Live event ticket vendor and concert promoter Live Nation recently had a memo publicized by Rolling Stone, which outlines their plans in the wake of the COVID-19 pandemic. This memo was intended for the company’s talent partners and described the pandemic as a “force majeure,” while outlining plans increase penalties for artists while reducing guarantees for shows.
The largest cut will be toward artist’s guarantees before an event, which will reduce the payment for artist’s fees by about 20 percent across the board. This is included alongside other penalties, if an artist cancel in a breach of agreement, they are required to pay double their artist’s fees. If an event is cancelled due to poor ticket sales, the artists only receives 25 percent of that fee.
Other stipulations included artists getting a 10 percent deposit a month before the festival, if they have fulfilled marketing requirements and agreement terms. The rest of their payments will be made after the festival. This agreement also requires artists to market the festival on their social media platforms, while also requiring that they allow their performance to be filmed by the festival for use in a live television broadcast and various forms of internet and satellite radio broadcasts.
Artists will also only receive 70 percent of merchandise sales at music festivals, while the purchaser will keep the other 30 percent. Accommodations and airfare are also the responsibility of the artists. There is also a strict radius clause in effect, while the “artist is required to maintain its own cancellation insurance as the promoter is not responsible for the artist fee in the event of a cancellation of the festival due to weather or a force majeure.”
These stipulations also prevent artists from receiving their fees in the event of a “force majeure” cancellation like COVID-19. Artists are also expected to pay back any money paid if their event is cancelled by orders of the venue or any governmental entity.
Live Nation has hit difficult financial times due to the COVID-19 pandemic, with its stock dropping by 50 percent in the event’s wake. The company was forced to cancel all tours this year and recently had $500 million of its stock purchased by Saudi Arabia, who are trying to boost its tourism industry, in spite of its controversial human rights record. The company has enacted various measures to raise funds such as considering drive-in concerts and selling 800 million in bonds for “general corporate purposes.”
Prior to the pandemic Live Nation also attracted some attention due to statements made by the company’s CEO Joe Berchtold who said “the vast majority of shows are very reasonably priced for fans,” despite ticket prices averaging at about $96.17 in 2019. The company was also forced to settle a series of anti-trust lawsuits, named in a class action lawsuit for price inflating tactics and fined $3.4 million for misleading online pricing. Live Nation was also alleged to have had Metallica and potentially other artists, allegedly place their retail tickets directly on StubHub.
Read the full memo below:
Live Nation Memo to Talent Agencies
The global pandemic has changed the world in recent months and with it the dynamics of the music industry. We are in unprecedented times and must adequately account for the shift in market demand, the exponential rise of certain costs and the overall increase of uncertainty that materially affects our mission. In order for us to move forward, we must make certain changes to our agreements with the artists. The principle changes for 2021 are outlined below.
Artist Guarantees: Artist guarantees will be adjusted downward 20% from 2020 levels.
Ticket Prices: Ticket prices are set by the promoter, at the promoter’s sole discretion, and are subject to change.
Payment Terms: Artists will receive a deposit of 10% one month before the festival, contingent on an executed agreement and fulfillment of marketing responsibilities. The balance, minus standard deductions for taxes and production costs, will be paid after the performance.
Minimum Marketing Requirements: All artists will be required to assist in marketing of the festival through minimum social media posting requirements outlined in artist offer.
Streaming requirements: All artists will be required to allow their performance to be filmed by the festival for use in a live television broadcast, a live webcast, on-demand streaming, and/or live satellite radio broadcast.
Billing: All decisions regarding “festival billing” are at the sole discretion of the promoter.
Merchandise: Purchaser will retain 30 % of Artist merchandise sales and send 70% to the artist within two weeks following the Festival.
Airfare and Accommodations: These expenses will be the responsibility of the artist.
Sponsorship: The promoter controls all sponsorship at the festival without any restrictions, and artists may not promote brands onstage or in its productions.
Radius Clause. Violation of a radius clause without the festival’s prior authorization in writing will, at the festival’s sole discretion, result in either a reduction of the artist fee or the removal of the artist from the event, with any pre-event deposits returned to the festival immediately.
Insurance: The artist is required to maintain its own cancellation insurance as the promoter is not responsible for the artist fee in the event of a cancellation of the festival due to weather or a force majeure.
Cancellation by Artist: If an artist cancels its performance in breach of the agreement, the artist will pay the promoter two times the artist’s fee.
Cancellation Due to Poor Sales. If a show is cancelled due to poor ticket sales, the artist will receive 25% of the guarantee.
Force Majeure: If the artist’s performance is canceled due to an event of force majeure – including a pandemic similar to Covid-19 – the promoter will not pay the artist its fee. The artist is responsible for obtaining any cancellation insurance for its performance.
Inability to Use Full Capacity of the Venue: If the promoter – either because of orders of the venue or any governmental entity – is not permitted to use the full capacity of the venue, then the promoter may terminate the agreement, and artist will refund any money previously paid.
We are fully aware of the significance of these changes, and we did not make these changes without serious consideration. We appreciate you – and all artists – understanding the need for us to make these changes in order to allow the festival business to continue not only for the artists and the producers, but also for the fans.