fbpx
x

The latest industry news to your inbox.

    

I'd like to hear about marketing opportunities

    

I accept IQ Magazine's Terms and Conditions and Privacy Policy

news

Economic indicators point to rocky recovery

Factors including weak consumer confidence, competition from streaming entertainment and a worldwide recession could stifle the live sector's return to normal

By IQ on 08 Apr 2020

Global trade is predicted to slump up to 32% this year, which could hamper the live sector's recovery

Global trade is predicted to slump up to 32% this year


image © NOAA Photo Library

Live entertainment businesses face a long road to recovery, even after restrictions on mass gatherings are lifted, research on post-coronavirus consumer behaviour, as well as the future global economy, suggests.

As the industry looks forward to a time when large-scale live events are once more permitted to go ahead, data suggests that the after-effects of the Covid-19 pandemic – including fear among fans of visiting large venues and a global economic downturn – could stifle the live sector’s recovery.

A study by Performance Research and Full Circle Research Co., published in late March, found that 44% of American consumers plan to attend fewer large public events once the crisis is over, with 47% agreeing with the statement that going to a large event “will scare me for a long time”.

The survey of 1,000 people additionally revealed that over half (56%) of those questioned will steer clear of indoor concert venues after the pandemic has subsided, with respondents saying it would take anywhere from “a few months” to “possibly never” for them to return, even after the venue has been deemed safe.

Packed-out bars and restaurants could also be off limits for the foreseeable future, according to John Gordon, founder of Pacific Management Consulting Group, in a scenario likely to have an even greater impact on crowded music venues.

Speaking to Business Insider, Gordon says bars, particularly those in crowded urban areas, will need to adjust to a “new normal” in which close contact still concerns many people.

56% of Americans say they will steer clear of indoor concert venues after the crisis subsides

“That’s an area [where the recovery] might lag considerably because of the social distancing issue,” he explains. “Even with two people on a date, there might be a little bit more distancing.”

Jason Tramm, assistant professor of music at Seton Hall University in New Jersey, says he believes the return of “‘normal’ functions and gatherings will take time, but will occur”, and additionally predicts an “explosion” of creativity from musicians shut indoors by Covid-19.

“History is our greatest teacher and guide,” he says. “As the bubonic plague racked Europe multiple times, church and court functions had to be halted and life drastically altered. [But] people came back and society went on to produce the Renaissance.

“I believe that this time of isolation and instability will result in an artistic explosion, as artists need to express what is inside.”

Perhaps of even greater concern for the concert business is the prospect of the coronavirus triggering a global economic downturn – a recession some experts believe has already begun.

In an article for Bloomberg today (8 April), financial journalist Bryce Baschuk writes that “evidence is mounting” that March marked the start of a global recession, amid “a cratering of trade, reined-in business investment, cowering consumers and surging unemployment that’s sparing few industries”, as well as a telltale slump in goods trade that could reach -32% this year, according to World Trade Organization (WTO) forecasts.

“These numbers are ugly and there is no way around that,” says WTO director-general Roberto Azevêdo, who is nonetheless optimistic of a post-coronavirus recovery. “The pandemic cut the fuel line to the engine,” he adds. “If the fuel line is reconnected properly, a rapid and vigorous rebound is possible.”

“The pandemic cut the fuel line to the engine”

In the live music industry specifically, Pollstar expects losses to be between US$2.3 billion, if touring is possible as early as late May, and nearly $9bn, should the situation not improve until the end of the year.

According to Mark Mulligan of Midia Research, during the last economic downturn in the late 2000s, consumers “cocooned” – that is, staying at home while cutting back on spending – something he expects to see again in the event of another downturn. “The signs are that this pattern will be replicated if another recession comes,” explains Mulligan, “particularly so because of public concerns about health risks in public places”.

Midia’s coronavirus research shows that live music is “widely cited” as a luxury that consumers expect to cut back on, along with eating out, in the event of another recession.

Mulligan suggests this trend towards “cocooning” could be even more pronounced than in 2007–09, as consumers now have access to a wealth of digital content in the form of TV and music streaming services. “[C]onsumers now have much better home entertainment options than they used to,” he writes. “Cocooning is therefore an even more appealing prospect.

“Indeed, there are probably already many people looking forward to binge-watching themselves through a few virtual boxsets.”

Live music is “widely cited” as a luxury that consumers expect to cut back on in the event of another recession

Even pre-recession, consumers are watching more television than ever, according to London-based Rare Consulting, whose coronavirus weekly tracker reveals the locked-down UK is already a nation of TV addicts.

For the week commencing 30 March, Rare found that 56% of Britons are watching more TV series and 46% are spending more time streaming films online. Nearly half (49%), meanwhile, are streaming more recorded music than usual.

For Tramm, while the pivot towards streaming live music online is something that “should be embraced”, he believes “nothing can replace the power of live music performed by musicians, as good as recordings and streaming performances can be. There is an energy and power that simply can’t be transmitted electronically.”

For now, though, it’s a good time to be in the streaming business, says Mulligan. “In short […] coronavirus may actually benefit streaming business models, especially video,” he concludes. “If a recession comes then entertainment spend will be hit, but significantly less so than leisure.

“These are worrying times – but at least we’ll be able to binge-watch our way through them.”

 


Get more stories like this in your inbox by signing up for IQ Index, IQ’s free email digest of essential live music industry news.

FOLLOW IQ