fbpx
x

The latest industry news to your inbox.

    

I'd like to hear about marketing opportunities

    

I accept IQ Magazine's Terms and Conditions and Privacy Policy

news

Artist contracts renegotiated as Covid-19 reality bites

Faced with a difficult immediate future, promoters are seeking to strike new deals on more favourable terms ahead of the resumption of concert touring

By IQ on 06 May 2020

Some agents are receiving new offers with lower ticket prices are guarantees

Some agents are receiving new offers with lower ticket prices and guarantees


As the concert industry’s collective thoughts turn towards the post-coronavirus recovery, artist contracts – particularly those enshrining huge guarantees for performers – are increasingly finding themselves under the microscope, with cash-strapped promoters pushing for more favourable terms when live music returns.

As a result of the global touring shutdown, many concert organisers are seeking to renegotiate deals for both rescheduled and future shows, asking for a reduction in the artist fee, a smaller upfront payment or a more equitable revenue split, industry sources tell IQ.

“With falling revenue and purchasing power, and increasing costs, it’s almost impossible to continue with the previous deals,” explains one independent European concert promoter, who has pushed back all their shows in summer, as well as many stretching in autumn. “Overpaying for shows will just lead to new losses – especially after we’ve generated next to no income this year.”

The traditional guarantee-plus-percentage model falls in favour of the artist, typically at between 80% and 95% of net income (or even higher for superstar touring artists considered an easy sell-out), alongside a guarantee or minimum fee. But these time-honoured fractions are changing in light of Covid-19. And according to agency sources in Europe and North America, the big two global promoters, Live Nation and AEG Presents, are not alone in pushing to renegotiate deals for postponed shows.

“They [promoters] are trying and testing, asking for a certain percentage off acts for festivals, lowering guarantees, etc.,” says a London-based agent. “We’re mostly seeing [offers with] ticket prices being dropped, with the guarantee being dropped even further. But I think there is still wiggle room to argue.”

Another describes a typical recent offer for two shows at mid-sized venues in the north of England. “I think one offer I had for [those venues] was a guarantee of £10k, which is insanely low,” they say. “For those two, you would probably normally generate a guarantee of £30k–£40k, or even more depending on a ticket price.”

“It’s impossible to continue with the previous deals … Overpaying for shows will just lead to new losses”

“A lot want to pay smaller deposits, too,” they add.

Given the current standstill the industry faces, alongside considerable uncertainty over the coming months, it is no surprise that existing deals are up for discussion. But complicating negotiations on the promoter side, one US concert organiser explains, is that it’s unclear what shape the first post-coronavirus concerts will take – and how many people will be allowed to attend.

In the majority of markets, “I don’t believe venues will be able to operate at full capacity with social distancing,” they suggest, “so that will obviously affect the possible gross.”

“It’s hard to even talk about an artist deal until we can see what that [social distancing] looks like market by market and venue by venue,” they say.

“We need more time to understand where we will all be once this is over,” agrees one of their European colleagues, who – regardless of future rules around social distancing (countries which have set a date for the return of live entertainment are generally insisting on at least 1m distance, in the case of Norway, between each attendee) – are already talking to agents about renegotiating the terms of several pre-coronavirus artist contracts.

“For all our rescheduled shows, we are discussing changes of guarantees, the percentage of deals and other details,” they explain, adding that the negotiations are frequently “really hard”.

“Of course, each case has its own specifics and difficulties,” they add. “So, we are trying to find an acceptable compromise together.”

“They are trying and testing, asking for a certain percentage off acts for festivals and lowering guarantees”

What that compromise looks like will largely depend on how quickly the industry gets back on track. As IQ editor Gordon Masson noted in issue 89, “[t]he very nature of the live music industry had historically relied on a cash-flow wing and a prayer, with everyone in the chain relying to some extent on future earnings to pay for their latest projects” – and with no earnings in the immediate future, many are left with no choice but to try and save some money in the present.

While concerts will likely return to some extent in 2020, many believe it could be years before live music returns to business as normal.

“I think [promoters] are being extra-cautious right now, which is understandable,” says a European agent currently renegotiating a number of rescheduled dates. “But I feel it will go back to normal by 2022 and 2023.”

Another says they don’t foresee any major live music events taking place in Europe, North America or Australasia until next summer at the earliest. “You look at sporting events, stuff like the F1, they’re going ahead without fans – but it’s not like you can do that with concerts,” they comment. “As crazy as it sounds, I don’t think you’re going to see any big shows until mid-2021 now.”

Whether the answer to the mass-gathering conundrum lies in some form of social distancing, such as chequerboard seating, or by visible measures like checking fans’ temperatures before they enter a venue, remains to be seen. Less obvious to concertgoers, though, will be the behind-the-scenes compromises it took to get the artist on stage.

 


Get more stories like this in your inbox by signing up for IQ Index, IQ’s free email digest of essential live music industry news.

FOLLOW IQ

Leave a Reply

Your email address will not be published. Required fields are marked *