Name: Concert Industry Hits Peak Bleak as Artist Guarantees Disappear, Refunds Get Complicated
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Concert Industry Hits Peak Bleak as Artist Guarantees Disappear, Refunds Get Complicated

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As entertainment businesses go, the live music sector has taken among the heaviest beatings by the coronavirus pandemic, with before concerts and other stage performances return to something resembling normalcy.But for artists, agents, promoters, vendors and customers, the pain is immediate and complicated. As the industry struggles to find its footing in this new age of uncertainty, it’s meant taking drastic action to conserve cash flow. At whose expense? No corner of the industry will emerge unscathed, but some will sustain injuries longer than others. And judging by recent reports of refunds being held back from ticket holders, the person “most f—ed is the customer,” offers one live industry insider.More on that shortly, but first a look at the artists. Going forward, multiple sources tell Variety, guarantees — the financial commitment to an act, regardless of ticket sales — will all but disappear for medium to major touring artists as contracts are renegotiated for shows impacted by the pandemic. Any tour in which the on-sale date never came to pass is essentially considered canceled or else up for complete renegotiation of terms, says a source.Typically, a guarantee versus percentage formula has been used where the promoter and artist agree upon a previously negotiated percentage of the gross for a scheduled performance. But if the income comes in lower than the minimum guarantee, the acts gets the guaranteed amount anyway. It’s a low-risk scenario that offers financial security for the artist. If sales are soft, you don’t walk away empty-handed. And if the engagement sells well, you get a percentage share from the first ticket sold. (For context: an artist on the level of commands in the vicinity of $3 million per sold out engagement at London’s 20,000-seat-capacity The O2, according to a well-placed source.)Instead, headlining acts are being offered a bigger share of net profit for the engagement at a scale of 90% — leaving the remaining 10% for the promoter — in lieu of a guarantee. That puts the onus on the act to bring it, as it were, and try to make up for the audience percentage they stand to lose out of residual coronavirus reticence.In an attempt to minimize the damage, promoters may look at other profit-sharing options — offering a guarantee plus percentage based on a break-even, where the act shares in revenue only after production costs are covered and the event makes a profit; or percentage after costs, wherein local promoters lay out all of the costs and pay the act a previously negotiated share. But this too has risks particularly if the organizers have high production costs.“They might consider going to an expense-based deal where they guarantee covering a band’s basic costs, like a tour bus and crew and all that, but to make money and profit, the band is going to have to earn it,” says , founder of the . “Artists who go on the road next year are going to have to make a gamble on themselves.”On the festival front, acts are being asked to take a 35% reduction in fees for a rescheduled appearance. Typically a guarantee only with no profit sharing or backend, the festival reduction is not an official policy but promoters and venue owners are “putting it out there,” says an insider.The amount of disruption that the pandemic has caused is unlike anything veterans of the live industry have ever seen. “This is just so out of the norm,” says Lyman reflecting on his nearly 25 years running a major touring festival (Warped Tour ended its summertime runs in 2018). “We all just have to have an honest discussion about what’s feasible right now.”Indeed, the situation is so out of the norm that early in March, most of the largest live-entertainment agencies and promoters — including , CAA, ICM,&nbsp;, Paradigm and&nbsp;UTA , which are usually at each other’s professional throats&nbsp; — banded together to form a task force to strategize and coordinate a unified response to the spread of coronavirus and its growing impact on the touring business. While the group was initially holding conference calls several times per day, its activity has since tailed off, insiders tell Variety. Among the topics on the agenda was the inevitable bottleneck of demands on venues when re-routing postponed tours (major music tours are booked months if not years in advance) — attempting to reschedule intricately planned outings, all at once, into the fall and winter months require an unprecedented level of cooperation by the agencies.But competition remains despite the good faith effort as venues and touring artists bid for gear, crew, vending and the multitude of basic venue needs. Considering how many companies reliant on live music may struggle with solvency the longer the pandemic goes on, such providers are insisting on 50% deposits just to hold a