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United in crisis: The view from Russia

Promoters in Russia view a fall in purchasing power and a reduction of disposable income as the main obstacles facing the reopening of the live business and have united with other sectors of the industry to form a new live entertainment industry association in an effort to safeguard their future.

In Russia, as in many markets worldwide, all concerts, tours and festivals have been officially banned for an indefinite period of time. Although many local summer festivals are still on sale, “nothing good is expected for summer 2020,” Sergey Podgorny, COO of majority CTS Eventim-owned promoter TCI, tells IQ. “It is obvious that large-scale events will be the last to return.”

Podgorny says TCI is “optimistic” about starting work again in September, but cautions that a “bad scenario”, which sees no live events for the remainder of the year, is a possibility.

Most of TCI’s local and international summer events – and even some autumn ones – have been postponed, with the company turning to “economy mode”, cutting costs amid a dearth of sales.

A similar tale is told by Maria Axenova, of Moscow-based promoter Melnitsa Concert Agency. The promoter is currently working to reschedule its July festivals, Moscow Park Live and Kiev UPark, which are set to feature acts  including My Chemical Romance, Deftones, the Killers and Sum 41, to 2021, along with tours and stand-alone concerts.

“The most frustrating thing about this pandemic is that it is so very bloody unknown,” says Axenova. “What is clear, however, is that all live events are doomed at least before the fall.”

Sergey Babich of Colisium International Music Forum, which represents promoters in Russia, Ukraine, Kazakhstan and Belarus, agrees that events will most likely restart at the beginning of autumn in Russia, although this could differ across the country, as each region has the authority to select its own quarantine exit strategy.

“Both quarantine and the pandemic have revealed that we have a large industry, but we don’t have an authority that can negotiate with the government”

Of Colisium’s other represented markets, Kazakhstan offers the most cause for optimism, with venues planning to reopen in June and governmental support on offer such as tax breaks, rent holidays and unemployment benefits. Ticketing company Ticketon.kz is also allowing fans to buy tickets on credit, with the agreement of banks and credit card companies, in a bid to avoid complete stagnation of sales.

Elsewhere, Ukraine’s lockdown is due to be lifted on 10 May but, according to Dmytro Feliksov of Concert.Ua, events will restart no earlier than July.

“As for Belarus,” says Babich, “the situation is more difficult.” With no official event ban or lockdown enforcements, the government is simply recommending the public avoid “crowds”. The authoritarian nature of the Belarussian government has led to a general acceptance of the advice.

“No one ventures out to organised events,” says Babich. “There are a few sales for autumn, but there are a lot of doubts about summertime.”

As for promoters the world over, the issue of ticket refunds remains the “main problem” for TCI. In view of the current situation, the government has extended the grace period for issuing refunds from 30 days to 90.

So far, however, TCI has received few refund requests, as fans approach the situation with “stoicism”. “I want to believe that fans will be waiting for their artists,” says Podgorny. TCI is also working with ticketing partners to develop a strategy regarding refunds and compensation for fans.

Unlike in other European countries, the Russian government has not yet provided any direct financial assistance for different sectors. “At the very least, the industry is counting on a tax cut and a delay in ticket refunds of 12 months,” says Podgorny, adding that the government is expected to announce a new package of measures in May.

“We are bringing together those who were separate, and working together for the best future of the entire industry”

In order to gain more lobbying power with the government, Colisium and other members of Russia’s professional music industry have joined forces to create an official live music industry association. Promoters in Russia including SAV Entertainment, PMI and NCA were previously represented by the no longer operational promoters’ association Soyuz Concert.

“Both quarantine and the pandemic have revealed that we have a large industry, but we don’t have an authority that can negotiate with the government,” Vladimir Zubitsky of SAV Entertainment and Russian Show Center, said in an interview about the formation of the association.

“The Association will include all major players, all active people from the distant regions of Russia, and everyone involved in the industry: technical companies, producer centers, artist management, security, insurers.

“We are bringing together those who were separate, and working together for the best future of the entire industry.”

The 20-plus co-founders of the association are currently preparing documents for the registration process, and plan to begin in full force in the summer although, the founding group has been working together de-facto since mid-March.

The industry association is a welcome addition to Russia’s live community, as promoters predict a rocky road ahead.

“The market will not be able to recover for a year or so,” says Michael Shurygin, head of National Concert Agency (NCA). Shurygin believes that the impact of the pandemic will change even fundamental elements of the business.

“These [postponed] events have been transferred from the world of flourishing business to the world of recessions”

“Free online shows, possible new restrictions on attending live shows, decrease in peoples’ incomes – all these things will inevitably affect the customer and it is very likely there will be a drop of the show attendance in 2021,” says Shurygin.

The economic fallout from the coronavirus shutdown is a worry on the minds of all promoters IQ approached for this article. The commodity-sensitive ruble has been weakened by the collapse in oil prices in the past months, as global stay-at-home measures have led to a precipitous drop in demand.

“The drop of the ruble’s rate will greatly affect the local economy and possibly lead to higher costs (of everything),” says TCI’s Podgorny. “Combined with the collapse of many businesses affected by the epidemic and falling incomes this could be a serious problem for ticket sales.

