INDIO, CA - APRIL 21: Festivalgoers are seen during the 2019 Coachella Valley Music And Arts ... [+]
This week’s drumbeat of coronavirus news ended with an especially loud bang: the cancellation of South By Southwest, Austin’s venerable music-and-tech confab. The news was confirmed moments ago in a press conference in which the city’s mayor declared a local disaster and issued an order to cancel the event.
The music industry is already buzzing about what might be the next live event to fall, with all eyes turning to Coachella. It’s hard to understate the impact of the two festivals: SXSW provided Austin with an economic impact estimated at $356 million last year while Coachella’s footprint has been pegged at north of $1 billion worldwide. But the latest news is only the beginning of what’s shaping up to be a cruel summer for a jittery music business that has tried to project confidence even as the crisis deepens, threatening an industrywide recovery that’s been years in the making.
“We’re beginning to see it affect the entire music ecosystem,” says one prominent artist manager who spoke on the condition of anonymity. “We’re getting calls from our agents about promoters canceling individual shows. Songwriters and producers have canceled flights into L.A. for sessions, so it’s starting to trickle down to the songwriting and production communities as well.”
Although the rise of streaming has revived the fortunes of recorded music, most artists still make the bulk of their bucks on the road. According to Pollstar, the top 100 tours grossed $5.55 billion in 2019, a 41% increase over 2015. The world’s ten highest-paid musicians earned $1 billion last year, up from $886 million the year prior, thanks in large part to massive stadium tours.
Live Nation, the world’s biggest concert promoter, notched a record $11.5 billion in revenues last year; while acknowledging a “cautious” approach in light of the outbreak, chief executive Michael Rapino was generally upbeat in his comments late last month even as Live Nation’s stock tumbled to a 52-week low.
“Looking at 2020, we believe that our double-digit fan and show count growth so far this year against a backdrop of very high artist activity across all venue types and markets sets up our flywheel to deliver another year of strong global growth,” he stated.
Rapino made note of his company’s backloaded calendar—indeed, 70% of Live Nation’s attendance is expected from June onward, buoyed by top acts from Justin Bieber to Lady Gaga—and limited exposure to Asia, where acts from Green Day to Avril Lavigne have already canceled dates. As long as the coronavirus situation stabilizes in time for the summer concert season, the thinking has gone, everything will be fine.
But in the wake of the recent cancellation of Miami’s Ultra Music Festival—and now SXSW—many believe the crisis is already here. Conversations with a handful of usually chatty artists and high-profile managers revealed pervasive uncertainty around touring over not just the medium term but also the near term. That skittishness is understandable: Express uncertainty over whether dates will be canceled, and fans won’t buy tickets.
On a deeper level, much of the anxiety stems from the economics of a canceled show. It’s not just the loss of a paycheck and the accompanying merch sales. In the case of a Coachella gig—especially for an up-and-coming act looking to make a splash—there are the added expenses of holding rehearsals, building a stunning set, booking a pricey Airbnb and more. Those are expenditures of time and money that can’t be returned. In the meantime, the uncertainty has its own costs.
“What we’re hearing from Coachella is that it’s on,” says the aforementioned manager. (Representatives from the festival did not reply to a request for comment for this story.) “But we have $1-2 million in production costs already sunk in that the artist would be responsible for. ... We’re not finding any insurance companies who will cover our risk of cancellation due to [coronavirus]. I’m holding off on spending any more until we see how this plays out.”
Of course, major arena shows are currently taking place around the country every night; so are basketball games, spring training tilts, movie screenings and the like. And if things do get worse, there are some alternatives for music fans, albeit ones that are less lucrative for artists than live shows.
Much the way foreign sports teams have been playing to empty stadiums, bands could live-stream shows in private spaces, giving a boost to a corner of the industry that has yet to fully deliver on its initial promise. Companies like Stageit and Big Room could find new opportunities in that sort of chaos.
Until then, the industry remains in a state of flux. As Stageit founder Evan Lowenstein prophetically told Forbes back in 2012, “the future of our business remains to be seen. But I’m still holding on.”
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