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.
Ticketmaster to refund booking fees in the Netherlands
The Dutch Consumers’ Association (Consumentenbond) has urged other ticketing companies to follow suit after Ticketmaster announced it would begin refunding customers’ booking fees in the case of cancelled or postponed events.
The association said last month there is “no good legal reason” not to reimburse service fees along with the cost of the ticket for called-off events, an opinion it said is shared by the Netherlands’ consumer watchdog, the Authority for Consumers and Markets (ACM).
According to the Consumentenbond, Ticketmaster Netherlands has now become the first ticket seller in the country to adopt a policy of refunding fees along with the cost of the ticket. Service fees can range between €2 and €10 depending on the ticket price, it says.
“The Consumers’ Association calls on other ticket providers to follow the positive example set by Ticketmaster”
“The Consumers’ Association calls on other ticket providers who have not yet [committed to] reimbursing the service costs to follow the positive example set by Ticketmaster,” the association says in a statement.
Ticketmaster is the leading ticketing service in the Netherlands, followed by Eventim, which gained ground on its competitor last year, according to the International Ticketing Yearbook 2018.
The price of concert tickets in the Netherlands has increased an average of 3% this year, as the country’s rate of VAT – which includes “admission to cultural events” – rose from six to nine percent.
Australian court rules Viagogo misled consumers
The Australian Federal Court has found that secondary ticketing platform Viagogo misled consumers, falsely marketing itself as an official ticket seller, exaggerating the scarcity of tickets and obscuring booking fees.
The Australian Competition and Consumer Commission (ACCC) instigated legal proceedings against Viagogo in 2017, alleging the Swiss-headquartered secondary ticketer “made false or misleading representations, and engaged in misleading or deceptive conduct, regarding the price of tickets on its online platform by failing to disclose substantial fees.”
The federal court ruled today, Thursday 18 April, in favour of the Australian watchdog’s allegations, finding Viagogo in breach of consumer law.
The court found that the ticketing site claimed tickets to certain events were in short supply in order to incentivise buying, when in fact the scarcity only referred to the tickets available on its resale platform, and not elsewhere.
“Today’s federal court decision is a reminder to businesses that consumers must be clearly told that there are additional fees associated with a displayed price”
“Viagogo’s claims misled consumers into buying tickets by including claims like ‘less than 1 per cent tickets remaining’ to create a false sense of urgency,” says ACCC chair Rod Sims in a statement.
The ruling also objected to the presence of the word ‘official’ in Viagogo’s online adverts, which misled consumers into believing they were purchasing tickets from the event’s official ticketing site.
“Extraordinarily high booking fees” of 27.6% were another point of contention. The court found that the website failed to sufficiently disclose additional fees or specify a single price for tickets, instead attracting customers with the promise of prices that did not exist.
“Many consumers were caught out,” states Sims. “Today’s federal court decision is a reminder to businesses that consumers must be clearly told that there are additional fees associated with a displayed price.”
Viagogo’s head of business development Cris Miller says the company is “disappointed by the ruling”, which “does not reflect” the ticketing platform in its current state, or the “many changes” the company has made.
“Without services like Viagogo, people would be forced to return to buying and selling tickets outside venues, or to use informal social media platforms”
“Our first priority continues to be to provide people with a safe and secure platform to buy or sell sport, music and entertainment tickets, many of which would otherwise not have been available to them due to the limited number that event organisers release to the box office.
“Without services like Viagogo, people would be forced to return to buying and selling tickets outside venues, or to use informal social media platforms where no customer protection exists.
“We are disappointed that the chair of the commission does not support the greater competition that Viagogo and other ticket resellers bring to the market which provides greater choice for Australians consumers,” states Miller.
The penalties that the controversial secondary ticketing company will receive are to be determined at a later date. The maximum penalty amount is set at AU$1.1million per contravention.
Anti-touting campaign group FanFair Alliance lodged a similar complaint against Viagogo in the UK last year. The country’s Advertising Standards Authority (ASA) rejected the claims.
The secondary ticketer has been embroiled in multiple lawsuits across Australasia and Europe. The company recently resumed dialogue with the international press, after years of silence.
