The coronavirus continues to progress. We learned this weekend of the cancellation of the South By Southwest (SXSW) festival set usually held annually in Austin. The city’s mayor declared a local state of disaster and gave the order to cancel the event.
As the music industry questions the next event that could be cancelled, all eyes are on Coachella. It is difficult to underestimate the economic impact of the two festivals: SXSW was estimated at $356 million last year, while Coachella would bring in more than $1 billion annually. As coronavirus progresses ever more, the summer promises to be cruel for the music industry.
A famous artist agent, who wished to remain anonymous, said: “We are starting to see that this is affecting the entire musical ecosystem. We receive calls from our agents about organizers canceling shows. The authors and producers have cancelled their flights to Los Angeles for the recording sessions, so we feel that it is starting to affect composers and producers as well.”
Although the rise of streaming has revived the music industry, most artists earn most of their cachet by touring. According to Pollstar, the top 100 tours in 2019 brought in $5.55 billion, a 41 percent increase over 2015. The world’s top 10 highest-paid artists earned $1 billion last year, up from $886 million the previous year, largely thanks to stadium tours.
Live Nation, the world’s largest concert promoter, posted record revenues of $11.5 billion last year. Its chief executive, Michael Rapino, admits to taking a “cautious” approach to the epidemic, but is broadly optimistic, as Live Nation’s stock has fallen to its lowest level in 52 weeks.
“In 2020, we hope that double-digit growth in the number of fans and shows, in a context of very strong activity in all markets, will allow us to record strong global growth again this year.”
Michael Rapino points out that his company’s schedule is very busy, with 70% of Live Nation’s sales expected from June, thanks to artists like Justin Bieber and Lady Gaga. However, some artists like Green Day and Avril Lavigne have already cancelled dates in Asia. But the CEO remains confident, and says that everything will be fine as long as the coronavirus situation stabilizes in time for the summer season.
But with recent cancellations multiplying, many are losing hope. There is pervasive uncertainty about the fate of the tours planned in the following months. The organizers must remain cautious in their communication, because if they express the slightest uncertainty about the possible cancellation of a show, the fans will not be there and will not buy tickets.
But the main uncertainty comes from the economic impact of cancellation. It’s not just the loss of a big cheque, because in the case of a festival like Coachella, you also have to count the extra costs associated with rehearsals, the construction of a set, the booking of accommodation for artists, etc. These are expenses of time and money that cannot be repaid.
For now, according to the agent contacted by Forbes, the Coachella festival is maintained, even if the representatives did not wish to answer our questions. He explains: “We have already incurred between $1 million and $2 million in production costs that would be borne by the artist in the event of cancellation… We do not find any insurance company that is willing to take the risk because of coronavirus. I’m waiting to see how it evolves before I spend more.”
In the world of sport, precautionary decisions have already been made. The Paris Police Prefecture has announced that Wednesday night’s Champions League match between Paris Saint-Germain and Dortmund will be played behind closed doors. Artists could also do the same, by organising live concerts on the internet.
— Préfecture de Police (@prefpolice) March 9, 2020