The Concert and Event Business

12

Consumers may be changing their habits to listening to music streaming services instead of buying or even stealing the recordings they love. But nothing can replace the energy, sparks, and higher level of emotional connection between the acts and fans at a live performance. It’s still the emotion business based on a creative system of writers, musicians, performing artists, and others. The business systems are based on the promoters’ money, productions, publicity, distribution, sales, and marketing of events instead of albums for sale. The established industry may be changing and evolving, yet the consumers’ desire to be personally entertained remains a growing profitable business. For new acts, this is the best time in many years to become a part of the industry and it’s a chance to connect creatively with your own generation and to build a fan base. For the aged superstars, it’s a great way to make millions in a couple of hours of live performance.

Let’s take a quick review of how we got here, from the writer who creates the copyrightable work to making money from the corresponding entertainment products and services.

The first finger is in the air, as someone has created something in the form of a legal copyrightable work others may use to create a wow recording, movie, book, computer game, or whatever. Notice that we do not know yet its true value in financial terms, yet because we created it, we may assume it’s priceless, when in reality it may not be worth a cup of cold coffee. The next step is to pitch it to the established entertainment industry to see if any of the executives want to use it in the form of a hit recording, movie, book, and so forth.

Table 12.1 The Creative/Administrative Business Process. The traditional business model for creativity illustrates how a creative “work of art” is formed, owned and authored by the person, persons or company who make it.

The Creative Circle: Writers, authors, sciptwriters, game creators, photographers, and many others create copyrightable works of art	Creators have ownership and authorship, plus six exclusive rights	Note: If anyone wants to use the creative works then they may buy the copyright or license its use in a book, film, recording, computer game, or stage play
The Representative Circle: Businesses that act as “agents” to pitch the creative works to artists and production companies that want to use the works in their entertainment products	Music publishers Literary agents Talent agents Booking agents	Deals include selling of the copyright for a percentage of the revenues generated for licensing opportunities
Production Circle: Companies that license creative works to be turned into entertainment products	Record labels Film production studios Book publishers Theater/stage Computer game manufacturers	Mechanical License: Direct or The Harry Fox Agency Sync License: Direct or The Harry Fox Agency on small projects Print License: Direct for song books, etc. Promotion: Providing a sample Master License (use of a recording) in a visual presentation

Raise the second finger on your right hand up in the air. The production company found a wow story and song, budgeted the product, hired the production teams, and made the entertainment products, including a major motion picture, stage play, and album from the original copyrighted creative work. However, there’s a little problem: nobody knows that the wow movie, play, or album even exists. Sticking it up on the Internet isn’t a solution as even if the buzz about it starts, consumers will download or watch it free, and we just lost millions of dollars. By the way, if this is a Disney project, there’d also be a kids’ computer game for sale, cartoon versions, and the list goes on. It’s time for the branding, promotion, publicity, and distribution side of the business to kick in.

Most executives are financially conservative, as they know that committing $1 million to $100 million can determine the future of the company and their careers.

Table 12.2 The Traditional Production Business Process. Once the licenses for the original copyrighted “creative works” such as a book manuscript, song, stage play, etc., are obtained it’s time to make The Sound of Music as a play and major motion picture, and the sound track as a major album release. Let’s the cash machine collections begin!

Production Circle: After entertainment companies have obtained the licensed rights to use the creative work in their form of business, the companies start the production process.	Determine cost of production.	Analyze the total cost of production including talent, union workers, facilities, and wages and benefits.
	Determine potential market and gross income.	Analyze the potential size of the market to determine how many “units” may be sold, or services (live shows) might be performed. Determine the potential value of the products and services. Find the break-even point by subtracting the total cost per unit or show from the potential gross.
Executive Decision: Decide if the risk of spending the money is worth the opportunity of financial gain. If yes, then “green-light” the project.	Hire actors, directors, producers to supervise production. Sign recording artists for musical recordings. Hire skilled workers to create the entertainment products. Note: Many professional workers (at this level) are represented by unions, such as the AFM, SAG-AFTRA, and Equity.	Create the product or show: • Distribution of hard platforms to brick and mortars. • Provide digital copies to servers such as iTunes. • Provide streaming and media with products.

The Magic in the Message

If you’re starting to see how creative individuals and companies use innovation and technology to monetize entertainment products, move the third finger on your right hand up in the air. It is joining the other two fingers you raised in the first part of this chapter. Our products have been licensed and are ready for distribution, for sale, and for use in other media. How are the production companies (who spent millions on making, distributing, and marketing the products) going to generate money? And, following the chain of events, how are the original copyright holders (let’s say a songwriter) who created it in the first place and the production company that licensed and paid for the creation of the entertainment product (let’s say the labels) going to make any money? In the old days it was simple: sell albums if you were a label, and sell screenings at local theaters, DVDs, or licensed uses by the networks if you were a movie studio. Now, as you know, things are much more difficult due to the innovations of technology, the Internet, and violation of copyrights. Now, how are the labels (and soon the film companies) going to make money? The answer is again simple: any way they can! Entertainment products are just forms of communication that consumers find magical. Of course, if they can attain them for free, most will download everything possible. However, try this as an example for one week. Turn off all devices, don’t read any books, newspaper, or printed products, and don’t watch any TV or listen to any radio stations. No music, social media, live shows, sporting events, Facebook, Spotify, zip, zero. Now, think about how much we value entertainment products!

Table 12.3 The Traditional Business, Promotion, Publishing and Distribution Process. Executives have to make business decisions cold about creative productions based on financial projections often determined by accountants and lawyers. The entire world is the market and the question is what’s it going to cost and how much money can we make. Most executives are financially conservative, as they know that committing $1 million to $100 million can determine the future of the company and their careers.

