In our efforts to make available as much music business information as possible for Alabama music artists, Alabama Music Office.com has asked music business professionals from all over the world to share their knowledge and experiences.
Austin, TX (March 30, 2017)—It’s been one of the most dramatic changes in the concert landscape in the past 10 years: the spawning of hundreds of new music festivals worldwide. There are, of course, many reasons for this—the need for musicians to augment shrinking revenues from CD and streaming with live performance fees; the popularity of festivals as a way for fans to see 10–20 bands over 2–3 days; and the benefit to promoters from both the scale and quantity of performances. With—according to SXSW—more than 32 million people attending at least one music festival a year, they have become “a mainstream pastime of our culture.”
This phenomenon was the subject of a special March 17 panel session, The Future of Music Festivals, at the SXSW Music festival and conference.
Behind the festival trend as it played out in recent years in the U.S. is the phenomenon that music concerts are no longer just “concerts.” They are shows with high production values, demanding big ticket prices. Concert ticket prices are up significantly and there are more outdoor events (because most music festivals are outdoor events). Many are major events with massive video technology that goes beyond IMAG to create elaborate visual experiences for all attendees, even in huge outdoor venues. Big production values are the norm. Stages now hold much more equipment, including massive LED screens often 40 feet high or more.
But what is the future of music festivals? Will the rise of niche festivals take away from the bigger festivals? Not likely. Big production-value festivals will continue, but it behooves anyone involved in outdoor concerts and festivals in particular to listen to what’s discussed at SXSW; the conference track is known for shining a light on strong new trends the rest of the country doesn’t immediately see.
As befits SXSW, the discussion prompted attendees to think outside the box. The starting premise for the discussion at the panel was that despite the advancements in technology, sound engineering and digital media, large festivals are perceived by some fans and artists as having “become generic, boasting similar lineups and experiences.”
“So how can we reshape the future of music festivals?” was the question the session explored. The panel assembled some top festival players helping to redefine the music festival experience, looking at cultivating and supporting local music scenes, sourcing unique performances, and creating new economic opportunities for musicians, while fostering new visions for what a music festival can be for fans and artists. With moderator Doug Freeman of the Austin Chronicle moderating, the panel consisted of Jeff Vetting of Vulcan Inc, who is launching the new Upstream festival in Seattle; Robin McNicol, one of the managers of the huge Bonnaroo festival; and Christian Morin, a top festival promoter in Germany.
All of the panelists coalesced around one theme: Big festival lineups are more similar than they used to be. There are a number of reasons for that, but one is that a few big festival promotion companies are buying up others. But even as the festival models morph, there has for the last 5-10 years been a constant that festivals have been ‘propping up” the music economy. In other words: yes, the decline of revenue for artists and promoters from recorded or streamed music has everyone on the road and the festival is the most date- and artist-packed platform there is.
The panel delved into ways that festival business models are evolving to meet new challenges on both the provider and artist side. Jeff Vetting, whose new Seattle-based Upstream festival will debut in May as a multi-venue festival—sees a new role for festivals helping artists “make money after they play, to continue to make money…we want to help the emerging artists, not just have them play our stages.”
Christian Morin echoed all the panelists in reminding that “you can’t finance the festival from just the ticket sales, so you need either public money or corporate sponsors.” That public money he referred to is an EU, or German, phenomenon. Freeman joked that “we don’t know anything about corporate sponsorship…” referring of course to the fact that at SXSW, corporate sponsorship money is everywhere.
“People tolerate the corporate sponsorship much more now,” said Robin McNicol. And Vetting noted that the goal now is to “turn that into a positive experience; the model does not work without it.”
On the technology front, live video streaming was lauded by all the American panelists as a rising trend for festivals. Likewise, all agreed that live video streaming does not cannibalize live attendance. “Video streaming is a sponsorship thing,” said McNicol, “and it does not stop people buying tickets.” Vetting said that he is now putting together streaming deals for the Upstream festival.
