A guide to the live music business

Your Guide to the Live Music Business

If you are a music artist (singer, musician, or DJ) or you are looking to work behind the scenes as a concert promoter, booking agent, or ‘roadie, you will benefit greatly by identifying the live music business’s key players and show booking processes. I teach music business, live sound engineering, and concert tour management to all sorts of students, and I am constantly amazed that people don’t know the ‘key players’ of the live music business and how the industry partners work together to put artists on tour and host open-air festivals. Read on, and I will help you define how the live music business works.

Key players:

The Artist & Artist Manager

The Booking Agent

The Concert Promoter

The Showing Booking Process:

The Contract

The Contract Rider

Tour Budget

Tour Support


Key players:  The Artist & Artist Manager

The key players in the Live Music Business
The key players in the Live Music Business

Everything in the live music business revolves around the artist. ‘Artist’ in this case means the band, singer, DJ, duo, turntablist – any contemporary music artist who will perform live. In the early days of an artist’s career, it is the artist themselves who gets the gigs – finding bars, pubs, clubs, anywhere, willing to book them in for a show. As an artist becomes more successful – and busier- an artist manager will become involved. Also known as the personal manager, the artist manager is central to the artist’s career. The manager’s job is to represent the artist in all business areas and to guide the artist towards the best logistical and financial decisions. This guidance role extends to recordings, publishing, and non-performance promotional activities, but it is the role of the artist manager in shows and touring that is relevant to you here.

Managers handle an artist’s affairs in return for a percentage (called ‘commission’) of the artist’s gross earnings. The commission rate is between 10 and 20 percent of the artist gross earnings. So, if an artist makes $500,000 from recorded music sales (!), a manager on a 20% commission rate would earn $100,000 from those sales (20% of 500,000 = 100,000). Make a note that this example is a for ‘gross commission’ rate – the manager takes her percentage ‘off the top’ before they deduct other costs.

Gross commission vs nett commission

A gross percentage commission rate is not the best deal for live performance income; as an example, say an artist is touring, and the artist’s gross income from all the ticket sales is $40,000 for 10 shows. Let’s also suppose that the costs for the tour – wages, transport, accommodation and other live production costs – are $38,000 (touring is expensive). The profit, therefore, is $2000, and this goes to the artist. If the manager then charges 20% of the gross (for her commission), the tour costs are in fact $46,000 – $38,000 + $8000 managers’ commission. This is not an ideal position for the artist as they are now losing money – $6000 to be exact. Ideally, the manager should charge a nett commission rate – only taking their percentage on whatever is left after they have paid all expenses. Here that would be 20% of $2000 = $400. Not great for the manager, and an incentive for her to reduce costs as much as possible (figure 1).

Figure 1. A diagram showing the effect of gross or nett manager commission on touring income. Commissioning on the nett figure means less money for the manager which is an incentive for the manager to control the cost of playing live.

This is in fact what happens for most artist managers nowadays – they charge a nett commission, and so are keen to reduce touring costs. You may stand in a gig, surrounded by hundreds of ticket payers, and think the artist is making a lot of money. They may be, and they will also have huge costs for each show or tour – wages, transport, accommodation, and other tour production expenses, that eat away the money made from ticket sales. So, as well as finding lots of gigs for the artist, the manager needs to find the money necessary to play live, if not the artist will lose money paying for crew wages, splitter van hire, and so on. One way of funding a tour is to apply for tour support (more on this later).

Managers will have to book shows and negotiate performance fees for their artists themselves in the early days of their client’s careers; after a degree of success (or perhaps signing to a record company), the artist management will work with a booking agent to get live show bookings in place.

The Booking Agent

A talent agent is someone who finds paid engagements (film, TV, radio writing) for creative people. A talent agent who finds gigs, shows and tours for a band or singer, is known as a booking agent; the process of securing a show or tour is known as a ‘booking’–hence the name. The booking agent does not put on shows; they represent the artist to promoters (more on them later) who may want to put on a show featuring that artist and broker the resulting deal. Booking agents have become powerful in the last 20 years because of the increased importance of live performance and the amount of money it generates for an artist. However, an artist cannot simply hire a booking agent – the agent will contact the artist, as and when the artist can earn sufficient money for the agent.

A booking agent makes money by charging her client (the artist) a percentage of that artist’s gross income for the performance. The percentage charged by the booking agent is known as the commission, similar to that of artist management commission. This commission rate is universally set at 10% for contemporary live music – rock, pop, alternative, what have you, and 15% for DJ work. This percentage rate may be a convention and has precedent in US regulation; the US entertainment unions, AFM (American Federation of Musicians), and SAG-AFTRA (the entity formed after the merger of the American Federation of Television and Radio Artists and the Screen Actors Guild) have set talent agency commission at 10% for all talent agents, including booking agents. There is no official regulation in the UK concerning agency commission rates, but 10 % seems to be the norm for ‘traditional’ artists, and this rate recognises the official rates set by the US unions.

