Hey everyone! I wrote a 40 page paper this semester on the live music industry. I would be attatching it here but the forum does not allow .doc files to be attatched! So I\'m throwing in the actual words, and although my formatting is destroyed, my ideas are not. Enjoy!
The Show Must Go On
An Analysis of the Live Music Industry in Present-Day America
Phish @ Big Cypress Seminole Indian Reservation; Big Cypress, Florida. December 31, 1999.
Seth Wolfman December 17, 2003
The Show Must Go On
Table of Contents
Section I:
Come as You Are:
Introduction . . . 3
Section II:
Money…It’s a Gas: Consumer Expenditures and the Entertainment Industry . . . 5
Section III:
The Electric Slide: Modern Online Music Acquisition . . . 12
Section IV:
It’s Been A Hard Day’s Night: The Production of a Live Musical Event . . . 20
Section V:
I Say Tomāto, You Say Tomâto: Conflicts In the Music Industry . . . 28
Section VI:
I Get By With a Little Help From My Friends: Works Consulted . . . 38
Section I: Come As You Are
Introduction
The purpose of this report is to discover and elaborate on the present condition of the live music industry. Through thorough research and limited previously acquired personal knowledge, I hope to show how all parties involved in this industry work together, and what they can improve on to stay successful as the industry changes. Strengths, weaknesses, opportunities, and threats to all interested parties and to the music industry as a whole will be discussed.
The first step is to take a look at the live music industry’s consumer. The live music consumer is the most important party to the live music industry. Consumers must be exposed to an artist’s music before the consumer will make the effort to see that artist perform. The most ardent live music consumers are people aged 18-30 who live within close proximity of a city. There are many ways for consumers to acquire music. The most modern and controversial method is by acquiring music over the Internet. New laws and rules are constantly coming into play in online music. Several trends become evident in this section. Most notable are the declining entertainment expenditures and the differences between races in America in entertainment expenditure. Rising ticket prices are also a concern. Over the last decade, many small promoters across the country have been bought up by either SFX or Clear Channel. Then, in 2001, Clear Channel acquired SFX, and in so doing achieved exclusive booking rights at hundreds of major arenas and amphitheatres across the country. Ticket prices have been steadily on the rise due to the monopolization of promotions and because businesses that can afford expensive tickets have kept sales going despite the increased prices. While overall attendance is down, revenues and profits have grown slightly.
Online music acquisition has been a hot topic in the last five years. Free online music via Peer-to-Peer networks such as Napster promulgated billions of music files. However, in a controversial court battle involving Napster, free Peer-to-Peer music was outlawed. Free online music is on the verge of extinction now, with pay-per-play services taking over. Different demographics and market segments are best for selling online music to based on their Internet usage habits.
Understanding how concerts come together is the next objective. First, either a promoter or an artist must have the idea to put together a show. Once the two parties have agreed to a date, the show can be promoted. On the show date, many different parties must work together to make sure that the event runs smoothly and that everyone gets paid fairly. Presently, the promoting conglomerates, particularly Clear Channel, hold booking power because artists need to play rooms that these companies hold so many of.
The music industry experiences several difficult and persisting conflicts, which, if unchecked, will harm the industry. The hottest conflict right now is ensuring the security of the patrons and staff of a live musical event without taking away from the entertainment value. Small and large venues face different challenges in maintaining security. By understanding how these challenges come to exist, I hope to infer how they might be overcome as well. Some proposed solutions are outlined for each conflict.
My hope is that I will come away from this report better prepared to enter a career in the live music industry. Thanks are due to Professor Easwar Iyer of the Isenberg School of Management Marketing Department at the University of Massachusetts at Amherst for all of his input and guidance. Enjoy.
Section II: Money…It’s a Gas
Consumer Expenditures and the Entertainment Industry
The modern American consumer faces the difficult yet pleasurable task of choosing how to spend discretionary dollars on entertainment. The number of options available to most consumers is greater now than it has ever been. Also, discretionary spending has been on the decline for many segments. Live music has seen an increase in gross ticket sales, but a loss of overall attendance, which may be highly attributable to newfound competition.
In order for the live music industry to prosper, the economy and consumer attitudes must support discretionary spending. It stands to reason that for most consumers, necessity purchases such as food, clothing, rent/mortgage payments, home utility payments, and such will always be made before the purchase of entertainment products. While basic human needs are universal across race lines, there are distinct differences in how various racial groups in America disperse their discretionary and mandatory spending.
Whites and Asians tend to be the most willing to spend their money on entertainment and other discretionary devices. Hispanics and Blacks spend less overall on entertainment and a higher percentage of their income on the necessities. This may be attributable to the higher average incomes and expenditures of Whites and Asians compared to the average incomes of Blacks and Hispanics. In the year 2000, American Whites and Asians as a combined group expended an average of $39,406 per person. (American Demographics 4/02.) Blacks only spent $28,152 and Hispanics $32,735. When one is spending less overall, it is only logical that a higher percentage of those expenditures would go towards purchases of goods that satisfy basic human needs. On apparel, Blacks spent 6.2% of their income and Hispanics 6.3% of their income in the year 2000 compared with 4.6% for Whites and Asians. In total food, Whites and Asians combined spent 13.2% of their income while Blacks spent 14.7% and Hispanics 16.4%. While food is clearly a basic human need and consumption of it is mandatory for all humans, food does become an entertainment and discretionary expenditure when it is consumed outside of the home. Going to a restaurant fulfills the basic need of food consumption, but is also an entertainment option and comes at a premium. It is noteworthy that Blacks (9.6%) and Hispanics (10.7%) spent a much higher percentage on food consumption at home than Whites and Asians (7.5%). This implies that Whites and Asians may be more likely to spend discretionary dollars by purchasing entertainment that occurs outside of the home, which includes attending live music.
