UK promoters discuss impact of currency fluctuation
A number of UK promoters have spoken to IQ about the impact of currency fluctuation on international touring, as the pound sterling continues on a tumultuous trajectory.
The currency slumped to a two-week low against the dollar of $1.0954 on Tuesday morning (11 October), before rebounding less than 24 hours later. However, Goldman Sachs told Pound Sterling Live it expects the pound to continue to weaken due to “flawed fundamentals”.
Richard Buck, head of European touring and Middle East partnerships at TEG Europe, tells IQ that the declining rate is having “a significant impact on international touring”.
“Offers made in USD, if the currency is not pre-booked, may need to be adjusted or even pushed back,” he says. “Also for artists who are paid in pound sterling, it becomes less attractive to visit the market as their potential return can diminish by around 20% versus the original forecast.
“Anyone that is incurring costs in dollars and getting paid in sterling, in particular, is going to struggle”
“Any multi-territory deal that has been made in USD is now harder to sell into territories as the return is harder to achieve. However, those already sold into markets such as the Middle East where the primary artist currency is USD may benefit from the improved conversion.”
The pound fell to an all-time low of $1.03 last month in the wake of the government’s mini-budget, prompting AEG Presents UK chief Steve Homer to list the exchange rate as one of the promoter’s biggest concerns, while US artists including Animal Collective cancelled tours, in part, due to currency devaluation.
But as Kilimanjaro Live CEO Stuart Galbraith points out, dwindling currency is not an issue unique to the UK.
“The dollar is strong against most currencies in the world at the moment so it’s probably an issue in Europe generally,” he notes. “But anyone that is incurring costs in dollars and getting paid in sterling, in particular, is going to struggle.”
Galbraith says that even though a large proportion of Kilimanjaro’s business is domestic, the promoter is still seeing the effects of the pound-to-dollar slump.
“Acts from America are telling us that they cannot afford to tour in Europe. We’ve certainly lost a couple of isolated shows in the last three or four months and we had a couple of tours that we were about to go on sale with but we’ve now been told the artist isn’t coming to the continent.
“Some acts will have put together budgets earlier on in the year when they were expecting they’d get a $1.30/40 for every pound. If they’re now redoing those budgets on an almost parity basis then you can absolutely understand why they’re not able to balance the books and go through with the tour.”
“It comes down to whether a US artist is able to use crew and suppliers that are UK and Europe based”
Galbraith says there are two possible short-term solutions for American artists. The first is to incur as many costs as possible in local currency and minimise the exposure to dollar expenditure, and the second is to reduce the scale of the show and do it on a more cost-effective basis, he says.
“It comes down to whether a US artist is able to use crew and suppliers that are UK and Europe based, instead of bringing staff and equipment from the US – which is all going to be paid for in dollars – and incurring transatlantic flights which are now extremely expensive in comparison to pre-covid times,” he says.
While Galbraith believes cost-cutting measures could be the solution to bringing US artists to the UK, Homer is concerned it’ll come down to UK promoters to offer bigger fees.
“We were almost on parity, which has not been something we’ve been familiar with for a long, long time. And it’s really biting in terms of artists touring over here – it becomes far more expensive for them to do it and it’ll be interesting to see how that impacts going forward. It’s creating a few anxious thoughts as to whether we can afford to offer American artists what they need to come over, so it might mean we’re missing a few that we would normally see.”
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Trump win “devastating” for Mexican live industry
A Republican victory in the 8 November US presidential election would be a disaster for its neighbour to the south, Mexico’s largest concert promoter has warned.
Speaking to IQ, Guillermo Parra Riveros, director of international events at Ocesa, says the financial turmoil economists predict a Donald Trump presidency would usher in could be “devastating for the Mexican economy” and its live music industry.
“For the last four weeks,” Riveros explains, “a major factor in the value of [Mexican currency] the peso has been who has been leading in the US election polls. Currently we are at Mex$19.20 [to US$1], but analysts predict a Trump victory could take it to Mex$25 to US$1.”
