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LN updates terms for 2021 festivals

Live Nation, the world’s largest concert and festival promoter, has issued updated terms for its 2021 festivals, according to a recent memorandum sent to booking agency partners.

The memo, reportedly sent out last week, comes as many promoters across the business also look to renegotiate artist contracts signed before the Covid-19 shutdown, in order to reflect a very different business environment next year.

Among the proposed changes is a 20% reduction in guarantees from 2021 levels, minimum requirements for marketing activity and a stipulation that artists hold their own cancellation insurance in the event that the festival does not go ahead.

“The global pandemic has changed the world in recent months and, with it, the dynamics of the music industry,” reads the document. “We are in unprecedented times and must adequately account for the shift in market demand, the exponential rise of certain costs and the overall increase of uncertainty that materially affects our mission.”

Agency sources tell IQ many high-profile artists have already agreed to the new terms, though it is unclear whether the memo extends to Live Nation’s international festivals, or is restricted to the US. The company declined to comment.

“We are in unprecedented times and must adequately account for the shift in market demand”

Courtesy of Rolling Stone, the full memo is reproduced below:

The global pandemic has changed the world in recent months and with it the dynamics of the music industry. We are in unprecedented times and must adequately account for the shift in market demand, the exponential rise of certain costs and the overall increase of uncertainty that materially affects our mission. In order for us to move forward, we must make certain changes to our agreements with the artists. The principle changes for 2021 are outlined below.

Artist Guarantees: Artist guarantees will be adjusted downward 20% from 2020 levels.

Ticket Prices: Ticket prices are set by the promoter, at the promoter’s sole discretion, and are subject to change.

Payment Terms: Artists will receive a deposit of 10% one month before the festival, contingent on an executed agreement and fulfillment of marketing responsibilities. The balance, minus standard deductions for taxes and production costs, will be paid after the performance.

Minimum Marketing Requirements: All artists will be required to assist in marketing of the festival through minimum social media posting requirements outlined in artist offer.

Streaming requirements: All artists will be required to allow their performance to be filmed by the festival for use in a live television broadcast, a live webcast, on-demand streaming, and/or live satellite radio broadcast.

Billing: All decisions regarding “festival billing” are at the sole discretion of the promoter.

Merchandise: Purchaser will retain 30 % of Artist merchandise sales and send 70% to the artist within two weeks following the Festival.

Airfare and Accommodations: These expenses will be the responsibility of the artist.

Sponsorship: The promoter controls all sponsorship at the festival without any restrictions, and artists may not promote brands onstage or in its productions.

Radius Clause. Violation of a radius clause without the festival’s prior authorization in writing will, at the festival’s sole discretion, result in either a reduction of the artist fee or the removal of the artist from the event, with any pre-event deposits returned to the festival immediately.

Insurance: The artist is required to maintain its own cancellation insurance as the promoter is not responsible for the artist fee in the event of a cancellation of the festival due to weather or a force majeure.

Cancellation by Artist: If an artist cancels its performance in breach of the agreement, the artist will pay the promoter two times the artist’s fee.

Cancellation Due to Poor Sales. If a show is cancelled due to poor ticket sales, the artist will receive 25% of the guarantee.

Force Majeure: If the artist’s performance is canceled due to an event of force majeure – including a pandemic similar to Covid-19 – the promoter will not pay the artist its fee. The artist is responsible for obtaining any cancellation insurance for its performance.

Inability to Use Full Capacity of the Venue: If the promoter – either because of orders of the venue or any governmental entity – is not permitted to use the full capacity of the venue, then the promoter may terminate the agreement, and artist will refund any money previously paid.

We are fully aware of the significance of these changes, and we did not make these changes without serious consideration. We appreciate you – and all artists – understanding the need for us to make these changes in order to allow the festival business to continue not only for the artists and the producers, but also for the fans.

 


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Artist contracts renegotiated as Covid-19 reality bites

As the concert industry’s collective thoughts turn towards the post-coronavirus recovery, artist contracts – particularly those enshrining huge guarantees for performers – are increasingly finding themselves under the microscope, with cash-strapped promoters pushing for more favourable terms when live music returns.