date.Still, agencies can agree on one thing: they want to keep the money with the artists, which is where refunds come in. — including market leader &nbsp; — that only allow for refunds in the case of a full cancelation, leaving angry fans hundreds or thousands of dollars out-of-pocket for tickets for shows that could be bumped far into the future. In the case of leading secondary-ticket market leader StubHub, the company dropped its refund policy in favor of vouchers for 120% of the original value (leading to at least one lawsuit), saying that refunding every concert canceled due to the pandemic is financially unfeasible.So far, the only major festival to offer ticket buyers a full refund, should they request one, is AEG’s . Its competitor Live Nation, the world’s largest live-entertainment company and owner of Ticketmaster, is struggling with liquidity as its stock price takes a beating — at one point last month the company, valued at 76.08 on Feb. 20, lost two-thirds of its worth, although it has rebounded — and staring down six months or longer with no income. Considering refund returns for Coachella could come in as high as 40%, the cash flow crisis is very much real — no wonder companies don’t want to hand over the many millions of dollars in funds being held.Artists don’t feel comfortable keeping fans’ money hostage either. As Australian dance act RUFUS DU SOL recently explained in a social media post announcing the cancelation of tour dates in May and June: “We explored rescheduling these shows, however we were advised that cancelling was only option in order to trigger immediate refunds to ticket buyers. It felt important to us that we take the necessary action to ensure that your money gets back to you as soon as possible.” Thanking “all the promoters and venues,” the band continues, “It’s a shame this is the only way forward.”Yet in the face of those strong headwinds, Live Nation chairman has made a number of moves intended to bolster confidence in the company and the industry as a whole. Over the past few weeks, he’s invested $1 million of his own money in the company’s stock and announced that he will forego his own $3 million salary this year (moves echoed in lesser amounts by other top executives), along with other cost-reduction efforts cited in an April 13 SEC filing as “hiring freezes, reduction in the use of contractors, rent re-negotiations, furloughs, and reduction or elimination of other discretionary spending,” including, among other things, travel and entertainment, repairs and maintenance, and marketing. Rapino has also created a&nbsp;, and repeatedly assured the staff on conference calls that there will not be layoffs.However, even if quarantines are lifted by late spring, it’s difficult to predict with an accuracy when authorities will give an all-clear to even smaller gatherings — let alone when people will feel secure enough to congregate.A more realistic scenario, industry experts tell Variety, is a “staged evolution” — a gradual return to concertgoing, beginning with smaller venues and slowly ramping up to arenas and stadiums, presumably well after a vaccine has been proven effective.“It’s not like someone’s going to ring a bell and say ‘It’s safe to go to any concert, anywhere,’” says one insider. “It will depend on the capacity of the venues, whether or not the venue is outdoors, where in the country they are and what the social-distancing possibilities look like.”That perspective was echoed by Zeke Emanuel, director of the Healthcare Transformation Institute at the University of Pennsylvania, as part of an expert panel assembled by on life after the pandemic.&nbsp;“You can’t just flip a switch and open the whole of society up,” he said. “It’s just not going to work. It’s too much. The virus will definitely flare back to the worst levels.”And the DNA of deals — not to mention the risks — will change along with that staged evolution. “The shows will have to be profitable before anyone’s profitable,” adds Lyman. “We are going to see many many ways the live business is restructured.”With reporting by Kristin RobinsonJavaScript is required to load the comments.Loading comments...A Variety and iHeartRadio PodcastadTo help keep your account secure, please log-in again.You are no longer onsite at your organization. Please log in.For assistance, contact your corporate administrator.

As entertainment businesses go, the live music sector has taken among the heaviest beatings by the coronavirus pandemic, with before concerts and other stage performances return to something resembling normalcy.But for artists, agents, promoters, vendors and customers, the pain is immediate and complicated. As the industry struggles to find its footing in this new age of uncertainty, it’s meant taking drastic action to conserve cash flow. At whose expense? No corner of the industry will emerge unscathed, but some will sustain injuries longer than others. And judging by recent reports of...

Concert Industry Hits Peak Bleak as Artist Guarantees Disappear, Refunds Get Complicated

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