State of the Music Industry: State of Clubs

By Dominic Wren

Nightclubs have long been at the core of the electronic music scene. Without nightclubs, EDM might not have thrived as much as it did. Well in 2020, nightclubs are facing one of its biggest challenges for survival as clubs stand against the health and economic challenges of a pandemic. This article focuses on clubs specifically as I have mainly talked about music festivals in the past articles of this series. Since March, clubs have been forced to shut down due to safety concerns for the attendees during a pandemic. In Canada, clubs have stayed closed and have no sign of reopening until later deconfinement stages, though those stages depend on the province you live in. Generally, for large gatherings in large clubs, it will be the last sector of the economy to open again. Though other countries have tested models where clubs can remain open, such as in South Korea. Unfortunately, as reported in Time Magazine, that glimmer of hope for Korea is dwindling as spikes in coronavirus cases have sourced from nightclubs and forced them to shut down again.

“Nightclubs are gone. Gone. One million per cent. Until a vaccine is found. Maybe.”

In Canada, the situation does not seem much better. Much of Canada’s nightlife is facing closures left and right and it does not seem like there is anything to stop it until a vaccine comes around. Charles Khabouth, owner of some of Toronto’s biggest nightclubs, doesn’t have high hopes for the future of Toronto’s nightlife. He told the Financial Post “Nightclubs are gone. Gone. One million per cent. Until a vaccine is found. Maybe.” In cities where rent is through the roof (pun not intended), like Vancouver and Toronto, clubs facing the even harsher situations as some establishments are having to pay million dollar rents with no income, says Nate Sabine to Vancouver Is Awesome, director of business development for This Is Blueprint, which itself owns 4 nightclubs in downtown Vancouver. Sabine adds that he expects that 50% of nightclubs in the city won’t even reopen. In the same article, Dave Kershaw, owner of Cabana Lounge in Vancouver, mentioned that for the clubs that will be able to open again, proper operation would not happen before 2021. To help these incredibly tough times, the Canadian government has come forward with some relief packages to help clubs pay rent, though access to funds came later (too late for some).

Canada’s Emergency Commercial Rent Assistance for small business requires landlords to offer a 75% minimum rent reduction for the months of April, May, June, and an extension to July. Adding to this, on July 8th, the Canadian government announced that for-profit live music organizations could gain access to a $20 million fund. This is great news many clubs and other live music organizations. Some believe that this crisis will force nightclubs to adjust their “terms and conditions” when buying concert tickets in the future. Ali Shafaee, director of Escapade Music Festival, discussed in an interview with EDM Canada the future of ticket purchases. In those next acquisitions, extra insurance costs will have to be considered on top of extra costs for hygiene appliances and more. When buying your next concert tickets, it is highly suggested you read through the “terms and conditions” to be aware of what you’re paying as there will be new costs. Nonetheless, clubs need our help and we are the only ones who can actually save them. When it is safe to attend clubs again, going out and buying those tickets is the revenue streams that clubs desperately need.

DJ Kärl K-Otik, a well-established Montreal trance DJ, told EDM Canada in a interview: “I believe that supporting the small clubs around you can keep the base afloat and gradually rebuild the industry.” This is definitely one of the hardest times facing nightclubs and their survival. Though the idea that new clubs and venues will appear in the future is a reassuring one, the support for the current clubs is crucial for keeping the culture that we love alive and authentic. Their future is in your hands!

State of the Music Industry: How the Industry has Suffered in the Past

By Dominic Wren

The Coronavirus pandemic has made times incredibly uncertain for many people. The music industry is definitely not immune to this but like most sectors of the economy, the music business has had its set backs in the past. 2020 is simply a new set back. In our lifetime, we could think of 4 major crisis’s that have affected the music industry though some were more severe then others. What is most interesting is how the industry rebounded and what came out of those disasters. The overview of these world events will be simplified for the sake of not making this article six pages long.

