund-scandal-could-tarnish-reputation-theatre-industry).

Again, this partial-refund is a customer service not universally endorsed by ticket buyers.

***

 

 

Ctrl + Alt + Del: ‘Live’ is dead, long live ‘Live’

As previously discussed (https://tjchambers.com/2020/05/01/what-future-is-there-for-concerts-festivals-and-events/),  for live entertainment to return, subject to local and national government regulations and timetable guidance, the live entertainment industry has to calculate operationally and logistically how it will reopen, assuming no vaccine is readily available: with the potential maintenance of some form of social-distancing; identity verification and personal temperature checks at event entrance; proof of immunity and/or on-site antibody testing; contactless-everything once admitted; and with organised queues to fill (at the bar) and then to empty (at the toilets).

 

Given that the initial return to live is likely to be piecemeal, downsized or small-scale, Artists may have to be convinced that they are ready and able to travel to the event, utilise whatever back stage facilities, dressing room, House PA, Lights and Backline is available, and then perform on whatever stage is accessible, all whilst maintaining a social-distance.

 

While this will not be too much of a culture shock for some, there is also considerable industry chatter (Producers overhaul contracts to minimise future lockdown losses – https://www.thestage.co.uk/news/news/coronavirus-producers-overhaul-contracts-to-minimise-future-lockdown-losses + Artist contracts renegotiated as Covid-19 reality bites – https://www.iq-mag.net/2020/05/offers-revised-down-post-covid-19-negotations-begin/) that some Promoter / Producers are already re-negotiating Artist fees with an expectation of shared risk, no guarantees and downward pressure on show settlements to reflect smaller (initial) audiences and increased risk and costs.

So, Artists willing and able to tour should expect smaller venues and reduced fees, with shorter Onsale periods for ticket sales, albeit with potentially increased focus on upgrade bundling (in an effort to maximise event ROI) and lots of communication in advance and onsite about health, hygiene and safety.

 

 

Assuming regulatory approval, the technical means to re-open, and a successful (re)negotiation with the talent, then the live industries have to convince its audiences that it is safe to re-engage with some form of mass marketing campaign (ATG announces “The Shows Will Go On” campaign across the UK – https://www.whatsonstage.com/london-theatre/news/atg-stage-close-advertising-show-go-on_51204.html) aside from event specific messaging and onsite signage, to reinforce the safety-first aspects of the live experience.

 

Additionally, it also will also have to convince consumers to purchase tickets once-again in advance for events scheduled (not guaranteed) for the near-future, thus providing the live industry with the return of some form of positive cashflow.

 

The industry will also collectively have to consider what constitutes the live experience going forward.  Does this period of shutdown enable new formats (and thus new stakeholders) incorporating live streaming and/or video-on-demand to develop a meaningful and monetizable audience?

Or as a temporary workaround will audiences relocate to the nearest drive-in: Is the future of live music a drive-in concert? – https://www.latimes.com/entertainment-arts/music/story/2020-05-01/drive-in-concerts-denmark-coronavirus + Drive-in concerts: A new normal for live? – https://www.iq-mag.net/2020/05/drive-in-concerts-a-new-normal-for-live/ + The world’s first drive-in raves are being held in Germany – https://mixmag.net/read/worlds-first-drive-in-rave-germany-news + ‘Save the summer’: event organisers working on drive-in summer festivals – https://www.brusselstimes.com/all-news/business/109739/save-the-summer-event-organisers-working-on-drive-in-summer-festivals/.

Alternatively, will the long-trumpeted arrival of AR / VR finally deliver a viable means to enable international artists (both the living and the glorious but previously departed) to ‘appear’ at local nightclubs and stages, or will the technical requirements for sophisticated A-V projected holograms and/or personal headsets reduce market penetration to domestic environments?

 

Arguably, it is with the livestreaming of events that offers the greatest potential disruptive fracture of the live industry as currently organised and how it might operate going forward.

***

 

 

You just can’t disrupt the live experience… or can you?

 

Attending live performances has never just been about seeing the artist play some songs, the actor recite some lines, or the sports star excel in their athleticism, but for the audience, fans and supporters, it’s also all the other value-add experiences that surround and encompass the event: the anticipation during the ticket purchase and then the journey to the venue; who you’re with; how close you are to the spectacle; the sweat-on-the-brow of the artist; the emotion of the audience; the stumble on stage, or pitch, and their recovery; the noise and the hush; the feeling that the single moment will last forever; and the sense of being part of something more.  A collective, a tribe, inclusive and important, joyful, serious and life affirming.

But the technical ‘remoteness’ from the spectacle of the performance hasn’t hurt for example the adoption of eSports and gaming whom attract mass audiences both online and in-person for (virtual) events. 

 

Arguably, just as streaming has replaced physical product as the main music revenue source (with 56% of recorded music revenues in 2019), the opportunity for live streaming to replace (in part) the live event will be powered by new operators, emerging technologies and alternate sources of capital for whom the ‘live experience’ may be only part of their audience-acquisition/audience-retention business development strategies.

Given the economic frailty of many of the leading live entertainment organisations, both large and small, saddled with debt and no recurring revenues, the sector may itself be ripe for reimagination and/or disruption from those with access to capital and for whom content merely aids market differentiation for their product range, with less concern over the marginal revenues related to event promotion.

‘Silicon Valley’ tech-giants and their Venture Capital / Private Equity funders prefer to move in on pre-existing sectors that support a hierarchical employment structure, with ‘archaic’ or restrictive practises and antiquated technologies, and offer an alternative, an ‘MVP’ initially seemingly inferior to the established product, but one that makes the consumer believe that the ‘service’ can be provided cheaper and in seemingly a more personally-bespoke manner (at a time, price and distribution channel apparently designed to first suit the consumer), and typically moving towards a ‘free’ price-point modifying historical patterns of supplier-user behaviour, in exchange for consumer data, and future revenue realignment.

No-one within the VC community will need convincing that the current live industry model is broken – no cashflow, huge debts, no suitable technology, endless unusable real estate requiring uneconomic social-distancing and hygienic retrofitting, and crucially doesn’t own any I.P. – and so for the next six-to-twelve months or more livestreaming, linear TV and webcasts offer a unique disruptive opportunity to re-invent the production of events and connection to an audience.

 

Until the lockdown the generally accepted economic reality was that the primary source of income for artists was via touring.  But for the organisations centred around the promotion of concerts, theatrical shows or sports their business model had almost nothing to do with making money from the promotion of the event – as the artist / attraction / star typically retained the overwhelming majority of event-related ticketing receipts.  Rather event promoters are more focussed on the incremental revenue opportunities derived from advertising, sponsorships, and various commissions related to F&B sales, car parking, merchandise, bundles & packages, and retrospective period-based discounts on production services and hall-rental etc.

