Federal reserve: Germany market report

As the biggest live music market in Europe, Germany suffered more than most when it came to two years without international tours. But while the return to business has been welcomed, the post-Covid ‘new normal’ is delivering a new set of challenges, making an already cautious market even more wary. Adam Woods reports.

Every year for more than three decades, German insurance company R+V Versicherung has been asking Germans about their worries. And this year’s survey, published in October, revealed that they have a lot of them, from the rising cost of living to unaffordable housing to the fear of rising taxes and the worsening economic situation.

“Overall,” said study leader Grischa Brower-Rabinowitsch, “people are significantly more worried than they were a year ago.”

None of this will surprise German promoters, who, even in this jam-packed catch-up year, have been well aware that something was up.

Scarred by Covid, hammered by inflation, and gloomy about the imminent future, Germans are increasingly inclined to stay at home and keep their money in their pockets – maybe coming out for a big show or a festival but otherwise seemingly directing their leisure budgets towards Netflix and heating bills.

The business is therefore feeling discomfort on several fronts. Jens Michow, president of the Federal Association of the Concert and Event Industry (BDKV), recently called for more government aid to cover increased energy costs, as venues reported huge increases in their own bills.

“We don’t just live on cake, we live on bread. And all the bread is gone”

Saddled with galloping costs, supply shortages, perilously variable demand and the persistent spectre of fresh winter Covid restrictions, many promoters are beginning to wonder whether the business is sustainable at this level for long.

“It’s shit,” says MCT Agentur’s Scumeck Sabottka. “I mean, in the pandemic, we couldn’t work, and of course there was no business. But speaking for myself, we would never have thought the market would be so disastrous when we returned. And that goes equally for small clubs that should sell out but don’t, to venues that ought to sell 4,000 and end up selling 1,200. My guesstimate is that we are running at lower than 50%.

“The really big and hot things still sell,” adds the Rammstein and Robbie Williams promoter, “but the middle bit is really struggling. And that is the important bit because we don’t just live on cake, we live on bread. And all the bread is gone.”

The pattern is one familiar to many markets: big shows guzzle consumer spending, giving a very tangible impression of a market in rude health, but the greater mass of shows – those that form the fabric of the business, not to mention the pipeline of future stars – are often troublingly hard to make a success of.

“It’s weird because, on the one hand, if you only look at all the sold-out shows, it feels like everything is okay”

“All the stadiums in Germany are super-busy in all the available windows. Everything is booked up,” says Ben Mitha, managing director at veteran Hamburg-based indie Karsten Jahnke Konzertdirektion. “It’s weird because, on the one hand, if you only look at all the sold-out shows, it feels like everything is okay. But then, for every big sell-out, you might have ten or 20 smaller shows that are not doing very well.”

But, though all is not entirely well, Germany remains the largest live music market in Europe and the third biggest in the world. In addition to heavy gig-going cities such as Berlin, Cologne, Munich, Hamburg, and Frankfurt, it has a further 35 cities with populations of around 200,000-plus and plenty of shows and local events in most of them.

To some extent, the post-pandemic months have been a success. The bigger domestic and international shows have broadly performed well, and most of the larger festivals have made a fairly safe landing in the new era. Groups such as CTS Eventim and DEAG, meanwhile, have reported H1 2022 revenues higher than those of the same period in 2019. But in the short- to medium-term, the overall pot seems likely to shrink even as the cost of staging shows increases and profitability declines.

Under such challenging circumstances, says Sina Hall, Semmel Concerts senior project manager, entertainment, it is critical that the international industry adopts a policy of honesty and understanding when deals are being done.

“We all need each other in the future, and it is the responsibility of everyone in the industry to understand the position everyone else is in”

“I think it is about being transparent and aligning our expectations with everyone involved,” says Hall. “It can’t be that domestic promoters are taking on the increased costs of touring on top of everything. And I feel like a lot of conversations with agents have changed in that way. We all need each other in the future, and it is the responsibility of everyone in the industry to understand the position everyone else is in.”

Already, the shape of next year’s calendar appears to be shifting. “It used to be you did a regular indoor tour in the spring, then a strong festival summer and then maybe a second tour in the autumn,” says Mitha. “Now a lot of artists are skipping the indoor touring and just trying to squeeze as much as they can into the summer because it’s the safest period in terms of infections.”

There is no doubt that aspects of the German industry will still draw a crowd in 2023. The question is what proportion of shows will struggle and whether there will be much of a profit to be made in even the successful ones.

“Will it be a fantastic year?” ponders FKP Scorpio CEO Stephan Thanscheidt. “I have my doubts. It surely won’t kill us, but it won’t be the best year. And then again, maybe the war ends, everything normalises and the people’s pur- chasing power rises again. It’s all just completely out of our control.”

