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Russian industry pleads for moratorium on refunds

The Russian live industry is pleading for a moratorium on ticket refunds, as concerts and festivals are cancelled en masse.

Green Day, Imagine Dragons, Louis Tomlinson, Yungblud, Franz Ferdinand, Iggy Pop, The Killers, Nick Cave & The Bad Seeds and Bring Me the Horizon are among the artists that have pulled out of performances due to Russia’s invasion of Ukraine.

The Association of Concert, Theater and Ticketing Organisations (KTiBO), which represents more than 20 of the biggest players in Russia, is proposing a moratorium on ticket refunds to prevent “the collapse of the industry”.

The association wants refunds to be frozen for events scheduled from 9th February 2022 to 3rd September 2023, provided they are/were cancelled or postponed before 6th January 2023.

“Due to circumstances beyond the control of the Russian organisers, such companies fell under the consequences of restrictive economic measures (sanctions) imposed by foreign states against the Russian Federation, including against banks, and do not have the opportunity to receive a refund of advances paid under transactions on time, established by the respective contracts,” it wrote in a letter to the chairman of the Central Bank of the Russian Federation Nabiullina E.S. and the head of the Federal Tax Service of the Russian Federation Egorov D.V.

Semyon Galperin, producer, art director and talent buyer for live music venue Tele-Club in Yekaterinburg previously pointed out that the issue of refunds is further complicated by the current sanctions on Russia.

“We will have to refund ticket buyers, but some of the money is already in agencies’ bank accounts, and they won’t be able to send that back – as far as I understand – because most Russian banks will be under severe sanctions.

“Some of the money is already in agencies’ bank accounts, and they won’t be able to send that back”

“So the international part of the business will suffer terrible losses, which will probably make a lot of leading Russian companies either bankrupt or severely in debt…

“There is also this strange question about how we can find some options to rebate ticket fees to customers because of the blocked financial system.”

The issue is being felt by individual promoters across the country including Moscow-based concert agency Pop Farm, which says that at one point “tens of thousands of people” contacted them for ticket refunds.

The promoter has cancelled all of its upcoming live music events including concerts with Foals, Twenty-One Pilots, Pixies, Michael Kiwanuka and Alt-J, as well as its June festival Pain.

“We physically don’t have time to process all the return requests,” reads a post on Pop Farm’s Facebook page. “We need a few days off to figure out how to proceed, so please be patient – returns will take longer than before…”

“We don’t know what will happen to the concerts next,” reads the post. “We don’t know (and no one knows) what will happen next.”

Elsewhere, Moscow-based festival Park Live is also asking fans to be patient during the refund process, as the event continues to shed international acts.

Placebo, My Chemical Romance, Slipknot, Biffy Clyro and Iggy Pop are among the artists that have disappeared from the line-up.

 


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The Great Refund Debate

With fans still sitting on event tickets that they bought as long ago as 2019, the industry is facing a dilemma when it comes to who merits a refund and who does not. And as Covid becomes endemic, should refunds remain obligatory for ticketholders who test positive? James Hanley investigates.

The race to contain Covid-19 outbreaks and variants over the last 24 months has been likened to a game of Whac-A-Mole. But as the international live music business begins to emerge from the horror of the pandemic, it will need its own mallet at the ready to combat the litany of fresh problems popping up day-to-day.

One of the more mundane but contentious debates to be sparked in recent months surrounds the matter of refunds. The issue was brought to the fore by Dead & Company and promoter CID Presents’ Playing in the Sand destination festival, which was set for Mexico’s Riviera Cancún over two weekends in January this year.

Amid the omicron surge of late 2021, organisers opened a 48-hour refund window for fans having second thoughts about attending (all ticketholders were ultimately refunded when the event was pulled at the 11th hour due to a spike in infections). However, CID declined to repeat the offer for its other January festivals: Crash My Playa and HootieFest: The Big Splash.

“If, at any point during the two weeks leading up to a particular event, the CDC Risk Assess- ment Level for Covid-19 for the Quintana Roo (Cancún) region of Mexico rises to a Level 4 or Mexico designates the area unsafe to hold an event, we will be offering full refunds to those not wishing to attend the particular event,” said a statement by the promoter. “We continue to recommend buying travel insurance, which may help protect against the risks of Covid-19 and travelling internationally during the pandemic.”

