The COVID-19 crisis has grounded the live music business to a halt, slowing the momentum of a rising new generation of headliners and costing leading concert promoter Live Nation billions in losses. But the pandemic has also created a rare opportunity for the company to push through long-term changes to how it compensates artists who play festivals like Lollapalooza, Austin City Limits and Bottle Rock.
“We are in unprecedented times and must adequately account for the shift in market demand,” an unnamed company official said in a memo sent to talent agencies last week. Now Live Nation is aiming to renegotiate the terms for thousands of shows postponed to 2021, including more than 100 festivals around the world. The changes could mean a fundamental change in the business model, shifting substantially more risk to agents and artists while potentially leveling the playing field for independent promoters and festival owners as they struggle to recover.
“In order for us to move forward, we must make certain changes to our agreements with the artists,” the memo continues. That includes across the board pay cuts “adjusted downward 20% from 2020 levels,” as well as addressing industry practices around cancellations with changes that could save the promoter tens of millions of dollars a year.
If a festival “is cancelled due to poor ticket sales, the artist will receive 25% of the guarantee,” the memo reads. This would mark a dramatic decrease from the current requirement that promoters pay 100% of an artist fee if a show gets cancelled. On the flip side, if an artist cancels their appearance at a festival and is found to be in breach of the agreement, “the artist will pay the promoter two times the artist’s fee.”
This type of cancellation penalty is unprecedented in live music and would make the concert business far less risky for promoters, potentially creating a more level balance of power between promoters and talent. One independent promoter who has seen the memo tells Billboard artists currently face virtually no consequences if they cancel a headline slot at a festival, regardless of the long-term effects such a last minute cancellation can have on a a festival brand.
“But if I have to cancel my festival, for whatever reason, I am expected to pay artists in full even if they didn’t help me sell a single ticket, and that’s not fair” the independent promoter says. Reducing the burden on promoters for canceled festivals by 75% — as the Live Nation memo states — would mean significant savings. And while agents and managers have been expecting this type of demand from promoters, they warn that the change could bring with it unintended consequences, like artists avoiding newer festivals or agents demanding a role in choosing the lineup to mitigate risks.
“It wasn’t unexpected,” says Christian Coffey, tour director for Coffey Black which works with artists like Run the Jewels, ASAP Rocky and Childish Gambino. “Everyone has lost money this year — and that includes Live Nation and every other promoter. Those losses were going to change how business was done and I think everyone was waiting to see it on paper.”
AEG is also seizing the moment, issuing its own memo last month to clubs and theaters that book shows from AEG Presents, warning “all deals in 2020 will be renegotiated regardless if they went on sale before the start of the crisis.” For shows with less than 90% of tickets sold, the money an artist was guaranteed to receive will be reduced “25% to 50% of original all-in guarantee based on sales before postponement.”
Several agents who have seen both memos say they view the new contract points as a starting point for discussions for booking 2021, but understand all stakeholders should at least expect a reduction in fees.
“I wouldn’t be surprised if this was a trial balloon that’s being released to establish a middle ground,” says John Pantle with Sound Talent Group, who works with artists like Natalia Lafourcade and Residente. “We are going into unprecedented times and no one really knows what is going to happen, or how the business will come back.”
Live Nation wouldn’t comment on the memo, but a source close to the company says the memo is a framework for negotiating 2021 events and added that none of the policies are set in stone. But it’s clear Live Nation is not missing out on the opportunity to reshape a relationship dynamic that many say favors artists and puts nearly all the risk on promoters.
The list of changes includes a provision that would remove artists from a promoter’s event cancellation insurance policy, which are skyrocketing in cost. To lower premiums, Live Nation would require artists to purchase their own cancellation policies and file their own claims, instead of expecting payment from the promoter’s policy.
Between the insurance requirements and new cancellation payouts, artists have significantly less incentive to play first year events, Coffey says. Tours will “try and go the safe route with proven ticket sales on [an established] festival versus a new one that might hold more risk of performing poorly,” said Coffey. Some indies will try to adapt to Live Nation’s policies and protections, Coffey predicted, while others will try to set themselves apart from Live Nation as more “artist friendly” and willing to agree to demands.
While a number of agents interviewed by Billboard say there is no chance their artists would agree to pay a penalty if they had to cancel an appearance at a festival, most are prepared to take a fee reduction as the concert business comes back to life in 2021.
“Live Nation has a lot of leverage going into 2021, because they’re one of the few companies booking shows,” says one agent who wished to remain anonymous. “But there are far more festivals needing talent than there are artists capable of headlining a large festival and it won’t take long for the balance of power to swing back to artists.”