The Live Music Industry is in Danger of Collapse

Live Nation will be out of free cash in 10 months. Independent venues are pleading for help to hang on. Millions of furloughed artists, agents, promoters, producers, techs, and bartenders desperately need a vaccine. Unfortunately, the vaccine won’t be a silver bullet. 

By Bubba Krishnamurti

Photo by Hannah Rodrigo

It is no secret that the live entertainment industry has come to a stand still. The concert industry has seen a 98% reduction in revenues. Independent venues’ survival is not guaranteed. Many will shutter. Millions of production staff, bartenders, and others who depend on events to cover their bills have been out of work for 6 months. Major agencies have laid off or furloughed scores of scared cow agents. With no end in sight to restrictions on large public gatherings, uncertainty pervades every aspect of the industry. Who survives and what survival looks like becomes a more precarious question with each passing day. 

The burning question on every insider’s mind is whether Live Nation can weather the storm. Despite myriad financial acrobatics earlier this year — including layoffs, pay cuts, debt sales, and even re-negotiating artist contracts —  the proverbial clock has begun to tick for the leviathan of concerts and festivals.  

According to Live Nation’s second-quarter earnings report, the company is hemorrhaging cash at a rate of $185 million per month. Given its current liquidity, this means Live Nation Entertainment (NYSE:LYV) will have no free cash in roughly 10 months. According to the report, Live Nation predicts this free-fall to persist through the end of the year. 

Optimistically, the company contends that its cash reserves are adequate to survive “until the expected return of concerts at scale in the summer of 2021, preceded by ticket sales earlier in the year.” Yet there are no assurances that large scale events will return at scale throughout the country even if a vaccine becomes widely available. To be clear, there are only federal guidelines for reopening population centers but no mandates. For example, this means though Boise, Idaho may have concerts and festivals as a result of low transmission rates, Los Angeles could still preclude large scale gatherings if they have a marked uptick despite the presence of a vaccine. With most national tours depending on multi-city routing to be economically feasible, this is a major hamstring to ‘returning to scale.’ 

Remember: a vaccine is not a cure. Epidemiologists expect initial vaccines to hover somewhere around 60% effective. The FDA said it would authorize a safe vaccine if it was only 50% effective. 

Despite such uncertainty, Live Nation’s optimism is a survival mechanism. Large swathes of their cash reserves are ticket dollars from events they surely knew would cancel. The company cynically claims fans are demonstrating their demand by not demanding refunds from postponed events. This of course flies in the face of the fact that they initially refused many refunds and much of the ticketing economy is secondary with people buying tickets cash or from third parties.  

Independent venues don’t have a few billion in reserves to see them through the hard times. The ‘mom and pop’ shops of the live music world were “the first to close and will be the last to fully reopen.” Despite no revenue coming in the door, obligations such as staff, mortgage/rent, bills, loans, taxes, and insurance go unabated. Just as Live Nation needs multi-city/state routing to return to profitability, the same goes for independent venues. 

Efforts such as #SaveOurStages, National Independent Venue Association ( NIVA ), and #RedAlert have made valiant efforts to save the lifeblood of live music culture. A bevy of legislative attempts have had varying degrees of success. The most feasible legislation comes in the ‘Save Our Stages Act.’ The law is co-sponsored by Minnesota Democrat Sen. Amy Klobuchar and Texas Republican Sen. John Cornyn and is expressly designed to ensure the survival of independent venues. It issues $10 billion in grants for venue operators, independent promoters, production, and agents. Venues can use these funds to cover expenses such as “rent, utilities, mortgage obligations, taxes, maintenance, paying contractors, and any COVID-related expense.” This is much needed assistance. Pollstar estimates a “$9 billion loss in ticket sales alone – not counting food and beverage revenue – if venues remain closed through 2020.” According to NIVA, live events provide “ 75% of all artists’ income. For every $1 spent on a ticket at small venues, a total of $12 in economic activity is generated within communities on restaurants, hotels, taxis, and retail establishments. The estimated direct annual economic impact venues bring to local communities is nearly $10 billion.”

The moral imperative is that independent venues deserve your support, petition signing, and donations right now. These venues are the incubators to the soundscapes that eventually bubble to the top and our cultural heritage requires their survival. Live Nation, even if it goes bust, it might not be a totally bad thing for live music. And it may actually come out on top when the dust settles. As discussed in this space before, Live Nation, Ticketmaster, Sirius XM, iHeartRadio, and Pandora have been rolled up into one monster by one man at Liberty Media. Stay tuned for more consolidation. 

Sign the NIVA petition NOW!

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  • Terry Babb

    Live Nation and Ticketmaster have been fleecing
    the artists, crews and fans for decades. Monopolies have no place in live entertainment.
    Frankly, I would celebrate their demise.
    That being said, the industry needs a
    fresh start, a more fair arrangement than
    in past years. I sincerely hope this pandemic
    will force a restructuring of the industry that
    benefits all the hard-working people who have
    been getting screwed by the big money players.

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