First South by Southwest was canceled and Coachella got postponed. Now the live-music business is facing billions of dollars in lost income as its two largest promoters shut down shows.
Live Nation Entertainment and AEG Presents, the corporate behemoths that dominate the concert industry, on Thursday suspended all their current tours in response to the coronavirus pandemic, according to two people with direct knowledge of the companies’ decisions.
The move is a major blow for the concert industry, which was already grappling with the cancellation of South by Southwest and the postponement of the Coachella Valley Music and Arts Festival. Live performances, an all-important source of income for artists, superstar and indie alike, in the streaming era, are also the bedrock for crew members, merchandise sellers and a range of others who depend on live music, all of whom are now facing possibly months of lost wages.
Major tours presented by both companies — which include Billie Eilish and Celine Dion — will pause starting this weekend, with a few already in progress to continue on Thursday and Friday. Both companies expect to keep the tours off the road through March, and re-evaluate the situation in April, in the hope of restarting for the lucrative summer season, according to the people, who were not authorized to disclose the companies’ plans.
Also on Thursday, an industry task force — including Live Nation, AEG Presents and representatives of the major talent agencies — issued a statement that said its members “collectively recommend large-scale events through the end of March be postponed. We continue to support that small scale events follow guidance set by their local government officials.”
Yet exactly how these changes would take effect remained unclear, including questions about refunds and rescheduled dates.
News of Live Nation’s decision to postpone tours was first reported by Billboard.
As the virus spreads, concert promoters, club operators and artists’ managers are contemplating a difficult year that could be full of postponements and cancellations — and with that, the potential for millions or even billions of dollars in lost income. The reach of Live Nation, a music industry behemoth, extends to many midsize clubs, like the House of Blues, which it also owns. And its choices may have a ripple effect on even independent venues across the country.
“It’s kind of an hour-by-hour scenario,” said Michael Dorf, a promoter and the founder of City Winery, an upscale club with locations in seven cities, including New York and Atlanta. Morgan Margolis, the chief executive of Knitting Factory Entertainment, which hosts shows at 11 venues across the country, said in a statement on Thursday that it was “monitoring the situation market by market, venue by venue, and tour by tour.”
Even before the Live Nation cancellation, the damage of the pandemic was severe in the music world, said Allen Kovac, manager of Mötley Crüe, which was set to begin a stadium tour in June. “You have people delaying on-sales for tours, and you have people who are going to postpone tours. It’s chaotic and stressful, from agents and managers to artists, their families and their support teams.”
The reach of the concert industry is global, with many tours stretching deep into Asia and Latin America; last year, U2 played its first show in India.
And the concert industry has grown steadily over the last two decades to become a primary source of income for many artists — a position that has become only more pronounced in the age of streaming, when a hit can catch fire almost instantly around the world but royalty income can still be minuscule.
According to a report last year by PricewaterhouseCoopers, the global market for ticket sales and sponsorship for live music was predicted to reach nearly $29 billion in 2020; according to industry practice, the majority of ticket sales go to the performing artists. By comparison, the global market in recorded music was recently estimated to have around $22 billion in sales, with artists’ royalties typically representing a much smaller proportion of the profits.
Until Thursday, the industry had been holding relatively steady. Eilish opened her spring arena tour in Miami on Monday, as planned, and last week fans began registering to buy tickets for Lady Gaga’s latest outing from Live Nation. Among AEG’s big tours is one by Justin Bieber, set to open in May.
Some acts had already begun rethinking their plans. This week, Pearl Jam postponed its coming tour, and Billy Joel delayed two of his Madison Square Garden concerts. On Thursday afternoon, Dan + Shay, the Grammy-winning country duo, issued a statement, from their tour bus parked at their just-canceled show at the Wells Fargo Center in Philadelphia, that they were delaying the remainder of their dates until summer.
“These shows mean the world to us, and it was important that they be postponed and not canceled,” the statement said. “We want the shows to be memorable, and not experienced with fear.”