Dice abandons no-booking fee model
Dice, the famously fee-free mobile ticketing platform whose founder, Phil Hutcheon, once criticised ticket fees as being “like a drug”, has quietly introduced booking fees of its own for some shows, saying its no-fee model meant it lost money on every ticket sold – and increasingly struggled to gain ticket allocations for bigger events.
Following a public Twitter back-and-forth with the band Shame, Russ Tannen, Dice’s UK managing director, has explained the move, saying the company’s growth, coupled with its recent expansion into North America, left a choice between introducing fees and Dice “being a small player forever”.
We’ve backed you from the beginning. From the free shows to the current tour. All without making a single penny. We’ve told tens of thousands of people on DICE about how great you are live.
— DICE (@dicefm) February 10, 2018
“As we grew (thanks to you guys) we discovered that to get a significant allocation of tickets for bigger shows, we had to agree to include a ‘booking fee’,” writes Tannen in a blogpost aimed at Dice’s customers. “This was particularly the case for our expansion in North America.”
“Ultimately,” he continues, “it was a case of either drop ‘best gigs’ or drop ‘no booking fees’. So we decided to start incorporating some fees to a small number of shows and dropped the ‘no booking fees’ line in January 2017. What didn’t change is our commitment to always try and be the lowest price.
“I wish we had written a blog post explaining all of this back then. And I’m sorry for not posting this sooner.
“So what are these fees? It’s essentially a small markup that covers some of our costs, and fulfils contractual obligations to some of our partners. We hate hidden extras and fake price breakdowns so the upfront price is always what you pay at the end. We believe in presenting one simple price to fans and there are lots of shows where we don’t have any mark-up at all.
“I hope this explains where we are right now. We started Dice to completely change how people discover and attend live experiences all around the world, and we’re as committed to this as we have ever been.”
CTS’s oeticket defeated in Austria over ticket fees
A court of first instance has found against CTS Eventim Austria, ruling that the practice of charging delivery fees on tickets – including those printed at home – is illegal.
The case, brought by the Consumer Information Association (VKI), concerns tickets sold via CTS’s oeticket website, which charges €2.50 for ‘print @ home’ and mobile tickets and €1.90 for those picked up from branches of Libro or oeticket’s own box offices.
According to to the Handelsgericht (commercial court) of Vienna, such charges are “unusual and disadvantageous” for consumers and inadmissible under Austrian law.
CTS Eventim will likely appeal against the verdict, which is not yet final, as it has in a similar case making its way through the courts in Germany.
If and when the court’s decision becomes legally binding, affected consumers are expected to have up to 30 years to apply retroactively for refunds.
“Charing customers a fee to print their own tickets is very surprising,” says VKI lawyer Joachim Kogelmann, who adds that the judgment should lead to “more price clarity when buying a ticket”.
OLG upholds ban on self-printed ticket fees
A German appeals court has upheld the ban on charging fees on print-at-home tickets, quashing an appeal by CTS Eventim.
Munich-based Eventim told IQ last September it intended to appeal against a ruling that declared as unlawful the €2.50 fee the company charges on its ‘print @ home’ tickets.
However, the Higher Regional Court of Bremen (Hanseatisches Oberlandesgericht, OLG) yesterday sided with Bremen district court, which passed the original judgment, declaring the €2.50 charge for self-printed tickets – as well as the €29.90 charge for ‘premium shipping’, which also includes a processing fee of an indeterminate amount – found in Eventim’s terms and conditions to be “invalid”.
“processing fees should be included in the so-called normal price of the ticket”
The company was also ordered to pay all legal costs.
A press release from the OLG (pictured) confirms its view that “processing fees should be included in the so-called normal price of the ticket”.
The court did, however, grant CTS Eventim permission to appeal the case once more: this time to the Federal Court of Justice (Bundesgerichtshof, BGH) in Karlsruhe, effectively Germany’s supreme court.
In a statement provided to IQ, Eventim says it intends to do so: “The OLG has recognised the fundamental nature of the issue and has approved a revision before the BGH. We have appealed against the OLG’s verdict and assume that it will not stand before the BGH.”
Photo: © Ajepbah / Wikimedia Commons /
‘Festivals are to Belgium like tea is to Brits’
Pukkelpop programmer Chokri Mahassine has hailed the diversity of the Belgian festival market, telling IQ that – far from there being trop de festivals – “people like the variety our festival scene has to offer”.