It was a similar situation at Wilco’s Sky Blue Sky “concert vacation” in Mexico, also in Janu- ary, produced by Cloud 9, The Bowery Presents, and Higher Ground Presents, which stressed its no-refund policy and encouraged festivalgoers to purchase travel insurance. “A refund, or the ability to hold one’s spot for a rescheduled date, will be available to purchasers if the event were to be postponed,” Cloud 9 told Billboard.

But far from limited to sun-drenched getaways, the refund question is pertinent at all levels of the industry, in every market across the globe. “There is a set Live Nation policy across the board,” explains Barnaby Harrod of Mercury Wheels, part of Live Nation Spain. “When an event is cancelled, you get an automatic refund. With reprogramming, the original tickets are, of course, valid for the new dates. However, if some- body can’t make the new show, or doesn’t want to, they have 21 days to ask for a refund, and that has been applied across the pandemic.”

Certain events and promoters also offer refunds or a voucher for anyone who is unable to attend due to testing positive. Harrod advises that every claim is assessed on its own merits.

“For exceptional refunds, which are requested outside the established timeframe, we work on a case-by-case basis,” he says. “So in the current climate, where the government has restrictions in place for people who have Covid, if somebody can certify that they have Covid, then they should be entitled to a refund.”

Elsewhere in Europe, AEG Presents France GM Arnaud Meersseman points to France’s “very protective” consumer laws, which allow customers to claim refunds up to five years after the event.

“Obviously, if a show is rescheduled or can- celled, it’s an automatic refund and there’s no discussion there whatsoever,” he tells IQ. “As for no-shows, as of today, they can warrant a refund. But we’ve seen in practice that it’s not really the case, as a lot of people don’t ask for them.

“The last big show I did was December at the Zenith Paris, and out of 6,000 tickets, we had 20% no-shows. The only other big shows I had be- tween September and December were two nights of Nick Cave, but they were seated shows at 2,000- cap each, and we had almost zero no-shows.

“Over here, what most people have done in practice is wait out a month in terms of refund requests, and if those refund requests haven’t come in during that time, we settle off the show basically. But that’s not really the law, I mean, people can ask for refunds after five years. But we’ve noticed that essentially, past one month, there’ll be the odd refund request here and there, but it’s really rare.”

DEAG executive Detlef Kornett says it is difficult to make general statements due to the fragmented nature of the German market but suggests most promoters have maintained a flexible approach to refunds.

“We have demonstrated a lot of flexibility and offered customers the opportunity to re-book their ticket if and when possible, use it for a different show, get a voucher, or in certain instances, even reimburse the ticket value,” he says. “That was true also if they were unable to attend due to Covid.”

DEAG’s UK subsidiary Kilimanjaro Live returned to action in August 2021, staging two arena dates by Gorillaz at The O2 in London. Kili CEO Stuart Galbraith attempts to sum-up the story so far.

“We never get 100% attendance – between 3% and 5% of people indoors and up to 10% outdoors buy tickets and then just don’t come – but we were back up at 95-97% attendance rates all the way through September, October, and November,” he says. “Then as omicron started to come into play and we headed into Christmas, those rates started to drop again to as little as 70% on some occasions.

“When we came back after Christmas, almost instantly, those attendance rates went back up to 95-97%, and that’s where they’ve been ever since. But what was very interesting is that virtually none of the customers who didn’t attend the shows before Christmas asked us for refunds. They’d just decided they weren’t going out and would take it on the chin.”

He continues: “The analogy I’ve used over the last couple of years is that, if you had an EasyJet flight booked that cost you £20 to £40, in my personal experience, I haven’t bothered to ask for a refund on that because I can’t be bothered. It’s just one of those things. However, if I’ve got a transatlantic flight, which is worth several hundred quid or thousands of pounds, I do want a refund on it. And I think that tickets and concert tickets fall into that EasyJet category – I don’t think people can be bothered to ask for the refund, to be quite frank.”