The second part of the Production Circle is giving the public an opportunity to discover the new released entertainment products.	Promotion	Radio play and advertisements. Trade magazines and popular press advertisements. Social media (paid ads placement). Music videos, such as YouTube.
Executive Decision: Deciding on the image of the product or act is important. Keep it simple in order for consumers to understand the product as an emotion they experience. Tie the image to branding to connect with manufactured products.	Publicity	The “backstory” of the act, book, play, computer game, stage play tied to the image—such as: TV and radio interviews. Articles placed in the trades, popular press, traditional and social media.
	Branding	The process of making the lifestyle of the product or act enticing to the consumers by connecting it or them to significant events, lifestyles, and other products and personalities.
	Distribution	Placing the product for sale and use by media such as streaming is increasingly important, as the licenses fees provide new revenue streams to the labels and film production companies.

The Practical Solution—360 Revenue Streams

If the situation remains the same in the future as it has in the past, the investors of highly professional products will find another way to make a profit or it all will dry up and blow away. Maybe Congress will put some teeth back into copyright laws, but until they do, more revenue will have to be generated from streaming, concert tours, and live events. To be successful, the film companies, labels, computer game companies, and others are morphing their business models toward increasing their revenues through branding and a higher level of emotional lifestyle connection with the fans. Thus, on the production side of the music industry, computers are decreasing the need for audio engineers and, in some cases, musicians. Recording studio sessions are being reduced, and after the basic tracks many albums (and films) are finished using computers to generate vocalists, sounds, musical parts, mixes, and tune quality. If the act hits the excitement nerves in the consumer base (through wow products, promotion, and publicity), then larger revenues are generated out of merchandise, corporate ownerships, branding, and ticket sales. That piece of the pie was solely the artist, but in the 360 deals, the labels receive a percentage of the profits (based off gross), in order for them to recoup and profit on their investments. The film industry is headed in the same direction, book publishing companies are struggling, and who knows what may happen to the rest of the gang. We’ve got three fingers in the air, but now it’s more difficult to raise the other two, as it’s harder to make money.

Associated Industries

Concerts and special events provide record labels, promoters, artist representation, media, and venues with another way to profit from the fans’ excitement about specific acts. It’s the emotional frosting on the cake for the consumers and an opportunity for the acts to grow their reputation, fan base, and bank accounts. It’s survival for the major labels, bands, and corresponding road crews, promoters, IATSE production crews, and others. However, the concert and event business is really a separate industry with its own set of entrepreneurial executives and rules. Concert promoters risk their own money on the public’s interest to attend a staged event (a concert) based on an opportunity to make a lot of money quickly. Booking agents represent the various acts. Their job is to call on the promoters to book the acts into various tours and venues. Once again, it’s an industry with a golden thread connecting the many different types of professionally skilled workers, executives, creative artists, and government agencies with the fans. And if the fans dig your show, songs, personality, image, brand, and sound, there is an amazing amount of money to be made. Let’s party and in the process have a great time making some serious money.

Statistics

The worldwide event business grosses about $25 billion a year, with a projected annual growth of 4.5%. It employs over 219,000 people and consists of around 65,000 clubs, venues, bands, and other supportive businesses.¹ The U.S. market in 2014 grossed $6.2 billion. According to Pollstar, the leading trade magazine for the concert business, that’s an increase over the past few years, primarily due to the increase in festivals. However, in January 2015 Pollstar projected that the increase will not make up the differences in financial losses paid to the labels and acts due to decreasing CD sales and digital downloads:

Capital-Intensive

The concert and event industry is a serious money business based on just a few hours that usually determine the profits and losses. The fans buy the tickets and show up or they don’t. Still, everyone has to be paid, so the promoters perceive touring as an opportunity and not necessarily a risky business. It’s still similar to gambling in Las Vegas, just with tougher odds if you don’t know what you’re doing. Nightclubs are often a cash business for newer acts, while (at the same time) millions of dollars, euros, and yen are transferred digitally over secure transmission lines from the promoters’ accounts (being held by the booking agents) into the act’s account as soon the superstars hit the stage. Therefore, the amount of capital required on the front end to actually create an event depends on the size of the venue, the number of ticket buyers, the fame or drawing power of the act, their image and brand, the time of year, location, size of the market and fan base, and other possible things (e.g., weather) that can go right or wrong. As you may suspect, touring exemplifies all the elements of monetizing entertainment. Peel back the layers of the show and you will recognize everything we have talked about so far. The level of your success on the concert stage is a summation of your successes and failures in your career as a wow.

Research

Promotion companies and individual promoters do their research before they sign a deal to employ an artist for an event. As an example, they often use the same data and information we’ve talked about in this book, such as the Billboard charts, SoundScan retail and digital download reports, Pollstar box office gross revenue reports, Variety, Buzz Angle, and Nielsen. These companies (for a fee) can provide the city, zip code location of the number of streams, downloads, radio plays, CD sales, graphic, and other psychographic information. This type of research provides the promoters with the names of the cities in which their artists are trending and the ones they should avoid. Based on sales data and social media hits, a promoter can estimate the best possible cities and venues to create events that are correlated to the most popular acts available to book for the potential consumers in those cities. Billboard and Pollstar also provide information on the number of seats available, compared to the number of seats sold plus the concert gross revenues. Pollstar has a free service that allows the promoter to analyze all the venues in a city on a daily basis to determine the market competition. It also shows open dates in each city and venue when promoters want to set up a tour.

