<p>Tiësto</p>

Tiësto
Courtesy of Tomorrowland 2020

What Do Virtual Festivals Pay Artists? Tomorrowland Tests a New Model

The Belgian organizers are paying artists by their views and overall ticket sales, in what could be a first in the livestreaming world.

Did Tomorrowland just discover a new formula for compensating artists on the festival’s imaginary island of Pāpiliōnem?

Since the coronavirus pandemic began shuttering much of the world’s live music scene in March, many in the industry have wondered how much revenue digital livestream festivals could generate and what kind of paydays artists and headliners would earn.

Last weekend’s Tomorrowland: Around the World festival was one of the first major festivals to go digital and put an astounding $10 million on the line in artist payments and production costs for a massive online event. The two-day electronic dance music festival, which founders of the Belgian event say took over three months with a team of more than 200 workers, featured a fantastical computer-generated world with big-name DJs like Tiësto and David Guetta performing pre-recorded sets filmed in green screen studios on four continents.

One industry source tells Billboard that between the financial support of nearly all of the event’s long time sponsors and strong ticket sales, the $10 million event likely broke even and potentially netted a small profit.

Where other major EDM festivals have canceled or postponed their events, most until 2021, Tomorrowland organizers decided to hastily adapt their plans and create a virtual festival with a limited, star-heavy lineup, which also included Martin Garrix, Steve Aoki, Afrojack and a 15-minute medley set by Katy Perry that included her recently released songs "Smile "and "Daisies." Over the two days, 67 artists appeared digitally, compared to more than 1,000 that appeared live last year for the three-day event in Boom, Belgium.

The festival struck deals to pay artists a royalty for every ticket sold, and the number of views their sets generated, according to festival spokesperson Debby Wilmsen. “So, of course they get paid for their DJ set, but also for the views. It depends a little on the artists and the relationship we have with them.”

While the rates varied according to the artist, the starting royalty rate was one euro cent “per sold pay-per-view ticket incorporating the artist’s performance,” according to a deal terms sheet obtained by Billboard.

Under this plan, if 100,000 total tickets were sold, a performing artist would be paid €750 ($880), while the sale of 500,000 tickets would net a payday of € 3,750 ($4,415). More well known artists were paid a flat fee, plus a per ticket royalty rate negotiated with the artists camp. One high-ranking industry source estimated that headliners were able to earn about half of what they were going to make at this year’s festival prior to the COVID-19 pandemic.

The festival charged viewers €12.50 (about $15) for a day pass, 20 euros for a weekend pass, and offered a separate €12.50 “relive” option that allows fans to tune back in for up to a week to see their favorite performances.

(Tomorrowland said early Monday that more than 1 million people tuned in over the weekend, but did not disclose how that number was calculated or how many tickets were sold.)

Wilmsen declined to elaborate on the profit-sharing model and the formula the festival used to compensate artists. But one manager with an artist performing at the event told Billboard that artists could make up to 100% -- but not more -- of their full booking rate, if enough passes are sold.

For artists and their teams, after a few months of DJs free livestreams, often for COVID-19-related relief programs, Tomorrowland was a welcome change. “The livestreams are really scaling back,” the manager who spoke to Billboard said. “Artists are spending $10,000 to $15,000 to produce their livestreams. Not only are they not making money [for the livestreams], they are losing money.”

Tomorrowland had been doing free livestreams as well, as co-founder Michiel Beers noted during a digital press conference last week. “We did seven or eight free livestreams with [our livestream initiative] United Through Music with a lot of big artists,” he said. “But this is a multi-million dollar investment that we are doing to bring this to this level -- and at a moment where our account is in the worst place in years…And the price we are asking is more than fair.” (Regular weekend passes have typically cost about €500 for the live event.)

In the past, an A-list DJ could earn a low seven-figure artist fee to play a top-tier festival like Tomorrowland. The artist’s fee was guaranteed no matter how many tickets had been sold, with festivals typically needing to hit 80% to 90% of capacity to turn a profit. Paying artists royalty-based rates on tickets sold shifts some of the risk on to the talent, but in theory creates the potential for a higher upside in the future since online festivals have an unlimited capacity.