“People have almost been treating a ticket like something they bought off Amazon and saying, ‘Oh, we don’t really fancy that now,’ the day before. And at that point, what do you want the festival organiser to do about it?”

Paul Reed, CEO of the UK’s Association of Independent Festivals (AIF), reveals the organisation took legal advice with regards to refunds last year on behalf of its 90 members – and reached a definitive conclusion.

“The fact is a consumer is not legally entitled to a refund if they’re isolating and not allowed to travel, in the same way as if they were unable to travel for any other reason,” asserts Reed. “The view was that, ultimately, the customer is not due a refund, but I think it’s a decision that has to be up to the individual event. It is entirely at their discretion and there is no obligation. But from speaking to others in the industry, my sense is that it is being assessed on a case-by-case basis, irrespective of the legal situation.”

Reed adds that some AIF members have ex- pressed concerns that a “refund culture” has seeped in among punters.

“Perhaps it’s understandable, but people have almost been treating a ticket like something they bought off Amazon and saying, ‘Oh, we don’t really fancy that now,’ the day before. And at that point, what do you want the festival organiser to do about it?” he sighs. “You’re not due a refund, but I think that mindset has permeated a little bit more throughout festivals and live experiences – customer expectation shifting – and people feeling more entitled to a refund when it is more complicated than that.

“When you buy a ticket, it is binding, and that is all very clear in the Ts and Cs. I think customers need to understand a little bit more about what they’re committed to when they buy a ticket, so I don’t know whether some education is needed around that.”

Fans no longer able or willing to attend events are encouraged to sell on their tickets via face-value resale sites.

“Specific insurance is also available to the customer as a voluntary upsell, and I believe some travel insurance policies also cover it,” says Reed.

Guy Dunstan is MD, ticketing and arenas for Birmingham-based NEC Group, which manages five of the UK’s leading indoor venues including Birmingham’s Resorts World Arena and Utilita Arena, as well as national ticketing agency The Ticket Factory. He tells IQ the company has been proactive on the issue by offering ticket insurance with Covid cover included.

“I know that some venues and ticketing companies have been hit harder than others with regards to the refund situation,” says Dunstan. “We’ve been offering ticket protection insurance to customers for a significant period of time, so the refunds we’ve given have been pretty minimal because we’ve been able to point customers to the fact that they were offered the insurance at the time when they purchased the tickets.

“We were able to get that as cover quite early on in the pandemic through the ticket insurance provider that we work with, and it’s been of real benefit to us. So our sense is that we’re well protected from that moving forward.”

Down under, Live Performance Australia (LPA) administers the ticketing code of practice for the entertainment industry that outlines consumers’ rights to a refund. First released in 2001, the trade body reviewed and updated the code in 2020.

“While the impetus for the most recent changes was the Covid-19 pandemic, LPA was conscious to ensure any updates have a life beyond Covid-19,” says the group’s CEO Evelyn Richardson. “The ticketing code was widely used by the industry pre-Covid and will continue to be the go-to resource about refunds as Covid-19 moves to becoming endemic and beyond.”

Richardson says the LPA expects its members to treat ticketholders fairly if shows are forced to can- cel or are postponed due to government mandates.

“Whether ticketholders are entitled to a refund, exchange or other remedy will depend upon the ticket terms and conditions applicable when tickets were purchased,” she states. “Many companies have a Covid refund and exchanges policy, which sets out if ticketholders will get a refund, exchange or credit note if they are un- well with Covid symptoms, unable to attend the event due to contracting Covid, awaiting test results, [have been] in close contact, or [due to] border closure.”

With the world slowly emerging from the pandemic, the conversation turns to how flexible the live industry will be as things return to something like normal. Richardson indicates there could still be room for a little leeway.

“Ordinarily, if a ticketholder is unable to attend the event because they are unwell or other personal circumstance, they are not entitled to an automatic refund under Australian consumer law,” she says. “However, event organisers always have discretion to provide a refund or other remedy, if they wish, even though there may not be a legal requirement to do so.”

UK prime minister Boris Johnson has already announced the ‘Living with Covid-19’ plan, which has put an end to the legal requirement in England to self-isolate after a positive Covid test. Free testing has also been scrapped, although that isn’t an issue everywhere.

