Consumers used to spend lots of money on live music tickets. But now that there are virtually no concerts to see, where is that money going? Take a look below.
An image of Queen Elizabeth II and quotes from her broadcast to the nation in relation to the coronavirus epidemic are displayed on screens in Piccadilly Circus on April 09, 2020 in London, England.
That's the multibillion pound question tormenting artists, promoters, agents and record labels -- and the answer requires understanding the complicated relationship between fan spending on live music and recorded music.
On top of the face value is the secondary market activity, which can be extrapolated using public data from eBay’s 2019 filings on StubHub prior to the company being sold to Viagogo earlier this year. They stated that 5% of their turnover was from the U.K., while Britain’s Competition and Markets Authority reckons the company makes up 40% of all U.K. secondary ticketing. Multiply that through, you have a prudent estimate of £136 million in additional spend on secondary ticketing. .
That's where we need to press pause and curb our enthusiasm. The impact of the COVID-19 is likely to send both ships in different directions again. We can model out the potential impact of COVID-19 on an artist's income by using a simplified 80/20 rule. For live music, we strip out fees and taxes from the face value of the ticket and give the artist 80% of what’s remaining. For recorded music we take the label's own wholesale value of music and give the artist 20%.
A clue can be found in the way that concerts and festivals have been stockpiled -- as they’ve been delayed, not canceled, meaning there’s no reason to refund the ticket. From a cash flow perspective, that makes all existing ticketing revenues for this year largely unchanged, but no"on the night" spend to draw from; whereas next year will struggle to sell new tickets but win back the customers' night-of spend. Expect bar prices to be increased next year.
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