“We will need to be more careful when choosing events and estimations for the upcoming concert seasons.”

Caution and uncertainty surrounding future shows is also affecting the deals that are currently being re-negotiated between agents and promoters for postponed events.

“All these events have been transferred from the world of flourishing business to the world of recessions, falling incomes, increased expenses and losses from 2020. So, such “re-negotiating” will not exactly be easy,” says Podgorny.

For Axenova, the “colossal fall” of consumers’ spending capacity is the main issue, especially that of the youth – “the very bulwark of our industry”.

“We all look forward to the return of a live dialogue between the artist and the audience”

“With so many businesses collapsing, we cannot expect a prompt bounce back of the market,” adds Axenova. In the meantime, Melnitsa is working on new online projects to generate financial assistance for artists and provide emotional support for fans.

Colisium’s Babich also sees the value of regular online activities to bring “additional monetisation” to the industry and for charitable purposes.

“We are very proud that online projects exist in our countries to support the medical sector, for example online concerts with donation systems in Russia, Belarus and Ukraine. All money collected from these concerts goes straight to support doctors.”

Online events are being supported by the largest media outlets in Russia, such as Yandex, Rambler, Mail.ru, Vkontakte, Odnoklassniki and MTS Mobile, with the opportunity for virtual reality (VR) and 360° video.

Although such virtual experiences offer a welcome respite from the tedium of lockdown life for many, the Russian live industry is raring to get back to the real thing.

“All online efforts are a good temporary substitute, but they definitely not replace a real live show, as a soccer game on TV will not replace a real vibe of a full stadium,” says Podgorny.

“We all look forward to the return of a live dialogue between the artist and the audience.”

 


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Rock in the USSR: SAV Entertainment at 30

Russia, to quote American writer Ralph Peters, has “long been a land of contradictions layered upon contradictions.” Straddling East and West, democracy and absolutism, collectivism and capitalism, the world’s largest country has always been a nation of stark contrasts – and never more so than in 1987.

Thirty years ago, as the ruling Communist Party of the Soviet Union (CPSU) celebrated the 70th anniversary of the October revolution, Russian society stood at a crossroads. A year earlier, general secretary Mikhail Gorbachev had used the 27th congress of the CPSU to introduce a range of reforms, including glasnost (openness), perestroika (restructuring) and demokratizatsiya (democratisation), paving the way for reduced state censorship, a degree of political liberalisation, and, ultimately, the fall of the Soviet Union and an independent Russia’s transition to a market economy.

Not, then, the kind of stable political environment in which most people would think to start a new company – especially one engaged in the inherently risky business of promoting live music – but then Nadia Solovieva, co-founder and CEO of Moscow-based SAV Entertainment, isn’t most people.

Solovieva, for four decades the matriarch of the Russian live music industry, tells IQ that SAV was initially conceived as a vehicle for promoting Russian artists in the West, capitalising on the USSR’s appeal to capitalist audiences amid the glasnost-era thaw in East–West relations. “The initial idea for SAV was the opposite of what it eventually became,” she explains. “Russia was hip at the time! But we gradually realised there wasn’t much of a business there, and started bringing foreign artists to Russia instead.”

Solovieva cut her promotion teeth at Gosconcert, the Soviet state concert monopoly, where she worked in the late 1970s and early 80s as a tour manager and translator. The first Western artist she worked with at Gosconcert was Elton John, who toured Russia with Harvey Goldsmith in 1979. Solovieva has promoted Sir Elton on numerous occasions since (he played the 7,500-cap. Crocus City Hall in Moscow with SAV on 14 December), but the British singer’s famous first visit to Russia – which set the stage for a lasting friendship between Solovieva and Goldsmith – was actually something of an accident, as the latter recalls.

“Elton went onstage [at Wembley] in 1977 and announced he was never going to tour again,” explains Goldsmith. “Later, we had lunch and he said, ‘I’ve got a new album coming out and I’ve promised to do a show in Paris for the record company – but I’m not touring.’

“Before then, there were no businesses except those owned by the state – even the word ‘business’ was new!”

“Over lunch, he kept saying, ‘I’m not touring, I’m not going to all those places I normally go,’ and that he wanted to play new places: Russia, Israel, Egypt… In the end, ‘not touring’ ended up being 18 months on the road!”

New beginnings
The genesis of SAV – originally Seabeko Alla Venture, after the company’s initial partners, Canadian investment firm Seabeco Group and singer Alla Pugacheva – came in 1987 when Gorbachev legalised private enterprise. Unlike their counterparts in Europe and North America, Russia’s fledgling promoters had little experience of the international live music industry – and, crucially, even less experience running a business, with private enterprise having been illegal since Stalin’s abolition of the New Economic Policy in 1928.

“We were, all of us together, learning how things worked,” Solovieva explains. “Before then, there were no businesses except those owned by the state – even the word ‘business’ was new, for God’s sake!

“Of course, now everything is here: the hotels, the transfers, the infrastructure… The only thing the promoter has to have is the ability to be music-orientated – and have money, of course. But when we started out, we had to learn everything from scratch.”

 


Continue reading this feature in the digital edition of IQ 75: