Money Money Money – 2013’s State of the Union

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Year after year, China’s music scene ebbs and flows.  While the fluctuations at the more independent end of the spectrum are naturally smaller and the trend is consistently upward, the bigger end of the industry, particularly from an international perspective, is a massive swinging beast.

Our first reference to a bubble was back in February 2008.  We were somewhat prescient, as shortly after, Bjork made her infamous outburst and set the industry back a ways.

Then in November 2008, Kanye West and Kylie Minogue went spectacularly wrong and spelled the end for China West, the first of the foreign promoters in China.  You can read more about that in our interview with Steve Sybesma, then boss of China West here.  This portended a two-year lull in international bookings, as China West went under, Livenation China went quiet and other companies drew their horns in.

Of course, 2011, 12 and 13 so far have all been increasingly good years.  We recently made our second doom laden pronouncement in November 2012.  Shortly after this, Elton John did his “let’s all piss off the Chinese Ministry of Culture”.  With all this in mind, perhaps we should stop trying to predict bubbles in China’s live music industry.

But wait – the lineup presented to us for the next few months is just too good an opportunity to pass up for a 3rd pretentiously titled State of the Union.  It seems that all of the promoters of big international talent in China decided at the beginning of the year that they would get out their big guns; and it looks like they will shoot each other to death.

So what is coming up?

Jamiroquai in the 9,000 seat Grand Stage next week (ouch), Metallica x 2 arena shows (the one outlier in this list – sold out twice: YAY), the Pet Shop Boys in the Grand Stage and the Wukesong // Mastercard Arena in Beijing (double ouch).  At the end of the month, Pitbull plays the same 10,000 capacity Mercedes Benz Arena as Metallica and the Gongti Workers Stadium in Beijing (jury’s out on that one).  All the while, Creativeman // Livenation in Japan have decided that this is the right time to launch their Summersonic Music Festival into the market.  Shanghai Sonic leaked with a good lineup and formally announced a month ago with a very average one.

Shanghai Sonic

the leaked lineup for Shanghai Sonic. Of the international artists named, only Limp Bizkit is actually playing. And not Jack Bugg 🙂

We somehow doubt Creativeman, even with their partner Shanghai Media Group, will be able to sell out the 80,000 capacity Shanghai Stadium with 90’s throwbacks, the nu-metal band Limp Bizkit and hard rockers Korn, plus a bunch of local artists that have played 100 other festivals over the last year in similar locales.  It will be chastening for Creativeman, who have been looking at the China market for such a long time, to come in with such a whimper, and a stark lesson to other internationals with an eye on China not to be seduced by the big government media agencies who promise so much and deliver so little.  This outing won’t do much for the Summersonic brand either.  We’ve already pointed you to the sponsor video, but here it is again:

The biggest bath is likely to be the China debut of aging rockers Aerosmith, who have been booked to play the 23.000 capacity Hongkou Stadium in Shanghai, also in August.  We can tell you (off the record of course) that the fee scales to that 23,000 level.  We can’t imagine what the promoter was thinking, but this is going to be a painful lesson for someone, and while we can’t necessarily throw accusatory glances at the band for accepting, we can’t imagine it will be fun playing to a quarter filled venue.

Onwards, there is Suede in the Grand Stage again (they definitely have fans in China, but this is a big call) the big AEG organized Justin Bieber Asia tour that will most likely do well, followed by the Killers and Akon in October.  Alicia Keys will come back to China in November, hosted by Livenation.  For nearly all of these arena shows, pricing starts at around US$70 and scales up to US$400.

All the while, there are expensive looking club shows coming through the main cities: the likes of Owl City, Tony Bennett, Coheed and Cambria (last week), George Benson and Herbie Hancock are priced at US$60 and beyond.

Live music in China is definitely on the up: live house capacity in the major cities has grown tremendously in recent years, with Shanghai and Beijing now hosting a good handful of venues that all have shows many times a week.  Every second and third tier city worth its salt has its own thriving concert venue.  Arenas have sprung up and festivals are legion, with prices for Chinese talent going through the roof.

That’s just it: the overwhelming preference is still for domestic (Mandarin Chinese speaking) talent.  International music was hardly listened to at all pre-internet (2007) and in the main this paradigm still exists.  Chinese media is still relatively disinterested in all but the hottest international celebrity talent (which is why Pitbull might do OK) and so fan acquisition is an incredibly expensive exercise.

The most important fact still remains though (and we have beaten this particular drum since we first started writing this blog back in 2007): the tickets are too ridiculously, crazily expensive.  China is still a predominantly low-income country: only 6% of the urban population has disposable income of US$16-34k, and only 2% have disposable income exceeding US$34,000 (source, McKinsey & Co.).  There is no local audience for the heritage acts because nobody listened to their music back in the 60’s, 70’s, 80’s and 90’s, so the likes of Aerosmith, Jamiroquai, Limp Bizkit and Korn will have to make do with an expat audience (the Pet Shop Boys might fare a tiny bit better having done a corporate job with Prada in 2010).  For those acts “born” after 2005, it’s still a massive call to ask their fans to part with US$200 for a decent seat.

The real money needs to be spent at the grass roots level, building the stars of the future.  Ticket prices need to be in line with the incomes of people that might actually go to shows (students and young professionals) and artists chosen that fit the tastes of these consumers.  Yet the big promoters keep going large on artists that they themselves like or have heard of, taking little or no heed of the real needs of the people.

The good thing is that there are increasing numbers of promoters and people doing this.  Our sister company Split Works produces over 40 tours a year, most of which have ticket prices between $5 and $15, plus 3 festivals which we try to keep below $40 per day.  Along with our friends who are also doing similar things, we could use the millions of dollars that will be lost on these shows to actually change the way concerts work in China.

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