Hey! Hope your Friday is going well. I’m saddened and angered by the murder of Ahmaud Arbery and everything surrounding it. It’s been top of mind. I can only imagine how his family and loved ones feel.
Quick reminder: I’m doing another Trapital Mailbag podcast. Any questions on your mind on the business of hip-hop? Reply to this email, let’s hear it!
Today’s update is on Live Nation, re-opening the economy, and how the politics of that decision impacts hip-hop. It’s a shorter update on one topic. If you prefer updates like these, reply to this email and let me know!
Yesterday, Live Nation reported its quarterly earnings. Revenues are down 21% year-over-year and 9,000 shows have been impacted by COVID-19. The future is still uncertain. CEO Michael Rapino is optimistic though. He wants to instill confidence and has some data to back it up.
Here are some quotes from Rapino in the earnings call:
“In a survey we just posted, we talked to 10,000 casual and ongoing ticketbuyers and the data is pretty compelling: 90% of fans are saying ‘I can’t wait to get back to the show,’ and I think our refund rate says everything — we’re running somewhere between a 5-10 refund rate right now on a global basis.”
“Whether it’s in Arkansas or a state that is safe, secure and politically is fine to proceed in, we’re going to dabble in fanless concerts with broadcasts, we’re going to go and do reduced capacity shows because we can make the math work. There are a lot of great artists that can sell out an arena, but they’ll do 10 higher end smaller theaters or clubs. We’re seeing lots of artists chomping to get back out once it’s safe.”
it’s important for us to keep doing drive-in concerts, which we’re going to test and roll out, which we’re having some success with, fanless concerts which have great broadcasting opportunities, reduced capacity festival concerts, which could be outdoors, could be in a theater, could be in a large stadium floor where there’s enough room to be safe.”
That first quote is a bit assumptive. Yes, I believe that 90% of fans can’t wait to get back to the show. But that doesn’t mean that only 10% of those who bought tickets want refunds. Since the outbreak, Live Nation changed its refund policy twice after fan complaints. Refunds can be time-consuming and fans may not want to deal with it. The 5-10% who got refunds were willing to go through the steps. If refunds were as easy as one-click purchases on Amazon, more would be processed.
Also, “90% of fans can’t wait” doesn’t mean they all “can’t wait” for socially-distant alternatives, or would attend if concerts resumed today. That may depend on the genre of music.
Live Nation’s socially-distant events will strike a big divide, especially in the U.S. According to an ABC poll, 65% of Republicans want to reopen the country now to salvage the economy, compared to just 6% of Democrats. It’s easy to view this solely as an urban/rural divide. But the protesters in densely-populated conservative regions like Orange County, California beg to differ.
Hip-hop leans liberal, while country music leans conservative. If Live Nation meets its adjusted 2020 expectations, it will be on the backs of those who want to open up the world ASAP. Drive-in concerts are now a thing, but again, those are much more common in rural areas.
This divide may play out in a few ways. First, this viral outbreak has accelerated shifts that were underway in entertainment. In music, consumption patterns differ tremendously based on genre. Drake’s Dark Lanes Demo Tapes is on track to sell a similar amount of album-equivalent units as Kenny Chesney’s latest album. Drake’s sales are almost entirely streaming, while the country star’s sales are driven by bundles for an upcoming concert. We can assume that Chesney’s fans are more willing to attend his concert sooner, while Drake fans might be fine waiting until 2021, or later.
Second, and related, those country artists will likely get first dibs on venues. Now that the NFL schedules are out, Live Nation can start scheduling its bankable stadium-level acts. A concert promoter’s job is to limit risk and book safe bets who can guarantee sellouts. If a promoter is choosing between a country star and hip-hop star, who do you think gets booked first?
Additionally, Live Nation is experimenting with fanless concerts for broadcast opportunities. But hip-hop doesn’t need Live Nation for this. Rappers have spent the past few months experimenting with livestream platforms. But other genres of music may take Live Nation up on that offer.
We’re heading for a dangerous loop. There’s been tons of speculation on the future of live events. They are the fifth and final stage of reopening for most states. But reopening the economy is the politically-charged debate that won’t end anytime soon. The lines are drawn, and the entertainment dollars that follows those lines will surely be impacted.
Have a great weekend! Reply to this email or jump in the Slack group. Would love to hear your thoughts.