The Oil Crisis of the 1970s was so impactful on the music industry due to vinyl being the main method of music consumption of at the time. During the time of the crisis, records were being made out of a plastic sourced from crude oil. The Oil Crisis led to rise in scarcity of oil, therefore making vinyl record increasingly more expensive. To counter this, the recording industry tried recycling the vinyl to make the record in an effort to keep the prices as low as possible. Because of this, records lost much of their audio quality. The loss of quality led to major reductions in LP sales that led to losses of hundreds of millions of dollars for the recording industry.

The next set back on the recording industry was caused by the death of disco music during the 1982 recession. With major label facing 22% interest rate with crippling debt and the end of one of the most popular genres of the time created an overwhelming surplus of disco records in record stores. According to Disco–Disco, some of the industry’s most prominent labels were either bought or ceased to exist. In 1982, the industry was in a whole but Sony and Philips jointly launched the Compact Disc and ultimately revolutionized recording forever. This new method of music delivery was much more attractive to consumers due to larger data storage and more consistent audio quality. This introduction outright saved the recording business, as fans would set out to replace entire vinyl music libraries for the new compact discs.

Starting the 21st century, the 9/11 attacks on New York City only inflated new but major problem within the recording arts. 9/11 itself didn’t have a direct effect on the recording industry outside of the political and economic fallout in western countries following the event and the banning of certain songs from being played on the radio after the attacks as they were deemed “inappropriate” right after the fall of the World Trade Center. September 11th is more used as a time frame of when Napster was really gaining traction. Napster was a digital file sharing software where consumers could rip digital music files and share/download them for free. The rise of Napster during one of the United States’ darkest times brought the recording industry and physical sales on a downward spiral. This battle between Napster and the recording industry eventually led to the birth of streaming as an alternate to buying physical media and ripping songs off the internet. Today, streaming makes up about 90% of how people listen to music according to the IFPI Global Report.

The 2008 financial crisis didn’t have any greater effect on the music industry than any other industry but one major impact of the recession is the major labels facing bankruptcy. According to the Music Business Journal, some companies saw a 50-60% drop of their share price in a week including EMI’s shares, which was a label previously part of the “Big Four,” lost more than half of its value that year. Today, Sony Music owns EMI. Nonetheless, outside of crippling debt and the impossibility of securing more loans from creditors, there were not many long-term game-changing effects from this crisis.

The 2020 pandemic will go down in history as one of the greatest financial downfall for the music industry. 2020 is a year unlike anyone has seen before: a pandemic, people in lockdown, a grinding halt on live music, an unpopular government in the US, threats from China, and an unpopular government in Britain that is exiting the EU. According to the World Economic Forum, the COVID-19 pandemic has been the primary cause of loss of almost 50% of the entire global music industry, which is equivalent to the loss of Iceland’s entire GDP and in Canada alone, Music Canada says that 80% of artists have reported needing financial assistance. Adding to this, six months into the initial shut down of live music has reportedly cost the industry over $10 billion in sponsorship deal according to the Information Engineering Group. These figures are absolutely devastating. But what next? In an interview with Alan Cross, a highly reputed music journalist, he explains that this will do a couple of things: first, it will weed out all the weak players and it will force new strategies and new technologies going forward. He adds that some companies will use this as an excuse to reinvent themselves too. Unfortunately, this causes a massive amount of disruption, though it may be for the best on the long term. “There will be casualties,” Cross claims, “but there will also be new power houses that will come out of this.” In my opinion, I agree with Cross. Though we might not see the tumble of one of the “Big 3” as they still gain (increasing) revenue from streaming and more but we might witness the fall some major players of the live music business. Companies like Live Nation, AEG, and other big players are having to manage immense financial losses, having to refund millions of clients for cancelled shows, and reputation-tarnishing law suits. Though I believe the recording industry will come out of this relatively ok, the live music scene will likely look very different from what is was before the pandemic. The reality is that no one really knows what will come out the other side of this crisis but it could lead to something that is even greater.

The point of looking at the past major events that crippled the music industry is to recognize that after every major downfall that was mentioned revolutionized the music industry in one way or another. The Oil Crisis in the 70s and the 1982 recession was the groundwork for the birth of Compact Discs. 9/11 and the battle with Napster later introduced to world to streaming. 2020 has been a year like non-other and has hit many industries with a baseball bat but we can already feel the start of something bigger and greater coming our way. 

