Are digital concerts the next frontier for the music industry?
It’s 9 o’clock on a Saturday. These days, however, I won’t be part of the “regular crowd” shuffling in to a dive bar to order $4 pints and watch a band perform. Tonight, there’s my grandmother’s old Sony boombox sitting next to me (in my living room) as I sip on my soda and gin. Gone (for now) are the nights I’d spend attending local punk shows in downtown Toronto. It’s not because punk is dead — it isn’t— it’s because live shows are in a state of pandemic-induced purgatory, waiting for society to safely re-open before they can return to greatness.
From the advent of the radio to the emergence of the “that’s a TikTok song” genre, music has seemingly evolved rather quickly over the last hundred years. That old Sony boombox, staring at me as I write this, is a poignant reminder of how rapid the pace of technological innovation in the music space can be. I remember going with my grandma to Wal-Mart to buy it back in the early 2000s. We were all super excited because it had not only an AM and FM radio transmitter but also a CD player and tape deck too. At that time, Napster had just rolled out and I downloaded a bunch of songs and burned them to a CD on my old Windows 95 computer. It was cutting edge stuff at the time. Gone were the days where I would create hack-job mixtapes by pressing “REC” on the tape deck to capture something playing on the radio.
Nowadays this boombox stares at me, as I ask my Alexa-controlled smartspeakers to play “This is Drake” on my Spotify, like it was some modern metaphor for Shelley’s Ozymandias. It’s been unplugged for years but I can still hear the sounds of the super scratched up New Found Glory CD skipping between tracks three and four and recall fondly the hours I would spend waiting for the weekly top 40 to be updated on Thursday evenings.
One thing that hadn’t changed over the course of my lifetime — at least until very recently — was the concept of live music being an in-person experience. The idea of a concert in my head was always linked to waiting in line with a bunch of people, hanging around the stage surrounded by a bunch of people, and singing along with (you guessed it) a bunch of people. It was loud, it was sweaty, and it was intimate both auditorily speaking and, of course, physically.
In a time before recorded audio was available, live music was the only way to consume music. From the Viennese orchestras of the late 1700s to the Mississippi band stands of the early 20th century, live music was an inherently social experience. In the Enlightenment period, the nobility and merchant classes of Europe paid large sums to see pianists perform and mingle with high society. Throughout the Industrial Revolution, musical performances became an increasingly urban phenomenon. Taverns began realizing the powers of live music in drawing crowds and selling alcohol. As manufacturing improved, owning musical instruments became more affordable and amplification made performing in front of larger audiences possible. The Jazz Age of the 1920s witnessed a proliferation in live music venues across major the cities of the world.
The invention of vinyl and the subsequent rise of popular music were integral to the birth of the music industry and bolstered the economics of live musical performances. Ticket sales and performance rights were no longer the only revenue streams available to artists and managers. Vinyl created an avenue for building fanbases and generating a buzz. The royalties earned from record sales were used to finance tours, where the supply (i.e. available tickets) could be controlled and demand was strong. The high-margin generated from live shows financed productions and spun off merchandise sales, creating an entire industry. And while record and merch sales and Grammy’s and other accolades are important determinants of an artist’s commercial success, concerts remain the primary revenue driver for the music business. The pandemic, however, may have changed all this.
As concert halls were shut down and music festivals began getting cancelled, music fans started to confront the reality that they were not going to get to see their favorite artists perform in person for a very long time. Artists were equally, if not more, concerned as their primary source of income was cut off, with some projected to lose close to two-thirds of their pay without their touring earnings. For some, it was beginning to feel as though the show was over entirely.
Thankfully, the music didn’t stop. While in-person concerts were put on pause, the industry found a way to innovate and fill the void that the lockdowns had created.
Artists and tour managers began organizing live streams to reward loyal fans who had purchased previously scheduled concerts. While many of these concerts were free for all to enjoy, some were pay-for-admission. These exclusive digital shows essentially digitized the traditional live show touring model. Concert streaming sites like DreamStage and Pandora Live have risen in popularity as the demand for live music continues to rise.