The major booking agencies

The Pollstar ‘Booking Agency Directory 2018 Summer Edition‘ lists 640 worldwide booking agents. These range from the multi-national, ‘full-service’ agencies, such as WME and CAA, down to the tiny agencies who specialise in a genre, such as blues, or electronic music.
The major booking agencies based in the US (but operating worldwide) include:

These agencies represent most of the artists in the Pollstar Top 100 tours – in 2014, they represented 72 of the TOP 100 tours!

Major booking agents in the UK include:

The booking agent works with the artist manager to plan the touring schedule for the artist. This schedule could be a run of summer festival shows, or a string of headline gigs to coincide with a new album release, for instance (although touring to support a new album is an old-fashioned concept, and artists are more likely to release an album in order to publicise a tour). Having agreed a period of touring or concert activity, the agent will approach promoters and offer the artist’s services. The agent will attempt to secure a fee (the ‘guarantee’) for the performance and a percentage of the profits if the show sells a lot of tickets (the ‘back end’ or ‘breaking percentage’). It is the agent’s job to negotiate the deals with the promoter based on what she knows of the act’s status, the city or venue she is pitching to, and the relationship with the promoter.

When the agent has provisionally booked the act into various cities, she will inform the artist manager of the dates on offer and the fees expected. If the manager approves the tour, the agent will issue contracts to the promoters. The agent will then be available to answer any further questions or concerns the manager or promoters may have before the tour and will act as a go-between should any disagreements arise during the tour itself.

It is very rare to work with a touring contemporary touring artist not represented by a booking agent and I have no doubt that booking agents are the most powerful people in today’s live music business.

The Concert Promoter

In the UK and Europe, they are known as promoters; the US knows them as talent buyers. Whatever the terminology may be, these are the brave souls who decide they can make money out of putting on a show or event.

The concert promoter’s goal is simple: put bums/asses on seats. This means the promoter takes an artist, puts her into a suitable venue, and sells tickets for the concert to the public. The promoter then makes a profit after paying the artist and the cost of staging the concert – venue hire, publicity, etc. Some venues manage their promotions (in-house) and outside promoters will hire other venues to stage a show. Figure 2 shows a breakdown of venues and the promoters.

A table of the various music venue type, with examples, and the promoter associated with each venue type.
Figure 2. The various music venue type, with examples, and the promoter associated with each venue type.

A concert promoter must be able to identify new talent, as well as staging concerts by established artists who sell great numbers of tickets. Nurturing new artist will hopefully see those artists transitioning into the headliners and stadium fillers of the future. Liaising and networking with artist managers, booking agents and record labels has become a big part of the successful concert promoter’s work-load.

There is an enormous risk involved with concert promotion, and a good promoter will look at turning a profit over the long term by developing good relationships with the artist and their booking agents. A good relationship with the agents means direct access to the agent’s roster, her more successful acts. The major concert promoters, as reported by Pollstar, include:

A quick look in your local or regional gig listings will also show you concert and festival promoters not listed above, and you will encounter many in-house, regional and national promoters when studying the live music business.

The Show Booking Process

The artist manager, booking agent and promoter work together to book shows and tours. Booking agents will approach promoters (or perhaps the manager will approach the promoter in the early days of an artist’s career) to see if the promoter wants to put on a show featuring an artist. The promoter will examine the costs involved in putting on the concert or club night and the profit potential for him and the artist. The booking agent may well have a figure in mind for the performance (called ‘the guarantee’), and it up to the promoter to work out whether he can afford to pay that guaranteed amount and still make a profit. The ticket price, multiplied by the number of tickets that can be sold, less the costs for staging the concert gives the profit. Costs include supplying sound, lights, and the stage, marketing and publicity, and the price of printing the tickets. Figures 3 and 4 show you some example show costings.

Picture showing the costings a promoter will use to decide on how much to pay an artist for a show
Figure 3: The costings a promoter will use to decide how much to pay an artist for a show

 

A diagram of promoters costings that show a loss if the concert takes place
Figure 4: In this case, the promoter will lose money if they pay the artist the guarantee and rider costs being asked for by a booking agent.

The Contract

Two documents become important at this stage – the contract and the contract rider. Once the promoter and booking agent agree on the guarantee, the ticket price and the promoter’s costs, the booking agent will draw up a show contract, specific to that concert, and send it to the artist and the promoter. They should sign it to agree to the terms. After signing, the promoter returns the contract to the booking agent, and the concert is now happening. This process is repeated If a tour is being put together – contracts are sent out to the individual promoters, who sign to agree to the date, ticket price, venue and guarantee, and then return the contracts to the booking agent. A standard concert contract deal will stipulate the promoter agrees to the guarantee, and that they will supply ‘sound, light, and catering to the artist specifications’ at their own cost. Figure 5 shows an example of a contract for a concert.

An example show contract part A

An example contract for a concert part B
Figure 5: A live performance contract. It is specific to that show.

The show booking process will take place at least three months before the show takes place, and often much earlier. so that the promoter has plenty of time to market the event. Tickets may not go on sale to the public until two months before the show. Have a look at concert listings in your area and see how far in advance the concert is taking place to see this for yourself.