On the discretionary side, Whites and Asians are outspending their Black and Hispanic counterparts on a per-capita basis. Overall entertainment expenditures as a percentage of personal income were 5.1% for Whites and Asians in the year 2000 as opposed to 3.5% for Blacks and 3.6% for Hispanics. Entertainment fees and admissions (read: concert tickets, parking, etc.), were 5.1% for Whites and Asians, but far less for Blacks at just .6% and Hispanics at .8%. If “Entertainment: Fees and Admissions” is understood to be the cost of getting into a live entertainment show, then Whites and Asians are spending nearly nine times more than Blacks and 6.5 times more than Hispanics per dollar earned on live entertainment.
Spending trends throughout the 1990’s indicate a decline in the amount spent on entertainment Dollars. This decline has taken place despite an increase in overall expenditures.
The average household spent $38,045 in 2000, up 34 percent over 1990, outpacing a 28 percent rise in inflation. But consumers directed a larger share of their budgets to health care, housing and transportation, and less to food, apparel and entertainment. A complicated interplay of economics, merchandizing and demographics helped form these big-picture trends. (American Demographics, 4/02)
Yet despite the decreased entertainment expenditures, gross concert revenues have been up significantly. This is attributable to the increase in cost of attending events. Ticket prices have been rising sharply in the last decade, as have concessions, parking and other common entertainment-oriented expenditures. In 1995, the estimated cost of attending a rock/pop concert for a family of 4 was $168, and in 1997 it went up to $187. (Research Alert 10/3/97) That’s a 9% increase, despite an inflation rate of only 5.31% percent in the same period. (U.S. Bureau of Labor Statistics Inflation Calculator) Ticket prices themselves rose from $128 to $148.20 in the rock/pop category, and were up comparably across the board for classical concerts, family shows, and live theater.
These costs have risen as large corporations have increased their stake in the entertainment industry as a means of garnering fame and taking care of clients. By purchasing building naming rights, luxury suites, and large blocks of tickets, businesses have driven up the price of entertainment for the average consumer. A look at new stadiums and arenas built in the year 2000 shows the importance of naming rights and corporate-owned luxury suites. These stadiums and arenas are comparable in most ways to most of the new venues that have been built in the entertainment venue building binge that started in the mid-nineties. Enron Field (home of Major League Baseball’s Houston Astros) boasts 77 suites and is named for what was a powerful corporation. (Amusement Business 12/25/00) Comerica Park (MLB’s Detroit Tigers) has 100 suites, 4000 club seats, and 7000 square feet of club space. Nationwide Arena (National Hockey League’s Columbus Blue Jackets) has 57 suites, 1438 club seats, and 17,500 square feet of signature restaurants. Paul Brown Stadium (National Football League’s Cincinnati Bengals) is loaded with 114 luxury boxes. The list goes on, but these examples show that expensive, high-class entertainment options are being installed throughout venue types.
Luxury boxes and club seating come at prices that only businesses or the wealthiest individuals could ever hope to pay. At Paul Brown Stadium, the cost of renting a luxury suite starts at $48,000 per year, with a five year minimum. (
http://www.bengals.com/tickets/suites.asp) With 16 seats in the suite, and 10 home football games a year, that’s exactly $300 per ticket. Club seats are seats with premium views and services but are not in a private box. At the same venue, club seats range from $800-$2050 per season, or $80-$205 per ticket, with a three season minimum. (
http://www.bengals.com/tickets/clubseats2001.asp) Compare that with total average yearly expenditure for various racial groups. Blacks spent an average of $28,152 in 2000 on everything. (American Demographics 4/02) The $2050 club seat would represent over 7% of the average Black consumer’s total expenditures for a year. However, the average Black used only 3.5% of their expenditures for all entertainment for an entire year. The club seat would be double the amount of an entire year’s entertainment to the average Black consumer. This does not amount to a viable entertainment option for this demographic. The same seat would represent 5.2% of a White/Asian person’s annual expenditures. This is more than their entire entertainment budget for a year (5.1%). Clearly, these seats are intended only for the very wealthiest consumers or seriously rabid football fans. With so much space and resources in new venues being devoted to super-premium entertainment options, the cost of all entertainment options in these venues has risen along with it. A person spending their own money to attend an event now finds themselves in a market where prices are being driven up due to rich customers’ ability to pay huge prices and drive up the market value of tickets and other amenities. With fewer and fewer seats going on sale to the public, ticket distributors can adjust the price ranges at the bottom of the price range to be affordable to only the more financially apt public consumers.
Another factor driving up ticket prices is the surge of ticket agencies. These agencies are the same thing as “scalpers” in that they each obtain as many tickets as possible to big events with the sole purpose of reselling the tickets for more money. The difference is that the agencies acquire a license to practice this trade, while scalpers do not. These agencies pay fees to ticket distributors, usually Ticketmaster and the venues themselves, in order to get the best access to tickets when they go on sale. In some cases the agencies are given special phone numbers and Internet IP addresses that have easy access to tickets. In order to further facilitate attaining tickets online, the agencies run programs on their computers that open thousands of browsers and can automatically fill out ticket request forms. Some of these agencies can be found at
http://www.barrystickets.com, http://www.maximtickets.com, and
http://www.ticketbrokerusa.com. Yet another factor driving up prices is the advent of Ebay and other Internet auction sites. The face value of a ticket has all but lost its meaning to the market. The value of a ticket is now whatever the market will bear, as the entire nation can come together in one place to bid on tickets, driving prices above the face value very quickly. Consumers are becoming aware that if they do not wish to use a ticket, the best place to get rid of it is on Ebay. While some states such as New York and Florida have passed laws limiting the amount their citizens can bid on events within the state, these laws are very hard to enforce and are not universal. Ticketmaster has watched for five years now as the face value of its tickets sometimes go up as much as tenfold overnight. Ticketmaster has announced plans to auction tickets itself in order to capitalize on the actually market value of the ticket. (New York Times 9/1/03) This will further increase the price consumers must pay for live music and other entertainment opportunities.