Historically event promoters had overcome their capital-poor inadequacies or operational inefficiencies, by taking advantage of the advance ticket retail model of the consumer funding the sector, aided and abetted by the willingness of ticket agencies and box offices to forward revenues that should have been held in escrow on behalf of the consumer until event maturity.

The COVID-19 global shock to the live industry has fundamentally blown apart this business model and it now finds itself with ongoing infrastructure and real estate costs (venues, offices, equipment, and staff – not just the mega-million compensation packages of CEO’s but also the army of self-employed, freelancers, and zero-hours support workers).  It is also unable to claim back costs via insurance (an industry represented by bigger & uglier lawyers than even the live industry can afford), or to recoup advances previously made to the talent, it also has to renegotiate contracts with various landlords and suppliers whilst scoping out new health and hygiene services.  And all the while has massive consumer-side refund liabilities (morally if not legally). 

All of which opens the live industry to potential disruption.

***

 

 

Is It Live, Or Is it Memorex? (https://en.wikipedia.org/wiki/Memorex)

With thousands of concerts, festivals and tours cancelled or postponed due to the COVID-19 pandemic, the various social networks and streaming platforms have become the go-to resource and distribution networks for Artists and Rights Owners to continue to perform for their fans, patrons and supporters.

When Michael Rapino announced in the Live Nation Q1 Results statement (7th May) (https://www.prnewswire.com/news-releases/live-nation-entertainment-reports-first-quarter-2020-results-301055191.html) that the company was ‘well positioned to lead (the) live industry’, he also noted that ‘almost a million fans have come to our ‘Live From Home’ site to find virtual tours and acoustic performances from home.’

Without forensically analysing each and every stream (so apologies for the following generalisation) but other than providing an initial discovery and aggregation service for the various livestreams, the virtual destinations for these online performances were typically not venues owned or contracted to the promoter or the ticketing arm, nor was the live streaming technology an in-house solution, and many of the performers appealed directly to the viewer to donate to them, or fundraise for other worthy causes.

So, there was little direct gain for Live Nation, other than generating goodwill with its ongoing support for the Artists.

However, others were already busy.

 

Facebook announced plans (24th April) (Introducing Messenger Rooms https://about.fb.com/news/2020/04/introducing-messenger-rooms/) to allow users (creators and small businesses) to charge for livestreams, recognising the growing ‘demand for real-time video’.

Facebook further stated that it would enable ‘more ways to connect when you’re apart’ whilst providing a way for musicians and other creators to monetize their events on the platform ‘anything from online performances to classes to professional conferences’ (Facebook announces paid-for livestreams, more tips – https://www.iq-mag.net/2020/04/facebook-announces-paidfor-livestreamed-shows/.

Spotify had also announced its own virtual tipping facility (Artist Fundraising Pick – https://artists.spotify.com/blog/introducing-artist-fundraising-pick), which enabled streaming listeners to donate via the Spotify artist’ profiles using PayPal, GoFundMe or Cash App (incurring a backlash from some for serial underpayment to Artists by the platform): ‘With this feature, we simply hope to enable those who have the interest and means to support artists in this time of great need, and to create another opportunity for our Covid-19 music relief partners to find the financial support they need to continue working in music and lift our industry.’

Then on 19th May Facebook announced the development of ‘Facebook Shops’ (Mark Zuckerberg announces Facebook Shops, making it easier for businesses to list products for sale – https://www.cnbc.com/2020/05/19/zuckerberg-announces-facebook-shops-e-commerce-for-businesses.html ) a free service to enable businesses set up product listings on their Facebook page and Instagram profile.  In the future, it would also allow businesses to sell products to customers through the chat features of WhatsApp, Messenger and Instagram Direct.

Amazon-owned Twitch has also reported huge upturns in interest in livestreaming over recent weeks, with MD Mike Olson stating Twitch is helping thousands of independent artists get paid in a time when they are unable to perform live’, adding ‘we have a number of scaled monetisation tools for artists, including paid subscriptions’ (How livestreaming is taking its chance to shine – https://www.musicweek.com/digital/read/how-livestreaming-is-taking-its-chance-to-shine/079549).

Dan Chalmers MD YouTube Music EMEA, stated that ‘these types of virtual events and the responses we’ve seen will be here to stay. The numbers of some of the livestreams have been significant. It far outweighs any of the physical audiences in the clubs, plus you’re playing immediately to a global audience. It’s really exciting, for the talent and ourselves.’ (YouTube Music Europe director Dan Chalmers on the rise of livestreams – https://www.musicweek.com/digital/read/youtube-music-europe-director-dan-chalmers-on-the-rise-of-livestreams/079840).

Collaboration between Artists, technology platforms and media organizations has exploded since the pandemic, and it has quickly became apparent that livestreaming ‘virtually’ enables audience contact, engagement and retention whilst also providing the opportunity to fiscally support Artists, or Venue(s), for example MVT launched a #SaveOurVenues campaign (http://musicvenuetrust.com/2020/04/music-venue-trust-launches-saveourvenues-campaign/) which featured ‘at home’ performances by artists livestreamed in support of particular venues important to their careers.

Livestreaming has also supported those impacted by the Coronavirus, connect those feeling isolated and raise profile and funds for deserving charities, for example: ‘A Night Of Covenant House’ which featured Jon Bon Jovi, Dolly Parton, Meryl Streep, Morgan Freeman & Stephen Colbert in aid of the homelessness charity Covenant House – via Amazon Prime Video, Facebook, Twitch & YouTube.

https://www.covenanthouse.org/ 

 

Initially some of the livestreams were quaintly amateurish, with musicians prone to mistakes in presenting style and content (Lockdown launches a stream of live concerts – https://www.ft.com/content/c26e8bae-7e43-11ea-82f6-150830b3b99a) and many major artists quickly became co-opted within more homogenous (and mawkish) TV standard web-casts (One World: Together at Home — Stones steal the show while Gaga keeps it low-key – https://www.ft.com/content/2ae3415c-82fe-11ea-b872-8db45d5f6714) which simultaneously aired on ABC, CBS, and NBC with an edited version then available via the BBC.

https://www.bbc.co.uk/mediacentre/proginfo/2020/16/together-at-home

It should however be noted that OneWorld raised approx. $127M for Coronavirus relief – so let’s not be too sniffy (One World: Together at Home concert raises $127m for coronavirus relief – https://www.theguardian.com/music/2020/apr/20/one-world-together-at-home-concert-lady-gaga-raises-127m-coronavirus-relief).

 

Amongst the many, many other livestreamed offerings, the Royal Opera House announced #OurHousetoYourHouse (https://www.roh.org.uk/streaming) a free programme of curated online broadcasts via Facebook and YouTube

The National Theatre announced a weekly series of free past-performances (https://www.nationaltheatre.org.uk/nt-at-home) via YouTube

Radiohead announced their intention to stream concert films during the quarantine (https://consequenceofsound.net/2020/04/radiohead-concert-films-youtube/) again via YouTube: https://www.youtube.com/user/radiohead.

