😷 What's happening to the money people usually spend on live music but can't in a pandemic?
From lockdown to a global economic recovery in 2023
The problem
Mark Mulligan, of MIDiA Research, recently wrote a blog about the winners and losers of the current pandemic era. He specifically mentions Live Nation and Disney as losers.
“Live Nation and Disney (because of its theme parks) were two of COVID-19’s biggest and highest-profile entertainment company casualties. Live Nation’s revenues fell from $3.2 billion in Q2 2019 to $74 million in Q2 2020, a 98% decline. Disney’s fall was less in relative terms (-38%) due to having a diversified business but more than double Live Nation’s loss in actual terms. Between them, Disney and Live Nation lost nearly $10 billion of revenue which can be bluntly equated with $10 billion of consumer entertainment spend that went unspent in Q2 2020. The big question is whether that spend remains dormant, waiting to be tapped when doors open again, or has it gone elsewhere – and if so, can it be won back.”
That’s a big question: will we return to the amount of money people spent on live music? Moreover, will we get back to the growth that we were seeing year over year? And, related to this, what new spending must Live Nation - and all the smaller players - need to unlock from potentially new consumers?
The obvious answers
Handily, a week after Mark’s blog post PWC released their latest update on their Global Entertainment & Media Outlook allowing us to find a potential route to answering the above questions.
First the bad news: 2020 will see an overal decline of 5.6% in overall entertainment and media revenues compared to 2019. The PWC press release mentions this is the sharpest decline in the 21 year history of the research. IQ Mag has seen that live music will generate ‘$10.4bn in 2020, down from nearly $29bn in 2019.’ As such recorded music will be more valuable to the overall music industry than live, growing to $30.4bn this year aided by a continuining growth of streaming music. This immediately shows where part of the money not spent on live music has gone: streaming subscriptions.
Another obvious destination for money normally spent on live concerts will be going to livestreaming and other forms of direct-to-fan monetization schemes. Sessions founder Tim Westergren spoke to Music Ally and mentioned one artist who ‘recently generated $10k of revenue performing to only 300 viewers.’ Similary, artists have been exploring subscription businesses, witnessed by the growth of musicians on Patreon, let alone the myriad other platforms available in this space.
The opportunity in gaming
This is probably twofold. On the one hand there’s the precedent set by Travis Scott performing in Fortnite (Anderson .Paak is next up this Saturday), and Roblox partnering with Monstercat and hosting virtual concerts. On the other hand, there’s the involvement of artists in gaming, especially e-sports. Considering the money players - and viewers via Twitch, etc. - spend and the growth projected for video gaming in the PWC report - which stands at 9%-15% - there’s a big opportunity for the music industry to siphon some of the money not spend on live towards gaming-related channels.
Other opportunities: VR
Is mass-adoption of VR finally upon us? With the just announced Oculus Quest 2 that might just be the case. Moreover, the PWC report has VR as the top performer coming out of the current pandemic in the next five years.
This paints a bright future for the likes of Wave and MelodyVR and an opportunity for artists to jump into this space now, while it’s just beginning to grow. Tom Grennan, for example, is the first artist to join MelodyVR’s series of events on 2 October. And Tidal has teemed up with Oculus to deliver a series of immersive concerts. As there will be more to consume, and as the headsets come to meet consumers’ needs, demand for the content will grow too. And that content will be easier to create, at least from an AR perspective, as social platforms are leaning into the cross-reality experience. As noted in a recent article in eMarketer, AR experiences have been up on Snapchat across the board. Artists have been a major group to tap into this, using AR as an extension of the music video which brings fans closer through active participation.
Recovery
Overall, PWC predicts that live music revenues will be back to 2019 levels in 2023. This analysis seems to match that of Goldman Sachs, whose Lisa Yang recently said that while the global concert sector loses around 75% of its value this year, they’ll have recovered by 2022. It seems important to note here, however, that consumer habits may have changed permanently and a recession may mean people will have to make hard choices: that gig or a meal out? That festival or a holiday?
Quick
We’ve written about the recent edition of the Salzburg Festival before in this newsletter and it now looks like their impressive safety and hygiene protocols are becoming an international prototype.
Spotify’s rumoured livestreaming integration … is just a livestream concert calendar.
Further to the discussion about the potential of gaming and music, Facebook has announced licensing deals with basically all labels and Twitch has announced a deal with the French collecting society SACEM.
Since we’re all trying to follow the success of BTS’ livestreaming business, it’s good to take note of their next endeavour: a month-long virtual exhibition.
Let’s not stop considering that livestreaming has not been a boon for the majority of crew working behind the scenes on traditional tours.
Another pandemic acceleration seems to be taking place in the catalog space. Cherie Hu has asked herself whether the Hipgnosis Song Fund strategy will actually work. And MBW interviewed BMG’s CEO Hartwig Masuch about how the money involved impacts both his business and artists’ ability to claw back their rights.
Conductor Ivan Fischer has created a face mask that enhances acoustics. And it’s apparently quite popular!
On Tuesday Bas mentioned he’s hosting a panel at the LiveEurope Festival about how music venues are staying relevant and active while their stages are closed. You can sign up for that session - and the other ones at the festival - here.
Music
I’ve been listening to Jyoti’s new record Mama, You Can Bet! a lot since it came out. I’m a fan of Georgia Anne Muldrew and she sounds like an entire jazz ensemble on her Jyoti albums. She brings together hip hop, soul, electronics, and jazz in a way that makes it seem totally natural and oh so groovy.
MUSIC x CORONA is composed by Bas Grasmayer and Maarten Walraven.
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