“Scalping”, which is the common slang for selling a ticket directly outside of the event for more than its face value, is illegal everywhere but can be done in advance on Ebay. This leads people to engage in independent “renegade” ticket brokering, or buying tickets to events anywhere with the intention of reselling the tickets online. Before online auctioning, any “renegade” ticket brokers were very limited in their options, basically only being able to sell tickets at events they could physically get to. Now people can scalp tickets to events anywhere in the country. While it is very hard to say how many people engage in independent ticket brokering, it is safe to say that it is happening frequently and that it is driving ticket prices up.
Consumer expenditure is up overall over the last decade, but generally has only kept pace with inflation. Expenditure on entertainment declined in the 1990’s and is declining again in the current economic slide. White and Asian Americans spend more on entertainment outside the home than Hispanic and Black Americans in total and per capita. Ticket prices to all entertainment events are rising sharply due to corporate purchasing power, online auctioning, and agencies. For the majority of regular public consumers, this all adds up to a message of “Get a connection or stay out”. Despite this unfortunate circumstance, it seems as though prices will continue to rise or stabilize at their already inflated levels since there are enough purchasers in the market at these prices to sustain the increased price levels.
Section III: Electric Slide
Modern Online Music Acquisition
The experience of hearing music can take place in several different ways. There are live performances, ranging in magnitude from coffeehouse open mic nights to huge outdoor events. There is also playing music, which provides the most intensely interactive experience. However, the way that music is almost always experienced is via the playing of recorded music. Most popular music artists make the vast majority of their earnings through the sale of records, as opposed to the sale of concert tickets. In today’s technology-rich America, the sale of albums is threatened by the ability to copy CD’s and other media, and by the ability to share computer music files.
The record industry has been suffering in the last five years, which is the same period of time in which CD burning and file sharing have become popular. Jonathan Lamy, spokesman for the Recording Industry Association of America, claims that record sales are down 31% in that time. (Knight Ridder/Tribune News Service, Sept 30, 2003) In addition, industry publication Billboard estimates that 1000 record stores have closed in the last six months. (KRTNS 9/30/03) Many artists and the RIAA clearly are feeling a pinch, else they would not be taking such drastic measures to prevent these exchanging activities, particularly file sharing.
By understanding who the people are that exchange music, we can achieve a better understanding of who is actively involved in music listening, and therefore most likely to be a consumer of the live music experience. Online music swapping seems to be engaged in by people of all ages and races, particularly those between the ages of 13 and 25. According to a 2001 survey of people ages 15-24 conducted by International Communications Research, 72% of respondents who go online said that they use the Internet to download music files. (Medical Marketing and Media 2/02.) The top uses were send email or use Instant Messenger services at 92% and “look up things for school” at 89%. Despite these and other competing uses of the Internet, nearly three out of four young Internet users are using the Internet to share music files. It is also relevant to note that young Internet users must be Internet experienced (at least one year of Internet usage) before they are likely to being heavily file sharing. While 70% of online teen “veterans” download music files, only 36% of online teen “newbies” participate in these activities. (Youth Markets Alert, XIII, August 2001.) In addition, 65% of teen veterans reported listening to music online as opposed to only 49% of teen newbies. Of the 16 online activities investigated, including “use email”, “send instant messages”, and “buy something online”, the two music activities had the two largest discrepancies between usage amongst veterans and newbies. This suggests that new Internet users may view interacting with music online as a complicated action. 85% of new users use email, and 64% look for information on hobbies. These numbers are nearly double the amount of newbie activity in music. Thus, it seems that some Internet proficiency and comfort are important towards stimulating online participation in music.
Young adults (18-29) are not the only age demographic downloading music, although they are the most dominant. 27% of Internet users age 30-49 also report downloading music. (Pew Internet Project Data, Music Dowloading, File-Sharing, and Copyright, March-May 2003) However, there is a significant drop-off in the age 50 and over category, with only 12% of these Internet users reporting downloading music. All evidence, and even the titles of the reports, seems to conclude that music downloading is dominated by younger users.
In addition to age, differences in online usage and online music exchange can be seen in between races as well. The most active and established race online in America are Asian-Americans. 72% of Asian-American men and 60% of Asian-American women are online users. (Marketing to the Emerging Majorities, February 2002) This significantly outpaces the entire Internet population, which is 52% of all men and 48% of all women. In addition, Asian-Americans are online much more than the next closest race, which is Whites at 55% of men and 50% of women.
The Asian-American users tend to be more experienced with the Internet than other users. 35% of all Asian Internet users are of age 25-34. Overall, the 25-34 year old demographic represents only 24% of Internet users, largely because in all other races surveyed, the 18-24 bracket and the 35-44 bracket have larger percentages than they do with Asian-Americans. In addition, 49% of Asian-American online users report having at least three years of Internet experience. Only 35% of White users, 26% of Black users, 27% of Hispanic users, and 34% overall reported having this much experience.
As stated earlier, it seems that some Internet experience goes a long way towards encouraging online music activity in the teenage demographic. The same holds true for racial demographics. According to the Pew Internet and American Life Project report entitled "Asian Americans and the Internet: The Young and the Connected," 40% of Asian-Americans online report downloading music. This outpaces all other races, including outpacing White users (21%) by a nearly 2:1 margin. In addition, 46% of Asian-American users reported listening to music online, which also outpaces all other races, except Blacks at 55%. The trend here is that Asian-American users tend to be more experienced online, and also tend to participate in online music with more frequency. Again, it seems that Internet savvy leads to Internet music.