Also as part of YouTube’s #StayHome #WithMe campaign, a two-part online series featuring all 41 songs from Eurovision 2020 artists, premiered exclusively on the Eurovision Song Contest’s YouTube Channel: https://www.youtube.com/user/eurovision.

And Orchestral Manoeuvres In The Dark released ‘Live From Your Sofa’ an ‘online visual performance featuring never before seen footage of the whole of the band’s 2019’s Hammersmith Apollo London show’, again via YouTube: https://www.youtube.com/watch?v=Or02GYRDmCE.

http://www.omd.uk.com/news/omd-live-from-your-sofa/

 

MusicWeek reviewed the latter detailing various KPI’s revealing impressive viewership, engagement, charity donations, and virtual merchandise sales:

Last weekend saw over 30,000 OMD fans tune into YouTube to catch the airing of OMD: Live From Your Sofa, featuring an hour and a half of footage recorded from the band’s headline show at Eventim Hammersmith Apollo, in November 2019.

The band also offered a pre-show meet and greet where 800 fans queued for a live chat with Andy McCluskey, a virtual merchandise desk that took in 2,000 orders, and a charity raffle which auctioned off rare signed items and test pressings, raising a total of £6,000.

OMD, together with their manager and label chose charities to donate to, with Marie Curie, Reach (Newark) and Hotels Joining Hands (Cambodia) all set to benefit from the funds raised.

The show has now been viewed over 115,000 times

***

 

A trigger for this overall post was also the (always) excellent Tim Ingham, Founder of Music Business Worldwide (https://www.musicbusinessworldwide.com/) who wrote in Rolling Stone: Why the Music Business Should Be Looking Closely at Fortnite and Epic Games – https://www.rollingstone.com/pro/features/music-business-epic-games-fortnite-991211/ .

The article highlights the huge audience for video games / music crossover with the Fortnite in-game appearance of Travis Scott, whose ‘Astronomical’ virtual concert attracted over 27.7 million attendees.

The related post by Murray Staasen (Sony is building a team ‘dedicated to reimagining music through immersive media’ – using Fortnite maker Epic Games’ Unreal Engine – https://www.musicbusinessworldwide.com/sony-is-building-a-team-dedicated-to-reimagining-music-through-immersive-media-using-fortnite-maker-epic-games-unreal-engine/) with some specific job details outlined that some people at Sony were also thinking about what comes next.

***

 

Back to the livestreams …

Virgin EMI has also staged one of the biggest label livestream events since the lockdown:

https://www.lockdownlive.uk/

The event was in support of Global Citizen and the World Health Organisation’s COVID-19 Solidarity Response Fund and lasted three days (April 3-5) featuring artists performing from across the roster.

Whilst Italian tenor Andrea Bocelli performed a solo Easter concert from an empty Duomo di Milano streamed live to millions of people around the world in coronavirus lockdown.  (Update: “The Music for Hope” performance streamed via YouTube has now been watched more than 39 million times.)

https://www.youtube.com/watch?v=huTUOek4LgU

***

 

 

Other ‘Disruption’ from within

 

The Coronavirus crisis has also led to a number of independent live industry start-ups and emerging operators develop new solutions or even pivoting their pre-existing business to support artists, labels and live music campaign groups, with D-I-Y bedroom-streams, multi-screen orchestras, and slick TV-style webcasts & VOD (Video-On-Demand).

 

Bandsintown, the ‘platform where artists and fans connect’ has partnered with MusiCares to help collect donations for their COVID-19 fund for Artists, whilst also launching ‘Bandsintown Live’, their own live music channel on Twitch, showcasing live stream sets from Artists across all genres to connect with their fans.

https://news.bandsintown.com/article/2020-03-18-to-our-bandsintown-community-we-will-get-through-this-together/

 

Dice the event discovery and ticketing platform announced (17th April) the launch of a new TV function aimed at personalising livestreaming for users.  The aim is that ‘Dice TV’ will encompass concerts, festival appearances and DJ sets, ‘with fans able to buy tickets, make donations, invite and share events with other users’.

‘This is a crucial moment for the live industry to develop a sustainable ecosystem that helps creators and artists thrive’, said Co-Founder Phil Hutcheon. ‘This is just the start, we have a dedicated team on Dice TV and this will grow to be a long term solution for the industry.’ (Dice launches new TV function as focus shifts to livestreaming – https://www.musicweek.com/live/read/dice-launches-new-tv-function-as-focus-shifts-to-livestreaming/079504).

https://dice.fm/event/dr9vo-lewis-capaldi-live-and-acoustic-16th-may-stream-via-bathgate-edinburgh-tickets

 

Festicket, the travel packages and ticketing solution, announced (19th May) a new platform – in partnership with YouTube and Vimeo – to enable music fans to watch and engage with artists direct from their home.

Festicket Live will host free and also ticketed live streams, with Marketing Director Luis Sousa stating ‘The past weeks and months have seen a dramatic shift to online streaming, with over 60% of our customers saying they had watched a live stream since the lockdown began. We see this trend continuing, and possibly even remaining once physical festivals and events begin to return.’

 https://www.festicket.com/magazine/news/festicket-launches-live-streaming-platform-festicket-live/

***

 

 

In conclusion, Artists, Agents, Promoters, Venues and Ticketing Companies will all face several lean years, assuming COVID-19 survival, following the effective shutdown of the $27Bn global live music industry.

In the absence of anything else, the recent livestreaming explosion has been a boon for music discovery and promotion, but until the Coronavirus pandemic the real money remained in the live (physical) performance.

Going forward Artists and other Rights Owners may see within livestreaming a potential to replace part of that dependency.

However, to do so livestreaming is going to have to move beyond the traditional linear event performance to incorporate Q&A with the lyricist explaining the art of song-writing, band rehearsals & soundchecks, acoustic versions of works, guitar roadies explaining the various tech set-ups, backstage preparation and dressing room banter; fans surveys for favourite songs to be performed etc.  

And livestreaming can’t always remain a free exposure marketing tool, it has to be linked to virtual and eventually live event ticketing, merchandise, news, and regular interactions with fans and supporters.  Perhaps live streaming can then be aligned to a subscription model as part of a fan club or D-2-C service, extending the overall event experience into something more?

 

At a time of collective dislocation, the (recorded) music industry and others (the social networks, mobile platforms and web channels) have quickly encouraged consumers to ‘watch’ live, as opposed to ‘experience’ live – because that is the best available at this time. 

 

However, this transference also reflects the power and authority of the Rights Owners (Artists, Recorded Music & Publishing etc.) to quickly agree new monetisable relationships with the various tech distribution channels and media networks. 

 

These ‘emergency’ partnerships and new partnerships are not reliant upon the historical live entertainment business, and without assuming that live concerts and touring will never re-establish itself, the model will undoubtedly be changed going forward.