Promoters
International operators including CTS Eventim, FKP Scorpio, and DEAG all call Germany home. And at the top of the market, concern for the immediate future mixes with bullishness, as big players make the most of the demand unleashed by the unrestricted reopening of the market in May while acknowledging that treacherous times lie ahead.

“I think Germany might be one of the weaker European markets because the energy crisis is particularly severe here,” says DEAG COO/CDO Christian Diekmann. “But we are in a good mood because we are in the middle of a very strong year. In the first half of 2022, we increased our revenues by 110%, from €63.9m to €133.4m. And that’s not compared to ’21 or ’20 but compared to the last regular year of 2019.”

After Germany’s May restart, DEAG sold more than 3m tickets between June and August 2022, while Diekmann attributes a successful Christmas last year to DEAG’s Christmas Garden series of events, which sold 1.9m tickets as 2021 drew to an end.

“That was a very good start to ’22,” he says. “Like all of our competitors, we have the problem of the lack of material, the lack of staff, the increasing costs. But the strength of our group structure means all of our subsidiaries can combine purchases in every segment, and we have been in a position to get everything we need for every concert and every open-air this year.”

“What we are seeing is that artists are already going on sale as early as they can”

DEAG, which includes promoters including Frankfurt’s Wizard Promotions and the UK’s Kilimanjaro Live among its stable, isn’t pretending to be immune from market turbulence.

“For 2023, we are very, very careful,” says Diekmann. “Of course, we have exploding expenditure in every field of the business. We have the energy crisis, we have the inflation, and the majority of economic forecasters expect a very strong economic dip. That is the situation. What we are seeing is that artists are already going on sale as early as they can.”

CTS Eventim experienced a group-wide bounce of its own, with revenues of €734.4m from January to June 2022 – up from €696.6m in the first half of 2019. Those are international numbers, but Eventim’s strength in the German market is profound, with stakes in FKP Scorpio, Semmel Concerts, new Matt Schwarz-helmed, Berlin-based promoter DreamHaus, Peter Rieger Konzertagentur and a number of regional promoters, as well as venues such as Cologne’s Lanxess Arena and the Waldbühne Berlin.

DreamHaus has made an auspicious start, launching in early 2021 and assuming responsibility for Rock am Ring and Rock im Park, as well as building its own touring and festival business.

“2022 has been difficult, challenging and felt long, when I was hoping for it to be a transition year”

“The beauty of being a startup during Covid times is that we didn’t have to deal with any aftermath of cancelled or multiple-postponed events,” says Schwarz. “We could focus on Rock am Ring and Rock im Park and had enough lead time to set these up.

“We also have multiple domestic and international arena and stadium tours cooking right now,” he adds, listing Muse, Måneskin, Sam Smith, Lewis Capaldi, Yungblud, and domestic arena star Apache 207, among others.

“2022 has been difficult, challenging and felt long, when I was hoping for it to be a transition year,” says Schwarz. “But I am proud of what we’ve achieved.”

Live Nation GSA is also powerful, having built on the acquisition of local giant MLK since 2015. As well as a heavy schedule of international tours, in September the corporate brought Berlin-based festivals, booking, and services agency Goodlive into the fold.

Across the wider market, while there is little doubt that many shows that once would have delivered guaranteed returns are now falling well short of expectations, there are those who point to encouraging signs at grassroots level and suggest that the market simply needs refreshing.

“If all you’re doing is putting up posters for shows the market has seen many times before, things aren’t going to sell”

“Young, exciting talent is absolutely selling tickets and selling out,” says Max Wentzler at Berlin-based national promoter Z|ART Agency, citing recent German shows by Jockstrap, Pip Millett, Lola Young, and Jordan Rakei. “We had Remi Wolf over and people were hyped. Rachel Sermanni, too – she has never been to Germany, she has had a couple of releases, and she deserves that attention.”

Market pressures aside, Wentzler has a mischievous but serious theory that many established promoters and artists have been caught napping by the changing expectations of the market.

“I think established artists need to bring something new to their show, and not just rely on their ‘established-ness,’ for want of a better word,” he says. “Also, the traditional mechanism of how to get fans to buy tickets has completely shifted.

“Don’t get me wrong, we are all having to work hard. But it is about being present and engaged with your audience and bringing more value to a show. We are experiencing a shift in the live industry. If all you’re doing is putting up posters for shows the market has seen many times before, things aren’t going to sell.”

“People are possibly going to spend less money next year, and we as an industry influence what they spend their money on”

If there is a recurrent characterisation of the German market, however, it is an aversion to risk and an attraction to proven formulas.

“It is a very slow-moving market in the way that things progress,” says Jack Summers of London-based promoter The Culture Collective, which promotes UK dance acts in Germany. “That is true of the music industry as a whole, but the German attitude, where live music is concerned, is if it’s not broke, don’t fix it.”

