The recent Desert Trip Festival has certainly amped up the debate as to whether the concert touring business will continue to shrink as the titans leave the stage or be replenished with a new crop of big ticket acts. Although it might be fun to set out the positions (which we hear all the time as entertainment management consultants), no one would debate that there is a dearth of acts that will sell out well into the future. In the meantime, major markets are saturated with both venues and promoters vying over the same small pool of artists driving talent costs ever higher, with the increase in ticket prices not necessarily enough to fully mitigate the costs. And, although the big guys can handle it, the margins are razor thin. In fact, many prominent festival brands have been shuttered over the past 24 months from escalating talent costs and a slide in turnstiles as fans finally had their fill of rising entry costs without new, exciting reasons to pay. We are not suggesting that the big players, venues or markets are going to systematically fold, they won’t. The bigger question is what small and mid-size players will do in this quickly shifting paradigm.
Small and mid-markets are also driven by headline talent. However, in order to get into the routing, smaller markets must often pay major market prices (or a disproportional percentage of these prices) which they simply can’t support. Yet, small market operators need headliners to build their venue brands and drive their annual concert schedules. What’s the solution? The goal is to convert these loss leaders into higher margin dates and to diversify by adding non-traditional attractions. Although this issue applies to every venue type, it’s heightened for our live outdoor entertainment consulting clients who are subject to season announcements dependent on headliner eye candy and short schedules with an insufficient number of shows to average out the low performers.
Simple, Modular Strategies
We spend quite a bit of time assessing and adjusting the composition of venues’ event inventory and advising on how to structure schedules that go beyond the same old fare. Of course, it’s great when these venues can attract alternative events such as touring food festivals or the latest jackpot of eGaming touring competitions, but often these events are not routed through their markets. Instead, using some of these same alternative concepts, venues can design events from the ground up capitalizing on their position as one of the major entertainment destinations in the region. In doing so, the key is to be efficient in building modular attractions that can be stand-alone events or added to featured concerts (converting some of the historical loss leaders into higher margin events). The stand-alone model with local or regional music is relatively easy to accomplish. However, folks often think that is where it ends and that they can’t tie these attractions to national touring shows due to potential conflicts with the artist. However, consider the local food festival concept and how few touring artists actually have an attraction of their own tied to their concerts (Zac Brown is one). The fact is that building these attractions around the main event help sell tickets and, often from the artist’s perspective, are no different than selling any other food or beverage since they don’t share in the revenue anyway. At the same time, consider how many of these secondary markets have had an influx of specialty food and craft beverage purveyors over the past decade looking for ways to penetrate their markets. Hosting an event at the venue is all about experiential brand marketing and activation and we have found local companies are willing to come to the table in a big way to make it happen. And the venue builds its own brand as the place to hang with friends whether it’s the must see show of the summer or just having a cool time listening to local players resulting in better and more consistent results. In some cases, these added attractions and events have afforded the operators the ability to secure additional headliners with less concern of them being loss leaders.
These concepts are not entirely new, but what has changed is their level of importance in terms of capacity utilization and annual financial performance. What were once fillers on dark days for a few extra pennies are now viable revenue generators of their own accord and necessary in a world of increasing costs.