 

 

Lastly, for (much) more information about livestreaming ‘The legal underbelly of livestreaming concerts’ by Cherie Hu is an immense guide available via Water & Music / Patreon – subscribe here: https://mailchi.mp/9ab07d2b7dc4/waterandmusic and please support her work.

***

Comments, please email: chambers.tj@gmail.com

 

 

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#Ticketing Consultancy: Pay-It-Forward

During the current lockdown many ticketing organisations will be deeply concerned about the immediate financial survival of their company, the well-being of staff, the ongoing support of clients and the ability of audiences to eventually re-engage with live entertainment and events after the crisis.

The recent uptake in live streaming by some artists, or the online exhibition of previous performances may help retain interest in the art form(s).  But the ‘live experience’ is currently on-hold and social-distancing with restrictions on public assembly impacting any timetable for its return.

Event promoters and their ticketing partners have been wholesale forced to cancel or postpone events, and whilst some have devised schemes to convert advance ticket purchase into donations, essentially for many in the industry this is a period of massive negative revenue with the operational stress of refund requests swamping the sector.

So, whilst it may appear counter-intuitive, now is the time to develop your future strategy.

 

I strongly believe that to get out of this situation we are all going to have to work more collaboratively and creatively, utilising new technologies and business practises. So, this is my offer.

Confidentially contact me with your Name, Email Address, Company & Website details, and a brief description of your business, key issues or development needs.

If advice can then be provided, introductions made, networks engaged, or direct assistance offered in the development of next-stage strategies then count me in.

Please note, I’m a (sole trader) consultant, and not a bank, funding organisation or government agency, but do have some ticketing industry standing, commercial and M&A experience with international connections. (LinkedIn: https://www.linkedin.com/in/tim-chambers-235a912/)

And if we do then work together, then I’ll accept payment on a discounted Pay-It-Forward or Payment Plan basis.

 

So, nothing ventured, nothing gained.

Speak to you soon.

 

Email: chambers.tj@gmail.com

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What future is there for Concerts, Festivals and Events?

Working towards a new ‘normal’

 

After just a few weeks the seemingly bland normality of the lockdown, bathed in warm sunlight and deep blue skies, languidly drifts along like a Ballardian dystopian novel.

Whilst Doctors, Nurses, Paramedics and Social Care Workers bravely and urgently aid those infected with the deadly and invisible Coronavirus, the rest of us are restricted to new codes of behaviour, forced to develop new ways of surviving economically and spiritually, and contemplating new protocols going forward for social interaction in the period after COVID-19.

 

Despite the fact that the main information source we have about the crisis is a media dominated by even-handedly presenting ill-informed bleach-dispensing salesmen, or reiterating unelected herd-apostles who have replaced absentee heads of government, there is the beginning of a consensus (formed over multiple video-conferences) as to what the new ‘normal’ environment for live entertainment could be after the lockdown is eased.

However, before any relaunch of the live experience, we must first get through the containment phase whereby national governments are primarily focussed on public health and sanitation and have banned in-person mass gatherings and unnecessary group assembly including concerts, festivals, meetings, and conferences.

 

The UK Government (belatedly) introduced (23rd March) three measures: requiring people to stay at home; the closure of businesses and venues; and the stopping of all gatherings of more than two people in public.  The UK lockdown was for an initial three weeks and has been extended until (at least) 7th May with no official end likely as testing and tracing tools are still not widely available.

Our European neighbours moved quicker on both fronts and have also banned mass gatherings deep into the summer.

For example, earlier in March Denmark moved to ban gatherings of more than 10 people and closed its borders.  Then (6th April) the Danish prime minister, Mette Frederiksen, confirmed that large public gatherings would remain banned until the end of August: https://politi.dk/en/coronavirus-in-denmark/extension-of-measures-during-the-covid19-outbreak-in-denmark.

Austrian Chancellor Sebastian Kurz (6th April) confirmed that public events of more than five people will remain banned until end of June: https://www.ft.com/content/d7025074-496e-4609-84c3-22c000cc41d6.

President Emmanuel Macron announced (13th April) that France would extend their lockdown until 11th May and that public events, venues, bars, cafes, museums and restaurants won’t re-open until at least until mid-July: https://www.bloomberg.com/news/articles/2020-04-13/macron-says-he-ll-extend-lockdown-in-france-until-may-11.

Then on 28th April the French Prime Minister Edouard Philippe announced an extended ban on sporting events and festivals until September: https://variety.com/2020/film/global/france-government-extends-festivals-ban-september-cannes-1234591792/.

The German Government (20th April) stated that since events play a major role in infection dynamics, they remain prohibited at least until August 31, 2020’https://www.bundesregierung.de/breg-de/suche/bund-laender-corona-1744306.

The Irish Government (21st April) has also extended its ban on mass public gatherings until the end of August: https://www.gov.ie/en/news/3afa7d-government-statement-on-licensed-events/.

The Dutch Government (21st April) has extended its ban on events requiring a permit to 1st September 2020: https://www.government.nl/topics/coronavirus-covid-19/news/2020/04/21/measures-to-stop-the-spread-of-coronavirus-extended.

And the Scottish First Minister Nicola Sturgeon confirmed (23rd April) that social distancing or ‘gathering in groups, for example in pubs or at public events, is banned or restricted for some time to come’: https://www.gov.scot/binaries/content/documents/govscot/publications/strategy-plan/2020/04/coronavirus-covid-19-framework-decision-making/documents/coronavirus-covid-19-framework-decision-making/coronavirus-covid-19-framework-decision-making/govscot%3Adocument/coronavirus-covid-19-framework-decision-making.pdf  with the Edinburgh Festivals in August already cancelled: https://www.theguardian.com/culture/2020/apr/01/edinburghs-five-festivals-cancelled-due-to-coronavirus .

 

When should governments ease the containment lockdown?

Each country faces a challenging balancing act – economic security and public safety – but as Dr Tedros Adhanom Ghebreyesus, the World Health Organization chief has warned lifting lockdown measures too early could spark a ‘deadly resurgence’ in infections.

Additionally, the lifting of COVID-19 pandemic containment measures will not be easily co-ordinated as, for example across the EU and the UK and there are multiple healthcare administrations, with differing infection rates and inevitably different priorities as regards kickstarting their own coronavirus-battered economies.

Possibly the only common factor is that the prolonging of any lockdown will deepen the inevitable global recession, perhaps of record dimensions (‘Deep Global Recession in 2020 as Coronavirus Crisis Escalates’ –  https://www.fitchratings.com/research/sovereigns/deep-global-recession-in-2020-as-coronavirus-crisis-escalates-02-04-2020 + ‘Coronavirus means a bad recession – at least – says JP Morgan boss’ – https://www.theguardian.com/business/2020/apr/06/coronavirus-means-a-bad-recession-at-least-says-jp-morgan-boss +  ‘Eurozone to contract 11% in 2020, warns Morgan Stanley’ – https://www.ft.com/content/fc508cec-9b09-3bd6-9e8d-c315c3966770).

