In a recent company memo, Live Nation announced they’re cutting artist pay as they begin to plan future festivals. The global entertainment company is a major player in the live music industry, especially in the electronic music space. In 2013, Live Nation and Insomniac Events, an electronic music event promoter, formed a partnership where Insomniac would retain creative oversight of their branded events. Insomniac has a strong foothold in live music events as it’s behind one of the biggest electronic music events Electric Daisy Carnival (EDC) Las Vegas. The joint venture between two leading giants left little room for competition, but even they have felt COVID-19’s impact.
Live Nation’s operations are plenty with a worldwide footprint. They control venues including The Met (Philadelphia) and The Fillmore (San Francisco). They also manage more than 500 artists in major music genres including The Weeknd, Chris Stapleton and Santana. Live Nation is parent company of Ticketmaster, one of the largest ticket sales and distribution companies in the world. As it’s evident, they have their hands in several sectors within the entertainment industry.
The new policy, which you can read in full at the end of this article, comes on the heels of already cost-reduction plans. Earlier this year, the company furloughed 20 percent of its workforce, reduced top executives’ salaries by up to 50 percent and its CEO gave up his three million base salary. It seems that the decision for Live Nation to cut artist pay is another way they’re trying to salvage their bottom line.
The memo’s festival policy shifts aren’t the only challenge the music industry is facing. A recent study found that up to 90 percent of independent music venues in the U.S. are risking closure by the end of the year if they do not receive federal aid. With smaller, independent venues and promoters struggling to survive, Live Nation’s new policy has raised a lot of questions in the music industry as a whole.
The burning question remains: when will live music events see the light again? While the answer is uncertain, event organizers are doing what they can to keep their heads afloat.
The same memo also outlines other major policy changes that will take into effect in the coming year. Changes include streaming requirements and financial shifts in cancellation policies. Some of the cancellation stipulations are unprecedented like the updated cancellation by artist policy in Live Nation’s memo. “Never has an artist had to pay a promoter two times the artist’s fee,” says an agent from a reputable booking agency for top international artists. “What happens when a flight is canceled and the artists physically can’t make the show? How you can hold the artist accountable for something in which they have no control? Would this mean flying an artist in the day before a show? Then the fee will have to factor in a ‘travel day’.”
In an industry where artists reap great monetary benefits from touring how will this impact them? Particularly, artists who aren’t full-time artists but also work other jobs? Moreso, how does this affect artist teams? The music ecosystem is far-reaching from booking agents and promoters to publicists and managers.
In our intimate underground house and techno scene, events are a vital revenue stream. The pandemic has blindsided touring artists in our sector particularly hard. If Live Nation’s stipulations are mandatory, this could gut their market share.
Live Nation acknowledged taking careful thought before cutting artist pay, “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.”
Several agents in the music industry whose job it is to book artists for these events have weighed-in anonymously. Here is what they had to say:
These policy changes are effective for festivals only at the moment. However, only time will tell how the live music industry will continue to adapt due to the pandemic.
The global pandemic has changed the world in recent months and with it the dynamics of the music industry. We are in unprecedented times and must adequately account for the shift in market demand, the exponential rise of certain costs and the overall increase of uncertainty that materially affects our mission. In order for us to move forward, we must make certain changes to our agreements with the artists. The principle changes for 2021 are outlined below.
Artist Guarantees: Artist guarantees will be adjusted downward 20% from 2020 levels.
Ticket Prices: Ticket prices are set by the promoter, at the promoter’s sole discretion, and are subject to change.
Payment Terms: Artists will receive a deposit of 10% one month before the festival, contingent on an executed agreement and fulfillment of marketing responsibilities. The balance, minus standard deductions for taxes and production costs, will be paid after the performance.
Minimum Marketing Requirements: All artists will be required to assist in marketing of the festival through minimum social media posting requirements outlined in artist offer.
Streaming requirements: All artists will be required to allow their performance to be filmed by the festival for use in a live television broadcast, a live webcast, on-demand streaming, and/or live satellite radio broadcast.
Billing: All decisions regarding “festival billing” are at the sole discretion of the promoter.
Merchandise: Purchaser will retain 30 % of Artist merchandise sales and send 70% to the artist within two weeks following the Festival.
Airfare and Accommodations: These expenses will be the responsibility of the artist.
Sponsorship: The promoter controls all sponsorship at the festival without any restrictions, and artists may not promote brands onstage or in its productions.
Radius Clause. Violation of a radius clause without the festival’s prior authorization in writing will, at the festival’s sole discretion, result in either a reduction of the artist fee or the removal of the artist from the event, with any pre-event deposits returned to the festival immediately.
Insurance: The artist is required to maintain its own cancellation insurance as the promoter is not responsible for the artist fee in the event of a cancellation of the festival due to weather or a force majeure.
Cancellation by Artist: If an artist cancels its performance in breach of the agreement, the artist will pay the promoter two times the artist’s fee.
Cancellation Due to Poor Sales. If a show is cancelled due to poor ticket sales, the artist will receive 25% of the guarantee.
Force Majeure: If the artist’s performance is canceled due to an event of force majeure – including a pandemic similar to Covid-19 – the promoter will not pay the artist its fee. The artist is responsible for obtaining any cancellation insurance for its performance.
Inability to Use Full Capacity of the Venue: If the promoter – either because of orders of the venue or any governmental entity – is not permitted to use the full capacity of the venue, then the promoter may terminate the agreement, and artist will refund any money previously paid.
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.