Festivals

Festivals are huge in Europe, and local bands and older known bands hit nightclubs and performance halls as part of the younger culture’s nightly activities. Festivals in the United States are popular, offering every type of musical performance, from the Monterey Jazz Festival to the Coachella Valley Music and Arts Festival. In 2014, all festivals like these had earnings of a total $183 million.³ They use their expertise, money, and social and business connections to stage concerts (events) that help generate the positive cash flow opportunities needed by many performing artists and labels (through increased unit sales due to the live appearance of the act). Success is changing the industry, as stated by Pollstar:

The AFM and AFTRA Contracts

The purpose of creating an event is simply to make money, and artists deserve to be paid for their work. How much the act makes depends on their cost of putting on the show compared to how much they are paid by the promoter to perform. In the previous chapter, we accomplished a simple analysis of what it costs for a new act to actually start performing. Local acts may need only a couple of hundred dollars to perform and be happy. Major superstars cost millions of dollars to launch a multicity concert tour. Where does the money to pay all the bills come from? It’s the promoters who risk the money, paying all bills and expenses connected to the event. The American Federation of Musicians (AFM) and SAG-AFTRA use booking agents they license to represent their artists and contacts provided by the union headquarters. Thus, if you’re a union member, you’ll be paid scale and be supported if a promoter tries to skip out on the payments.

How much money do the promoters pay the acts for their performances? It depends on the fame of the act and the act’s ability to draw a large enough audience, buying tickets priced high enough to cover all the bills and provide a profit to the promoter. Another benefit of creating events is the revenues generated by corporate sponsorships, endorsements, and merchandise sales that sometimes boost bank accounts more than ticket sales. The percentages of the merchandise and sponsorship revenue going to the band, venue, or house are negotiated in the contracts between the booking agent, promoter, and general manager of the venue. And because of the 360 deals, a percentage of the gross is also going from the artist’s touring income to the label. While the 360 deal is the model labels have identified as the way to survive, the deal ends up taking more money from the artist’s bottom line. This is an essential cost of doing business as, in the past, all the money from merchandise and touring went to the artist, paid by the promoter. Now, a part of that money has to be returned to the label to cover the loss from album sales.

Tour Date Approvals

Everything is negotiated by the promoter and the venue managers for the place to hold the event with the approval of the headline artist. The artist’s manager must approve bookings (scheduling) of tour dates presented by the booking agent. A deposit or guarantee of 50%–100% of the agreed-upon price for the act is generally required from the promoter to complete the deal. The money is placed into an interest-bearing account. During the concert, the road manager, tour accountant, and promoter tabulate the concert receipts in the back office. The down payment is subtracted from the money owed to the band. Full payment for the band’s/artist’s performance is required at closing. Successful promoters are known by industry insiders and are often hired for entire national tours, regions, or clusters of cities to reduce the band’s risk of working with amateur promoters.

Once promoters determine which acts to book (employ), they match the artists (who are on tour and available) with the venues that have open dates. At the same time, booking agents who represent the artists call regional promoters, corporations, and venture capitalists (who may act as promoters) to generate additional concert dates for their artists. It’s a huge gamble as it’s usually a couple of hours’ event that can be highly profitable or a money drain, depending on crazy things, such as an ice storm, an artist saying something negative that may turn off some fans, sound, lighting, and venue problems, world events, and so forth. It’s easy to see why the concert promotion business is considered a very risky business, given the amount of money that will change hands within a few minutes of the first note being played on stage.

Venues

While many promoters rented venues, the business has shifted in the last few years towards larger promotion companies owning their own properties. Many of the larger venues in major cities are the arenas, concert halls, and football stadiums owned and operated by the local government. Professional industry-related experts usually manage the venues, controlling budgets, events, schedules, and personnel. Most of them never make any money for the city, yet the football games, concerts, and sporting events usually draw large audiences of consumers who spend lots of money for hotels, food, merchandise, and other opportunities. The city receives the rental fees for the venues and then taxes from the money generated by the event and consumer spending.

Profit Margins

Promoters subtract their total projected expenses from their projected gross ticket sales revenues to determine their break-even points and profit margins. Knowing their profit margins helps the promoter become familiar with how many tickets they can sell at various prices. That total becomes the projected gross ticket revenues (income). Then using a bid sheet, promoters determine their projected expenses (total cost of creating the event), subtract the projected expenses (debt) from the projected gross income (revenue), and determine profitability. Profit margins are based on how many seats must be sold to break even or make a profit. Many concerts require 50%–80% of all tickets to be sold to break even financially. Promoters hope the profits will be much greater than 20%, depending on the act booked, promotion, and publicity. However, other types of margins are common depending on what is negotiated on the front end and, of course, the type of deal and the number of tickets sold.

Sponsoring Radio Stations

Labels want their artists touring to promote their latest recordings. Promoters and labels often work together to select a local radio station to sponsor the concert. The promoter receives a break on advertisements and the station is allowed to claim it is sponsoring the concert.

Risk Management

What if it rains or snows? What if there is another concert by another promoter the same week as yours? What if a band member gets sick? What if the artist makes a negative public statement or is caught by the press doing something illegal? The concert may still have to be played and the attendance may suffer, which means the promoter gambled and lost money.

Types of Deals

Concert promotion is a very risky business if you do not understand how the system works, as there are often five types of deals that can be structured. The deals inherently have risks for the artist and the promoter, just as the concert itself does. However, according to Mark Volman, of the super group The Turtles from the 1970s (who is still actively touring), four of the following five types of deals are the basic foundation for all the various scenarios that may be negotiated between the act’s booking agent (approved by the personal manager) and the promoter of the event.