So, a (safe) economic relaunch is desired by all.

 

For the EU there are three main sets of criteria for assessing when to ease restrictions (A European roadmap to lifting coronavirus containment measures – https://ec.europa.eu/info/live-work-travel-eu/health/coronavirus-response/european-roadmap-lifting-coronavirus-containment-measures_en):

  • Following a sustained reduction and stabilisation in the number of hospitalisations and/or new cases for an extended period
  • A sufficient health system capacity in terms of an adequate number of staff, hospital beds, pharmaceutical products and stocks of PPE equipment
  • Appropriate monitoring capacity, including large-scale testing to quickly detect and isolate infected individuals

The one thing that the EU is clear on is that concerts and festivals will be the last sector to have restrictions lifted (EU: Festivals, concerts to be last to reopen – https://www.iq-mag.net/2020/04/eu-festivals-concerts-to-be-last-to-reopen/), with steps towards normalisation taken on a gradual, targeted and localised basis before expanding territorially.

Further the EU recommends that a phased approach to internal transportation and external border controls should be maintained, enabling ongoing supervision and the swift redeployment of measures in case new infections occur.

Lastly, gatherings of people should be progressively permitted whilst maintaining social-distancing: schools and universities; commercial and retail activities; social dining – cafes & restaurants; and then larger scale public assembly i.e. events.

The U.S. Government’s ‘Gating Criteria’ (https://www.whitehouse.gov/openingamerica/for a return to normalcy similarly has a three-phrase approach, based on the advice of public health experts: to assist states to reopen their economies; get people back to work, and continuing to protect lives.  However, the federal guidelines are nonbinding and put decision-making in the hands of states and their governors.

The guidelines initially recommend a ban on non-essential travel, with strict physical distancing (six feet) between consumers whether at movie theatres or sport stadia, with public assembly of no more than groups of ten, increasing in the third-phase, to fifty attendees so long as there is no rebound in virus infections with an eventual ‘return of packed arenas for sporting events, large crowds and concerts.’

 

 

When will consumers re-embrace the live experience?

The Robert Peston political discussion programme on British television network ITV, revealed on Wednesday 22nd April (https://www.itv.com/hub/peston/2a4458a0142) the results of polling research undertaken by JLPartners (https://www.jlpartners.co.uk/polling-results) with 2,033 respondents.

The questions polled included: environments where to wear a mask; the desirability of a personal-identifying NHS App monitoring the spread of the virus; voluntary vaccination; restrictions of movement for older members of the population; the timing for any easing of the lockdown; and which sectors – schools, shops, workplaces, bars & restaurants – should be prioritised to re-open.

In the poll were several queries relating to a public return to pre-COVID-19 activities, including concerts.

The answers were not particularly positive for the live entertainment sector, indicating that currently the majority of consumers would be reticent about re-immersing within the live experience:

4% of those polled would return to live events immediately, or in a few days

8% would go back after a few weeks

21% would go back in a few months

22% would not go back until a vaccine is available

12% did not know

and, 33% did not attend concerts before the lockdown

(A revealing statistic is that 1/3rd of the respondents did not attend concerts before the virus – a reminder that the live music industry had previously failed to engage with the full spectrum of potential audiences.)

 

The ITV / JLPartners survey is obviously a snapshot at a time when everyone is extremely nervous regarding any future normalcy, especially whilst they are faced with more important life and death matters, but of those that attend concerts, approximately 1/3rd would wait a few months before returning, and another 1/3rd would not return until a vaccine was available.

Almost immediately Tom Kiehl the Acting-CEO of UK Music (the umbrella organisation which represents the UK’s music industry) responded to the Peston survey findings stating that more support was required for arenas, venues and festivals:

https://twitter.com/Tomkiehl/status/1253391646886150144

 

A Reuters / Ipsos opinion poll published on the 28th April (https://www.reuters.com/article/us-health-coronavirus-usa-events/most-americans-to-avoid-sports-other-live-events-before-coronavirus-vaccine-reuters-ipsos-idUSKCN22A2AK), which surveyed 4,429 American adults from 15-21 April, and where the poll questions noted a vaccine might not be available for more than a year) also outlined its results:

Professional Sports

17% would attend an event when they reopen

26% would wait until there was a vaccine available

Cinema, Concerts & Live Theatre

27% would go to a performance when venues reopen

32% would wait until there was a vaccine

Amusement & Theme Parks

20% would visit when facilities reopened

59% would wait until there was a vaccine

 

In total 55% of the respondents stated that events should not resume before a vaccine is available.  That figure includes those who have attended such events in the past, which as Reuters noted is ‘an ominous sign for the sports and entertainment industries hoping to return to the spotlight after being shut down by the pandemic.’

 

 

Medical realities & economic considerations for events post-lockdown

Assuming the regulatory approval to reopen the live entertainment sector in a phased and controlled manner is granted, event organisers are then going to have to undertake detailed Risk Assessments for their businesses detailing measures required to protect consumers, staff and performers.

HR and Health & Safety teams will need to develop policies and procedures for workforce contact with colleagues, suppliers (staging, lighting, PA, crew, merchandising etc. as well as administrative consumables), touring artists and the public, and establish clear guidelines for regular SARS-CoV-2 antibody testing and identify retrospective-tracing measures to follow-up on any test results.

There are also other event administrative requirements which may include liaison with police, local licensing authorities, emergency services, technical carnets and personal health passport schemes, or the fulfilment of new event insurance criteria.  (Given the paucity of insurance pay-out for event cancellation or business disruption within the live sector this will undoubtedly be an ongoing source of conflict – see the NTIA campaign against the no-pay-out insurance industry: https://www.ntia.co.uk/philip-kolvin-qc-to-challenge-insurance-claim-denial-by-hiscox/.)

 

With the current requirement to minimize non-essential travel, and with a number of countries operating 14-day quarantine restrictions for international travellers, touring by overseas acts may be logistically impractical and certainly too expensive for many, and so events going forward may need to focus on local / national acts and/or combine elements of virtual or live streaming of performances.

It is also likely that before the deployment of any vaccine, some form of social-distancing (two metres?) and masks for audience members travelling to/from the events will continue to be required for an extended period.

Once they arrive at the event these wider societal restrictions surely would not cease – unless the live industry is asking for an exception due to economic needs overriding medical advice?

 

Assuming social-distancing is then required at events there would be no personal contact permitted i.e. no hugging, handshakes or mosh-pits, with potentially barriers and metered queuing in all public foyer areas, toilet facilities and at entrances and exits.

How audiences would then be accommodated in seated venues within social-distancing guidelines is currently unclear.  But architectural firm DLR Group have stated (‘Sports arenas could require ‘necessary renovations’ for social distancing, architect firm says’ – https://www.cnbc.com/2020/04/26/coronavirus-social-distancing-could-require-necessary-renovations-to-sports-arenas.html) that in the short-term venues could limit seat sales leaving a safe perimeter to abide by social-distancing regulations, and in the mid-term seats could be permanently removed if necessary.

