Things got a bit heated at a music industry conference on social media and touring entitled "Social Live Music Industry: Where Is the Money?" Organized by U.K.-based European music and technology events-and-networking specialist 2Pears, the event was the latest in 2Pears' Music 4.5 debate-conference series held in London.
One of six sessions held at this edition of Music 4.5 was a panel called "The Dirty Ticketing Market…Do You Ask For Legislation or Do You Work Around/With It?" comprised or Joe Cohen, CEO of Seatwave, a U.K.-based international secondary-ticketing service, and Tom Hopewell, "wing commander" at Music Glue, the U.K. online-marketing platform for artists, promoters and venue owners.
Their participation in the conference, held on Dec. 13, comes at a time when the live-music business is trouncing recorded music. Indeed live music in the U.K. generated an estimated £1.48 billion ($2.29 billion) in 2010, compared with £1.23 billion ($1.9 billion) in recorded-music sales, according to "Adding Up the U.K. Music Industry," a recent Economic Insight report by British collecting society PRS For Music. The report also states that U.K. music festival ticket revenues grew almost 20% last year, and attendances at festivals on continental Europe grew 6%.
But when asked about his views on the state of live music, Cohen, a former VP and general manager of Ticketmaster Europe, told the Music 4.5 audience that the demand for some headline acts by several festivals has become aggressively competitive.
"These days, 90% of (a concert's) gross revenues goes to the artists; sometimes, it is as much as 105%, leaving nothing for anyone else. That is what is breaking the model of live," he declared, adding that, should these demands from popular artists, their managers and promoters continue, they could hurt live music's growth.
He argued that this demand has triggered a trend wherein artists are making unsustainable payment demands. This is forcing growth in the sector this year to be driven not by increased sales but by increased ticket pricing, he said.
"Pricing is based on how many trucks are on a tour; that's how tickets get priced," Cohen stated, much to the consternation of several audience members, which included artists, promoters, digital-marketing experts and music-technology specialists.
When an audience member questioned his analysis by pointing out that several of today's emerging acts have a closer relationship with their fans via social media, and so are not inclined to exploit ticketing prices, Cohen responded: "Most people are not aware that the majority of the booking fees gets rebated back to the promoter or the artist. But most promoters are already working on thin margins. If they can get 5%-10%, they are doing pretty good. The sad thing is finding them and a venue making money by selling beer instead."
The Music 4.5 debate comes after Ticketmaster in the United States agreed to settle a class-action lawsuit over its ticket order-processing and shipping fees earlier this year. Meanwhile, Live Nation has agreed to acquire digital-media measurement company BigChampagne , which will include direct-to-fan and ticketing data among its offering to clients.
Although he did not offer specific examples of the exorbitant demands made by artists, Cohen's was not the only voice to observe the growing power of established live acts during business negotiations with promoters.
Music 4.5's keynote speaker Jon McIldowie, promotions director of the MAMA Group--the live-music subsidiary of HMV Group, the struggling U.K. recorded-music retail giant --had earlier said, "Artists' fees for festivals is increasing year-on-year, especially in the U.K. where there is a lot of competition [for talent]."
He disclosed that he would be prepared to pay an act in demand £20,000 ($30,950), which several people in the audience agreed was a significant sum, to play at a MAMA Group festival, if it stopped that artist going to a rival event.
This did not stop HMV Live, which includes the MAMA Group's festivals include Global Gathering, Lovebox and The Great Escape, from being the only profitable division at HMV when it recently announced its financial results for the six months ending Oct. 30.
A potential solution to the unpredictability of ticket pricing and its impact on live music is the emerging direct-to-fans model, where artists interact directly with fans using social media, observed Music Glue's Tom Hopewell.
Its current claim to fame is enabling Mumford & Sons, the popular British folk-rock act, to control their live-music strategy totally by using social media to hire the venues, push ticket sales and use email addresses to market their shows.
"Artists are becoming more social-media savvy," Hopewell said. "And data collection has become so key to artists now." However, he emphasized that his company does not farm out its clients data to third parties. Hopewell also disclosed that Music Glue plans to expand into Europe.