Surge in demand for live music wanes

Concert promoters remain upbeat despite losses in 2010

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By Jarkko Jokelainen
     
      We now have an answer to a question that has been floating in the air for several years.
      The question is how long supply and demand for live music can continue their powerful growth.
      The answer seems to be that the limit may have been reached.
      Last year brought a stop to the growth that had continued for a long time.
     
In 2010, ticket sales for concerts and festivals with foreign stars as their main attraction declined slightly, according to figures put out by the Finnish Composers’ Copyright Society Teosto.
      The amount of money paid out by Teosto for large concerts declined by about four per cent from 2009.
      In other countries, the figures are even starker.
     
Live music had been seen as something that would rescue the music industry from the sharp decline in sales of recordings in recent years.
      As record sales dwindled, artists hit the road.
      Even Madonna had to come to Finland, which had been waiting for decades to get her here.
      Record companies also latched on to the life preserver and started to get into the business of live performances.
      The “360 model” emerged, in which record companies get part of the concert and merchandising revenues generated by their artists.
      Now this cash cow seems to be showing signs of fatigue.
     
Pollstar, an American company which monitors ticket sales, reports that international tours of music artists brought in about 2.93 billion US dollars last year (about 2.1 billion euros), which is 12 per cent less than in 2009.
      The decline was greatest in the United States.
      In an interview with The Economist, Michael Rapino, CEO of Live Nation Entertainment, said that last year around 40 per cent of concert tickets were left unsold, and the StubHub online ticket store reports that the average price of tickets declined by 18 per cent between 2008 and 2010.
     
The situation is not quite as alarming in Finland, where the trend is one of an easing of demand since 2006.
      According to an advance assessment by Teosto, copyright payments for live performances totalled about EUR 5 million, which is about as much as it was a year earlier.
      Big concerts did not sell as well as before, but the situation was balanced out by domestic demand for performances by Finnish artists at smaller venues, which experienced 8% growth.
     
“The growth really appears to have stopped last year”, says Katri Sipilä, managing director of Teosto.
      “This is partially due to a few credit losses, and also there were fewer big mega-events.”
      “Nevertheless, the situation is fairly good. There are certainly as many events, but they have been in smaller venues.”
      Performance fees are in direct proportion to ticket sales and prices. Music producers get 3-8 per cent of the income.
     
In the view of Markku Laaksonen, chairman of the Finnish Show Producers’ Association, demand for concerts has not necessarily peaked.
      “It is not possible to draw conclusions about trends on the basis of one year”, he says. “Already a couple of concerts can influence things one way or another.”
      “The figures for 2010 reflect the recession, which always comes with a delay. People spend their own money on concerts like they did before, but companies reduce their ticket purchases. Cyclical factors can be felt in this business as well.”
     
For market leader Live Nation Finland, 2010 was a good year.
      It included two U2 concerts at Helsinki’s Olympic Stadium that were both sold out.
      “In fact, we had more big outdoor events last year than at any time before, and our most important events sold very well. I believe that our sales have grown”, says head promoter Scott Lavender.
      “This year we are aiming at the same. We will have two or three stadium events, and three or four big outdoor concerts.”
     
Market saturation is also not something that Juhani Merimaa of the Tavastia Club and the venerable Ruisrock Festival is particularly worried about, although he did decide to cancel the Ankkarock Festival in Vantaa after a couple of slow years. Merimaa says that the number of events is still growing.
      “There is no saturation in Finland or Europe. The situation in the United States reflects the economic decline. In larger cities, concerts will succeed, but smaller ones have quieted down.”
      He says that there are still plenty of performers available, and price trends have not stopped.
      “Now we are living a time of big risks. Not everything goes through, and then there are bankruptcies. Large companies are still going strong.”
     
Last year was toughest for the Speed Promotion & Agency company, which has posed a challenge to Live Nation as an organiser of big events.
      The company went into bankruptcy after the Helsinki Live concert in June, when the main performer Guns N’Roses did not attract as many people as had been expected.
      “There are undoubtedly many reasons for the bankruptcy”, says CEO Kalle Keskinen.
      “The final straw was the Helsinki Live event, which had a goal of selling 10,000 more tickets than it actually sold.”
     
The setback did not crush Keskinen, and he still has faith in the power of market forces.
      He has set up a new company called Live’n Proud Promotions, which is organising five big events next summer in a number of cities, including Turku, Tampere, Seinäjoki, and Oulu.
      “Without a doubt, one domestic player will fit into the market”, he says.
      “Not all agents want to sell gigs to just one player. A monopoly is not possible in this business, either.”
     
     
Helsingin Sanomat / First published in print 1.2.2011
     

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 Plenty of Finnish gigs for international artists this year

JARKKO JOKELAINEN / Helsingin Sanomat
jarkko.jokelainen@hs.fi