The Contract Rider

The other document that becomes important in the show booking process is the contract rider. You will know the term ‘rider’ in relation to the food, booze, and red M&Ms that promoters provide to bands in their dressing room (as in ‘where’s the rider?’ and ‘that support band drank all the rider’). However, the term ‘rider’ refers to every aspect of the band’s touring needs, from truck parking spaces to humidity onstage. Whereas the contract serves as an agreement particular to individual performance, the contract rider is an agreement for every performance, regardless of other consideration. This document ‘rides’ with the contract, hence the name. The rider says, ‘For us, the artist, to do a good show, we need the following items, and you, the promoter, have to supply them at your own cost.’ Remember the ‘sound, light, and catering’ agreement in the contract? The contract rider should tell the promoter what sound, lighting and catering the band will require. Figure 6 shows a typical contract rider.

 

 

 

Figure 6: A contract rider – a general document for every show an artist performs.

I mention riders as they have an impact upon the amount of money the artist will make for a show, and we need to go back to the show booking process for a moment to explain this. When planning to stage a concert the promoter will work through the finances, much as shown in figures 3 and 4, and propose a financial offer to the artist (with a scenario such as figure 3),or agree to the guarantee asked by the booking agent. Promoters profits are small, compared with the artist’s fees, and concert promoters must work hard to reduce costs.

Contract riders cost promoters money

Unfortunately, a big part of any promoter’s costs will come from supplying items and services set out in the artist’s contract rider – sound, lights, catering, etc. You can see what I mean if you reduce the amount set aside for catering, as in figure 7 – the show will now break even, with perhaps a small profit for the promoter. In an ideal world then, sending the rider would be done before the promoter agrees to put on the concert so they can include the items listed in their costs. However, because of ever-changing tour personnel and requirements, booking agents often send out outdated, incomplete, or ludicrous, riders. Any updated (or late) riders may then contain items that affect the promoter’s ability to stage the show under the agreed-upon terms (and within his budget). It is important that booking agents have the latest, sensible rider information from the artist manager before the booking agent issues the contracts.

Diagram showing promoters costs after she has reduced the amount set aside for catering in the artist's rider
Figure 7: The promoter has reduced the amount set aside for catering in the artist’s rider and the show will now just about break even.

Tour Budget

The booking agent will work with the promoters, asking for and collating the promoter’s offers. She will then send all the various promoter’s offers to the artist and the artist manager if putting a tour together who, once presented with a list of potential concert dates, will have to make sure the tour or show is viable for the artist. Figure 8 shows the sheet the booking agent will send the artist for their consideration. It’s then up to the artist, with the help of her manager, to work out if she can afford to undertake the tour or not.

A spreadsheet containing various promoters offers collated by the booking agent to make up a tour
Figure 8: The booking agent will send the artist a sheet that details all the promoters offers. The total income figure is the one that is most important to the artist.

I’ve said it before – playing live is expensive. It may be the case that the guarantees being negotiated by the booking agent are not enough to cover all the expenses the artist will incur from going out on tour. (This is true for one-off shows and festival appearances. Getting everyone together in the same place at the same time can cost a great deal of money; if the guarantee is low it may not be worth the financial hit the artist faces). In any case, the manager will have to work out the list of expenses the artist will incur from playing the show or tour. We call this list ‘the budget’, which is misleading as it is more a list of predicted expenses, but you get the idea. Expenses included in a budget are:

  • Wages
  • Transport
  • Accommodation
  • ‘Production’ – PA, lights, video, backline, set, staging, work permits and visas etc.

This is not only for stadium headliners – four dudes playing a show in the next city will still need to figure out their expenses – gas for the van, a hotel perhaps, spare guitar strings and paying for the rehearsal room (figure 9). Whether stadium or bar, the income from the show or tour, minus the expenses the artist may have, will mean either a profit or loss for the artist.

Figure 9: The budget for a small headline tour.

Tour Support

I mentioned tour support earlier; this is how it works. Once someone has worked a budget, two things may happen. If the budget shows a profit, or if the band is not beholden to any record label (if they are as big as U2, DeadMau5, or Ed Sheeran), then the manager will approve the tour and tell the agent to confirm the shows.

If the budget shows a loss (called ‘shortfall’), then the band can either decide not to do the proposed show or tour, or try to find extra money from somewhere else. The most common route is to go to the record label (if the artist is signed to a record label) and ask for tour support. Tour support is money given to the act by the label to cover the shortfall and enable the act to go on the tour. The artist and record company negotiate the amount of tour support at the time of the recording contract negotiations and it is ‘recoupable’ – it has to be re-paid – from whatever money the band earns from their music.

An artist will need to apply to their record company for tour support every time they want to go on tour. The application involves submitting a budget to the business affairs department of the record company. If the record company approve that application, they will stagger the amount given, paying a percentage of the tour support before the start of the tour, and the remaining amount to the artist on receipt of completed tour accounts.


 

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