“They’ve never had free Covid tests in Spain,” testifies Madrid-based Harrod. “You would always have to go to the chemist to buy one.”

For Galbraith, however, the ramifications for the sector’s refund policy are obvious.

“Realistically, now that Covid has no legal status over and above any other disease, then that’s it, life is back to normal from an event organiser’s point of view,” he offers. “If somebody has flu, chickenpox, mumps, or whatever, and they can’t go to the show, then, unfortunately, that’s just part of life, and I think the same will be true of Covid.

“In the last two years, we have seen a significant increase in the number of customers taking out personal insurance on their tickets. For a very small percentage of the ticket cost, you can insure your ticket in the way that you can a holiday or anything else. That insurance, in many cases, does actually give you illness cover. So I think that is an easy customer solution going forward.”

“Now the isolation rules have changed, and you don’t have to isolate, then I think it just becomes like any other illness,” agrees Dunstan. “We all have to take a sense of responsibility to make sure that we’re healthy and well [enough] to be going to events. But as for venues and companies that have been offering refunds if you can demonstrate you are Covid positive, I can just see that going away.”

On that point, there appears to be something approaching a consensus.

“Once it is endemic, Covid would most likely not be a reason that entitles you to a refund as such anymore,” muses DEAG’s Kornett.

“At the end of the day, if somebody has gastroenteritis or common flu, or gets grounded by their parents because they have bad grades, do you refund them?” concludes Paris-based Meersseman. “At some point, there is no law in this, it’s going to be commercial practice. Once this virus becomes endemic and breaks out of the pandemic stage, I don’t see us offering refunds for people who have Covid.”

 


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Stuart Galbraith talks getting back to business

Kilimanjaro Live CEO Stuart Galbraith has told IQ he is “optimistic but nervous” about the concert industry’s return to business.

As co-founder of UK trade body LIVE (Live music Industry Venues and Entertainment), Galbraith has been a key player in the restart efforts. But despite England lifting remaining restrictions last month, the promoter warns the spectre of Covid is likely to hover over the sector for a little while longer.

“We’ve been very optimistic, but we’re also still very nervous,” says Galbraith. “And I think for the next several weeks and months, we will still see some cancellations and postponements.”

Galbraith points out Kili was forced to hurriedly reschedule seven Simply Red arena concerts in February due to Covid cases in the camp (although, ironically, the band’s shows at The O2 would have been moved anyway due to the original dates falling in the week the London venue was closed due to storm damage).

Earlier this week, Belgium transitioned to ‘code yellow’ on its coronavirus barometer, meaning the majority of measures have now been lifted. Elsewhere in Europe, Denmark, Sweden, the Netherlands, Finland, Austria and Switzerland have all announced plans to lift all remaining limits, with Germany also set to axe most Covid curbs from its 20 March “Freedom Day”.

“Until the rest of Europe catches up with where we’re at in the UK, we’re going to also see some postponements and cancellations due to artists not being able to make the UK work in isolation,” advises Galbraith.

“Now that Covid has no legal status over and above any other disease then that’s it, life is back to normal from an event organiser’s point of view”

Speaking in the new issue of IQ, Galbraith also tackled the matter of ticket refunds as the world emerges from the pandemic.

“Realistically, now that Covid has no legal status over and above any other disease, then that’s it, life is back to normal from an event organiser’s point of view,” he offers. “If somebody has flu, chickenpox, mumps, or whatever, and they can’t go to the show, then unfortunately that’s just part of life and I think the same will be true of Covid.

“In the last two years we have seen a significant increase in the number of customers taking out personal insurance on their tickets. For a very small percentage of the ticket cost, you can insure your ticket in the way that you can a holiday or anything else. That insurance, in many cases, does actually give you illness cover. So I think that is an easy customer solution going forward.”

Discussing no-show rates, Galbraith says concert attendance is rebounding following a pre-Christmas slump, prompted by the Omicron spike.

“Customers were making the decision that they didn’t want to go out and expose themselves in crowded locations, and it crescendoed just prior to Christmas,” he says. “We could see a clear customer trait, which was, ‘I don’t want to catch Covid just before Christmas, so that I miss family Christmas. I don’t want to infect elderly relatives.