Also on Thursday, Gov. Andrew Cuomo of New York announced a ban on gatherings of more than 500 people, and a 50 percent reduction in occupancy for those with under 500. For venue owners, the calculus of keeping patrons, artists and employees safe while getting the staff paid was already torturous. “The revenue we make is from food and beverage sales,” said Dorf, of City Winery, which was due to reopen in its new Manhattan location on April 1. “If we give up the month of April, we have no revenue.”
“We’re trying to be correct global citizens and at the same time, we’ve got to think a little bit about all the mouths that we’re feeding,” he added.
The economic ripple effect is likely to spread not only to venue operators and talent agents but to an array of people who work on everything from lighting and sound crews to merchandisers and people who work in food service and at hotels.
“This is totally crippling to our industry and to all the people who depend on it as a way of life,” said Jackson Gallagher, who works on lighting for concert tours.
For artists and their managers, waking up each day to reports of rapidly growing numbers of coronavirus infections has fed a frustrating uncertainty, said Jonathan Daniel of the management company Crush Music. Green Day, Fall Out Boy and Weezer, which are all represented by Crush, are also planning a stadium tour together this year — and have already canceled dates in Asia.
“Usually in real-life events, you are in a reactive position,” Mr. Daniel said. “If there is a hurricane, you postpone shows; it’s after the fact. This is a proactive position, which is part of why there is so much uncertainty about it all.”
For artists and their teams, the postponement of Coachella is about more than just reshuffling dates. Coachella, which is promoted by Goldenvoice, a division of AEG Presents, holds a special position in the touring market as a tastemaker, and is closely watched in the industry for its bookings, its fashions, its hashtags.
It also represents a vital marketing opportunity for artists, who often book their tours around Coachella and rely on its halo of buzz to sell tickets elsewhere. Even the festival’s live video stream is a powerful form of media promotion; its 2018 edition drew a reported 41 million viewers in more than 200 countries.
“We launched the last Lorde album at Coachella,” Mr. Daniel said. “We set up our entire plan around that festival.”
One consideration is insurance coverage. Promoters and many artists typically buy policies that cover cancellations caused by things like inclement weather or an illness that affects an artist’s ability to appear. Communicable disease is less commonly covered. But by mid-January, once coronavirus was recognized as a serious risk to public events, insurers began to exclude Covid-19 from most new policies, said Peter Tempkins, the managing director of entertainment for HUB International Limited, a global insurance brokerage.
“Everybody now knows about Covid-19 and so they want to buy coverage,” Mr. Tempkins said. “But you can’t — it’s too late.”
After South by Southwest was canceled, its organizers announced that they did not have insurance coverage for coronavirus, and this week the festival laid off about one-third of its full-time employees.
A lack of coverage for coronavirus may lead more artists and promoters to postpone events rather than cancel them outright, according to artist managers and industry executives. But that could lead to a pileup of tours in search of new dates in the fall or even next year. And even if new dates are found, it may mean empty arenas and theaters in the short term — which could translate into lost revenue and wages for venues and workers.
Bob Bailey, the chief underwriting officer for ProSight Specialty Insurance, said that one result of the coronavirus could be more scrutiny of — and higher insurance rates for — large outdoor live events, like music festivals, where crowds may be harder to contain and control than inside a building.
“For the people who attend them, you may be signing a waiver,” Mr. Bailey said. “Like if you go to a motor sports event, you say, ‘I am attending this event, but I understand that there may be a limit to how much can you protect my safety.’”
If concert revenue declines, another question is who would be hurt the most. Top artists, who have a variety of income streams available to them, may be best able to weather any storm. But the impact could be felt broadly through the complex economic chain that supports the concert business, said Jerry Mickelson of JAM Productions, an independent promoter in Chicago.
Mr. Mickelson summed up the effect on companies like his.
“Live Nation and AEG have the financial ability to withstand the loss of income by postponing their concerts,” he said. “Other smaller independent promoters might not be as fortunate.”