Are We Facing a Post-Pandemic Concert Venue Consolidation?

 

Small concert venues teeter the line between a vital music industry need and a profitability challenge for their owners. They are a keystone to the entire music industry serving as the laboratories where artists hone their skills and are instrumental in building and empowering fan bases that will help push that talent up the pipeline to bigger spaces. Yet they operate within a risky business model that is loaded with unpredictability due to the status of the artists they support and the caps on their income streams.

 

There is no doubt that the major live event brands such as Live Nation and AEG understand the vital importance of smaller venues for their long-term strategy. They need these establishments to survive so future superstars and their fan bases can be cultivated to the point that they can fill their larger (and more profitable) amphitheaters and stadiums. Before the pandemic hit, Live Nation was on a $20 million-plus spending spree in Southern California including the acquisition of Spaceland Presents and their roster of small venues such as Echoplex, the Echo, and the Regent. Pre-COVID, both AEG and Live Nation were actively shopping the smaller cap space with every tool at their disposal.  Their strategies included buying out smaller promoters, partnering with established venues, exclusive promotion deals, and perhaps the most strategic.  Selling and installing their ticketing services into these independent venues, which not only provides the majors with revenue but a treasure trove of data to help focus their future investment decisions.

 

Most independent owners will tell you they do this for the love of music and when you analyze their basic business model. You will quickly surmise they aren’t lying. Profitability is difficult in the under 1,000 cap space. The smaller audience size means that the fixed cost per person is higher. This impinges on the variable costs per customer and leads to reduced profitability per show. Add in the fact that the acts at this level are still building their fan bases and owners face the very real possibility that they will not reach 100% occupancy on a regular basis. This lack of regular profitability leads to less money in reserves for slower times and very little protection from systematic risk such as a pandemic that forces them to close down indefinitely.   We have been witnessing this playout since COVID hit. By June of 2020, 90% of Independent Venue Owners said they would need to close within a few months without government help to sustain their businesses. Many are ecstatic that the US Government could provide much-needed relief soon, but this help may (unfortunately) be too little too late. Especially if there are no further rounds of funding coming down the pike.

 

Smaller cap venues simply do not have the economic resources to support reduced capacity, increased testing and sanitization protocols, state and local shutdowns, and weary public. Unfortunately, this means that we will likely continue to see many of these spaces shutter their doors into 2022, and while that is bad news for fans, independent owners, and the free market. It is a HUGE opportunity for well-positioned majors such as Live Nation and AEG.

 

In the words of Baron Rothschild, “buy when there is blood in the streets.” Unfortunately for the live concert industry, very few are positioned to heed the Baron’s advice. Both Live Nation and AEG have the infrastructure and financial reserves to withstand the COVID pandemic. While LN has a serious advantage thanks to their stock market status. A public company can secure financing through numerous debt instruments outside of typical lenders such as selling bonds or by releasing more shares. They can also renegotiate existing loans more easily thanks to their massive liquidity and the horizon-focused mindset of their investors.

 

Both companies have already reduced their workforce and cut spending at unprecedented rates due to the pandemic. And while this is difficult to swallow now, it does pose the opportunity for them to return to service much leaner and potentially free up capital to allocate towards future growth in the strategically important small-cap market. Add in the fact that both have troves of ticketing data which can be cross-analyzed against economic stricken hotspots, prime tour markets, and real estate prices and we are left with a large probability for future consolidation of the small-cap venue market.

 

There are a few saving graces for independent venue owners.  One is the creation of the National Independent Venue Association (NIVA). This organization burst onto the scene and was key in lobbying the US Congress for relief.  They will need to remain vigilant post-COVID and shift their focus from relief to the defense of a free market for the live music industry. Another comes in those with a true passion for live music.  Be it owners, managers, fans, or even leaders at the helm of these majors. We need people who understand that music was never meant to be corporate. It was meant to be raw, emotional, messy, and a little bit scary.  Only then will the magic present itself.

 

My New Gig

 

I am sure many reading this would agree 2020 has been quite challenging. It has been a crazy and (at times) exhausting year. Personally, things have been a bit more hectic as I relocated from AZ to FL to start my new gig with Virgin Voyages as their Manager – Music Production & Operations.