Seating distancing plan Source: DLR Group

However, this arrangement with alternate seats or rows left vacant (with ticketing service platforms already posting online demos of their new algorithm placing ticket buyers in best available socially-distanced seats) is unlikely to be financially feasible, or culturally desirable,  for event organisers and venues.

 

The live performing arts (ballet, comedy, dance, music, opera, theatre) already operates on too-thin margins (or relies on donations, subsidy and incremental event revenues to offset costs), so distancing guidelines if applied to events would make a return to pre-Coronavirus business almost impossible for any medium to large-scale production, unless support is offered by governments: Tom Kiehl, UK Music Op-Ed: Why the UK government must help save our live industry – https://www.iq-mag.net/2020/04/why-uk-government-must-save-live-industry/.

 

An additional query relates to how would performances be staged with social-distancing between actors, musicians and performers?

 

Personal protective equipment may also need to be provided for all those members of staff with high interaction with the public or event production services e.g. event crew and management, concierge, box office staff and event security.

Mobile App tracing technologies are potentially irrelevant to events – aside from any privacy issues, as they are designed to monitor the spread of the virus rather than guarantee the mobile owner is free of illness – unless personal identification will be required and that corresponds to the mobile app avatar which is then refreshed at point-of-entry, and they also have a valid event ticket?

Immunity Tests also cannot be implemented at event entrances (for obvious hygiene, security and traffic congestion reasons), but there is a growing discussion relating to the utilisation of Thermometer Scans at entrance points – with a quick test, if pass then enter, if fail either wait a few minutes and retest, or refuse admission and/or refer to medical assistance – if any are readily available for events, surely many will still be needed at the medical frontline elsewhere, or recovering from recent exertions.

There is also a moral as well as logistical question relating to the needs of the live sector disrupting or distracting the emergency services, police, ambulance and event support paramedics from their core health focus.

 

Additionally, sanitation and regular disinfection of all common and (one-way) high-traffic venue areas would be required, with increased ventilation of the performance space, auditorium and foyer areas, and this will all need to be documented enabling transparency for 3rd Party Agencies and to reassure the public, with special regard to entrances, exits, bars, toilets, hospitality suites, seating etc.

Event signage, queue management and digital ticketing – will any other format now be culturally acceptable? – will all need to be recalibrated.  Protective screens may need to be installed at contactless-only cash registers and box office counters with serving staff again provided with protective masks and gloves.

Similarly, any event F&B may have to utilise one-time use (disposable or recycled ?) drink cartons and/or individualised food portions / snacks i.e. no more buffet-style or open-access food displays.  But anti-bacterial hand wash dispensers should be readily available.

In short, hygienic and well-operated venues may feel that they have disinfected the spirit of live out with these new protocols, but welcome to the new normal.

 

Lastly, the possibility of a resurgence in infections following relaxation of the containment measures would potentially lead to more aggressive lockdowns with tougher isolation measures then currently enforced.  So, the live sector really does not want to get any of this wrong by rushing back too soon, or ill-prepared.

It is also noteworthy that both Microsoft (https://www.theverge.com/2020/4/7/21211721/microsoft-events-build-2021-digital-only-coronavirus-plans) and Facebook (https://www.conference-news.co.uk/coronavirus-updates-news/zuckerberg-says-facebook-wont-run-large-physical-events-until-june-2021) have postponed all large in-person gatherings – fifty or more – until the summer of 2021.  So, in-person keynotes from the tech industry or other international stars of culture and business may have to wait.

 

Without any clear guidance the live industries will have to work out much of this (and more) on an individual company basis as there is no industry-agreed lockdown exit plan, and then calculate how and when they might re-open, if at all.

We are just ending the first phase of the Coronavirus postponement cycle with live events, festivals and tournaments rescheduled or cancelled between March – June.

Now in the second phase events that were originally scheduled for July – September are also being impacted, and the industry expectation is that 2020 is already over for major international touring artists and events.

Going forward surely there can be no return to live events if there is any uncertainty with regards to the health and safety of artists, producers, venues and the public. Or will economic needs override?

The industry therefore needs to plan for the period post-lockdown with training and resources made available for the new operational environment.

But aside from that the sector also needs to educate and inform audiences and other event constituents what they are doing to protect them, for as noted by Rafael Behr (‘The lockdown in our minds will be the last restriction to be lifted’ – https://www.theguardian.com/commentisfree/2020/apr/28/lockdown-restrictions-solidarity-coronavirus-social-distancing ) the legacy of the lockdown will take some time to be erased from our collective consciousness.

 

Stay safe.

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‘Peak Bleak’ and the ‘Margin Call’ of Live Entertainment

Since my last scribblings Post-Lockdown: Remote-Experiences; the ‘Gig Economy’; Follow the Mon€y & the Disruption of Live some industry colleagues have remarked that perhaps my perspective is a little dark, overly simplistic or even negative with regards to the abilities of the live entertainment sector to eventually bounce-back, with renewed enthusiasm and energy.

We are only a few weeks into this lockdown, and all having to adapt to an evolving environment, with imprecise and isolated information and so it is difficult to be certain, but the outlook is not good.

I will obviously be very happy to be ultimately proved wrong, but in the current environment of a deadly pandemic with an associated economic downward-spiral of furloughs, layoffs, zero commercial activity, and no immediate horizon for an improvement, arguably it’s going to get a lot worse for the live industry before whatever level of relaunch happens along.

Stock Markets

Source: https://www.bbc.co.uk/news/business-51706225

And the timing of any recovery? Don’t be mistaken in thinking it’s going to be anything other than a painful and difficult process and take longer than many currently imagine (Why The Global Recession Could Last A Long Time – Peter S. Goodman, New York Times).

IMF Blog

https://blogs.imf.org/2020/04/14/the-great-lockdown-worst-economic-downturn-since-the-great-depression/

So that is the current and future macro-economic reality for the live industry, but more specifically.

 

‘Peak Bleak’

Last week Variety reported (‘Concert Industry Hits Peak Bleak as Artist Guarantees Disappear, Refunds Get Complicated’ – Shirley Halperin, Jem Aswad) that across the live music industry there was an urgent recalculation of the supply-side economics with artist guarantees likely to all but disappear in the near-future and negotiations with promoter-producers would likely involve some form of shared-risk becoming the preferred format for anyone willing and able to tour.

It was further reported that any 2020 events not yet announced were effectively cancelled and that the surviving, often already rescheduled, festivals were now offering a 35% reduction on artist fees: take-it-or-leave-it.

On the demand-side there was also reference to the apparent change in ticket agency refund policies, as reported by the New York Times and others (‘Angry Fans Say First the Concerts Were Canceled, Then the Refunds’ – Ben Sisario) stating that only events with full cancellation would be refunded.  But for postponed or rescheduled events consumers would be expected to continue to wait for further updates or event maturity.