Music downloading is highly dependent on having a broadband Internet connection. In Europe, music downloading is on the rise, as are the technologies to make it possible. In Europe, “Up to 18% of Internet users use file-sharing networks at least monthly.” (New Media Age 5/22/03) That figure seems to be low because many Internet users in Europe are not hooked up to the Internet via speedy broadband connections. Presently, 21% of European narrowband users download music from P2P networks such as Kazaa, and 18% listen to audio on the Internet. “Across Europe, 40% of users said that they were very likely to upgrade to broadband because of music-related activities.” (New Media Age) In America, broadband has become the industry standard for anyone planning to install new Internet service. Consequently, we see that a larger percentage of Americans than Europeans are downloading music. Approximately 30% of online Americans download music according to Marketing to the Emerging Majorities 2/02. In Europe, the numbers are 26% in Sweden, 17% in Spain, 15% in UK, and 21% in Europe overall according to New Media Age 5/22/03. In addition, 41% of online Americans with a broadband connection report having ever downloaded music, as opposed to only 25% of dialup users. (Pew) Having the right connection is critical to be able to efficiently download music. Since powerful broadband connections are not universally available yet, it is important to note that downloading music may not be an efficient or even plausible option for all Internet users.
Despite all of the recent lawsuit activities of the RIAA against music downloading individuals, most of these people still do not seem concerned about the ethicality of their actions or of the potential consequences. In fact, 67% of the music downloading population says that they do not care whether the files they share are copyrighted. (Pew 5/03) It seems as though the downloader’s attitude may center more on morality than legality. To a frequent downloader, getting free music does not feel wrong, and the illegality is either unbeknownst to them or it is not viewed as a serious threat. However, the record companies believe that downloading free music is both immoral and an affront to their control of the music.
It seems as though free music certainly has had an affect on CD sales and prices. CD sales volume has dropped in the last three years, as has the prices on CD’s. CD singles in America dropped an astounding 61% from 2001 to 2002. (Music and Copyright 4/2/03) As wee have already seen, the US leads the world in numbers of people who download music and those whom have the opportunity to download music. Given that the most downloading is going on in the United States, it can then be assumed that if the United States is losing album sales faster than other countries, then there exists a high degree of likelihood that this loss of sales is due in at least some part to the number of people downloading music. Indeed, the nation with the next biggest loss of CD single sales in the same timeframe is Japan, which lost 24% (Music and Copyright), a significant loss but still a far cry from the US’s 61%. Given that Japan is a technologically advanced nation with many people online, it follows suit that this nation would experience the second biggest loss in CD single sales.
It seems logical that CD singles would suffer the biggest loss when put up against downloadable singles. Once someone has that one song as a computer file, there seems to be little point in spending money to be able to listen to it more and go through the trouble of storing the CD. Buying the full album, however, still has distinct benefits even to someone who has downloaded every song on the album. The album comes equipped with liner notes and often other perks, such as a DVD or a coupon. Having the full album on a more mobile medium than a computer justifies the troubles necessary to store and maintain the CD. Also, the act of buying the album and being in a record store provides a certain immersion in music. The store clerk may recommend something else, or mention a particular concert that is coming up, especially if the store sells tickets. CD album sales in the US declined only 9% from 2001 to 2002, which is only about 1/6th the rate of decline for CD singles. (Music and Copyright) The nation that saw the biggest loss in album sales from 2001 to 2002 is Argentina, which saw its recorded music market cut by 41% (Music and Copyright) With Argentina’s economic structure collapsing during this time period, this would seem to do more to suggest that CD sales are tied to the economy more than how many people are downloading music.
Due to the loss of sales volume in the American CD market, massive price cuts are currently being implemented, and record store chains are suffering. Universal Music Group, America’s largest CD distributor, has recently decided to cut all of its CD prices by 25% in an effort to increase sales. (WSJ 9/18/03) In addition, it has reduced the suggested retail price from $18.98 to $12.98. (WSJ) With price cuts this significant, many record store chains will not be able to cover their overhead and maintain profitability. Margins for record store companies would plunge to an average 29% from 44% given these price cuts. (WSJ) Many record chains are seeing their business go to large electronics stores that sell lots of different items, and therefore can charge low prices for CD’s. At Best Buy, it is estimated that 50% of the customers come for CD’s, even though CD’s are only about 15% of the stores sales. (WSJ) This can lead to the big electronics chains cutting CD prices even more, because they use CD’s as a loss leader to get more customers through the door.
The changing face of music acquisition will have major impacts on the concert industry. As long as downloadable music is available, then big hits will get wider distribution and smaller acts will have an extra venue through which to be heard. Big stars have traditionally drawn higher at concerts when their songs are heard more, and smaller acts need whatever distribution they can get to encourage new fans that will come to see them. A loss of either downloadable music or of CD availability would most likely negatively impact concert going. This is due to the fact that most people check out a band through recorded music first, and then decide of going to see the band is worth the effort. In addition, if bands begin to make less money through record sales, then they may increase touring as an alternative means of revenue generation. An increase in touring by popular bands would strengthen the concert industry. Downloadable music would therefore help the concert industry in two ways; by gaining more widespread distribution for music and by forcing bands to do more touring.
While record companies have been fighting tooth and nail to stop the spread of music files, concert promoters have been noticeably quiet in their stance. Perhaps they face a conflict in not wanting to anger the labels that represent the bands that the promoters want to book. Either way, it seems as though record labels hold power over concert promoters, since the labels usually manage their own bands. The labels decide how much touring is necessary based on CD sales, while the concert promoters are left to sit back and appease the labels in an effort to book their bands.
