The rising stars take on the the megastars
Live entertainment has enjoyed many years of sustained revenue growth. But it has been the major acts, the biggest teams, and the blockbuster shows that appear to have enjoyed the bulk of the growth.
The public has lavished its attention and its spending on the biggest brands in live entertainment55. In the United States, the top 1 percent of artists' share of live revenues rose from 26 percent to 56 percent between 1982 and 200356.
Match day revenues for the English Premier League football clubs rose to £41 per attendee in 2006/2007, more than double the levels of a decade before and the average crowd for a home league match at Manchester United was 75,826, making it the best attended club in that season57. Overall revenues for the top 20 European soccer teams rose threefold between the 1996/1997 and 2006/2007 seasons58.
But the combination of falling real income, inflation, rising unemployment and falling consumer confidence may change this dynamic. The public is still likely to want live entertainment, but in many developed countries, may not be able to afford the prices paid in recent years59. As consumers focus on value, the 'premium' paid for the biggest stars, seen in the best locations, may well erode60.
Sponsorship revenues may also dip, with a resultant impact on live entertainment61. In sports, lower revenues for everything from naming rights at stadiums to logos on shirts, may slow the building of new, large venues, and the growth in match-day and commercial revenues.
Lower sponsorship revenue could also affect concerts. With less sponsorship around to bankroll major concert tours, there may be less appetite for larger, riskier, more extravagantly staged tours62.
Falling merchandising revenue may affect the ability of smaller venues to host major acts in 2009. Smaller arenas normally provide a large share of the box office to major artists and aim to make profit from merchandising sales. But if consumers become reluctant to purchase souvenirs as well as tickets, megastars may become less attractive to small venues63.
The best brands in the business may prefer to reduce capacity rather than cut prices64. Multiple dates at a stadium may be reduced to a single night, or else an arena might replace a stadium.
Those not able or willing to pay premium prices may divert their interest in lesser known talent, from theater currently on the fringes, to upcoming bands.
Bottom line
Managers of live stars should be ready to vary their offerings to meet changing demand. Megastars may have to play arenas, not stadiums, to retain their reputations as premium products. The highest paid stars may have to be part of a longer bill, playing longer sets, or offering additional acts, to provide better value for money.
Managers of the best talent should also be willing to try and defy expectations: good product, allied to strong marketing, could convince some consumers to drop everything else but premier live entertainment65.
Record companies should use this opportunity to familiarize audiences with scores of new acts. Labels have tended to focus on big stars in recent years, but in a downturn, creating a deep pool of indie bands may be the new road to riches. However, this strategy may require a different artists and repertoire (A&R) set of skills.
Consumers may now be more willing to attend relayed versions of concerts, transmitted to smaller, cheaper, local venues. The trend towards greater emphasis on 'armchair' sports fans may also continue. And they may also seek out other less expensive live entertainment experiences that provide the same 'bang for the buck'. Live theater, emerging bands and folk music festivals may all benefit.
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