Making Money in a Down Economy

A heavy-hitting panel was “Making Money in a Down Economy,” moderated by It’s My Party’s Seth Hurwitz, who also operates Washington, D.C.’s 9:30 Club and the Merriweather Post Pavilion in Maryland.

An immediate bone of contention on this panel was if there really is a down economy in the concert industry and, if not, is “the economy” just a convenient excuse for bad shows? Conversely, is the industry in denial?

There weren’t easy answers for that, with Hurwitz openly questioning if the U.S. economy in general is taking its toll on the concert world, C3 Presents’ Charles Attal saying people are in denial and Nederlander Concerts’ Adam Friedman wanting to know what anyone is doing about it.

“We’re definitely in a down period,” Attal said. “I’ve been in this business 14 years and have never seen this. We’re seeing 25 percent to 30 percent down at the club level.”

“It’s a shitty economy,” Friedman said. “What can we do to take our business, salvage it and maybe convert it? We should be looking at 2010 or ‘11. We’re gonna take it in the shorts in ‘09. It’s time to look at a new model with respect to pricing, taking money out of the secondary market and a whole bunch of things you can do to create opportunity.”

Hurwitz pointed out that the first thing he noticed was bar sales at the 9:30 Club going down.

REN Entertainment’s Steve Rennie joked the conventional wisdom says that when people got depressed, they’d get drunk. He added that Las Vegas is supposedly recession-proof, “but the cabbies are complaining about fares to the strip joints going down. Lap dances are down, too. You might start looking at that as a VIP experience.”

But getting back on a serious note, CAA’s Mitch Rose went back to the issue of ticket prices. “Be honest. A $35 ticket isn’t really a $35 ticket. Acts, managers and agents are sensitive to ticket prices. You don’t rape the customer on the ticket price. Yeah, the economy does make a difference. We might not feel a five-dollar difference, but the fan does.”

The Agency Group’s Steve Martin interjected that “It’s becoming a game of ‘Where’s Waldo.’ Where are these surcharges coming from? We have to stop nickel and diming them to death.”

Rennie used Incubus, which manages as an example of what he, has to consider in terms of ticket price.

“Some of the guarantees I saw were attractive but, having been a promoter, I didn’t even have to look at the details of the offer to know the ticket price was going to be too high. There’s got to be a gesture,” he said.

“Everyone has to be partners in this thing. It’s safe to say it doesn’t cost $10 for a beer. Why don’t we throw in a free beer or some kind of gesture to the fact that we want the fans to have fun? When there’s a whole pie of income and there’s a fair amount for everyone, this is the year I think everyone needs to look at the whole menu of things they hide and throw a bone out there.”

Hurwitz said he tries to price his shows to make the most he can “without pissing people off. They let you know.” He asked the panel if selling more tickets is more important than making more money.

Rose said it goes hand-in-hand. “Keep bands on the road and make as much as they can within the confines of the current realities, whether it’s better pricing, packag-ing or touring in fall instead of summer. To some extent this year is no different. You sell the most tickets and build the bands to the next level. Work with people like buildings to market shows in a new way.”

Friedman reminded the panel that the venue has to be part of the equation, too.

“There’s a big circle as to cost here to run a venue. To operate a venue is costly,” he said. “People don’t see it, and artists don’t see it. There’s the cost of maintaining buildings, capital, renovations, paying people to sell the alcohol and the food.

“But it’s all driven by how you cover your nut. One drives the other. We’re somewhat too late to put it into a pot. It’s been talked about for years and never executed.”

While there was plenty of moaning about ticket prices, high artist guarantees and ancillaries, one consensus was that difficult times can create change in what some see as a stagnant business model regardless of the economy.

And Rose pointed to one such idea tried out last year by Live Nation – which, predictably, was often the target of criticism by those on the dais and in the audience.

“Live Nation did a four-pack that worked,” Rose said. ”They sold four tickets for the price of three. The fan remembers getting the free ticket, but it’s at least $20 for him to just walk in the door between one $8 beer and $12 parking.”

Martin said it’s important to convince the artists that “it’s not an adversarial relationship but a symbiotic one with promoters.”

Attal asked how the panel would rewrite the business, if it could.

Friedman said it’s a question of the economies of scale. “Not to be critical, but Live Nation is big ship to run, and the corporate overhead is a lot to run. Maybe it’s time for a clearing out.”

Attal agreed, saying the industry will probably be seeing a lot of new faces in the next few years. Martin said the business could be undergoing a correction. “Mid-level and lower theatre acts will have to adjust. Ticket price will come down. It is a correction and there may be a ripple in the way some people are used to doing things.”

Rose concurred. “It could be one of those big picture moments. If it’s a wake-up call and everyone gets smart to focus on what they need and savor the premiums, it’s going to be great,” he said. “People still want to hear their favorite songs. When you’re in the moment, it’s tough.

“There’s incredible opportunity. Do what you do best. When people are scared, there’s opportunity, if you’re smart about your business. I have to be hopeful; it’s a great business.”

- Reported by Deborah Speer, Pollstar
- Photos by Jason Squires and John Shearer