Section IV: It’s Been A Hard Day’s Night
The Production of a Live Musical Event
Putting together a live musical event requires the concerted efforts of many different parties. It takes the combined efforts of the band management and promoters to make a truly successful show. These parties may disseminate micro tasks to other people as the time of the show approaches, but they are ultimately responsible for a concert’s success or failure.
Bands can benefit from concerts in two major ways. For most popular bands, live performances are a means of promoting a record. The individual shows themselves and the tour as a whole are a vehicle to help promote the latest album that the band has released. The songs themselves as they appear in the concert have minimal variation from how they sound on the album, and my even be pre-recorded. The second major benefit to bands in touring is turning a profit on appearance fees versus touring expenses. While the artist will naturally try to turn a profit while touring, the artist in this case understands that the main goal of the tour is to generate greater record sales. Therefore, the artist may be willing to take minimal monetary gains or even losses in some cases for a big show. There are some bands that tour heavily and make most of their profit from touring. These bands fall into two main types. The first are bands that have a non-mainstream or “cult” following. Hip-hop and jam-rock are two genres that have grown steadily over the last ten years with cult followings, and the leading acts in these genres draw as many people and gross as many dollars as any mainstream act. These acts do not get nearly as much mainstream radio and video play as their counterparts, and therefore do not sell nearly as many records. However, they are able to promote the band and draw crowds through grassroots marketing, independent radio play, and word-of-mouth. The second type of band that makes most of its profit from touring are well-established acts that have seen their peak record sales days go by, and continue touring as a source of guaranteed income. The Rolling Stones and Bob Dylan are two examples. Bands that tour as their main source of revenue spend extensive time on the road, playing anywhere from 50 to over 200 shows per year.
Promoters face different motivational factors for putting together concerts. “Promoters are the people in each market who hire [musical acts] for the evening. Promoters are the entrepreneurs who take the full risk of the concert.” (Passman 341-342) The live performance is the lifeblood of a promoter’s business, so they often find themselves in a position of needing an act to play in their room more than the act needs to play the room. Conversely, sometimes an act will want a room very much if it is a popular venue in a market that the artist wants to get into, and if the room is the appropriate size for the stature of the artist. Promoters may negotiate contracts for artists very differently depending on which party needs the other more.
Tour itineraries are another major factor in determining when and where concerts will take place, and by whom. One way that artist managers and booking agents create an itinerary from scratch is to do so based on the “golden show.” (Kroop) If the artists’ management can land one major show, such as at a large festival, they will often build a tour around getting to that show. Mr Kroop, manager of the band Psychedelic Breakfast, has indicated that in the summer of 2002, he was able to secure two slots for his band at the prestigious High Sierra Music Festival in California. Psychedelic Breakfast hails from New Haven, Connecticut. Since the band was going to be driving across the country no matter what, Mr. Kroop and the rest of the band’s business team felt that it would be most efficient to play shows on the way out to California and on the way back. Getting the one High Sierra show resulted in the scheduling of 41 other shows for the band that summer. If there is not a “golden show”, tours are generally designed to hit as many major markets as possible in an efficient and affordable manner.
The biggest threat to an artist in getting a show in a city they want is room availability. There are lots of acts that wish to book similar rooms in the same city. For this reason, shows are often booked months in advance. This is an especially serious problem for big-draw acts that must play in amphitheatres and arenas. Most cities only have one such facility, and the facilities are busy putting on pro sports, circuses, other musical acts, and more. An important city may have to be left out of the itinerary if there is no room available when the tour is scheduled to pass through town. Getting a room is often highly influenced by the drawing power and political clout of an act. If two acts are competing for the same room on the same night, the act that is more likely to bring a greater draw will usually get the room. In some instances, an act might have a room booked, but a bigger act may come along and ask for the room on that night. In this case, the promoter may cancel on the first act if the contract has a clause that allows the promoter to do so.
Time of year is also an important factor in determining when to tour for an artist. “The major touring season…is May through September, primarily the summer months when kids are out of school and can go to concerts every night” (Passman 344) Recently, new bands and cult bands have taken to touring in the fall and spring, when there is less competition for concertgoers’ dollars. “This is especially true for college/alternative acts who want school to be in session when they get to town.” (Passman 344) In addition, the holiday season lends itself to special holiday shows and New Year’s Eve shows. Many acts play small tours leading up to their shows on New Year’s Eve, or may play the same venue for several nights before New Year’s Eve if they have the drawing power.
First the artist must a reason to tour. This reason is almost always to promote the newly released record or to simply make money. Once there is a reason to tour, promoters work together with the artists to book a show that fits the artists’ itinerary. Once this happens, it is time to begin promoting the show. Depending on the drawing power of the act, show promotion can take on several different lives. For cult acts, extensive promotion is done through grassroots marketing. This can include outdoor advertising in the form of hung flyers, direct advertising in the form of flyers handed out at other shows and direct mailings, internet advertising, word-of-mouth advertising, and radio play. For these bands, radio play and the announcement of shows over the radio is usually done on college stations or on mainstream stations that feature alternate program formats during off-peak hours.
For medium-tier bands, marketing is often done in conjunction with radio stations and other events. Radio stations often sign deals to “present” an act in exchange for money, tickets, and favors. In the weeks leading up to the show, the station will give the artist extra airplay and will make announcements on the air about the upcoming show. The tagline is “presented by WXYZ radio”. Associating the band with a popular radio station positions the band as being socially accepted in the station’s market. This is an important selling point in the concert industry, an industry highly sensitive to image and prestige. Getting fans to like the music is the first step to success in touring, but creating an air of popularity about the band through positioning is also a big factor in getting people to come out to the shows.
For highly popular and established acts, virtually no promotion is necessary for a show. An announcement of tour dates via press releases is more than enough for these acts, as their prestige would make it impossible for them to keep their tour a secret for very long. These bands enjoy the luxuries of highly reduced need for promotion, a guaranteed sellout at most concerts, maximum and guaranteed revenues, and the political clout to get the rooms that they desire.
After weeks of appropriate promotions, the day of the show arrives. Many things must take place on the day of the show before the artist can take the stage. The scale of the production depends entirely upon the size of the act and how much gear they carry with them on tour. For an act fully equipped with its own light rig, sound rig, and a stage setup meant to be played in arena settings, the gear must arrive at least ten hours prior to the start of the show. If the act has not played in the venue before, extra work will be needed to figure out how the acoustics and lights will function in the dimensions of the room. If the act is familiar with the venue, then time can be saved setting up sound and lights to specifications based on notes. If the act plans on using decorations onstage or in the house, extra time and labor are necessary. Elaborate sets are often used during holiday shows, such as on July 4th, Halloween, and New Year’s Eve. Sets require extra work in the areas of design, acquisition, construction, and deconstruction. Artists may choose to hire outside contractors and consultants to help build any special sets that they wish to use.
A sound check is another mandatory step in the pre-show process for an act that has any intention of sounding professional. A sound check requires all members of the act to be on the stage, and the sound engineers to be at their show posts. The musicians first play one at a time so that their sound can be equalized. After this, they all play together so that the overall sound level can be mastered and so that the musicians can get their onstage sound customized. The entire sound check process usually takes between one and two hours, and must be completed before the doors open.
While the artist gets their gear set up, the venue must set up its own functions as well. Again, the amount of production a venue must go through depends on its size. Every venue, regardless of its size, will have a minimum of concessions, merchandise, security, and hospitality to take care of. At small clubs these may be run by one person, such as a bartender, while at large arenas, each of these tasks will have an entire staff assigned to it. Venues are expected to provide security and ample staff for concessions and hospitality. The area in which the venue and artist must negotiate who will do the labor and how the monies will be split is merchandise.
At the club level, most venues do not provide staff to sell the artist’s merchandise. The artist will usually have their tour manager or a trusted friend do it for them. However, in larger theatres and arenas, the house is expected to provide people to sell the artist’s goods, because it is generally not worth it for an artist at this level to pay to bring people on tour just to sell merchandise. When the house staff sells works to sell the band’s merchandise, it is unclear who should be making the profits. Because of this, merchandise monies must be negotiated between the artist and the house. Generally, the house will ask for a fixed guarantee to cover its expenses, and then a percentage of all sales after the fixed amount for a profit. The percentage after the fixed fee is usually around 35%-40% for the house, with the rest going back to the artist. Recently, artists have begun to squeeze the venues for a higher percentage of merchandise due to increased costs of touring, such as higher gas prices. (Passman 366) There are many different ways that these deals can be structured. Merchandise monies are the most negotiated revenue streams at a live concert besides the artists’ royalty fee. (Passman 360)
Once the show has been performed, several tasks must be completed. The house must clean up the venue in time for the next event. The artist is generally responsible for carrying out everything that they brought in. The artist must get paid whatever percentage they did not collect up front or as a deposit. This can get sticky if the promoter did not have a good night and no longer wishes to pay the band the promised amount. Although nearly all shows are booked with a contract stating how much the artist is to be paid, some promoters will take the risk that the artist will not pursue a lawsuit and not pay the artist. For festival style concerts that take place in one place over an entire day or longer, the cleanup process is much longer and more tedious since there is such a large area and so many facilities to deal with. However, in almost all festival cases the venue will not be used again for several weeks if at all, so there is ample time to clean up.
In order for the live music experience to exist, an artist and a promoter with access to a venue must have reasons to want to put on a show. The artist must then fit the show into their touring itinerary. Once the show is booked, promotion starts so that customers are aware of the show. Since most artists are constantly on the move, their concert in any given town is usually promoted as a unique “event” that can only be experienced this one time. It is hoped that this aura of scarcity will drive demand for tickets. When the show date arrives, the artist and facility each must work carefully to ensure that they are ready for the crowds and the production. Finally, the show is played, those with financial interests get paid, and hopefully a good time is had by all.
Section V: I Say Tomāto, You Say Tomâto
Conflicts In the Music Industry
Thus far, several different parties have been identified as possessing a stake in the live music industry. These include the artists, their management teams, promoters, venues, and customers. Between these stakeholders exists several conflicts that must be managed if the live music industry is to continue to prosper.
One of the most common conflicts exists between the consumer and the venues. These conflicts arise in two forms, the first of which is security within the venue. Security in most venues has been drastically increased since September 11, 2001. All venues, large and small, are security liabilities because they are places for crowds of people to come together. This makes them a target for terrorist attacks, as well as a fire hazard because lots of people are packed into a room and are unfamiliar with how to get out. In February of 2003, a fire at The Station nightclub in West Warwick, Rhode Island leveled the entire club within five minutes, and caused one hundred casualties. Also, in the same week in Chicago, twenty-one people were trampled at Club E2 when a stampede occurred after security guards used pepper spray to break up a fight in the club. Due to these events and other similar club fire catastrophes, security in small venues has tightened up in the last year. Most small clubs now face much tougher fire inspections after the recent tragedies. Also, clubs are being more stringent in their efforts to search customers at the door, and to curb any deviant or dangerous behavior inside the club. All of this creates an added conflict between the patrons and the security of the clubs. If patrons do not want to be searched, or if they choose to dive off of the stage, they are more likely to meet with behavior that they do not like on the part of the venue.
The conflict between small venue security and the customers is potentially dangerous for the industry. Clubs that put too much emphasis on safety and security will take away too much focus from their core product, which is entertainment. Excessive safety reminders and overbearing security workers will damage the reputation of a club. There are several ways that safety can be better managed at these clubs, without taking away from the product. First, a major issue with the catastrophes at The Station and E2 was that everyone stampeded for the same door that they used to enter the club. There seems to be a basic instinct within people that causes them to run for this door when they need to run out in a hurry. In order to curb this problem without taking away from the product by having somebody use stage time to announce where all the exit doors are, there are several things a club can do. First, clubs should use two or more doors as entrances. This way, not only will the crowd be familiar with different doors, but also as people inside see others come inside, they will be more likely to learn where another door
is located. Emergency doors are often camouflaged into the background at small clubs. In addition to having them open at the beginning of the night, they should be outlined with some sort of light, perhaps neon green or red light that makes it obvious where they are while contributing to the ambiance of a music club.
The expense of these options is hiring more staff to work the doors or moving more existing staff onto door patrol. The staff at these venues also needs to be more thoroughly trained in how to deal with unruliness. Many venues employ part-time workers. (Security Management 2/03) These workers are hired more for their muscle than their expertise. Using pepper spray indoors to break up a fight, as was the case at E2, certainly shows a lack of knowledge in both crowd control and pepper spray usage. Security guards should have to go through some sort of training and licensing regiment. Bartenders, club owners, and airport security workers must attain licenses before they can practice their trades, and so should security workers. Just because someone is large in size does not make him or her qualified as a safety expert.
Large venues also face challenges in crowd management. This is in addition to having to take new measures against terrorism. On April 12 2001, 43 people were crushed in a stampede at a soccer match in Johannesburg. Soccer events have had many other similar instances in the past. (
http://sportsillustrated.cnn.comlsoccer/news/200 1/04/1 2/south_africa_inquiry/) This was not the first time that a stampede has occurred at a large event either. One of the most famous tragedies occurred on December 3 1979 outside of a large venue in Cincinnati before a concert by The Who. Eleven people were trampled to death when a crowd of thousands charged towards the doors. The crowd had been waiting for hours for the doors to open because the show was general admission, meaning that the best seats were available on a first-come, first-served basis. Due to this tragedy, a task force on crowd control and safety was created, and their ensuing report is still used today as an authoritative guide on crowd control.
Large venues and events face the unique challenge of being obvious terrorism targets. Since September 11, 2001, promoters of large venues and events have been taking extra measures to ensure the safety of the patrons and staff. In a November, 2002 survey of 46 large arenas and stadiums, 96% of the venues claim that they now search patrons more intensively than before. (Security Management 2/03) 78% of those surveyed even reported monitoring their air intakes, although less than one-third report monitoring their water intakes. Also, one of the most commonly reported changes in security is an increase in entry-screening staff at the gates, which is concurrent with my recommendation on how small venues can be more effectively managed. In addition, the same survey also finds that one-third of these venues do not perform background checks on part-time staff. (Considering that some venues may not want to admit to any shortcomings, this number may be higher.) As explained earlier in the context of small venues, part-time staff can be as much of a liability as an asset due to lack of training. In the framework of terrorism, they may be a liability due to ulterior motives other than enforcing safety.
Permanent venues such as the arenas and stadiums discussed above have full- time staff and a constantly running business that facilitate coming up with new security measures for the long-term. However, fairs and festivals that take place once a year, and the venues that host them that are open only once a year or even less, are larger liabilities because they do not have the permanence that leads to heightened concern for security. In an article from “Amusement Business” entitled “Security Expert Warns Against Complacency”, Mr. Jimmie DeLoretto, owner of Starplex Corp., a concert safety company, warns that fairs and festivals have been becoming too lax in their security measures in an effort to “get back to normal.” (Amusement Business 1 / 13/03) Mr. DeLoretto recognizes the conflict between security and the consumer, as do some of his co-panelists. “Three other panelists, all managers of fairs, discussed changes they have made but also noted that implementing security requires walking a fine line that does not keep away the fair’s customers.” (Amusement Business) The alleged “complacency” manifests itself in different ways. For example, in his own survey, Mr. Deloretto reports that only about one quarter of fairs locate their deliveries off of the fair grounds or in an
isolated area of the fair. Also, at many fairs the office closes while events are still going on into the night, leaving patrons unsure of where to go if the need for help arises. (Amusement Business)
The suggested solutions to these problems illustrate the concept behind the solution to the greater problem of the security vs. consumer conflict. “It’s sensitive,” says Mr. Deloretto, “we don’t want to have a police state, but I think people appreciate security.” The best way to increase security at large venues is to do so as inconspicuously as possible in order to minimize consumer hassle. Mr. Deloretto suggests doing things such as increasing signage so that the rules are obvious, and thus people can police themselves. Doing this puts a constant emphasis on security in the mind of the consumer, but gives the consumer an opportunity to police himself or herself and avoid hassles from security employees. Even something as simple as color-coding telephone poles can let people know where they are or which way a first-aid station is without being overly intrusive.