Straight Guarantee

The act receives a guaranteed amount of money regardless of the success or failure of the promoter to generate an audience. The straight guarantee deal provides the promoter with an opportunity to lock in the act at a fixed cost and therefore increase his or her potential profit based on the success of the event.

Guarantee Plus a Percentage of the Net (Gate)

The act receives the guarantee plus a certain percentage of the net after the break-even point (all expenses have been paid). The percentage of the net becomes a negotiation point for the band to receive additional income on a very successful event and increases the negotiation leverage for the promoter to land or sign a more successful act for the event.

Guarantee Versus a Percentage of the Net

The guarantee versus a percentage of the net deal (after all bills have been paid) provides a base of security versus financial risk as the act receives either the fixed guarantee or a percentage of the net, whichever is greater. This type of deal is a mixture of the straight guarantee deal and the guarantee plus a percentage of the net deal and provides a little more financial security to the act. If the event is poorly attended or loses money for the promoter, the act is still paid the guarantee. If the event is very successful then the act is paid an amount that is better than just the guarantee. It also puts additional pressure on the promoter to control the bid sheet expenses and negotiate a correct percentage of the net (profit).

Guarantee Plus a Bonus

The act receives a guaranteed amount of money plus a negotiated amount or bonus based on the number of tickets sold. The bonus is a variable amount that increases as the number of seats sold hit various levels. This type of deal provides more security to the promoter and act as both receive payments based on the success of the event. The percentage of the bonus is determined between the promoter and booking agent based on the fame of the act (which means it may be easy for the promoter to sell more seats) versus giving the act a higher “bonus,” which may reduce the net money paid to the promoter. However, it also reduces the financial risk of putting on the concert or event in the first place due to the act’s ability to quickly draw a large audience.

Self-Promotion Deal

When you’re getting started as an act, most club owners, booking agents, and promoters will not sign you to perform at a show. Nobody knows who you are. There’s no buzz, as was noted in Chapter 11, and the people doing the hiring are not interested in taking those types of financial risks. Self-promotion deals happen at the beginning of careers and sometimes, if you become successful enough, at the end of professional careers. When a new act is unknown, they the act may have to bring a number of fans before the club owners approve their free performance. The owner gives the band a shot in exchange for bringing customers into the club, who will then hopefully buy booze and food. Successful club acts may have to “buy on” to be the opening act for a major artist on a tour—for example, 25 cents per seat for an arena to a dollar a seat for small venues. The purpose is to get the act in front of a new audience and to start building a fan base. If the deal is done fairly, the act should be allowed to sell merchandise to cover the buy-on expenses. Once the act becomes very famous, some will also self-promote. You have to put up all the money for the show, event, or tour, yet if successful, you’ll also make all the profits. A few acts have done this by successfully starting virtual corporations to run the business during the tour.

Virtual Corporations

Virtual corporations are sole-purpose companies set up to run the tour, ticketing, and merchandising. Promoters run the businesses out of their hotel rooms, using multiple phone lines, cell phones, fax machines, and email. These corporations often gross millions of dollars during the tour, and when the tour is finished, the companies are closed and “out of business.” The Rolling Stones, as an example, have been rumored to rent the entire upper floor of a hotel in Toronto, Canada, running their touring concert business while performing in the United States. All business is conducted on the Internet and when the tour is over, the business is shut down. And the exchange rates between the U.S. dollar and the Canadian dollar provide monies for extra travel and profits.

Merchandising

Merchandising is an integral part of the concert industry. Companies such as EMI, Brockum, FMI, Nice Man, Winterland, and Missing Link create a huge revenue stream by providing and selling merchandise for their artist(s). In the newer 360 deals, the labels control and outsource the acts’ merchandise in exchange for profits. The artist doesn’t have to do anything except cash the checks. The artists receive 15%–35% of the gross income from merchandise, while the providing company pays for all the merchandise, shipment, sales personnel, booths, tables, and advertisements. Artists approve the design of the merchandise and receive quarterly checks for their percentage of each piece of stock sold. In addition, the concert venue usually receives part of the total merchandise profits for providing space, tables, and advertisement opportunities to the merchandising company. T-shirts, hats, records, CDs, and other types of merchandise endorsed by the artists are considered merchandise. Soft drinks, food, and candy are common concessions sold by the venue, with all profits remaining with the venue. Concession sales locations and commissions are negotiated by the booking agent and approved by the artist’s manager before the final contracts are signed.

Artist’s Riders

A rider is an additional set of instructions for the promoter regarding specific artist requirements. Riders usually include the size of the stage, lighting, and security and may even include the type of food, drinks, or other necessities the artist wants supplied in the dressing room. Most rehearsals are closed to the public, and in some cases, security will sweep the entire building before the artist’s arrival. Security is very important, and the larger the audience, the harder it is to control the fans, who can get a little out of control. Fans do have the opportunity to buy backstage tickets to rehearsals and that gives a small group a close-up view of not only how the act prepares for the show but also how parts of the road and tour support work. Events like these keep interest in acts very much alive as they continue to tour the world, even including Sir Paul McCartney.

The Green Room and Backstage Passes

The green room is called that because it is traditionally painted green. The artists use the green room to host special guests after the shows. People invited will need a backstage pass that will be marked when the access to the backstage is permitted. Having a green room reception is a way for major artists to thank their fans, including members of their fan clubs, and to thank them for their support. The magicians Penn and Teller use the lobby of the theater they own in Las Vegas as their green room. They greet and thank every fan as he or she leaves the venue.