 

The cruise industry was not on my radar when I was looking for the next chapter in my career. Having worked on ships as a musician and later operating as a booking partner for all the major lines. I just didn’t feel that the cruise industry aligned with my goals. I was looking to create something new in the live music industry and in my opinion that doesn’t happen too often at sea. But when I came across the gig listed for Virgin Voyages it caught me as different. I felt compelled to apply and I am lucky that I did.

 

My enthusiasm to hit the high seas quickly elevated as I made my way through their interview process, spoke with their team, and learned about the Virgin culture. If you don’t know, Virgin got its start as a record club on the streets of London.  Shortly after, they opened a recording studio called The Manor, which morphed into a record label. Their first release Tubular Bells by Mike Oldfield would eventually become the theme for the 1974 classic The Exorcist. In 1977, Branson himself convinced The Sex Pistols to join Virgin and together they dropped a piece of Punk Rock history called Never Mind the Bollocks, Here’s the Sex Pistols.

 

When you join the Virgin namesake you quickly witness the correlation between their early days as a record label and what the (dare I say) conglomerate has become today. One where it doesn’t matter if you create progressive cinematic rock like Oldfield, screamed for anarchy like Johnny Rotten, or are made up of an eclectic group fronted by an openly Irish gay man like the Culture Club. If the product is good and you care deeply about it, Virgin has your back.

 

And so here I am. A Virgin employee getting ready to help launch our first ship – The Scarlet Lady with two more visible on the horizon. I am surrounded and supported by some of the most driven and intelligent cruise and non-cruise people in the game. The excitement of what we are creating is powerful. It has motivated me to reclaim my passion for music in ways I never thought the cruise industry could provide.

Why You Should Avoid Physical Press Kits.

 

Jeremy Larochelle offers up two reasons why he thinks it’s a bad idea to use physical press kits when selling your live entertainment services.

 

If you need help building your presskit, check out these online services that make life a bit easier.

Sonicbids: https://www.sonicbids.com/electronic-press-kit/

ReverbNation: https://www.reverbnation.com/band-promotion/press_kit

Bandzoogle: https://bandzoogle.com

Promoter and Buyers Explained

 

I am a talent buyer in the casino industry.  Yet, some people tend to call me a promoter and while both share similar responsibilities. There are some differences between the two as well as one very important concept both share.  Watch the video to learn more about talent buyers and promoters from entertainment consultant Jeremy Larochelle.

 

 

 

The Derivative Benefit of Record Studios Past

 

 

As I watched the 2018 Rock and Roll Hall of fame Induction Ceremony on HBO, I couldn’t help but admire how tight many of the bands inducted were despite their long absences from the stage. Most notably were The Cars. Whom had not performed together since 2011. The group burned through some of their most iconic hits including Moving In Stereo, Just What I Needed, and My Best Friend’s Girl nailing the tiny progressions, hooks, harmonies, and changes in each that are forever etched in our minds.

 

And it got me thinking.

 

Thinking about how our foray into the modern “home studio” has killed a very important derivative benefit that blest many bands such as The Cars, Lauryn Hill, The Moody Blues, and Bon Jovi during their upbringing in the “offline” world of music consumption. The benefit of being forced to craft a song into a hit by playing through its pieces over and over again.

 

We all know the primary responsibility of the recording studio – to record. However, pre-Pro Tools. The studio was a place where you and your bandmates went to develop your songs with the help of a producer. Unlike today, where you can kind of get the right notes down and then let the engineers copy, paste, and autotune them into perfection. The studio of yesterday required you to play your parts over and over again until you got the perfect take. Sure, there were crutches, but they were costly and generally took more time than the musician just working his or her instrument until they got it right.

 

This process surely helped make great hits – just ask The Cars. However, it also forced the musicians to commit these hooks, riffs, rhythms, and notes to their subconscious must like Danielson did under Mr. Miyagi’s tutelage with his “wax-on/ wax-off technique.” Then, when the recording was done. These bands hit the road for 200 plus dates a year playing those same riffs over and over, further committing them to a part of the brain that few people will ever tap into.

 

The end result is seventy plus year-old rockers who can still hit the stage after nearly a decade of not playing together and give me Just What I Needed – a collection of iconic tunes that sound just like I first heard them in a Pontiac Trans Am.

 

 

 

 

 

 

Is EDM About to Tip Over?

