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IMS report on the dance music sector puts a spotlight on clubbing industry challenges

By Chris Cooke | Published on Thursday 23 May 2019

The annual IMS Business Report launched at the International Music Summit in Ibiza yesterday confirmed that opportunities still abound in the dance music sector, though the clubs – like grassroots music venues – are facing an assortment of challenges.

The report, presented at IMS by its author Kevin Watson, confirmed that the decline in nightclub venues is accelerating in multiple markets. The UK has seen particularly steep decline, with the report noting that “the number of nightclubs in Great Britain fell by 21% in the twelve months to December 2018, compared to a 1% decline per year between 2013 and 2017”.

Clubs face many of the same challenges as gig venues, including licensing issues, and rising rents and business rates. Though, in a debate at the end of yesterday’s IMS proceedings, a number of club promoters said that one of the biggest challenges in recent years has been the four-to-five-fold increase in the fees demanded by middle-level DJs.

This has forced up the costs of promoting nights, some of which has to be passed on to the consumer in the ticket price, which has the knock-on effect of clubbers taking less risks on new talent when choosing a night out. Agents often justify the higher fees by citing a DJ’s social stats but, the promoters insist, a big social media audience doesn’t necessarily translate into any ticket sales.

Of course, middle level DJs in part began pushing up their fees when they saw headliners in the clubbing domain starting to command – and get – silly money for every show, a trend escalated by the boom in dance music festivals a decade ago and the ultimately short-lived “SFX effect” that followed.

The IMS report points out that, according to Forbes, fees earned by the super-star DJs have now peaked and were down year-on-year in 2018. Though the promoters and club owners taking part in the IMS debate yesterday generally seemed willing to accept headliner fees as these are the DJs that do genuinely sell out a night.

Of course, every club promoter’s ultimate ambition is to build a brand that doesn’t rely on super-star bookings to bring in a crowd. There was a feeling that, with middle level DJs now overpriced, more clubs will start to rely on local DJ talent to fill the support slots, which could in turn create a local scene, that could make each club’s promoters less reliant on securing the big name acts.

Beyond the nightclub challenges, the IMS report notes the continued resurgence of the recorded music business and how the dance music sector is a beneficiary of this, albeit in some markets more than others.

And there are other opportunities to be capitalised on as well. For example, the report notes, “the global videogames industry is worth seven times more than the music industry and represents a huge opportunity for electronic DJs and artists, as shown by recent collaborations between ‘Grand Theft Auto’ and Dixon, ‘Fortnite’ and Marshmello and ‘Secret Lab’ and Deadmau5”.

Despite the opportunities, IMS reckons that the value of the overall electronic music industry dipped by 1% in the last year to $7.2 billion, mainly because of those challenges in the clubbing sector and the decline in super-star DJ fees. Nevertheless, the report concluded that “the global industry continues to mature and stabilise”.