State of the Music Industry: Don’t Forget the Impact on the Supply Chains!

By Dominic Wren

When thinking of a concert, whether it’s held at a festival or a nightclub, the first things that will generally come to mind is the DJ/act, the music itself, the vibe, or even the location/institution where the event is being held. These are all very important parts to what makes a great music event, but one aspect that most concert attendees overlook is all the secondary businesses that are hired to actually make the event a reality and a success. Think of all the security, lighting, railing, PA systems (speakers), trailers, and even the assembly of the stages themselves. These are only a few of so many more crucial aspects of what makes a successful music event. Well with the live music industry coming to a halt, most of these companies are stuck in a position where they cannot sell their services anymore. Unfortunately, when looking down one section of the economy, it generally has much more collateral damage than we can think of.

In an interview with Zachary Monson, host of Stingray PausePlay and music producer, he stated: “Sadly a lot of the same fate of the venues will fall to the suppliers who, at the same time, have no events to supply to.” Other industry professionals have slightly different opinions on the effect of supply. Ali Shafaee, a director of Escapade Music Festival and DNA Presents, suggests that every industry is taking a hit, so those who are most innovative will breakout of this just fine. He states in an interview with EDM Canada: “It’s not about those with the deepest pockets who’ll survive, but those who are most innovative.” To give a bit a better perspective of the scale of the damage, according to the Daily Mail, Elton John, a musician that makes a gazillion dollars a year, has laid off his backing band and some staff members in the beginning of June. Some of those band members have even been part of the Elton John’s group since the early 70s.

Shut down of live music has unfortunately had some major consequences on not only the festivals and nightclubs but all the companies that make our favourite music events possible. Some areas are more affected than others but all companies that supply concerts have felt some damage. In the next article of the series, we will look at how the music industry has bounced back from past industry crisis’s and by consequence how the industry has evolved. Stay tuned! 

State of the Music industry: Realistic Timeline for the Return of Live Events

By Dominic Wren

The return of large-scale music events has been a major point of discussion within the music industry. Some want to see the return of festivals by the fall of 2020 and others are wanting to hold out as long as possible for the health and safety of music event attendees. Generally, the consensus is of a hopeful return of our favourite Canadian festivals by summer of 2021. Concerts, such as VELD, Shambhala, Escapade, Ile Soniq, and so many more have been postponed or cancelled until 2021.

Data from a New York Times survey of 511 virologist, physicians and scientists that specializes in the study of viruses and infections, showed that 64% of them said that we are not going anywhere for at least a year. With this said, EDM Canada had the chance to have a chat over the phone with Ali Shaffaee, who is a partner at DNA Presents, the company that operates Escapade Music Festival. EMF is set to return in June of 2021 but he mentions that people should not expect that festivals will be operated just like before. There are many things to consider when reopening a large-scale event, such as Escapade. One of the first thing to think about is how to keep people separate and safe in front of stages, in service areas, smoking zones, bathrooms, and how to get people in and out of venues safely. Another important factor to consider is how much people are willing to pay for extra post-covid costs like extra insurance (not only for festival attendees but also for all the workers too) and increased hygiene services. It might not sound like a lot but for organizers having to manage 35 thousand people, the costs will go through the roof and one way to manage that is by increasing the cost of individual tickets.

In an interview with Allan Cross, recognized for his legendary contributions in music journalism in Canada and around the world, he mentions that organizers and promoters must also consider the PTSD that will come out of this crisis. He states: “how willing are fans to go back to these venues next to all these strangers and potentially get sick.” Many political and medical authorities from Canada and around the world have claimed that large gatherings for festivals and other sorts cannot happen before a vaccine has been properly tested but that is at least a year or two away.

Throughout our interview, Mr. Shaffaee suggested that he does not believe that waiting 2 or 3 years for the return of normal life is realistic. He states that we are not a society that can live without contact, sports, and live entertainment for that long because it is such a huge part of people’s lives. In the end, the reality is that no one can be sure when big concerts will return. Not yet at least… We can only plan to reopen for the festival season of 2021 but that is still only a possibility. The only way to accelerate the fight against COVID-19 and actually make this a reality is to help prevent the spread of virus by wearing masks in public, frequently washing your hands, and social distancing. 