An even better system than increasing security that is unobtrusive to the consumer is increasing security that is welcomed by the consumer. Selling safety as a benefit to the consumer might be easy to do with cars or power tools, but it is a harder sell with live music. This is because live music is consumed for such a short period of time (usually one night, and rarely more than three days at a time). However, a radical and somewhat idealist approach is to make the consumer aware that there is increased security, and to have them feel good about it. This tactic has been working in airports, where security has obviously been stepped up in the last two years, but many consumers are happy to put up with increased hassles in exchange for a sense of safety. Since live music tragedies seem to occur less often than airplane tragedies, the consumer approaches a live music experience with much less trepidation than they do with an airplane experience, which makes live music security a tougher benefit to sell. Strange as it may seem, one strategy to selling the benefits of increased security at live music gatherings is to put more fear into the consumer as to what could happen at a live music experience. If the level of fear is increased, then security will appear to have a greater benefit. Shortly after the two aforementioned club stampedes at the beginning of 2003, I noticed that some of the clubs I was going to took time away from the show (product) to have someone get up on stage and announce where all of the exit doors are. Nobody seemed to mind, and I for one was grateful. Without the increased fear, however, this action would have seemed unnecessary to most patrons.
It may be true that some live music consumer segments would appreciate an increase in security more than other segments. It would seem that a rowdier crowd would want fewer rules, while a well-behaved crowd might appreciate a sense of order. For example, without taking too much of a liberty, it is safe to say that fans of metal-rock singer Ozzy Osborne are rowdier than fans of the Boston Symphony Orchestra. Selling security as a benefit may be easier to segments that are looking for a relaxed and secure atmosphere. Security is going to have to have to increase at most venues for at least the next few years due to our tumultuous world, thus, the challenge is to present the increased security in such a way that the consumer is either unaware of it or appreciative of it.
The next major conflict in the music industry exists between venues and consumers once again, this time in the form of increased prices of commodities within the confines of the venue. The trend in the industry is for major venues to make a fair
share of their income on food and beverage, and souvenirs. This has led to an increase in prices for all of these items, to the point where the prices are far beyond what the consumer would ordinarily pay for the same items outside of the venue. For example, at Boston’s Fenway Park, home of Major League Basbeball’s Red Sox, a hot dog sells for $3.50 and a 20-ounce soda goes for $4.00. (BostonPhoenix.com 12/1/03) The average sidewalk vendor sells a hotdog for $1 -2 and a soda for the same. Prices at luxury suites are much higher, as discussed earlier. For example, at Boston’s FleetCenter, home of the Boston Bruins of the NHL and Boston Celtics of the NBA as well as many live concerts, a side order of French fries in a luxury suite is $50, and a large cheese pizza is $140. (FleetCenter Premium Club menu) These items go for roughly $3 and $12, respectively, at the average pizza shop. Prices for souvenirs are also quite inflated inside the venues. At these prices, many consumers will be left with no choice but to remain hungry while they are in the venue, and to not attain the souvenirs that contribute to the complete experience.
At this point, solutions to this conflict seem to be difficult due to the fact that the venues that sell at these prices seem to be doing so profitably, else they would drop the prices. The venues are willing to sell fewer goods at high prices and a greater profit even if it means creating conflict with some of the more economically challenged consumers. From the perspective of the consumer who feels a conflict with these prices, the solution is to choose not to buy and hope that the prices will come down due to nobody buying. This solution will provide little in the way of short-term satisfaction to the consumer, but could pay off in the long run. A more complex but somewhat plausible solution to solve the merchandise price conflict (not the concession price conflict) is for consumer advocacy groups to educate the venues on the residual benefits of selling lots of well-branded souvenirs. If somebody is willing to walk around with a huge New England Patriots logo on his or her shirt, is the free advertising and ensuing brand recognition not just as beneficial to the venue that hosts the Patriots as the $50 that the consumer paid for the shirt? This should be the approach of consumer advocacy groups, in hopes that venues will reduce souvenir prices in lieu of their residual value as advertisements.
The next conflict exists between artists and their management team. The artists must surround themselves with a team of promotional and legal experts who know far more about music business than the artist does. Essential members of an artist’s management team include the personal manager, the business manager, a lawyer, and the representative from the artist’s record label. Non-essential members (common jobs that are handled at first by essential members until the artist grows to the point where the essential members can no longer handle these functions) include a road manager, merchandise manager, security manager, and more. (Passman) While the potential exists for conflicts amongst all of these members, the important conflict throughout the industry is the conflict between the artist and their essential management team.
Trust is the key concept in the relationship between an artist and their management. The management team handles a lot of negotiations and money on behalf of the artist that is usually either beyond the artist’s comprehension, or the artist does not care to deal with such matters, or both. Record contracts, gig contracts, sponsorships, and the monies associated with them pass through the hands of the essential management team and can make or break an artist’s career. There is a long history of management personnel using their business prowess to take advantage of artists. This is particularly common in the issue of song rights. Many record companies seek to own the rights to an artist’s music. Whoever owns the rights to a song has the exclusive opportunity to make money from the song. Many artists have left a record label or broken up as a band, only to find that they will never make money off of their albums even though they are still selling. Also, cases exist where managers have withheld monies for themselves from gigs that the artist expected to receive.
The key to eliminating these conflicts is to establish a strong network of trustworthy artist representatives. Artists should do thorough background checks on anyone whom they interview to work for the band. (Passman) In addition, a strong network can be established by using the Internet to create sites for artist managers and lawyers at large. Every listed manager or lawyer should have their information and references listed on the site, and resumes should be available as well. Presently, a lot of the networking that goes into finding good people to work for an artist involves a good deal of people recommending their friends who need work. (Passman) This is leading to the employment of some under qualified candidates and in some cases the employment of untrustworthy candidates. An artist may do better to put together a team of unknowns and make them work together in an effort to minimize the possible negative side effects of collaboration in the hiring process.
Solving conflicts within an industry is a major part of sustaining that industry’s health. The live music industry has its share of conflicts, the solutions to which are proposed within. Through understanding the problems and the proposed solutions, the various players in the music industry can do their share to ensure that live music enjoys the success it does today as a major entertainment option.
Section VI: I Get By With A Little Help From My Friends
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