Live Nation Memo Asks Artists To Take 20% Pay Cut, Cover Travel & More In 2021

Live Nation is asking a lot of artists in 2021 as it weathers the Coronavirus financial storm.
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Outside Lands Festival 2019 Crowd

Live Nation sent out a memo to talent agencies that lays out its policies for 2021 and there will be changes. With live music being shut down for the past few months because of Coronavirus and the future looking bleak in the United States and in many markets around the world, there going to be some pretty big changes coming. Independent venues have warned that they were on the verge of collapse without government help. Now Live Nation is issuing their own ultimatums to artists with some pretty remarkable demands that will reflect just how deep the pain the business is feeling.

According to the memo obtained by Rolling Stone, Live Nation will make a lot of changes to the contracts for concerts and festivals in 2021. The big sticker shock will be that they are asking artists to take a 20% pay cut on fees from 2020. This will impact those who are making $1000 per show, but for the big money tours that gross eight figures, this will be massive beyond just the artist. It will likely reduce production and live tour staff could be reduced as a result.

There are other big asks from Live Nation. They are asking that artists give 30% of merchandise sales to venues. Airfare and accommodation will now be covered by the artist, which may mean less private jets for the rich (which is a great thing). However, it could mean less touring for artists internationally. All artists now have to consent to being filmed at shows, which could be a big problem for those who are filming their own documentaries or don’t like being filmed.

If there are any independent venues left, this could be an indication type of demands they may need to make as well. Or it could give them an opportunity to offer artists lower fees, but fewer issues with insurance, merchandise or filming.

Live Nation lost $172 million in the first quarter of 2020 and that number will likely rise by quite a bit in Q2 and even Q3. At the end of the quarter, Live Nation held $3.3 billion in cash and cash equivalents including $842 million in client ticket cash, $817 million in free cash and another $900 million in available credit for $1.7 billion in available liquidity according to Billboard. They have undertaken emergency credit raises and cost cutting of nearly $600 million this year. The company had revenue of $11.5 billion in 2019 and its operating income was up 19% to $325 million in 2019.

See the full letter below.

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.

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