Some in Belgium, as elsewhere in the world, have cast doubts on the viability of the “festivalisation” of the live music business, with Christophe Goethals of CRISP warning last year that the “supply [of festivals] cannot grow indefinitely”. Yet despite this increase in competition – as well as the potential for terror attacks to hurt ticket sales, as happened last summer – Mahassine says the health of the market remains “excellent”.
“I certainly don’t feel like there are too many festivals,” he explains. “People like the variety.
“With small-town events, they can go with their families and hang out with friends while enjoying live music; the bigger festivals, of course, have even more to offer; and hip and trendy fringe events make festivalgoers feel that they’re part of something new. It’s a package deal nowadays: popular music, the latest fashion trends, fancy food, celebs and stars, glamping, hipster activities, art – it’s all there.”
For Belgians, says Mahassine, “festivals truly are part of our national heritage”. “They belong to the Belgian summer like sand to a beach!” he explains. “Or like tea to the British, for that matter…”
“You can’t cook without ingredients. Beer prices continue to rise, and so do the fees of our artists and security expenses”
Independently promoted Pukkelpop – meaning ‘Pimplepop’ in Dutch, as “we wanted a name to refer to something all young people have in common”, jokes Mahassine – is Belgium’s second-largest music festival, after Live Nation Belgium’s Rock Werchter.
Founded in 1985, it has taken place in the village of Kiewit, near Hasselt in Dutch-speaking Limburg, since 1991, with a daily capacity of 60,000. Ticket sales for the 2017 event, headlined by Bastille, Editors, Mumford & Sons and The xx, are off to a “good start”, says Mahassine, adding that he’s “pretty confident we’ll sell out this year”.
Heading into its 32nd year (there was no festival in 1989), Mahassine says one of the biggest changes he’s seen in the festival is an increased focus on non-music entertainment, such as poetry, theatre and comedy. “Fringe activities are gaining popularity rapidly,” he explains. “Nowadays, they’re part of the overall festival experience.
“Petit Bazar and Salon Fou usher in street theatre and comedy, entertainment and wellbeing, [while] Food Wood serves up dishes from around the world in the festival’s greenest nook and Baraque Futur focuses on sustainability, experiment and keynote speaking. […] No Pukkelpop experience is complete without a visit to these corners of the festival site.”
However, all those fringe activities come at a price – and with ever-increasing costs, Mahassine says it’s becoming a challenge to keep from raising ticket prices, echoing recent comments by North Sea Jazz’s Jan Willem Luyken.
“You can’t cook without ingredients,” he comments. “Beer prices continue to rise, and so do the fees of our artists. Plus, it won’t come as a surprise to hear that we’ve seen a significant increase in security expenses in recent years – and, of course, we continue to invest in our festival infrastructure.
“Fringe activities are gaining popularity rapidly. Nowadays, they’re part of the festival experience”
“We’ve set the bar high to keep all our festivalgoers happy, but ticket prices for Pukkelpop haven’t changed in four years. Last year we were forced to raise the price of food and drinks tokens, but we’re still offering them at a reduced rates in the presale. For now, we’re trying to keep the price level constant for another few years.”
As expensive as on-site security is, Pukkelpop can at least benefit from the sharing of security intelligence with other festivals, including those promoted by Live Nation Belgium, with which Mahassine says the festival has a “very good relationship”.
“We meet on a regular basis, and they help us with a lot of issues,” he explains. “Of course, that relationship is essential when it comes to booking international acts – but we also exchange security measures and other festival-related know how.
“[Live Nation Belgium CEO] Herman Schueremans always reminds us of the Belgian national motto, “L’union fait la force” (“Unity makes strength”). That’s a mantra we try to live by!”
Pukkelpop 2017 takes place from Wednesday 16 to Saturday 19 August.
Luyken: Artist fees “getting crazier every year”
North Sea Jazz Festival, the biggest indoor jazz festival in the world, has once again sold out, this year shifting all 75,000 tickets four months ahead of the event.
Festival director Jan Willem Luyken says the strong ticket sales are a tribute to North Sea Jazz (NSJ)’s unique venue and the originality of its programming, both of which help it stand out in an ever-more crowded festival market as it enters in 41st year.