Tomorrowland also didn’t have a digital radius clause for all artists -- “no specific exclusivity towards other scheduled livestreams is needed from the artist,” explained a term sheet obtained by Billboard for artists earning one euro cent per ticket sold. That’s a big departure from the festival space, where mega-events can have radius clauses excluding artists from playing within 1,000 miles of a festival for three to six months.

Most festivals also require artists to cover their own travel and production costs, but Tomorrowland promised to pay “all costs and out-of-pocket expenses directly related to the performance of the artist.” Tomorrowland also paid for the public performance rights and mechanical licenses for the compositions played during the event, which is standard practice for festivals.

Guetta, who has performed at all 16 editions of Tomorrowland, hinted at the uncertainty surrounding the compensation arrangements. “This is the only festival that has the guts to not only try a new creative model, in terms of artistically, but also even an economic model,” he said. “Because we have no idea how it is going to go. But I respect that you are willing to take a risk to do something innovative.”

With the pandemic spreading fast, forcing countries in Europe and elsewhere to prohibit large gatherings like music festivals, the Tomorrowland organizers decided in April to try something different. Other major EDM festivals, such as Ultra and Electric Daisy Carnival, had already decided to postpone their events. But Beers and his team decided to hold their event in July as always by adapting technology it had already used to pre-visualize the festival.

“All year long we make our stages in 3D, we make our light shows in 3D,” Beers explained at the press conference. “We have everything digital. We thought if we could bring all our favorite artists together with all the 3D designs we have in one enormous world, which on one hand feels surrealistic and [on] another feels really real, that would be a dream.”

The computer-generated world is a lush, hilly island called Pāpiliōnem, which seems like a cross between an ancient Roman outpost and the mythical city of Atlantis. Upon opening their browser, ticket buyers are presented with a stage map. Clicking on a stage opens that area, and the show happening within it, in a new browser. A single ticket provides access on three devices. There are waterfalls, a cave (with a DJ stage) and a “Moose Bar.” The main stage is bracketed by what look like 50-feet high statues of faceless men and a massive sundial in front of the DJ booth. Just like in any EDM festival, fireworks blast intermittently, lasers flash and there are giant floating screens with the artists in close-ups.

"We really didn't want to work with avatars," says Wilmsen. "Michiel thinks avatars are not sexy. They're not magical; they're not Tomorrowland. We had to bring the real DJs into the DJ booth."

To place the artists into the virtual world, the festival organizers set up video shoots in green-screen studios in Sydney, São Paulo, Los Angeles and Boom, Belgium, with custom-built DJ booths. “This is a Hollywood movie we are somehow making,” Beers said.

Some three weeks before the show went live on the website, the Tomorrowland team paid for Australian DJ sisters Nervo and their video team to travel from London to Boom, where the duo shot their 35-minute set. “It was recorded from about 20 different angles,” the group's Olivia Nervo tells Billboard. “It felt weird at the beginning because the ‘crowd’ consisted of about 20 of the crew, but everyone was super vibey. The volume was up loud, so it felt good.” (The festival says that the video director had up to 38 camera angles to choose from during the recordings.)

Veteran headliner Tiësto shot his set in will.i.am’s private rehearsal space in Los Angeles, according to one industry source familiar with the matter, hiring renowned director Stefaan “Smasher” Desmedt, whose credits include U2, Madonna and The Rolling Stones, to direct his performance.

Dimiti Vegas, part of the duo Dimitri Vegas & Like Mike, said that Tomorrowland had a lot to build on if virtual festivals were to become the new normal amid the ongoing pandemic. “The technology that has been used, the Unreal Engine, there are so many possibilities to dream up and play [with] in this amazing virtual world that Tomorrowland created,” he said during the press conference.

Katy Perry said the future had arrived.

“We kind of all knew this virtual insanity, dystopian future was upon us, especially with, like, Fifth Element and Blade Runner telling us 30 years ago,” she said. “We’re here now, so let’s embrace. They tried to do it with VR and we’re doing it now, with this.”

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