Business

As Livestreaming Goes Mainstream, It Could Be Survival of the Biggest

Tim Peacock

Startups raised the curtain for online concerts during the pandemic. Now Live Nation and other corporate giants want in — and touring is coming back.

Not even Jennifer Lopez could liven up an empty Times Square this New Year’s Eve, when she headlined the annual ball drop for a handful of shivering crew members and front-line workers. The real party was online, where a parade of flashy pay-per-view livestream concerts rang in the new year around the world: Justin Bieber marked his first performance since 2017 with a Beverly Hills, Calif., show in partnership with T-Mobile; KISS broke two Guinness World Records by setting off $1 million worth of pyrotechnics in Dubai, United Arab Emirates; and BTS headlined Big Hit Labels’ three-hour celebration in South Korea with guests Halsey and Lauv. It was a fitting way to cap the year that livestreaming transformed from a niche business to an essential, eight-figure industry amid the coronavirus pandemic, spurring the launch of over a dozen new platforms in a market that now looks pretty crowded.

What started as mostly free virtual bedroom performances early on in the touring shutdown have evolved into costly, ticketed productions that keep growing bigger and bolder. Dua Lipa’s futuristic Studio 2054 in November had a budget of $1.5 million-plus and drew an estimated 5 million global viewers to its premiere, with tickets priced at $10, while KISS’ livestream cost a reported eight figures to produce, with tickets ranging from $40 to $1,000 for a VIP package that included a collectible engraved metal ticket. Major players in tech and touring are now entering the space — Amazon-owned Twitch has built up its music team and become a virtual music festival destination, Live Nation acquired a majority stake in Joel and Benji Madden’s leading service Veeps on Jan. 19, and YouTube is doing its first paid access livestream with Blackpink on Jan. 31, signaling a new phase of growing competition and risk for the still-nascent sector. The livestream market has the potential to become "exponentially larger than what the live-music market was," thanks to virtual concerts' unlimited global audience capacity and lower costs than physical touring, says Mary Kay Huse, who last May founded the popular platform Mandolin. But with at least 30 companies now competing for artists and audiences’ attention, don’t expect them all to stick around.

A "feature war" is already underway, says Huse. Following a $5 million seed funding round in October, Mandolin launched a "Parties" function that allows fans to share livestream experiences by chatting in private virtual rooms during concerts. The company, which takes a subscription-based platform fee and then gives 100% of ticket and merchandise sales to the artist, also caters food, drinks and custom merch to at-home watch parties.

Other platforms are staking out specific niches. Sessions, launched by Pandora co-founder and former CEO Tim Westergren in April, focuses on promoting emerging and independent acts. The platform is investing $75 million in digital marketing powered by artificial intelligence that’s free for artists. "Every day, another livestreaming company joins the fray," Westergren told Billboard in November. “But artists don’t need more tools; they need an audience.”

Bulldog Digital Media — a white-label, turnkey livestreaming firm founded in 2012 by CEO John Petrocelli, a former AEG executive — hosts large-scale livestreams for artists and brands. It launched a native ticketing platform in July with a "teaser" service allowing viewers to watch a specified period of a livestream (such as the first song) before charging them to watch the rest, and offers "live studio in a box" kits with lighting gear and microphones to clients like Genius, which used one to film a Wiz Khalifa concert in July.

The pandemic has been a boon to the livestream concert business, but any advantage startups had from getting in early is slipping away as big companies enter the space, where they have such advantages as built-in audiences, relationships with artists and stored credit card information to streamline ticket sales. Facebook introduced ticketed livestreams in August and is letting musicians and other nongaming creators keep 100% of the revenue their livestreams earn through at least August. Twitch, a longtime kingpin in the gaming world, ramped up its music team amid the pandemic, partnering with festivals like Rolling Loud and Outside Lands for virtual editions while signing exclusive deals with artists like Logic and Brazilian funk music company KondZilla. YouTube, by far the world’s leading video platform, struck a first-of-its-kind partnership for Blackpink’s upcoming livestream where fans buy a membership to the group’s official YouTube channel to unlock access (starting at $30 for a two-month subscription), and plans for an official pay-per-view product to follow, according to a source. With Live Nation’s Veeps acquisition, it gained a successful startup that grossed over $10 million in 2020 from more than 1,000 ticketed livestreams to complement the 40,000 annual shows that Live Nation normally promotes. The announcement drove Live Nation stock to a new all-time high of $77.02 per share, even though the company’s revenue has dropped to about 5% of its prepandemic intake.

Petrocelli predicts that "one-third to half" of livestreaming platforms will either fade away or be bought by larger companies over the next year, since consolidation is a common pattern for online businesses. "I don’t know how all of these companies will survive, especially since they’re taking very small revenue shares and there’s a lot of costs to pull off these shows," he says, noting the complexities from production to network bandwidth and payment processing. "Even though livestreaming is so popular now, there are few people who understand how to properly code and make the audio sound correct." And while the livestream boom toward the start of the pandemic translated to over 2,700 concerts per week in May, that number has dropped to under 900, according to Bandsintown.

Once touring resumes, platforms that complement rather than cannibalize in-person shows will have better odds at survival — part of the reason why Mandolin’s Parties is helping fans host in-person viewing sessions that Huse likens to Super Bowl parties. Video game Fortnite and virtual reality events company Supersphere urge artists to add virtual stops to future tour schedules. And as Live Nation president/CEO Michael Rapino suggested in a statement regarding the Veeps acquisition, artists might benefit from livestreaming all physical dates: "Livestreaming is a great complement to our core business," he said, "and gives any show an unlimited capacity."

Petrocelli thinks the increased competition will give artists leverage to negotiate better terms, and Huse expects platforms to begin making artists sizable offers for exclusive deals. Both are among executives in the space who think the crowded market will benefit the music industry as a whole, which "isn’t known for a ton of tech," says Huse.

"The market exploded at the same time we were building the company, and we have embraced that competition because the rising tide lifts all boats here," she says. "I see now as the time that the music industry is going to go through a digital revolution."

This article originally appeared in the January 30, 2021 issue of Billboard.

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