Live music stages a comeback but new risks challenge the industry
Organizers have a number of emerging perils to watch for as the concert and festival goers return in droves.
The COVID-19 lockdowns of 2020 and subsequent restrictions on gatherings had a devastating effect on the creative economy. Losses to the live events industry totaled more than $30 billion, according to music industry trade publication “Pollstar,” including ancillary revenues such as merchandise, sponsorship and hospitality. Even after certain restrictions were eased in 2021, the pandemic left its mark on human behavior, with 84% of people saying they were spending more time on online entertainment at home than on in-person entertainment outside it.
But this year, the industry is singing a very different tune. Music lovers have returned to the thrill of the collective experience with seemingly more passion than before. Some smaller festivals have struggled because of rising costs, with the cost-of-living crisis hitting their ticket sales, but we’re seeing good demand from the spectator side, with most of the big-name festivals sold out and a lot of tours back on — although there have been some high-profile no-shows and postponements because of COVID. Looking further ahead, no one knows yet what COVID-related restrictions might be needed in the autumn and winter, but for the moment there’s real hunger from fans for live events, and larger promoters are recording record numbers.
New circumstances, new risks
Such a positive summer season is grounds for optimism, but the risk landscape of live entertainment is changing in line with world events, and organizers have a number of headwinds and emerging perils to be aware of.
High demand is something to celebrate, but it could lead to pressure on popular venues. The industry is innovative, and in recent years, we’ve seen successful events staged in exciting repurposed spaces such as the old Tempelhof Airport in Berlin, or The Vaults, a maze of tunnels beneath Waterloo Station in London. A lot of new festivals are popping up. Organizers of established festivals like Coachella in the U.S., Tomorrowland in Belgium, or Rock am Ring in Germany will be relatively familiar with their venues’ risks, but any new and untested venues require different risk assessments.
As with many other industries, the entertainment sector is facing staffing challenges. Almost 70% of companies surveyed at the end of 2021 reported a skills shortage, according to the U.K.’s Professional Light And Sound Organization (PLASA), with onsite workers such as engineers, technicians and riggers the most cited.
Staff shortages can become a particularly acute problem if it’s a lack of security personnel. In some cases, it could mean the authorities won’t allow an event to go ahead. In terms of other safety-critical roles, organizers need to ensure they run proper vetting of suppliers and contractors to allow for the professional execution of the event.
As well as shortages of staff, a scarcity of resources could potentially be a problem for the sector. If more shows are staged, and you have productions in parallel, there will be a higher demand on touring equipment, which is often hired from rental houses with limited resources. It requires thorough planning and ideally a backup plan for sourcing equipment.
The same goes for repairs and spare parts. The global semiconductor shortage has eased for the moment. Still, if other component shortages occur or restrictions are imposed on the movement of cargos in and out of ports because of COVID or the war in Ukraine, organizers will need to know what the trigger is in their insurance for delay in start-up. They might need to build in longer planning times and more contingencies within that.
Ending on a high note
Despite facing some undeniable macro challenges, it looks like the live music sector could be poised for the “roaring era” of concerts and other live events that Michael Rapino, CEO of the global entertainment company Live Nation, foresaw a year ago for 2022 and 2023. On August 4, his predictions seemed to be borne out in the company’s second quarter results — the company had already sold 100mn concert tickets for 2022, exceeding the full count for 2019, with concert bookings up over 30% for all venue types.
We can only be positive about the way ahead, mindful of the risks and constraints we face. I’m confident the entertainment live events sector will continue to flourish in the same way it has this summer. I believe its resourcefulness, creativity and energy will drive it forward to a bright future.
Michael Furtschegger is the global head of entertainment at Allianz Global Corporate & Specialty (AGCS), based in Munich. The AGCS entertainment line of business provides specialized insurance solutions for film productions as well as live events in sports, music and culture.
The opinions expressed here are the author’s own.
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