Despite the prospect of paying artists suddenly becoming a lot more expensive, Riveros says Ocesa – part of the CIE group and the world’s fourth-largest promoter – hasn’t made any contingency plans, but for now is “keeping our fingers crossed he [Trump] will not win”.
“We’re keeping our fingers crossed he will not win”
Currency fluctuations are also a concern for Dan Steinberg of US-based Emporium Presents – although, understandably, he’s more concerned about the value of the US dollar. “The dollar’s in a great place at the moment,” he explains. “When [George W.] Bush was in office the Canadian dollar was worth 10% more – now it’s at 70% of US$1. […] If Trump should win, the dollar will go down – there’s no question.”
Besides the currency question, however, Steinberg says a Trump presidency would have little effect on the American touring business, despite the Republican nominee’s infamously tough stance on immigration to the US. “I don’t see immigration as being equivalent to visas,” he explains. “The American people want to be entertained, and don’t see him standing in the way of commerce…
“It’s not going to stop acts coming.”
Steinberg also emphasises that despite the US president being theoretically the most powerful person in the world, “he’s really not that powerful”.
“Anything he wants to do on the legal side or the financial side has to be approved [by Congress],” he explains. “Obama is the most powerful person in the world and they’ve just blocked his supreme court nominee! So he [Trump] can’t just make laws.”
“The American people want to be entertained, and don’t see Trump standing in the way of commerce”
In the UK, meanwhile, the spectre of a Trump presidency is compounding the misery caused by the Brexit-induced fall in the pound sterling. Research by foreign exchange company WorldFirst reveals British small and medium-sized enterprises (SMEs) – or companies with fewer than 250 employees – are exposed to £34.6 billion worth of currency risks in the run-up to an unpredictable election.
WorldFirst’s Jeremy Cook says: “UK SMEs need to brace themselves for a bumpy road ahead. We’ve seen the pound fall against the dollar by record amounts over the past few months, and for businesses without the right foreign exchange protection this can add a lot of pressure on margins.”
More than 120 million Americans are expected to cast their vote in the election, with the final polling booths closing around 1am GMT. Last year’s victor, Barack Obama, was declared winner at 4.38am.
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Kashcoin, cryptocurrency for music biz, launches
Kashcoin, a cryptocurrency (or ‘altcoin’) for the music industry created by ex-Limp Bizkit turntablist DJ Lethal, goes live this week.
DJ Lethal – real name Leor Dimant – and business partner Justin Lally hope to drive mainstream adoption of the Kashcoin with a planned marketplace for merch and records, and say the cryptocurrency will eventually be “accepted at many places across the globe, from music festivals to retail stores”.
“The focus is on merchant adoption,” explains Lally. “Rather than just asking merchants to use Kashcoin, we are working to provide them with the tools to make this happen. If we do most of the hard work, merchants will be able to easily integrate Kashcoins into their existing payment solutions. We are asking merchants to tell us what they need and then respond to that with our development.”
It is not yet clear whether the company will approach other live-focused merchants, such as online ticketing companies, to adopt Kashcoin, although IQ has contacted Lally for confirmation.
“The focus is on merchant adoption. Rather than just asking merchants to use Kashcoin, we are working to provide them with the tools to make this happen”
Argentine secondary ticketing site EntradaFan recently became the first ticketing company to offer customers the opportunity to pay with a cryptocurrency. “We are always thinking about technological innovation,” EntradaFan’s Rodrigo Alvarez told the 2016 International Ticketing Tearbook, “and last year introduced payment with Bitcoin. So far it has been a very satisfying experience.”
The advantages of Kashcoin are the same as those of Bitcoin, the first and best-known cryptocurrency – an encrypted digital currency that operates independently of a central bank – says the company, and mostly include the cutting out of two “unnecessary middle men: banks and governments”. “Because of this, no individual or group has more access to transaction data than the public,” it says, “and without middle men, the costs are fractions of the current standard.”
Pros for buyers include unspecified “special deals and VIP perks”.
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