In the wake of the financial havoc wreaked on the live-entertainment industry by the coronavirus pandemic, Live Nation plans to make significant changes to its policies regarding concert tours and festivals when touring is expected to resume in 2021, according to a memo circulated to talent agencies. The changes shift much of the financial risk from the promoter to artists and agencies, and as Live Nation is the world’s largest live-entertainment company, the move will impact most major tours and festivals; last month AEG, the world’s second-largest such company, issued a memo enumerating similar changes.
A rep for Live Nation did not immediately respond to Variety’s request for comment; the news was first reported by Rolling Stone and Billboard. However, a source close to the situation noted that most aspects of touring contracts are negotiable and that Live Nation’s memo was a first step in official renegotiations of contracts for post-pandemic events, which inevitably will be substantially different from those in the past.
The main points of the memo note that the company plans to decrease guarantees to artists by 20%; to give artists 25% of the guarantee — rather than the current standard of 100% — if a concert is canceled due to poor ticket sales; and perhaps most significantly, if an artist cancels a performance in breach of the contract, it will pay the promoter double the artist fee. The memo also states several other points, many of which were already existing conditions, including that ticket prices are set at the promoter’s sole discretion; that artists must agree to having their performances recorded for future television, radio or streaming purposes; and that if an 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, and the artist is responsible for obtaining cancellation insurance. In another move reflecting the pandemic and plans for reduced-capacity concerts, the memo states that if the promoter is not allowed to use the full capacity of the venue — “either because of orders of the venue or any governmental entity” — then the promoter can terminate the agreement and artist is responsible for any money previously paid.
The memo follows in full 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.