Whether something is truly broken or not, it is clear the market needs support if today’s developing and mid-level artists are to survive the current crisis and become viable in the longer term – and some promoters recognise the urgency.

“People are possibly going to spend less money next year, and we as an industry influence what they spend their money on,” says Hall. “So I think it is really important that we don’t just focus on the big shows but that we keep supporting new artists, who have already had it tough during the pandemic.”

Local promoters
From a geographical and promoting point of view, Germany is clearly a huge market and a federated one, in which the 16 states have significant local differences. Traditionally, national promoters have partnered with local promoters for shows in specific cities, though these days the boundaries are often less defined.

National promoters often run their own shows in cities where they have a presence, and some cultivate local specialists in-house. For instance, DEAG’s Wizard Promotions and sister company, handwerker promotion, formed a Frankfurt-based joint venture in 2018 called Rhein Main Concerts to produce events in the south-west region of the country.

Some local promoters have expanded well beyond their original regions: Semmel Concerts, these days a major national player, initially focused on Bavaria and Eastern Germany, before broadening its network across the country and into Austria.

Nonetheless, the old system remains broadly in place, with powerful local promoters including Eventim’s Dirk Becker Entertainment, which operates in the Rhine- Ruhr region of western Germany encompassing Cologne; DEAG’s Munich-based Global Concerts; Hannover Concerts in the northern German city of the same name; and Undercover, based in Braunschweig and operating in northern Germany and beyond.

German recording giant BMG has lately taken decisive steps into the market through this channel, acquiring Undercover in 2020 in order to lay the foundations for a new live music and events unit. In September, BMG announced that it had booked Berlin’s 1,600-seat Theater des Westens until the end of 2024 for a series of residencies by domestic and international recording artists, as well as stage musical productions.

Festivals
Germany boasts a giant festival scene that encompasses rock monoliths such as Wacken Open Air, Rock am Ring, and Rock im Park; electronic institutions such as Time Warp, Mayday, Love Family Park, and Nature One; and indie all-rounders including the Berlin Lollapalooza and twin FKP festivals Hurricane and Southside; not to mention vigorous newcomers such as Berlin’s Tempelhof Sounds and Munich’s Superbloom.

When Live Nation snapped up seasoned indie Goodlive in September, it took ownership of Superbloom, as well as festivals including Melt! and Splash! in Ferropolis; metal and punk festival Full Force in Löbnitz; and hip-hop event Heroes in Geiselwind.

The two-day Superbloom launched in Munich’s Olympic Park on 3–4 September after two Covid-related postponements in 2020 and 2021, with Calvin Harris, Macklemore, Megan Thee Stallion, Rita Ora, Skepta, and David Guetta among the acts that performed, alongside 12 ‘experience areas’ focusing on themes from fashion to science to sustainability.

“This is my craziness, that I want to do things like this, because I’m a strong believer that festivals can give young people examples that can change their views and their lives for good,” says Superbloom managing director Fruzsina Szép, who has previously worked on Lollapalooza Berlin and Sziget.

“There were so many festivals, even very well-established ones, that were not sold out”

It drew 50,000 visitors and ultimately sold out, for which Szép is grateful, if not entirely surprised. “There were so many festivals, even very well-established ones, that were not sold out,” she adds. “But I had this good feeling that we were doing it right, and we worked so hard to create this brand and this concept.”

She echoes the prevailing view that the biggest challenge in German festivals this year was human resources and suggests the weakening of vital functions such as security could yet be the most serious consequence of Covid.

“Everybody is keen to have a great line-up and booking and programming, but security is so essential, and we have such a responsibility to the fans and artists to get it right.”

FKP Scorpio toughed out a busy summer, reintroducing its Hurricane and Southside festivals, which brought 80,000 and 70,000 a day over three days, as well as drawing 25,000 to M’era Luna in Hildesheim and 40,000 to Highfield in Großpösna, while launching a new Berlin festival, Tempelhof Sounds, with local Berlin promoter Loft Concerts and Eventim stable-mate DreamHaus.

“All our festivals in Germany, besides Deichbrand, were sold out this summer, and this was not the case for a lot of other festivals in this market”

“It was a challenge this year, but in the end we had fantastic festivals, with no Covid-related cancellations on the artist side,” says Thanscheidt. “And we had Ed Sheeran and Rolling Stones stadium shows and our Tempelhof Sounds, which we announced four weeks before Omicron kicked in, but still we had 40,000 a day, so we can’t complain.

“That doesn’t mean we made a lot of money on festivals, because the margins were not really there with ticket prices from 2019 and exploding costs. But all our festivals in Germany, besides Deichbrand, were sold out this summer, and this was not the case for a lot of other festivals in this market.”