First and foremost. This is just my opinion on where the Electronic Dance Music (EDM) genre is headed. However, I will apply some scientific theory to my analysis. If anything more, than to just make me sound MUCH smarter than I am.

 

With that being said, I want to start off by presenting you with the basic Adoption Cycle.  It looks something like this. Some may notice it is a bell curve with a normal distribution and standard deviation.

 

A basic adoption cycle

 

The adoption cycle concept runs through nearly every conceivable business offering and music consumption is no different. Credit of the current model can be traced back to Everett Rogers who organized consumers into various groups based on their personality traits. According to Rogers, these traits influence their adoption of a new offering in the marketplace. The fashion industry is a great example of how the adoption cycle works. In this example, Gucci will unveil a new line at Milan Fashion Week. Right out of the gate, Innovators will spar and pay top dollar to be the first to don the coveted threads as they are typically of a higher social class and thus inelastic to price. Shortly thereafter, the Early Adopters will seek out the new styles. Many of these individuals are of the opinion class, industry gatekeepers, who influence the longer running growth of the Early Majority, which follows to the apex of the Bell Curve.

 

At this point, another economic principle takes hold. With Innovators, Early Adopters, and the Early Majority showcasing their new wears, more potential consumers are influenced and demand increases. However, those left are more price sensitive, so they seek out alternatives, which are satisfied through bargain stores such as Macy’s and Target that appeal to that Late Majority. At this point, Gucci has lost their competitive advantage and the company will move onto the next great design, leaving the market to these lesser profitable sales channels. With that exit, price continues to drop allowing the Laggards to pick up knockoff items for bargain prices at lower-cost outlets. Then, the cycle starts again with the newest fashion.

 

One might think that the adoption cycle is entirely the brainchild of the master brand to get you to purchase new items every year. And in many ways. It is.  In the technology market, this is called product obsolescence. However, the cycle is also a reflection on how different consumer personalities correlate to a particular product at various price points on the supply/demand curve and when analyzed from this perspective. One can more-easily predict when a product, fad, or trend is about to change or even disappear from the mainstream market altogether.

 

This analysis can be applied to the product of music as well. How many times has a friend told you about a new group that you have never even heard of? In this situation. That friend is an Innovator. Or have you ever listened to the radio or a curated playlist, heard a great new band, and then went and streamed their album. (That channel who lead you to the band is made up of Early Adopters). A year down the road, you go to their sold-out 600 seat show to join the Early Majority who have been influenced by those Innovators and Adopters. A year after that, your new favorite band is in-town playing before 1,500 Late Majority fans who have finally caught on. As the years follow, the band continues to pick up fans, but at a less rapid pace. They play to 1,850 the next year and 2,000 Laggards the year after that while a newer act fills the venue across the street on their second route through town.

 

This is also the case with entire genres of music.  Remember Grunge?  How about the Ska movement?

 

Which brings me to my contention regarding EDM.

 

Specifically in the U.S., we currently seem to be sitting at (or even slightly over) the apex of the bell-curve regarding the EDM adoption cycle. Evidence of this lies in where the genre has permeated society. It used to be that EDM was underground, held at house parties and hidden raves where Innovators caught artists such as Armin Van Burren, Daft Punk, and Afrojack on their rise. Music consumers looking for alternatives to typical live-music caught on, helping push these artists into larger clubs and thus acquiring a steady stream of Early Adopters. Eventually, DJ AM among others brought the genre to thousands with residencies in Vegas. Quickly pushing the genre up the Early Majority side of the curve. Today, EDM has found homes in most casinos, numerous festivals that dwarf anything live-music can match, and even terrestrial radio bringing the entire genre to the apex of the bell curve. Now, it is not uncommon to catch quality DJ’s in Nordstroms, restaurants, and even Whole Foods, which suggests the genre has not only peaked but actually may be moving into the Late Majority.

 

This does not mean that EDM is over. The bell curve representing this genre’s adoption is quite large compared to other musical choices such as, say, Texas Swing or even punk, which only lasted in the mainstream from about 74-84′. EDM’s start can be traced back to Jamaican dub in the 60’s with electronic music entering the mainstream in the 1980’s. This means that if we are in fact cresting today, in 2017, the genre has taken nearly 40 years to cover half of its adoption cycle.  Even if its fall is half that time, we still have a lot of booty shaking electronic bass to go.

 

However, as always in entertainment, the question remains.

 

What is next?