As a result of the global touring shutdown, many concert organisers are seeking to renegotiate deals for both rescheduled and future shows, asking for a reduction in the artist fee, a smaller upfront payment or a more equitable revenue split, industry sources tell IQ.

“With falling revenue and purchasing power, and increasing costs, it’s almost impossible to continue with the previous deals,” explains one independent European concert promoter, who has pushed back all their shows in summer, as well as many stretching in autumn. “Overpaying for shows will just lead to new losses – especially after we’ve generated next to no income this year.”

The traditional guarantee-plus-percentage model falls in favour of the artist, typically at between 80% and 95% of net income (or even higher for superstar touring artists considered an easy sell-out), alongside a guarantee or minimum fee. But these time-honoured fractions are changing in light of Covid-19. And according to agency sources in Europe and North America, the big two global promoters, Live Nation and AEG Presents, are not alone in pushing to renegotiate deals for postponed shows.

“They [promoters] are trying and testing, asking for a certain percentage off acts for festivals, lowering guarantees, etc.,” says a London-based agent. “We’re mostly seeing [offers with] ticket prices being dropped, with the guarantee being dropped even further. But I think there is still wiggle room to argue.”

Another describes a typical recent offer for two shows at mid-sized venues in the north of England. “I think one offer I had for [those venues] was a guarantee of £10k, which is insanely low,” they say. “For those two, you would probably normally generate a guarantee of £30k–£40k, or even more depending on a ticket price.”

“It’s impossible to continue with the previous deals … Overpaying for shows will just lead to new losses”

“A lot want to pay smaller deposits, too,” they add.

Given the current standstill the industry faces, alongside considerable uncertainty over the coming months, it is no surprise that existing deals are up for discussion. But complicating negotiations on the promoter side, one US concert organiser explains, is that it’s unclear what shape the first post-coronavirus concerts will take – and how many people will be allowed to attend.

In the majority of markets, “I don’t believe venues will be able to operate at full capacity with social distancing,” they suggest, “so that will obviously affect the possible gross.”

“It’s hard to even talk about an artist deal until we can see what that [social distancing] looks like market by market and venue by venue,” they say.

“We need more time to understand where we will all be once this is over,” agrees one of their European colleagues, who – regardless of future rules around social distancing (countries which have set a date for the return of live entertainment are generally insisting on at least 1m distance, in the case of Norway, between each attendee) – are already talking to agents about renegotiating the terms of several pre-coronavirus artist contracts.

“For all our rescheduled shows, we are discussing changes of guarantees, the percentage of deals and other details,” they explain, adding that the negotiations are frequently “really hard”.

“Of course, each case has its own specifics and difficulties,” they add. “So, we are trying to find an acceptable compromise together.”

“They are trying and testing, asking for a certain percentage off acts for festivals and lowering guarantees”

What that compromise looks like will largely depend on how quickly the industry gets back on track. As IQ editor Gordon Masson noted in issue 89, “[t]he very nature of the live music industry had historically relied on a cash-flow wing and a prayer, with everyone in the chain relying to some extent on future earnings to pay for their latest projects” – and with no earnings in the immediate future, many are left with no choice but to try and save some money in the present.

While concerts will likely return to some extent in 2020, many believe it could be years before live music returns to business as normal.

“I think [promoters] are being extra-cautious right now, which is understandable,” says a European agent currently renegotiating a number of rescheduled dates. “But I feel it will go back to normal by 2022 and 2023.”

Another says they don’t foresee any major live music events taking place in Europe, North America or Australasia until next summer at the earliest. “You look at sporting events, stuff like the F1, they’re going ahead without fans – but it’s not like you can do that with concerts,” they comment. “As crazy as it sounds, I don’t think you’re going to see any big shows until mid-2021 now.”

Whether the answer to the mass-gathering conundrum lies in some form of social distancing, such as chequerboard seating, or by visible measures like checking fans’ temperatures before they enter a venue, remains to be seen. Less obvious to concertgoers, though, will be the behind-the-scenes compromises it took to get the artist on stage.

 


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