“As Omicron started to come into play and we headed into Christmas, [crowds] started to drop again to as little as 70% on some occasions. When we came back after Christmas, almost instantly, those attendance rates went back up to 95-97%, and that’s where they’ve been ever since.

“What was very interesting is that virtually none of those customers who didn’t attend the shows before Christmas asked us for refunds. They’d just decided they weren’t going out and would take it on the chin.”

 


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IQ 109 out now: 60 years of Karsten Jahnke Konzertdirektion

IQ 109, the latest issue of the international live music industry’s favourite monthly magazine, is available to read online now.

In the March 2022 edition, IQ editor Gordon Masson reports on 60 years of Karsten Jahnke Konzertdirektion, tracking the company’s journey from humble beginnings to a European cultural powerhouse.

Elsewhere, details of events and social gatherings that await attendees of ILMC 34‘s in-person comeback are revealed, and family show producers provide a health check on the sector.

This issue also sees IQ news editor James Hanley examine international ticket refund policies in a Covid-hit business.

For this edition’s columns and comments, Craig Stanley reflects on the ramifications of Brexit, and Lina Ugrinovska suggests ways in which we can heal and grow from the turmoil and mental anguish of the pandemic.

In this month’s Your Shout, execs including Michal Kaščák (Pohoda Festival/VBPS), Sergii Maletskyi (H2D) and John Giddings (Solo) reveal the weirdest place they’ve watched a gig.

As always, the majority of the magazine’s content will appear online in some form in the next four weeks.

However, if you can’t wait for your fix of essential live music industry features, opinion and analysis, click here to subscribe to IQ for just £5.99 a month – or check out what you’re missing out on with the limited preview below:

 


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Could vouchers become a trap for promoters?

Live music markets in Europe have looked to vouchers as a cure for their coronavirus-inflicted crises. The effect of this type of medicine seems to be based upon a presumption that ticket owners will hold on to their rolled-over tickets, or use vouchers for another show instead, or wait for cash refund until late 2021.

Well, what if they don’t?

Voucher schemes have turned millions of ticketholders into promoters’ creditors. They can be divided into three sub-groups: Those who can afford it; those who can’t really but were not given a choice; and those whose present ambivalence may well turn into anger with passing time.

So far, the economic prognosis is that the effect of the corona crisis has not yet fully revealed itself and it will not be until three to six months from now when it will really hit hard, once various government support and help programmes are over.

Everything points to this crisis being the strongest in decades. The natural reaction is a great deal of uncertainty and, in this situation, the live music industry in countries using voucher schemes has sent a very clear message – if worse comes to worst, it will be the customers who will bear the load.

Ticketholders might be facing situations where they need access to at least some part of the cash spent on tickets to cover their daily needs. As their chance to get an immediate, full refund from  promoters is either restricted or made temporarily impossible, then they might be tempted to offload what they have in the only way possible – on the secondary ticketing market.

Voucher schemes have turned millions of ticketholders into promoters’ creditors

Desperate times call for desperate measures and ticketholders might have to give away their tickets as quickly – and therefore cheaply – as possible. If this happens to a significant extent, then it could affect the sales of the postponed events in question, as well as newly announced gigs.

Nowadays, promoters postpone their shows hoping for the best. Now, if it is a sold-out show, then one might worry only about lowering the profit margin, but if there is still some way to go to break even, then the promoter has every reason to worry.

Postponed shows were negotiated at the peak of the conjecture cycle with ticket prices reflecting both the expected buying power projected into selected capacities, as well as accordingly set fees and subsequent other costs.

The upcoming 2021 season will be tough. Experts’ projections quoted in media  see a decline in revenue of more than 50% for the leisure sector next year in some markets. Better than the current drop of 80-90%, but hardly a full recovery. By the nature of things, it can be reasonably expected that the lost revenue will be distributed in an uneven manner, show-per-show.