Our favourite artists are also stuck at home and having to social distance just like us. This is especially hard for DJs that need crowds to find exposure and grow their brand. The next article will look at what DJs and producers have been up to during their time in confinement. Stay Tuned! 

State of Music Industry: Article Series to understand the Impact of COVID-19 on the Music Industry

By Dominic Wren

The novel coronavirus has hit 2020 like a bus. Most parts of the national and the international economy have taken a beating like never before and it there doesn’t seem to be much end in sight. The music industry is in no way protected from this crisis and some even argue that it is one of the hardest hit sectors of the economy. During these uncertain times, so much of information is circling around of the impacts of the virus and it can become somewhat confusing to wrap your head around. In an attempt to clarify all this at least a little bit, a series of articles have been created for you all to read at your own leisure with the hopes that it will make the current situation slightly clearer. The next few articles will look at some of the main topics of this mess, such as realistic timelines for the return of music events, what artists are up to during quarantine, effects on the supply chains that support the industry, how the music industry has rebounded in the past, and the future of nightclubs. Please keep in mind that the information presented only scratches the surface of the reality facing the music business. Hopefully this upcoming string of articles will be of use to your comprehension of this worldwide crisis.

Starting with General Facts and Numbers 

During these crazy times, to say that the global music industry has been turned upside down is still an understatement. Unfortunately, the music business has taken a hit like never before and unless there is a sudden a major change in the course of this virus; it is only going to get worse. Though this might sound depressing, keep in mind that this crisis will also drastically change the way we consume music and that might not be such a bad thing (on the long run at least…). Before addressing these changes, let’s look at the numbers. In 2019, the global music industry was worth over $50 billion according to the World Economic Forum. Half of that total revenue comes from the live music scene alone. With a lasting ban on large-scale gatherings makes the concert business almost worthless. In the case of EDM specifically, the International Music Summit (IMS) reported that even though the global value of the electronic music industry grew 2% in 2019, the estimated total value of the industry is expected to fall 56% from $7.2 billion to $3.3 billion by the end of 2020. Though some small events, such as car raves and social distancing concerts have popped up across the board, it still only represents a very small fraction of the overall live music industry. The IMS has even stated that the club/festival alternatives are unlikely to see long lasting commercial success. With no large scale live events and limited alternative live music experiences, advertising and sponsorship deals, a core part of what makes music festivals and more a reality, is also seeing their share of troubles. According to the Interactive Advertising Bureau, a quarter of advertisers and sponsors have halted completely their advertising efforts while another 46% have reduced spending in the first half of 2020. Adding to this, a 6 month closure of live music has estimated to cost the industry $10 billion in sponsorship deals, the

IEG reports. The main revenue for music artists in the 21st century has come mainly from touring so with no shows and no advertising; artist revenue has also seen a significant decrease. Analysts at IMS have announced that DJ and artist income could fall 61% from $1.1 billion in 2019 to $0.4 billion in 2020. There is a bright side though. Even if this situation seems dire, some sectors have seen much growth. Live streams have been a sort of savior for music fans around the world. When no live performances are available, fans turn to the web for their fix of live music. Reports from the IMS show that 70% of the most watched music channels on Twitch were EDM focused, totaling at about 6 million viewing hours. The same analysis shows that DJs who performed a live set on Fortnite has increased their Instagram follower growth by ten folds during and after their event. Streaming is undoubtedly a promising medium for the future of the music industry though it is only expected to generate about $0.1 billion in 2020. This year is going to be a very hard year for the music industry but it is to be expected in a situation like this. Coming back from these losses will be a long and hard road but one thing that is for sure is that music will never die.

Most ravers around Canada and the world are for sure wondering when the next concert will happen. The answer to that question is unfortunately more complicated than simply assuming that concerts will return as they were on a future date. In the next article, we will be discussing what a realistic timeline for the return of live music event really looks like.