Tech Riders

The production rider is usually included with the artist rider. It covers the specific technological processes and steps that promoters are required to follow for putting on the show. IATSE crews use the tech or production riders for setting up the stage, lighting, sound, and other show processes. Items include the size and height of the stage, where all the instruments are to be placed, the number of super troopers (spotlights), and even when and where the lights are to be used during the show.

IATSE

The International Alliance of Theatrical Stage Employees, Moving Picture Technicians, Artists, and Allied Crafts is better known by its shorter original name, the International Alliance of Theatrical and Stage Employees, or IATSE, as it’s called in the business. It represents about 122,000 employees, such as audio engineers, lighting technicians, set designers and stage builders, and camera operators, and provides the stagehands for live shows.⁵ A union house is a venue or studio that has signed an agreement with the performance unions (IATSE, SAG-AFTRA, AFM, etc.) to allow only union members to be employed during the creation of various entertainment productions. Most Broadway venues, sports complexes, and movies made in Hollywood are considered union jobs made or performed in union houses or production houses. Exceptions include the production facilities in right-to-work states that often allow for nonunion productions, yet once the entertainment products are made they can’t be sold to a signatory label or movie company unless the differences in wages are paid. According to its website, IATSE’s role is to organize and fairly represent creative workers in the entertainment industry: “The goal is to apply the rules of labor legislation in order for the workers to be recognized as a unit and to compel the employer to negotiate a binding contract governing their terms and conditions of employment.”⁶

Road Crews

The roadies are members of the touring acts who drive the trucks to each venue, load and unload and often setup, operate, and break down the musical instruments, lighting, and sound equipment. The amount and type of work roadies can accomplish depend on: (a) the IATSE union agreements with each venue, (b) the contractual agreements made with the promoter and artist’s manager, and (c) specific items listed in the artist’s rider. Roadies or crew members often double as security and bus drivers, and provide other services to the entire act and crew as managed by the road manager (also called a tour manager). They work very long hours at a time and are often hired on their reputation for hard work, respect for the acts, and passion for putting on the best show possible. The trick is that every venue is different, which means they really need to be able to solve strange lighting and acoustical problems before every show.

Live Nation/Ticketmaster

Entrepreneur Gordon M. Gunn III collaborated with two others who had backgrounds in computer programming and in entertainment marketing, respectively, to create Ticketmaster in the mid-1970s.⁷ It merged with Live Nation in 2010 and now controls almost all tickets sold at over 3,000 U.S. venues, including those of more than 50 professional sports teams, and is the promoter of 22 of the top 25 global touring acts.⁸ The company is divided into four divisions or business models, including concerts, ticketing, sponsorship and advertising, and Artist Nation, a new stage for breaking acts. Its website has truly become a one-stop site for locating tickets, news, and events information. It had more than 1 billion hits in 2014, selling a gross value of $23 billion in tickets.⁹ It produced 22,801 events worldwide in 2014, entertaining 58,578,000 fans and grossing $1.3 billion in cash.¹⁰ It grew its business by offering many of the venues front money (in some cases millions of dollars) for the exclusive right to sell tickets to all the events scheduled at the venues.

Scalping

In some states, it is legal to buy a large number of tickets and then resell them at a higher price to consumers before the show, concert, or sporting event. In other states, you’ll end up in jail! Ticket scalping costs consumers, as fewer tickets are available at the suggested retail list price (as when tickets sell out quickly), leaving the only tickets available from scalpers at a higher price. The process also makes it appear the event is sold out, which is good publicity for the acts and creates a buzz, and yet if you want to go, you’ll have to find a ticket reseller. However, if the event is not in demand, then the promoters benefit as the scalpers may get stuck with the tickets, yet the promoters get paid for empty seats.

AEG Live

AEG Live is just one of the divisions of AEG, a subsidiary of the Anschutz Company, which is really of combination of over 100 major venues in the world. Top locations include the Staples Center in Los Angeles, the O2 World Centers in Hamburg and Berlin, Germany, the Colosseum at Caesar’s Palace in Las Vegas, and many top performance halls and theaters in the United States. It also owns three hockey teams in Europe and the LA Kings in the National Hockey League, and it manages the NBA LA Lakers organization. AEG Live is the live entertainment division providing touring, festival, exhibition, broadcasting, and merchandise for tour support and owns, operates, and books 35 significant venues. It produces the largest festival in the United States (the Coachella Music and Arts Festival), plus a touring roster including Taylor Swift, Bon Jovi, Pink, and Paul McCartney.¹¹

IEBA—New Talent Showcase

Talent buyers and promoters use the International Entertainment Buyers Association (IEBA), National Association of Campus Activities (NACA), and other showcase opportunities to discover, arrange, and set up concert tours. The organization holds annual events bringing buyers of talent (who may also be promoters), managers, and acts together. The IEBA is the top nonprofit organization in the nation providing networking and information gathering conferences and showcases for buyers to view acts and sign them up for tours. Hubert Lang and “Hap” Peebles formed the organization in 1970 as they felt “talent buyers need a voice” in the industry. It has grown to over 1,000 members, with a focus on networking information and live music.¹²

National Association for College Activities (NACA)—College Tours

NACA is a nonprofit organization that sponsors national and regional conferences for college representatives to view and book entertainment tours. According to naca.org,

The Classical “Serious” Music Market

The serious nonprofit music markets of symphony orchestras, opera, Broadway, and dance companies contribute billions annually to the U.S. economy. Many opportunities are available for classically trained, consummate musicians and vocalists. Private and public organizations, churches, universities, public and private grants, donations, businesses, and local volunteer organizations often finance orchestras and various types of choral groups. Many serious music organizations are dependent on these political, social, and music-supporting groups to provide financial support for local musicians. Local symphonies, operas, and so forth are marketed through the mass media by using their public service spots on radio and TV to announce performances and provide stories and photographs to the print media. The Boston Pops has a long history of showcasing popular acts and superstars in their summer and holiday concerts, including Cyndi Lauper. Major symphony orchestras enhance their bottom lines with international touring, which is both extremely expensive and wildly popular and profitable.

