The Coronavirus has temporarily altered life as we know it and has presented various obstacles and opportunities; a key time to be resourceful and resilient. That said, an article written by the Associate Editor at Complex, Shawn Setaro, “How Coronavirus Will Impact the Future of Live Rap Shows and Venues” piqued my interest. With roughly twenty years of experience in various facets of the industry, I have managed several high-end clients and promoted concerts at the Paradise Theatre, which boasted a capacity of 3,300; both posed their own challenges. I have been removed from promotion for roughly a decade and was curious as to Mr. Setaro’s standpoint on the current situation as well as his thoughts on the future.
Setaro starts off with feedback from Alex Damashek, a promoter based in New York City, who owns Move Forward Music. Damashek acknowledges that initially it was not so bad, but that changed when SXSW was cancelled. Similarly, for promoter Ric Leichtung, the March 12, 2020 ban on gatherings of 500 or more in New York state, “Was a very sobering moment.” Setaro speaks to the fact that clubs will eventually close and jobs will ultimately be lost without some sort of government assistance; something that many of the promoters expressed to Complex. Oddly enough, with escalating rents, I have slowly watched New York City nightlife dwindle over the last five years. With staples like Stage 48, BB Kings and Webster Hall closing, platforms have been limited for upcoming and unsigned talent prior to the virus; this will only exacerbate things. Setaro notes that, “Big corporate entities will almost certainly step up and take their place.” He offers Live Nation as an example; Live Nation, “Has exclusive rights for or has an equity interest in 273 venues.” This left me thinking; how is Live Nation’s stock doing during this tumultuous time in our nation’s history? My research on Live Nation proved to be very interesting. They own Ticketmaster and the House of Blues and were worth over 11B in it the latest fiscal year. According to Billboard, it was announced on January 29, 2020 that billionaire Mark Cuban and Live Nation would open a club called Hi-Fi Dallas; the venue, set to open in May, has a capacity of 1,000 and is set to cater to smaller bands. Live Nation’s stock was listed as $70.57 a share that day; it peaked at $76.58 a share this quarter. The stock was going strong until the Coronavirus hit the United States, and events were slowly being cancelled nationally and internationally; the stock dropped by fifty percent. Ironically, on March 12, 2020, the same day New York banned gatherings of 500 people or more, Mike Rapino, the CEO of Live Nation purchased one million dollars in stock according to Billboard. In the same breath, executives James Kahan and Michael Rowles purchased roughly $200,000.00 collectively; Live Nation was at $36.20 that day. According to Newsweek and Digital Music News, Mark Cuban also snagged Live Nation stock at bargain basement prices. Cuban, the owner of the Dallas Mavericks, has intimate knowledge of large venues, franchises, sponsors and events, as well as the supporting staff required to facilitate profitable endeavors. He is a visionary and understands that the Coronavirus has altered the entertainment world forever. Parallel to Damashek, who expressed in an email that he and Move FM are exploring ways to bring everyone together online with social content and virtual events, I have felt this way prior to the pandemic and knew that virtual events were the wave of the future. With more and more being done on social media and with the accompanying success of streaming; it was obvious that this was just a matter of time. Cuban, who knows all too well, the cost of the pandemic and the implications for what is to come, realizes an opportunity to capitalize on the entertainment everyone has grown to miss. Picture this; a world of virtual entertainment without the hindrance of weather, travel, accommodations, and natural disasters; no dressing up, paying for parking, security checks or waiting in line for concessions or merchandise. One may ask, well, how will you monetize and profit in the virtual market? Let’s look at the PPV model we have been subjected to for the last three decades of boxing and the like. When you take into consideration that the average venue that houses a major sports team or an arena that caters to top tier concerts, have capacities between 50k to just over 100k, what if your streamed the event live for the World to see? Consider this; the opportunity cost in just performing one time and seeing the revenue immediately or touring for months. Let’s take Ed Sheeran’s “Divided Tour” which is listed as the highest grossing concert tour of all time, according to Wikipedia. He managed to average $3.4 million per show with a mean of 34.5k in attendance for each performance; an estimated $775M gross, was the result. Conversely, there are 7.35B people in the World and 328 million people in the United States. If a quarter of Americans order the event on PPV for $100.00, a fraction of the cost of a ticket, the potential revenue is $8B; almost ten times more revenue than the tour. Cuban is merely “Testing the waters”, according to various sources, but I know better. He is a calculated genius that has done his homework and he wants in. He is a shark by nature and is attacking a familiar space; keep in mind, he sold www.broadcast.com to Yahoo for $5.7 Billion in 1999 according to Wikipedia. Whereas PPV is one option for major events, a subscription model may better suit sports teams and the like, who have a full season of games or shows. Setaro notes that Damashek “Suggests that the future of nightlife will be brought to you by Barclay’s”; close enough. Apple TV, Disney Plus, Amazon TV and NetfFlix, for starters, have all captured various markets; why should Live Nation be any different? Cuban is an industry-insider and would be embraced by owners within the NBA; he would capture the attention of other sports, CEO’s and brands with ease. With a plethora of options, Live Nation could license different entities, all while maintaining exclusive content. Athletes and entertainers would get a cut of the net revenue; sponsorship and merchandise would be based on the selling ability of the entity. As of March 27, 2020, Forbes estimates that the Coronavirus has cost the sports industry $5B, a number that could balloon to $10B, if play does not resume by July. Cuban is one of the owners paying his hourly employees while the Coronavirus keeps them out of work according to Fortune. In an article dated March 26, 2020 Fortune affirms that “He does hope to have games played in empty arenas, available to stream by mid-May or June, though.” Cuban’s motivation is twofold. Most importantly, bring back sports as quickly as possible via streaming; it creates instant revenue and stops the bleeding that comes with the absence of play. Secondly, to ensure that the entertainment world is never put in this position again; in the end game, one will prove to be more profitable than the other. Live Nation closed at $47.15 a share yesterday, up $10.95 a share or a profit of $300k on the one million that was invested just a few weeks earlier; if and when the stock price returns to its peak, the profit will exceed one million dollars. Business Insider reports that the Coronavirus will surge unemployment to 30% next quarter; specifically, the bartenders, security, cooking staff, ushers and others who rely on venues and the revenue created by these events. These individuals, who are currently out of work indefinitely, will be forced to thrive in new realms of society and gain employment in other sectors; the Coronavirus has presented the perfect opportunity to see how well people can adapt. Talent, booking agents, managers, promoters, publicists, graphic designers and the like, will remain in their positions and adjust accordingly. With Fortune reporting that the GDP will drop by at least 30%, new professions and careers will be created with the technologies that come with streaming and all it has to offer; merchandise will be produced domestically. Cuban sees virtual entertainment as an opportunity to create a platform made for everyone; mainstream and underground talent as well as producers and consumers alike. He and Live Nation will change the way we look at, and access, entertainment forever. They are just one of the hundreds of entities that will follow suit, lead the way and capitalize accordingly. A digital revolution is upon us; find your place at the dinner table or sit back and enjoy the ride, from your couch.
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Jenna A. HercheA native New Yorker, Jenna has been in various facets of the entertainment industry for over twenty years. Her newest venture is media. Be sure to stay tuned for her perspective on the industry and the politics that come with the territory. CategoriesArchives
March 2020
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