Elsewhere, eventimpresents/DreamHaus’s Rock am Ring sold a record 90,000 weekend tickets for its 2022 edition, which took place at the Nürburgring racetrack in June. The concurrent Rock im Park, at Zeppelin Field in Nüremberg, like-wise put in a strong year.

“Rock am Ring and Rock im Park underlined their position as Germany’s leading festivals,” says Schwarz.

“We had record-breaking attendance as well as streaming numbers, with the full festival being broadcast live in its entirety for the first time, so that felt great. We are currently finalising the programming for next year’s edition of the Rocks where we just announced approximately 50 acts.”

“We have been able to improve our sponsorship income by about 20%, which is remarkable because sponsorship is not getting easier these days”

Karsten Jahnke’s successes this year include shows by The Cure and 170,000 tickets sold for 49 shows in its Stadtpark Open Air series, in Hamburg’s park of the same name. “That was a really good season for us,” says Mitha. “Lots of legends – Deep Purple, Sting, Joe Jackson – and some really interesting up-and-coming artists like Michael Kiwanuka and Olivia Rodrigo.”

In October, DEAG acquired a majority stake in the renowned Psytrance/Goa Festival Indian Spirit, which has been held in Eldena, near Ludwigslust in Mecklenburg-Western Pomerania, since 1999.

Among its portfolio of more than 30 European multiday and one-day festivals, the group already owns German electronic events Nature One, Mayday, Ruhr-in-Love and Airbeat One. The last of these – the largest electronic music festival in Northern Germany, with 60,000 visitors – DEAG acquired in July.

In a different corner of the market, Opus’s Stuttgart Jazzopen, which fits 58 shows into 11 days in July, sold 44,000 tickets this year for acts including Sting, Van Morrison, and John Legend – some of whom had been booked for the cancelled 2020 event.
Next year, says festival head Jürgen Schlensog, the aim is 50,000, and there is reason to be optimistic on the commercial front.

“We have been able to improve our sponsorship income by about 20%, which is remarkable because sponsorship is not getting easier these days,” he says.

The Jazzopen, which is both cashless and carbon-neutral, ploughs its own furrow in the German market. “In Germany, we are quite lonely because the format we run is quite unique – we run an 11- day festival, which is obviously very different from weekend festivals.”

Venues
The upside of Germany’s top-heavy market is that bigger venues played out of their skin this summer. The Waldstadion, currently known as the Deutsche Bank Park, home of German football club Eintracht Frankfurt, had its best summer ever with 18 concerts – more than any other stadium in Europe, and including shows by Coldplay (two), Ed Sheeran (three), Iron Maiden, and Elton John – drawing combined crowds of 800,000.

“Summer 2022 benefited from postponed shows from 2020 and 2021, which finally happened this year,” explains Eintracht Frankfurt Stadion managing director Patrik Meyer. “We were able to add quite a lot of new shows as well, and we are very proud that we were part of the development of the first KPOP.FLEX Festival in a European stadium.”

Looking ahead, Meyer adds, “2023 looks even better than 2022. The bookings for next year are very good, and we will continue projects like KPOP, World Club Dome and Monster Jam. In 2023, we will also act as promoter for three shows, and we will be hosting an NFL game in November – a project we won through a tough tender process and are very delighted about.”

Germany’s busiest arenas include Munich’s Olympiahalle, the Lanxess Arena in Cologne, Hamburg’s Barclays Arena, Quarterback Immobilien Arena in Leipzig, and Mercedes-Benz Arena in Berlin.

“There’s a lot of really interesting concepts and new open-air venues that came out of the pandemic”

Bavaria-based developer SWMunich Real Estate continues to plan the 20,000-cap, €300m MUCcc Arena in Munich – optionally Germany’s first climate-neutral arena – which is expected to open within the next five years.

“In the Munich region, there is neither an arena specially designed for concerts and live shows, nor an indoor location with a capacity of up to 20,000 guests,” SWMunich managing director Lorenz Schmid told IQ in the summer. “We are closing this gap… at a time of increasing demand.”

There is movement elsewhere in the market, too. Berlin’s 4,350-cap Verti Music Hall, which launched in AEG’s mixed-use entertainment district Mercedes Platz barely a year before the pandemic kicked in, is once again up and running, with shows this summer from Jack White, Deftones, Lukas Graham, Franz Ferdinand, and Bastille.

Meanwhile, another modest silver lining of the pandemic has been the emergence of a new generation of outdoor venues, some of which live on in (more or less) post-pandemic times.

“There’s a lot of really interesting concepts and new open-air venues that came out of the pandemic,” says Hall. “I like the Seebühne in Bremen. It’s a lovely setting right by the harbour, and when you look at the stage, you have the sunset and the water in the background.”

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