The highest risk lies with events that have not yet reached breakeven and that have found themselves in a 2020 position that they probably aim to roll over to 2021. If an event, traditionally a festival, has tickets scaled from an early-bird rate to an on-the-door price and is now somewhere in the middle, then promoters will probably follow up the sales from the point an price that they stopped on prior to coronavirus, and offer a similar or identical line-up (value) in return.

In cases where the contracts were not renegotiated for a lower guarantee, then promoters will have both prices and costs set on 2020 expectations for the next season, which might deliver lower revenue. Maybe upwards of 50% lower.

It is not lowered income that breaks promoters’ neck, it’s the unpayable bills accumulated from previous commitments that do it

Additionally, we need to account for the risk of cheap tickets on the secondary ticketing market. If tickets are available for less that than the official presale on these sites, either for the very same event, a similar event or event in the same time period, or a better event, then it will likely redirect the cash flow from official presales and further lower the promoter’s future revenue.

If a market revenue goes down by 50 % and the remaining potential half is further affected by cheap resales, how much can reasonably be expected to be left over? If such a scenario becomes reality, then the expectations of future turnover might not (sufficiently) materialise, leaving the promoter with obligations to fulfil with insufficient funds.

Not to mention, that standard competition will continue, and new shows will have the advantage of a wow-effect over postponed and rolled-over events. Also, corporations in some countries are likely to come out of the crisis with loaded cash-flow from temporarily non-refunded tickets for cancelled arena shows with a limited time to reinvest it.

In this light, it might seem that the intention to lower artist guarantees by 20 % in 2021 is merely cosmetics.

If it is the case and all options are still on the table then, in some ways, it is not a bad option to leave in 2020 what belongs in 2020: ask agents to return paid advances, refund ticketholders or press on with substitute events and enter the next year without a ball and chain.

Generally speaking, it is not lowered income that breaks promoters’ neck, it’s the unpayable bills accumulated from previous commitments that do it.

 


Borek Jirik has worked as a show and festival promoter and arranged technical production for various arena and stadia tours. He now consults for live events, focusing on quality management, safety plans, studies, publishing and research. He was an initiator and editor of the Comprehensive Guide for Event Production and Organisation in the Czech Republic, 2018.

Sweden rules vouchers are not valid form of compensation

Sweden’s National Board for Consumer Disputes (Allmänna reklamationsnämnden, ARN) has declared that ticketholders are entitled to a cash refund for any events cancelled or postponed due to Covid-19.

The government agency has declared that organisers that have been forced to cancel or move events due to coronavirus-related restrictions cannot “avoid having to repay [the] money” unless a contractual condition states otherwise.

The principle of force majeure, says the ARN, does not exempt companies from the obligation to repay the cost of the service that has not been delivered, but rather applies to limiting liability.

“Anyone who does not get the agreed output, e.g. the opportunity to participate in an activity or to go to a concert, is therefore basically not obligated to pay for it,” comments ARN chairman and CEO Marcus Isgren.

In many countries in Europe, including Germany, Portugal and Italy, concert organisers are being allowed to offer ticket vouchers (ie credit) in lieu of cash refunds for cancelled events, as promoters warn that mass refunds may well lead to bankruptcies.

“Anyone who does not get the agreed output is therefore not obligated to pay for it”

However, ARN states that offering customers a voucher to attend the same event on a different date is not a valid form of reimbursement, as the chosen date “is usually crucial” to the consumer’s decision to buy the ticket.

“It is therefore not possible for the organiser to compel [the consumer] without their consent to accept that the tickets will be valid for a corresponding event another day,” says Isgren.

Despite ARN’s announcement, Joppe Pihlgren, head of Swedish live music association Svensk Live, says many fans “want to support concerts and organisers” and would rather wait until they can attend the event, than get their money back.

“As an industry we need the information on how and when we can restart,” Pihlgren tells Swedish publication Västerbottens-Kuriren. “I understand it is difficult, bu we need to know so we can plan ahead. This is essential for our operations.”

Unlike the vast majority of European countries, Sweden has kept some of its economy, such as restaurants, bars and shops, open throughout the coronavirus crisis. The government has placed a capacity limit of 50 on live events, leading to the cancellation of Way Out West, Lollapalooza Stockholm and Sweden Rock.

 


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