This position immediately attracted the ire of consumer groups, politicians, and media commentators (‘Ticketmaster Quietly Changes Its Refund Policy (TL;DR: You’re Screwed)’ – DigitalMusicNews + Ticketmaster, StubHub, Eventbrite Have All Changed Their Refund Policies – A Journal Of Musical Things), resulting in further policy clarifications and statements (Ticketmaster Clarifies US Refund Policy – IQ Magazine) which merely served to add to the noise and seemingly confirmed a business sector reverting to self-interested type and distancing itself from its consumer-facing moral if not legal obligations.

The Variety article also examined the role played by the self-styled ‘Global Taskforce’ (Statement From Live Nation, AEG, CAA, WME, Paradigm And UTA) the largest live entertainment agencies and promoters, who previously (March 12th) collectively coordinated and then presented a halt to concerts until the end of the month.

But unstated was that the joint-industry conference calls had obviously continued.

And not just to discuss the conflicting future logistical demands of routings and timings for artist and venue availabilities, but also if/when the pandemic should recede sufficiently for the live music industry to make any form of meaningful return.

However, the live sector isn’t the master of its own destiny with the U.S. (still its dominant market and economic driver) experiencing mass unemployment (22M Out Of Work In US As Coronavirus Takes Heavy Economic Toll – The Guardian) , and corporations across all industries desperately attempting to save cash, cutting costs, refinancing debt or pivoting operations to manage the economic fallout.

The Federal Government’s ‘gating criteria’ for the re-opening of venues effectively passed responsibility for the implementation of any timetable to the individual States. And many Governors (New York Extends Stay-At-Home Restrictions Through May 15 – Billboard) and city Mayors (Coronavirus Could Halt L.A. Concerts, Sporting Events Until 2021, Garcetti Says – L.A. Times) across America have indicated that without meaningful testing and protection, and with an effective vaccine still many months away, there will be no large-scale sporting events or concerts permitted until 2021 (New York And LA Mayors Say Live Events ‘Difficult To Imagine’ Until 2021 – Billboard).

Against this background, there was suddenly a fundamental change in the dialogue between the leading live music organisations and its consumers, fans, and patrons.

 

The ‘Margin Call’ of Live Entertainment

Margin Call

(© Before the Door Pictures / Lionsgate / Roadside Attractions)

As you’re all be aware ‘Margin Call’ is a 2011 film written and directed by J. C. Chandor (https://en.wikipedia.org/wiki/Margin_Call).  Essentially the story takes place over 24-hours at an investment bank during the early stages of the 2008 financial crisis and concerns the amoral decisions taken by senior executives to isolate and self-protect the company.

Substituting the above movie poster with headshots of the ‘Global Taskforce’Jay Marciano (Chairman and CEO, AEG Presents), Dan Beckerman (President and CEO, AEG & Board Member, ASM Global), Michael Rapino (CEO and President, Live Nation Entertainment), Rob Light (Managing Partner and Head of the Music Division, CAA), Marc Geiger (Partner and Head of Music, WME), Sam Gores (Chairman, Paradigm), Marty Diamond (Head of Global Music, Paradigm) and David Zedeck (Partner and Global Head Of Music, UTA) – would these executives now facing a similar global meltdown and potential fiscal ruin react in the same self-interested way?

The New York Times on April 16th first revealed (‘Concert Giant AEG Offers Frustrated Fans A Refund’ – Ben Sisario) that AEG was to offer a rolling 30-day refund period for all Coronavirus rescheduled events:

AEG’s refund window will work like this: On May 1, fans will have 30 days to request refunds for shows that have already been rescheduled. After May 1, they will get 30 days from the time new dates are announced.

This policy was consistent with the measures first taken by AEG / Goldenvoice following the original rescheduling of Coachella to October (It’s Official: Coachella Has Been Postponed Until October – L.A. Times), and importantly, this wider ticket refund statement had been agreed in advance with the various major talent agencies, all members of the ‘Global Taskforce’ and therefore under negotiation for some time.

 

Twenty-four hours later (April 17th) there was a follow-up article, again in the New York Times which revealed (Under Fire, Live Nation Outlines New Ticket Refund Plan – Ben Sisario) the response from Live Nation.

Like AEG there would be a rolling 30-day refund period for all Coronavirus rescheduled events, starting May 1st.  Additionally for Live Nation promoted events there were a number of incentives offered to consumers to hold on to their tickets, including the issuing of customer credits worth 150% of the tickets’ value to use on future events (albeit the program only applied to the U.S.).

 

Pushed or Jumped?

In the days surrounding these announcements, two members of the U.S. Congress – Representative Katie Porter and Congressman Bill Pascrell – had called on Live Nation and Ticketmaster to refund fans’ money for postponed as well as cancelled events:

‘With Americans weathering the brutal and continuing impacts of this global crisis, your decision to confiscate their money is reprehensible and should be reversed immediately’ – https://pascrell.house.gov/news/documentsingle.aspx?DocumentID=4260

Additionally, NY Senator James Skoufis had requested the New York Attorney General open an investigation into the practises of Ticketmaster.  A spokesman for the Attorney General had declined to discuss but added ‘We are already looking into the matter.’

Ticketmaster had previously denied changing its refund policy, saying that it only clarified language on its website, but Jared Smith (President Ticketmaster) now stated (April 17th):

Ticketmaster, with the support of our clients, intends to honour our longstanding practice of allowing refunds on cancelled or postponed shows https://blog.ticketmaster.com/a-message-from-ticketmaster-regarding-live-event-refunds/

The post further detailed that there were approximately 55,000 events on the Ticketmaster system between March 1st and the end of 2020, but that 30,000 had already been postponed or cancelled as a result of COVID-19.

Of those 30,000 events, over 12,000 have already been cancelled and Ticketmaster is actively issuing refunds to every one of the purchasers of those events.

A further 5,000 events have been rescheduled, and organizers have now authorized the issuing of refunds to consumers who request them.

Of the remaining 14,000 events – including sports, concerts and theatre shows – event promoters are apparently still considering options of rescheduling or cancellation, but as soon as Ticketmaster has confirmation of those decisions they would be passed onto consumers, with associated refund or ticket retention instructions.

The post confirmed that it is the standard business practice of the Ticketmaster platform to dispatch revenues to event organizers on a weekly basis as tickets are sold.  And Ticketmaster had apparently already distributed approx. $2Bn to those event organizers ‘making it impossible to issue refunds to fans before recouping sales receipts from the organizers, as we’ve done in the past.’

But that ‘Ticketmaster intends to refund as many tickets as possible in as timely a fashion as is feasible.’

