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Live Nation memo confirms promoters want artists to share the risk when the live industry swings back into action

By | Published on Thursday 18 June 2020

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A memo from Live Nation in the US has outlined some of the changes the live giant says it needs to make to its artist agreements once the live industry gets back into action after the COVID-19 shutdown. As well as a drop in fees and guarantees of around 20% across the board, the live music firm says it is also seeking to transfer some of the risks associated with staging events onto the artists.

The live industry, of course, has been hit incredibly hard by COVID-19, and that negative impact continues to increase the longer shutdown runs for, as even those companies that had the luxury of surplus cash start to run out of money. Uncertainties remain as to when shows and festivals will be allowed to properly return, and there are serious concerns that government support schemes will end before the gigs restart.

The extent of the problem does vary around the world. Different countries are taking different approaches when it comes to relaxing COVID-19 restrictions and regarding what physical distancing should continue even once larger gatherings are allowed again. Meanwhile, everyone continues to watch those countries where things have started to get back to normal to assess the risk of a second spike in COVID-19 cases.

However, looking beyond shutdown, promoters – as the primary risk-takers in the live industry – are considering how they can reduce those risks as things get back to normal. They will, after all, be operating after potentially a year of no income, and with the constant risk that any second COVID-19 spike could result in another round of cancellations. Many promoters also feel that, at the upper end of the industry, things have swayed too much in the artist’s favour over the last decade, so there is enough flexibility in the system for those artists to share the pain.

The big promoters have been in talks with the big booking agencies in recent weeks about what that might mean for artist contracts in 2021, including for rescheduled shows and festivals for which 2020 deals had been previously agreed. The Live Nation memo now doing the rounds summarises some of the changes it plans to make, especially for festivals.

Aside from artist guarantees in 2021 likely to be around 20% lower than what had been agreed for 2020 shows, there could also be changes with payment terms. Although perhaps most interesting is what the memo says about cancelled shows.

For shows cancelled due to poor ticket sales – possibly as a result of ongoing COVID-19 concerns among the fanbase – the artist will only get 25% of their fee. With shows cancelled due to ‘force majeure’ – which means major unforeseen events including, of course, a second spike of COVID – the artist would get no fee at all. That would also apply if a change to physical distancing rules made a show unviable.

Meanwhile, “if an artist cancels its performance in breach of the agreement, the artist will pay the promoter two times the artist’s fee”. Which is quite a bold demand. And with all that in mind, artists are being told that they should seek their own cancellation insurance. Assuming they can afford to do so as insurance premiums shoot up.

The Live Nation memo concludes: “We are fully aware of the significance of these changes, and we did not make these changes without serious consideration. We appreciate you – and all artists – understanding the need for us to make these changes in order to allow the festival business to continue not only for the artists and the producers, but also for the fans”.

Measures such as these are not unexpected, and everyone understands the challenges of getting the live industry back up and running. Though, obviously, there will be concerns that changes don’t negatively impact artists lower down the hierarchy whose live activity operates on much tighter profit margins and who are also dealing with a significant drop off in income as a result of shutdown. The impact will also vary from country to country where contractual conventions on the live side differ.

However, it seems certain that headliners will have to take a cut and incur more risk in 2021 at least. Many promoters may be hoping that that rejig remains more long term, though some agents reckon that once things return to something nearing normal, competition in the market place – especially in the festivals domain – will ultimately see things swing back in the favour of those artists who shift serious numbers of tickets.