Pollstar

Billboard magazine, the most popular weekly entertainment industry publication, covers all aspects of the music industry. Concert promoters, it may surprise you to learn, use Pollstar magazine to make concert business decisions. Promoters use the agency rosters to select and locate the artists they want to book. Venues use the trades to publicize their auditoriums for acts, managers, and promoters. Domestic and international news stories detail the artists’ lifestyles and their successful enterprises. To make business decisions, Pollstar provides a summary of radio charts, stations’ play (by formats), a listing of recent concert revenues (by the average gross), the number of shows per week and per act, a summary of album sales (by artist, title, and label), and a listing of touring acts’ scheduled concerts.

Award Shows

There’s nothing better than hearing your name called as they open the envelope for the Grammy, Oscar, Tony, Emmy, ACM, Country Music, Golden Globe, or any other type of award. It really means you’ve hit the jackpot of success in your niche of the industry, and it also means money! Winning a prestigious award increases your opportunity of going on tour and usually increases profits from sales of your albums, movies, books, tour tickets, and merchandise. Movie stars, no matter what level of talent they possess, can command more money for their next film after winning a major award. Voting for some of the awards is by members only. Others are by consumers, who phone or email their votes into a central location. The best awards that include songs, music, or some form of music production are the following.

The Grammys

The Grammys are presented by the National Academy of Recording Arts and Sciences (NARAS). The Grammys are the ultimate award for excellence in the recording arts. The founding nonprofit organization is located in Los Angeles, with chapter offices in Atlanta, Chicago, Florida (Miami Beach–area office), LA, Memphis, Nashville, New York, the Pacific Northwest (Seattle-area office), Philadelphia, San Francisco, Texas (Austin-area office), and Washington, DC. Voting members include singers, musicians, producers, songwriters, engineers, managers, and business professionals who work at the highest level in the industry. Associate and student members are connected with the business and creative industry but not at the same level as voting members.¹⁴

The Emmys

The Emmys are the ultimate award in the television industry, presented by the National Academy of Television Arts and Sciences (NATAS) and its sister organization the Academy of Television Arts & Sciences (ATAS). Emmys and Global Media Awards are presented for excellence in news, documentary, sports, daytime programming, creative and digital entertainment, public and community service, technology, engineering, business, and primetime programs.¹⁵

The Oscars

The Academy of Motion Picture Arts and Sciences, specializing in the movie and film industry, presents the Oscars. They’re the definitive award for filmmakers, producers, actors, scriptwriters, editors, songwriters, musicians, technical operators of cameras, lights, audio, and effects, and, of course, directors. Awards are also provided by the Academy to prestigious contributors in the creative arts and business through the Governors, Sci-Tech, and Student Academy Awards, and the Nicholl Fellowship in Screenwriting.¹⁶

Bid Sheets

Some agencies, such as CAA, require the promoter to fill out a bid sheet online before they submit their request to the agency. According to the CAA and others, items and cost factors on a bid sheet often include the information shown in Table 12.4.

If you’ve reviewed the first parts of the bid sheet, raise your fourth finger up in the air. Once you get all five up there, you’ve learned your stuff and you can “high-five” those around you.

The actual bid sheet helps the promoter project the total cost of the putting on the show (talent, venue, advertisement, insurance, bond, IATSE crew, riders expenses, etc.), and then the information gathered helps the promoter and booking agent project a realistic deal for both based on projected expenses and revenue. Everything is negotiable, yet instead of trying to score a huge profit by shafting the other guy, wise booking agents and promoters will attempt to establish long-term relationships that will provide future profitable events and opportunities.

Picking the Headliner

The projected ticket sales part of the bid sheet is the responsibility of the promoter. Smart promoters research the act using BDS for radio airplay, SoundScan for actual unit sales in their specific markets, BigChampagne for legal and P2P downloads (a sign of how popular the act might be), Pollstar for tour information, and other mass media and new media sources. Then they scale the house (ticket prices for various sections of venue seating) based on their perception of how hot the act is (emotional connection of the fans to the artist).

Table 12.4 Bid Sheet General Information. Where the act performs needs to “fit” the image and perceived “status” of the act. Also important are security, sound and light quality, dates, the reputation of the venue management, and other performances in (by the same act) nearby venues, that are or may be booked in the near future.

Name of the Artists (you want to hire)
Agent (who represents the act)
Date of Show Beginning & Ending Time of Performance Public or Private Show Billing	1. 2. 3. Private [] Public [] Other [] 4. Headliner [] Other []
Note: The General Information is the raw information required by the booking agent to determine the basic information of dates, times, and acts the promoter is seeking to hire.
Promoter (company buying services of talent)
Promoter/Company	Website Address Phone Number Email Address
Signatory (person signing contract):	Print Name:
Note: Anyone can “claim” to be a promoter. Thus, the promoter part of the Bid Sheet provides information to the booking agent and manager to help them determine the financial solvency, history, key people, and general information about the company before they even consider an offer.
Venue (place where the concert is to be staged)
Name of Venue	Website Address Phone Number Email Address
Contact Name (manager of venue & events)	Print Name:

Table 12.5 Production Company Bid Sheet. Production companies are often hired to “put on the show” even if the venue is an IATSE crew for load-in and load-out, sound, and lighting. The production also needs to fit the image and perceived status of the act. Security, sound and light quality, and production company reputation, personnel, and management are important. Managers prefer to work with productions companies that have provided excellent show productions in the past with their acts.