“The Dutch market is very busy, with lots and lots of festivals going on,” he tells IQ. “Big open-airs and smaller local niche festivals are everywhere.
“NSJ, however, has a comfortable position with its unique format and set-up, so we are not too much affected by that.”
North Sea Jazz, founded by Paul Acket in 1976 and now promoted by Mojo Concerts, has since 2006 taken place in the AEG-operated Ahoy Rotterdam following the demolition of its previous home, the Statenhal in The Hague. Its 2017 line-up includes Gladys Knight, Jamiroquai, Usher and The Roots, Van Morrison, Emeli Sandé, Steve Winwood, Erykah Badu, Herbie Hancock, De La Soul, Solange, Laura Mvula and George Benson.
“Big open-airs and smaller local niche festivals are everywhere”
It also, until recently, had a naming-rights agreement with a venue, North Sea Jazz Club, in Rotterdam, which closed after running into financial difficulties. Why, IQ asks, did the deal come to an end? “After a few years, we no longer felt comfortable with the musical direction in which the club was going,” says Luyken. “It was drifting away from the festival more and more, so we decided not to renew the collaboration.”
As an indoor festival, like Montreux Jazz in Switzerland and the new EFG London Jazz Festival, NSJ is protected from the sort of severe weather that disrupted several European events last summer – but having 75,000 people under one roof can, Luyken explains, present its own set of problems.
“The biggest challenge is crowd control,” he says. “The audience has to be able to move freely between the 14 stages, and we are less flexible with square metres compared to our open air-colleagues!”
While NSJ’s line-ups over the years arguably include a number of performers with only a tenuous link to jazz music, Luyken says a focus on other, related genres has always been at the heart of the festival’s booking philosophy. “Since the first edition in 1976, the festival has always been about jazz music and related genres such as soul, blues, funk, R&B, hip hop, world music, etc.,” he explains. “Paul Acket, the founding father of NSJ, realised back then he had to bring in popular headliners to sell the tickets, so he booked acts like Ray Charles, James Brown, Van Morrison and Chaka Khan…
“This is still, after 41 years, our formula. We’ll always stay true to our roots, but, of course, we have to stay up to date, book hot new acts and make sure to stay attractive to new audiences and follow up on trends. Luckily, with 14 stages we are able to do it all.”
“We’ll always stay true to our roots, but we have to stay up to date and book hot new acts”
The greatest challenge in filling those 14 stages, Luyken says, is rising artist fees – a view shared by many respondents to IQ’s European Arena Report 2016.
“To get the best line-up for the available budget is an ongoing puzzle,” he says. “Artist fees are getting crazier every year, so the biggest challenge is to keep the tickets affordable for our audience.”
One solution to the artist-fee conundrum, suggests Luyken, is to capitalise on the growing Dutch economy to persuade brands to part with more sponsorship money. “The economy is finally picking up,” he concludes, “which brings new sponsorship opportunities.”
North Sea Jazz Festival 2017 takes place from 7 to 9 July.
Live Nation sued over booking fees
A New York man is suing Live Nation over its practice of charging booking fees on tickets, accusing the promoter and its ticketing concerns of violating the Truth in Lending Act by “advertising one price for a ticket and then charging a higher price when people arrive at the box office”.
David Himber, of West Hempstead, took umbrage at paying US$55.50 for a $49.50 ticket to Rascal Flatts’ show at the Jones Beach Theater (15,000-cap.) on 1 September. “The advertised price is available to nobody,” Himber’s lawyer, Abraham Kleinman, tells the New York Daily News.
In Himber v. Live Nation Worldwide, Inc. et al, Himber is seeking to have Live Nation to refund the fees (including his $6) and pay statutory damages of $50 per ticket and $500 per purchase to all Live Nation box-office customers from the last three years.
“The advertised price is available to nobody”
Himber has filed three previous lawsuits in the Long Island federal court, although Kleinman says his client isn’t a prolific litigant. “Mr Himber successfully prosecuted his case against the Automobile Club of New York which displayed too much of his credit card information on his receipt, he did not prevail in his case against Intuit Inc., which assessed insurance fees for check stock, and settled his claim against Wal-Mart stores,” he tells the Daily News.
Live Nation does not comment on ongoing litigation.
A German court last month ruled it is illegal to charge fees on print-at-home tickets.