In addition to more live streaming of festivals, other tech tools that came under discussion were wayfinding (digital signage) for fans on site, RFID ticketing (to combat counterfeiting), and an increase in apps that can not only tell fans on site who’s playing where and when, but also be set up as digital “tip jars” for the artists.
Last July, songwriter Priscilla Renea, who has co-written hits for Mariah Carey, Fifth Harmony, Madonna and Pitbull -- including his 2013 No. 1 Hot 100 hit "Timber" -- found herself in a tough spot. Recently married, in the midst of remodeling her home and with the constant pressures that come with needing to come up with another hit to keep money coming in, Renea felt trapped behind the scenes, unable to stake her claim as a recording artist in her own right.
"As a songwriter, people in other areas -- A&Rs, managers, executives -- want to keep you at a certain [level] because they need you to keep writing songs for people," said Renea. "They don't want you to try and go and be successful as an artist, because then you don't have time to write songs for their people. It's just constantly running around, making everyone happy, meet the needs of everyone except for yourself -- they feel like they're just a disposable resource, that if they don't cooperate the industry is just gonna move on to the next hot writer."
Around the same time, Renea's mother was contacted by Sound Royalties, a company started by investor Alex Heiche in 2014 which specializes in providing advances on future royalties for songwriters and musicians who often resort to selling parts of their publishing or songwriting rights to earn short-term cash in exchange for long-term profits, thus surrendering financial control of their creative work."We provide advances that aren't based on 100 percent recoupment, so that enables an artist or a songwriter to keep money flowing in, which means they have a higher percentage chance of success rather than being set up for failure and needing to sell," Heiche says. "Secondly, we don't buy copyrights. We only use their music as collateral, because it's non-credit-based, but we don't buy and we don't own."
Now, Sound Royalties is doubling down on their strategy, pledging to pour $100 million in advances into the music industry over the next 24 months, a figure Heiche feels is reasonable after the company self-funded a $10 million pilot program last year helping artists such as Renea navigate uncertain financials while being able to keep their copyrights. In a music industry that is only now recovering monetarily from a 15-year revenue decline, Sound Royalties is one of several companies providing different options for songwriters and artists who have seen lower advances from traditional labels and publishers over the past several years.
Essentially, Sound Royalties works by calculating future royalty earnings for songwriters and fronting a percentage, gradually earning back its investment over an extended years-long period, allowing artists to take a chunk of future earnings right away and continue to earn during the set agreed-upon period. Where banks and other lenders may take a hard line on bad credit or high interest rates, Heiche claims Sound Royalties is artist-friendly, allowing songwriters flexibility in their needs. Generally, he says, artists fall into three tiers: the largest, between $10,000 and $100,000; a smaller number of artists in the $100,000 - $500,000 range; and a smallest pool in the seven figure realm.
"[The goal is] to get where any songwriter or artist knows that they have options available to them without having to sell their music or their rights," Heiche says. "It happens more than you know; either they have no clue they have options available to them and they're struggling, or they know that they can sell."
While there are some downsides to selling copyrights and publishing royalties, that particular option is not always the end of the world for songwriters; selling a portion of royalties can diversify an artist's income, for example, while royalty auction companies such as Royalty Exchange can lead to large windfalls. Likewise, investors dealing in royalty advances are under fewer regulations than traditional banks with less oversight, opening up the possibility of inflated interest rates and other shady practices. Renea, however, hasn't seen Sound Royalties in that light: "Sometimes you feel like people are leaving something out, or a dot isn't connecting -- it wasn't like that with [Sound Royalties].
"It's important for people to understand that this is not about somebody giving you a check so you can go buy a car or whatever," she says. "This is about giving you the room to breathe so that you can create the scenario that you want to operate in. If I'm experiencing these struggles at the level of songs that I'm putting out, how much worse is it for somebody else?"