Production Company (production of show)
Name of Production Company	Website Address Phone Number Email Address
Contact Name (manager of production)	Print Name:

Scaling the House

Scaling the house is the process of determining the ticket prices for various seats (in a variety of locations) in the arena or venue. Festivals often bypass the process by simply charging one ticket price for the entire festival, which may include many acts over a period of days or weeks. When there is assigned seating, fans will pay more money the closer they are to the acts or stage. Once the promoters have estimated the total projected cost of putting on the show by using the bid sheet, then they have to determine how much money they can make by estimating how much consumers will pay for tickets. The hotter the act, the higher the ticket prices!

A simple formula is to divide the total cost of the show by 50% of the seats. The idea is that by selling half of the venue seating the promoter should financially break even. Those ticket prices become the average ticket price for seats in the middle of the venue. Then the promoter will sell the back of the house in either one or two levels of cheaper tickets, depending on the size of the venue and the total number of seats available. As an example, the promoter may reduce seat ticket prices behind the middle of the average seats by 25% and then reduce the really distant or “bad” seats by 35%–50% off the average ticket price. To determine the “best seat” ticket prices, promoters simply add the average, poor, and bad ticket prices together to determine a premium ticket price. Sometimes super premium ticket prices are offered on first and second row seats or standing room areas next to the stage. Of course, this is a simple method, and in reality, actual ticket pricing may be more complex depending on the act, booking agent, venue, sponsorship contractual obligations, and other variables. Also notice that we’ve predicted 50% of the profits going to city, state, and national taxes. However, a few hours of work and a one-night score of $67,000+. My kind of business! If you perceive how this works, put your fifth finger up in the air and think about your future in the industry!

Table 12.6 Bid Sheet Projected Expenses (Cost of Show). What does it really cost to stage an event or concert? The bid sheet (Table 12.6) divides the cost into four different steps for staging an event: (a) preshow expenses, (b) show expenses (for live show), (c) production expenses, and (d) postshow expenses. The promoter will also be required to hire union workers for electricity and city officials (fire marshal and police), have a city and state business license, insurance (in case of fire or other problems), a personal bond (in case of lawsuits), and budget room for city, state, and federal taxes.

Preshow Expenses	Show Expenses		Production Expenses	Postshow Expenses
Advertising $_____________	Major Artist $_____________		Piano Rental $____________	Stage Manager $_____________
Sponsoring Station (Ads & Comp Tickets) $_____________	Opening Act $_____________		Piano Tuner $_____________	Rider $_____________
IATSE Crew Load In $_____________	Security [] Police [] T-shirt [] Private $_____________		Catering $_____________	IATSE Crew Load Out $_____________
Ticketmaster $_____________	Ticket Takers (show) $___________		Chair Rental $____________	Clean-Up $_____________
Ticket Printing $_____________	Ushers (show) $_____________		Electrician & Power $_____________	Credit Card Fees $_____________
Ticket Sellers $_____________	Box Office $_____________		Riggers $_____________	Housing (Acts) $_____________
Promoter Business Legal-Administration $ ________________	Dressing Room $_____________		Forklift Operator $_____________	Limo: Other: $_____________
Damage Deposit $_____________	Medical (on standby) $_____________		Equipment Rental $_____________	Transportation $_____________
Insurance $_____________	IATSE Crew Operation of Super Troopers & Audio $_____________		Barricade Rental $_____________	Personal Bond $_____________
Licenses & Permits (individual costs per license) ASCAP/BMI/SESAC $ ________________ City $________ State $________	Fireman (as required by codes) $_____________		Rental of Super Troopers & Lighting $_____________	Taxes: Federal: State: Local: $_____________
Total $	Total $		Total $	Total $
Projected Expenses Preshow $ __________ Show $ __________ Production $ __________ Postshow $ __________ Total Cost $ __________		Total Projected Expenses $

Table 12.7 Projected Revenue from Ticket Sales. Promoters take the cost of doing business (found in the third step of their process) and then try to figure out how much money they can generate with ticket sales. Different types of tickets are offered at different prices. Often the closer to the stage, the more expensive, and the back of the house seats (way up high) are much less expensive. Yet, it all depends on the drawing power of the main artist, which is determined as an emotional value to consumers.

