by : Business, January 2009

The Value of Live Music: Lies, Dammed Lies, and Statistics

It is now often argued that the future of music lies in live music. The decline of the record business, the old cash cow of the industry, is one consideration. Another is that live music is strong and festivals are doing well.
Clubs and midsize venues seem to offer good opportunities for musicians. For instance, in the last three years, ticket grosses of the venues that seat 15,000 and more were greater in the US than the revenues of the top five stadiums and the top five amphitheaters. Moreover, since 2003 there is a notable increase in the US receipts of venues that seat 5,000 and less and 10,000 and less.(1) Sean Moriarty, CEO of Ticketmaster, has said that, in the more developed markets, high-end talent is still needed to fill existing arenas, and that growth is going to come from construction overseas, in places like China, Germany (the City of Berlin), and Iceland, as well as the potentially dramatic expansion of a burgeoning domestic market in the US of resold tickets. While Ticketmaster is hoping to raise financing with a public offering this year, Live Nation is expected to issue tickets for its own venues in competition with Ticketmaster.(2)
Additionally, there is the growing convergence of the live and recorded music industries. Allusions to the novel “360 degree deals” between artists and their marketers/financiers are becoming common. Live Nation appeared to put the topic on the table squarely in October 2007, when it signed Madonna to a 10-year deal for $120 million through its new division, Live Nation Artists. The deal involved touring, new studio albums, merchandising, fan clubs, DVDs, TV and film projects, and, generally, anything that could be gainfully made from the Madonna brand.(3) Wind-Up Records, the largest independently owned and operated label in the United States, appears to be on the same track as Live Nation Artists. Jim Cooperman, Wind-Up’s COO and EVP of Business and Legal Affairs, maintains, “We always try to sign 360-degree deals”.(4) Indeed, the artist Robbie Williams and the rock metal band Korn had already begun to break new ground in their recording contracts a few years ago. Now, the signing of talent may no longer be the exclusive prerogative of the labels.
The existing map of the music trade, which boldly divides recorded music from live music, is becoming fuzzier. Labels, live music sellers, and investors are all changing the business of underwriting talent dramatically. Risks are being hedged against an artist’s entire career, and contracts that only consider recordings as a sufficient collateral may soon be antiquated.
The result is that live music is being put on a higher pedestal. For musicians, especially, live music playing is a key aspect of their present and future livelihood. Their stake in the market is undeniable, and, for them, its dollar value must be of concern. Current statistics, in the US as other countries, are derived from a yearly tally of all concert ticket grosses.
The standard for the US overall live music data is the Pollstar organization. Billboard has recently offered its own and newer service, Boxscore. But Pollstar data has a longer history, its reporting sources seem to be more numerous, and it produces a much read “Year End Special Edition” every January. In the latest offering of this report, which summarizes the North American touring industry (US, Canada, and Mexico), Pollstar estimates that concert ticket sales in 2007 were $3.9 billion, up 8% from $3.6 billion in 2006. This followed eight years of continued record-breaking numbers. For chief editor Bary Bongiovanni, 2007 was remarkable as well because the figures were excellent even when ticket sales and audience numbers were down significantly for the top twenty acts. As he reflected “20 artists does not an industry make”.(5)
Billboard’s Boxscore statistics, quoted at the beginning of this section, also bode well for musicians. They confirm Pollstar’s finding that the industry’s strength may be coming from the bottom up. For Billboard, it is the smaller sized venues that are driving growth. For Pollstar, it is a tier of acts below the top 20. Either way, the distribution of returns from live music performances suggests that, if there were a trend in the making after 2007, revenues are becoming less skewed by moving away from the marquis acts.
Yet many musicians might argue that spending on live music does not happen exclusively at clubs, amphitheaters, or top concert venues. The data there may be readily available, but it does not account for the entire story. Good historical writing, for instance, depends on more than the public record of government papers and other official documents. We need to have a sense of the lives of ordinary people too.
In particular, there is a significant flow of monies from musical performances in more private settings. Determining that value is critical for performing musicians. Also, the trade needs to do a better job of numerically establishing its worth in the marketplace. In this regard, it is probably best to start by looking at money spent on music at private functions (wedding receptions, corporate events, etc.) The example will illustrate how the live music trade is seriously underestimated in the US.
As shown earlier, Pollstar gave the value of live music in North America during 2007 as $3.9 billion. But if private functions mattered, what would the new number be? The point will be made just from US wedding data. Various estimate exist about the annual spending on weddings in the US. They can range from $60 to $90 billion, without counting honeymoons. The Bridal Association of America, one of the more conservative record keepers, estimates 2.3 million weddings for 2007 generating a market value of $66 billion. The average wedding would have thus cost nearly $29,000.(6) The median value of a wedding must be closer to $20,000, because the more expensive weddings likely skew the mean.(7) Using $20,000 as the typical cost, and estimating a five percent disbursement for music, as is common practice in the wedding trade, each wedding in the US would pay about $1,000 dollars for music making.(8) This number also makes sense to professional musicians.(9)
The total revenue collected for music played in the US at weddings in 2007 is therefore likely to be $2.3 billion, a staggering figure that adds much meat to Pollstar’s original number. Halving the estimate to err on the side of caution still leads to a formidable conclusion. The value of live music is being discounted in current statistics by nearly twenty-five cents to the dollar.
*The piece was taken from a longer article by the same author. See Peter Alhadeff, “US Music Industry Statistics: A Reappraisal”, MEIEA Journal, Fall 2008 (forthcoming). It was written in June 2008.
(1) Valentina Nucete, “Crossroads: Music and Commerce in the ‘00s”, Billboard & Nielsen SoundScan White Paper, March 2008, 1-10, 14,The source of Nucete’s data is Billboard’s Boxscore.
(2) Author’s own notes of Sean Mortiari’s Keynote Address, Billboard’s Music and Money Symposium, St. Regis Hotel, New York, March 6, 2008.
(3) Nucete, op.cit., 14.
(4) Author’s own notes, Billboard’s Music and Money Symposium, loc.cit.
(5) Pollstar, Year End Special Edition 2007, January 2008, 14.
(6) Data is from The Bridal Association of America, “Wedding Report: Wedding Statistics, Market Research, Trends and News for the Wedding Professional”, 2006. The BAA’s numbers, and its projections for 2007, were cross-referenced with other data;
see www.bridalassociationofamerica.com/Wedding_Statistics. 
(7) The data is skewed to the left, so the most representative average is the median, which in such cases is lower than the mean. I posit a value of $20,000 as reasonable.
(8) Websites that advertise music for weddings suggest as much. For example, a state-wide average spending on wedding music in North Carolina (no date given) is given at $1,100 when the national wedding budget was $22,000–exactly 5%; see www.ronksmith.com/stats.htm. For the National Association of Wedding Ministers the figure is 5.2% (no date given); see www.aweddingministers.com/wedding/statistics.htm.
BAA data for 2006 show an average spending on music of $953 out of a typical $27,000 wedding–a lower 3.5%; see www.bridalassociationofamerica.com/Wedding_Statistics. (9) At the Berklee College of Music in Boston, MA

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