 

The Liquidity of Live Nation / Ticketmaster

In preparation for the rolling release of ticket refunds for postponed and further cancelled events, Live Nation (including Ticketmaster) had announced four days earlier (April 13th) (https://www.livenationentertainment.com/2020/04/live-nation-announces-credit-agreement-amendment-additional-revolving-credit-facility-and-cost-reduction-program/) an amended credit agreement, an increased revolving credit facility and the targeting of approx. $500M in cost reductions during 2020.

After speaking to ‘Joseph Bagodonuts’ (a former accountant for one of the ‘Global Taskforce’) and a number of other industry colleagues, but without issuing a formal disclaimer (‘Past performance is not necessarily indicative of future results. All investments carry risk and all investment decisions of an individual remain the responsibility of that individual’), the following points are intended to prompt further discussion, and should only be interpreted as opinion, for which apologies in advance for any technical errors.

 

The amended credit agreement ensured that Live Nation was granted relief from the debt covenants for Q2 2020 and Q3 2020, because their bank realised due to the cessation of events, that there was likely no way to meet them.

Before this action, Live Nation was annually paying approx. $140M in debt interest with, as of December 31st 2019, approx. $3.4Bn in debt and $2.3Bn in operating leases (Live National Entertainment, 2019 Annual Report: https://investors.livenationentertainment.com/sec-filings/annual-reports).

Live Nation has successfully negotiated an additional (or higher) $120M line of credit, increasing its available borrowing to $940M – $400M from the debt facility and $540M from the revolver.

As part of cost reduction efforts Live Nation will implement salary cuts for senior executives, hiring freezes, reduction in the use of contractors, rent re-negotiations and furloughs with Live Nation indicating its intention to utilize the robust payroll support programs offered in the UK, Germany, Italy, France, Spain, and Australia to mitigate a substantial portion of employee costs.  Additionally, in the U.S., Live Nation expects to receive payroll support under the Employee Retention Credit for employer’s program established as part of the 2020 CARES Act.

Live Nation operating expenses are approx. $2Bn annually, so the next two quarters would normally see them burn through half of that, hence the need for $500M in costs savings – which should help see them through this year.

These actions would apparently raise the overall company liquidity to $3.8Bn.  But money received for events past February 29, 2020 are listed as event related deferred revenue which totals $2Bn and this may be a limiting factor.

Live Nation Cash

 

However, Live Nation expects that going forward not all customers will request ticket refunds (apparently over the last month only 5% – 20% of ticket holders for rescheduled shows have done so), with the vast majority preferring to hold on to their tickets for the future date(s).

Based on these trends, as well as an analysis of scenarios where refund rates increase above 20%, aided by the allowance that some international Governments including Germany, Italy and Belgium now permit the issuance of vouchers in place of cash refunds, and planned OnSales in late 2020 for events in 2021, Live Nation is confident it has sufficient liquidity:

‘… gives the company a total liquidity position of $3.8 billion. While event-related deferred revenue balances fluctuate over the course of the year, given the timing of shows in 2020 and expected substantial volume of on-sales for 2021 shows in the second half of this year, the company expects this number to remain above seasonally normal levels throughout this year.’

 

However, Live Nation ceased all concert activity in mid-March, and so the company’s Q1 2020 operating loss is expected to widen versus prior year with adjusted operating income (AOI) expected to drop from being in-line with 2019’s strong first quarter results to a loss, while revenue for the quarter is expected to be down approximately 20%.

Admittedly, Q1 2020 metrics do not tell the full story not least because it is typically the weakest of the year.  And in an interview with CNBC (https://www.youtube.com/watch?v=BVnp6QcOQqQ), Joe Berchtold (President Live Nation) offered an positive tone for the company’s future resilience and remained cautiously optimistic for the remainder of 2020, whilst stressing the consumers appetite for live events would remain undiminished when they (eventually) return in 2021.  (A gamble but what is the guy meant to say?)

However, most of Live Nation’s direct expenses are artist fees. So, two big questions:

Firstly, does Live Nation have ‘Force Majeure’ coverage for the already cancelled or postponed events?  Presumably not, or not consistently across all events, otherwise this would have been a good opportunity to trumpet the fact that they will be able to recover some costs.

Secondly, will Live Nation be able to exert downward pressure on the cost of talent going forward to ease the recovery of live?  Should artists and their management expect tougher negotiations in the near-future?

Additionally, events that were originally scheduled for May, June and July 2020 are currently very uncertain if not already lost.  Given that Q2 and especially Q3 are the key quarters for Live Nation (in 2019 Q2 + Q3 revenues were approx. 60% of annual total or $6.9Bn) the fact that events for August, September and beyond may also need to be cancelled or postponed will impact future projections and overall sustainability.

An article published (April 18th) by Bloomberg (The Music Industry’s Lost Summer: No Bieber, No Swift And Mass Layoffs) suggests that most promoters are increasingly accepting that 2020 is indeed a write-off:

‘The live concert industry might be in the most difficult position of any industry in America. … They talk about airlines. They talk about the auto industry. But the reality is they’ll be back in business way before the concert industry is back.’ – Gregg Perloff, Another Plant Entertainment

Another problem for Live Nation is where it has successfully postponed or rescheduled shows.  Even assuming the proportion of customer refunds remain consistently low, then Live Nation still has a level of increased show costs (the extended ticket sales window and complications resulting from refunds and rescheduling, event re-marketing, revised production services and event logistics, venue cleansing & hygiene, incremental insurance etc.), for a reduced number of events, inevitably attracting fewer attendees, with arguably lower spending on incremental services (F&B, Merchandise etc.) as even those consumers keen to attend will have less cash.

Additionally, Live Nation will have impaired sponsorship and endorsement deals – historically only 5% of its total revenue, but it accounts for up to 45% of its AOI.  In a recent WSJ article IEG reported that a six-month shutdown of live sports and entertainment would put at risk approx. $10Bn of sponsorships – ‘Live Sports and Entertainment Are Shut. Sponsorships Are Taking a Hit’ (SubReq).

Lastly, the act of postponement of events to late 2020 or even 2021 will effectively push concerts, festivals and tours into a new extended timetable and possibly neither artist diaries or venues will be able to easily accommodate this shift without impairing events originally planned for next year – even assuming consumer disposal income, demand for, and access to events has fully recovered.

In 2019 Live Nation had a total annual revenue of $11.5Bn  (https://investors.livenationentertainment.com/) but the full impact of COVID-19 will see that dramatically downsize this year and could also impact 2021 as the activities initially planned for 2020 effectively become split over two years, if not longer, and the cashflow impact is therefore extended for 12-18 months.

They can currently borrow approx. $940M but will have little-to-no revenue to cover any additional unplanned costs.  Add in their pre-existing debt service and unless there is a dramatic global breakthrough in vaccine and personal protection, they are at some point heading back to the ATM.

As previously outlined the live entertainment financial ecosystem as currently designed only works on velocity – covering one event reconciliation (debt) with the next Onsale (deal).

And it all stopped.  At once.  Dark enough for you?

 

***

Contact: chambers.tj@gmail.com