Type of Ticket # 1	Type of Ticket # 2		Type of Ticket # 3		Type of Ticket # 4
% of Venue ______	% of Venue ______		% of Venue ______		% of Venue ______
Advanced [] Premium [] Group [] Day of Show [] Student Discount [] Comp (Free) [] Other [] Number of Seats ________________ Ticket Price $_______________ 100% gross $ _______ 80% gross $ _______ 50% gross $ _______	Advanced [] Premium [] Group [] Day of Show [] Student Discount [] Comp (Free) [] Other [] Number of Seats ________________ Ticket Price $_______________ 100% gross $ _______ 80% gross $ _______ 50% gross $ _______		Advanced [] Premium [] Group [] Day of Show [] Student Discount [] Comp (Free) [] Other [] Number of Seats ________________ Ticket Price $_______________ 100% gross $ _______ 80% gross $ _______ 50% gross $ _______		Advanced [] Premium [] Group [] Day of Show [] Student Discount [] Comp (Free) [] Other [] Number of Seats ________________ Ticket Price $_______________ 100% gross $ _______ 80% gross $ _______ 50% gross $ _______
Projected Revenue From Ticket Sales
Revenue Tickets 100% Sold		Revenue Tickets 80% Sold		Revenue Tickets 50% Sold
Ticket # 1 $__________ Ticket # 2 $__________ Ticket # 3 $__________ Ticket # 4 $__________ Gross $ _____________		Ticket # 1 $__________ Ticket # 2 $__________ Ticket # 3 $__________ Ticket # 4 $__________ Gross $ _____________		Ticket # 1 $__________ Ticket # 2 $__________ Ticket # 3 $__________ Ticket # 4 $__________ Gross $ _____________
Projected Gross Ticket Sales @ 100%		Total Gross (100%)$
Projected Gross Ticket Sales @ 80%		Total Gross (80%)$
Projected Gross Ticket Sales @ 50%		Total Gross (50%)$

Additional Potential Revenue

Promoters usually negotiate additional revenue sources (money) from food commissions (hot dogs, soft drinks, etc.), the rights and processes for fulfillment companies to sell merchandise, and the act’s requirement to hang branding advertisements from corporate sponsorship deals (posters and signs behind the performing act or in the venues). Promoters negotiate between the act, venue, and themselves for some portion of the additional revenue. Often the food revenue goes to the venue and most or all of the merchandise revenue goes to the act. However, a powerful promoter can negotiate a better deal, if he or she is establishing a tour instead of single date, and yet it still depends on the power of the act, booking agent, and manager.

Profit and Loss Statement

The profit and loss part of the bid sheet shows the promoter the projected profits (or losses) based on the total revenues (from ticket sales and all other sources) minus the total expenses (cost of talent and putting on the event) based on the number of ticket buyers tied to the prices consumers paid at 100% sellout, 80% of venue, and 50%. This is an opportunity as seen through the eyes and gut reaction of the promoters. They have to make an important decision at this point to commit to the event or to stop before it goes any farther. The decision is usually based on the numbers and the experience of the promoter. Great promoters will know how much room they have to play the game, and if the numbers fail to be there, they will either negotiate with the booking agent for a lower cost for the band or pass.

Table 12.9 Bid Sheet Projected Other Revenues (Food Commissions and Merchandise). Many promoters and promotion companies, such as AEG Live and Live Nation, may use the 100%, 80%, and 50% ratios to determine the amounts of additional revenue that may be generated with food and merchandise. As an example, if the amount of ticket sales is only 50% then fewer people show up to buy dogs and t-shirts, so they may apply a higher percentage rate on each unit purchased. The 80% rate may be a lower percentage per unit sold (going to the promoter), but possibly more total revenues generated as more people attend.

Bid Sheet Projected Revenue: Food Commissions and Merchandise
Food Commissions [] Venue receives 100% [] Promoter receives 100% [] Artist receives 100% [] Split	Split Percentages Price (– Cost) _____________ % Promoter ___=___ per Tic % Artist ___=___per Tic % Venue ___=___per Tic			Totals $______ $______ $______	Soft Drinks [] Hard Drinks [] Popcorn [] Candy [], Hot Dogs [] Pizza [] Other []
Merchandise/Other [] Venue receives 100% [] Promoter receives 100% [] Artist receives 100% [] Splits	Split Percentages Price (– Cost) _____________ % Promoter ___= ___per Tic % Artist ___= ___per Tic % Venue ___= ___per Tic			Totals $______ $______ $______	T-shirts [] Posters [] Cloths [] CDs [] Hats [] Other []
Projected Revenue From Other Sources (if any)
Food Commissions (if any)	$ ____________		Added Gross at 100% _____________ Added Gross at 80% _____________ Added Gross at 50% _____________
Merchandise (if any)	$ ____________		Added Gross at 100% _____________ Added Gross at 80% _____________ Added Gross at 50% _____________
Projected Gross From Food Commissions & Merchandise @ 100% of tickets sold		Total Gross (100%) $
Projected Gross From Food Commissions & Merchandise @ 80% of Tickets Sold		Total Gross (80%) $
Projected Gross From Food Commissions & Merchandise @ 50% of Tickets Sold		Total Gross (50%) $

Table 12.10 Event and Concert Projected P&L Statement. If you’ve been following along with the concert promotion process, you’ll probably understand how stressful it can be waiting for the people to show up and buy stuff or face the music with a red face and learn from the experience of the money lost and move on.

Profit & Loss Projections
100% Sold Out Revenue Tickets $__________ Other $__________	Total $__________ (minus) Expenses -$__________	$
80% Sold Out Revenue Tickets $__________ Other $__________	Total $__________ (minus) Expenses -$__________	$
50% Sold Out Revenue Tickets $__________ Other $__________	Total $__________ (minus) Expenses -$__________	$

Table 12.10 shows you the variables in the idea of a successful tour—it is not a given.

If you’ve been following along with the concert promotion process, you’ll probably understand how stressful it can be, waiting for the people to show up and buy stuff or face the music with a red face and learn from the experience of the money lost and move on.

Your Right Hand High in the Air

If you’ve read the book and confidently feel you better understand the industry, then make sure you’ve got your hand and fingers reaching toward the sky. If you’ve got a sincere passion to be a positive, contributing part of this exciting business, take your hand (that’s reaching up in the air) move it behind your head and pat yourself on the back.

Welcome to the time of your life! Blessings, L.