The Eve of Disruption – the Effect of COVID-19 on Live Performance

Adapted from Epilogue: 2020 - Into the Future

The year 2020 began as one of optimism. The longest bull run in stock market history had begun in 2009 and propelled the Dow Jones index to an all-time high on February 12, 2020. The four-year upward trend in both live and recorded music revenue appeared to be the harbinger of things to come. Glowing forecasts issued by Citigroup, PricewaterhouseCoopers, and Goldman Sachs had contributed to venture capital infusions into all sectors of the industry, predicting that both recorded music and live performance revenue would almost double over the next decade.

Daily operations continued as usual. There were concerts, new record releases, and plans made for the rest of the year and beyond. Data was tabulated and sorted, tracks were streamed and downloaded, CDs and LPs were purchased, and studios churned out new recordings. The charts came out weekly as they always had, with new tracks rising as older ones receded, all moving on their own unique trajectories.

Overall, 2020 was anticipated to be a year of industrywide highs. Then with hardly a warning a new disruptive force beyond the collective imagination of the entire industry arrived in the form of the COVID-19 virus. As January’s whispers transformed into February’s misgivings, and then into March’s declaration of pandemic, the fear of a resulting downturn replaced the expectation of a continuing boom. How COVID-19 would affect each sector of the industry became the central issue of both immediate agenda and long-term planning. What had appeared to be another year of growth turned into an ongoing succession of uncertainties.

COVID-19 Closes the Concert Circuit

The live performance sector was the first to react to the looming pandemic affecting all from club to Coachella, lounge owners to concert promoters, roadies to rock stars, and everybody and everything in between. By the first week of March, confirmed cases were escalating. On March 5 San Francisco’s Ultra Music Festival shut down followed the next day by the cancellation of Austin’s South by Southwest. A few days later Coachella rescheduled to October. Early on March 12 Live Nation called all tours home, postponing all shows until at least April when it would re-evaluate. Although there were no immediate layoffs, staffers were told to stay home and work remotely.

AEG, the second largest promoter behind Live Nation, and the major talent agencies joined in for an industrywide postponement of all major concerts through at least March. With all tours still on hold, in mid-April Live Nation initiated a salary reduction plan for senior executives, including Chairman Michael Rapino, who canceled his own compensation for the duration of the crisis. A hiring freeze, reduction in all expenses, rent renegotiations, staff furloughs, and careful monitoring of all discretionary spending all also went into effect. AEG initiated similar across-the-board reductions while trying to avoid layoffs.

From the very beginning of the shutdown, policies were formed on the hope to be back on the road by fall, but it soon become apparent that returning in the fall was not feasible. Industry attention turned to the second half of 2021 or even 2022 as a target for a return to touring. Many promoters tried to reschedule rather than cancel the postponed tours to avoid refunding ticket purchases. Booking agencies initiated parallel rounds of cost reduction in all departments as film and television productions were also suspended.

In May Goldman Sachs issued an addendum to its Music in the Air equity report published earlier in the year titled “The Show Must Go On” forecasting a 25 percent decline in overall music industry revenue in 2020 due to the closure of live performances, with a rebound in 2021. The addendum further projected that in 2020 streaming revenue would rise by 18 percent, CD/LP sales by 3 percent, and publishing income by 3.5 percent to maintain the overall industry revenue decline at the projected 25 percent. The addendum further predicted that 79 percent of fans would resume attendance at live events four months after the lifting of COVID-19 restrictions, and the industry as a whole would eventually rebound to match or top their pre–pandemic estimates.

Box Office 2020: The Year that Could Have Been and the Year that Was

Looking back at 2020, Pollstar’s box-office liaison Bob Allen wrote, “Using the first quarter’s growth percentages for the Top 100 tours, we estimated in the Q1 analysis in March that grosses ....might have produced the first $12 billion year”* for all the major tours and venues tracked by Pollstar. 

Despite the promising start, at year’s end total gate receipts were down 78 percent from pre-pandemic expectations. In considering what could have been, Pollstar’s executive editor, Andy Gensler, hypothesized, “If one were to add the multiplier effect of each ticket . . . it doesn’t take much calculus to arrive at a full economic impact of greater than $30 billion.”** That estimate included events outside of the tours and venues that reported to Pollstar as well as related ticketing costs; sponsorships; merchandise sales; concessions; and transportation when going to festivals, residencies, or other cities for tour dates. Also to be considered were the secondary ticketing market resale markups.

Postponed until Further Notice

As spring became summer and the virus surged, the general consensus was that all would work out in the end, but no prediction was offered for how or when. While businesses could shift to working remotely, and consumers still had access to music through radio, smartphone, and home entertainment centers, touring artists had their lives and plans totally disrupted by this sudden shutdown. Net revenue from gate receipts normally accounted for the largest share of artist income. Billboard’s Ed Christman wrote that 2020's top earners’ revenue “fell tenfold, from $779 million in 2019 to $79 million and accounted for just 20% of artists’ collective 2020 take-home pay. In previous years, it has made up 75% to 80% of the top 40 Money Makers’ income.”*** 

Leading the 2020 Billboard moneymaker list (see infographic from book below) was Taylor Swift, netting an estimated $23.8 million without concert dates but a Grammy-winning album in folklore. Post Malone was right behind her at $23.2 million, but with $12.4 million from touring prior to closure. Third was Celine Dion with almost all of her $17.5 million from a Las Vegas residency that shuttered before March. The Eagles were in fourth with $16.3 million, $11.4 million of which came from pre-pandemic shows. Newcomer Billie Eilish was fifth with only $1 million of her $14.7 million from touring. These five took in 67.2 percent of the top forty artist's touring total. Combined revenue from all sources, however, netted only $95.5 million compared to $228.7 million for 2019’s top five.

Footnotes

* Bob Allen, “2020 Business Analysis: What Might Have Been Vs. What Was,” Pollstar, December 11, 2020, 2020 Business Analysis: What Might Have Been Vs. What Was - Pollstar News.

** Andy Gensler, “2020*—A Year Forever Qualified,” Pollstar, December 11, 2020, 2020*—A Year Forever Qualified - Pollstar News.

*** Ed Christman, “Billboard’s U.S. Money Makers: The Top Paid Musicians of 2020,” Billboard, July 19, 2021, Highest Paid U.S. Money Makers In Music: 2020 Rankings (billboard.com)