Artists are also using live streaming as an opportunity to build vast libraries of content for future distribution. With professional videography and live streaming equipment, some acts have turned their performances into cinematic masterpieces. This Billboard list of links to a bunch of live streamed concerts contains a litany of world-class acts like Justin Bieber, Dua Lipa, Bush, and Chief Keef. Many of these concerts were recorded and put on YouTube for future consumption.
Virtual concerts are not just for professionals. Amateur artists are also using streaming and social media platforms to reach their audiences. Facebook, Instagram, and Twitter are all becoming popular amongst the musical community. Even live streaming platform, Twitch, has a full page dedicated to music, featuring streamers who perform live for audiences all over the world.
Once thought of as an E-sports-only platform, Twitch is embracing the influx of concert viewers to its platform. This trend seems to be accelerating as more and more music creators flock to Twitch to reach new listeners and watchers.
Video games and music have historically shown great chemistry. Harkening back to the early days of the EA Sports franchises, gamers of the 2000s look back fondly on the soundtracks for NHL or Madden games. Guitar Hero and arcade favorite, Dance Dance Revolution, also showed some natural synergies between the two media. And who can forget the famous the soundtracks of the Tony Hawk Pro Skater franchise, which arguably gave rise to an entire subculture of suburban music fans.
Modern gaming platforms are finding creative ways to integrate music with augmented and virtual reality. Fortnite creator, Epic Games, broke the internet when it hosted a Marshmellow concert for Fortnite fans back in 2019. During the pandemic, it once again made headlines when it announced a five-show Travis Scott Tour. Roblox is also using part of its vast metaverse as a venue for live music, throwing virtual launch parties for Lil Nas X and Why Don’t We. These metaverse concerts are ushering in a brave new world for live music and are exciting even the most traditional music fans.
Other emerging technologies are also providing unique markets for music. Blockchain and non-fungible tokens (“NFTs” as they are commonly abbreviated) may also give artists mechanisms for monetizing their content and creating exclusive experiences for their fans.
If only my Sony boombox could see how much has changed since it was the new kid in town…
From a business model perspective, digital concerts have some obvious advantages over the traditional in-person touring model.
For starters, they are less operationally stressful than touring. Touring is unpredictable and the travel involved is exhausting. Audio quality is largely dependent upon the venues themselves and acoustics can vary significantly. Although no software is immune to glitches, live streaming can also be unpredictable at times but the audio and video conditions can be more easily controlled. Moreover, this model of live music can be produced and broadcasted from a single, stationary location, reducing the need for travel. Less travel also translates to less time on the road and less burnout for the artists and their teams. This, in turn, means more time for songwriting, studio recording, and for finding more ways to interact with their fans.
Virtual streaming is also more cost effective. Travelling and accommodations expenses are kept to a minimum under the digital model. Insurance costs are virtually eliminated and so too are the income taxes that artists and labels typically pay on their earnings in different jurisdictions. These cost savings can be put to use in other ways such as through paid media and other audience-building campaigns like branded activations.
The digital model also benefits from being direct-to-consumer, connecting fans with their favorite artists in ways unthought of in the past. Tickets can be sold to fans anywhere in the world and customers in the sales funnel can also be targeted for ads directing them to merch websites, opening up other revenue streams as well. There’s also the benefit of being able to sell these experiences even after the concert is originally aired, creating an unlimited inventory that in-person non-televised concerts cannot, by their nature, provide.
Artists are also no longer restricted by fire code event capacities and can sell as many or as few tickets as they see fit. This provides incredible flexibility in terms of pricing models. Under the traditional model, there is nothing worse than performing at a sparsely populated venue. Ticket pricing models are dependent upon achieving a certain level of capacity, such that the fixed costs of touring are covered. Given the scalability inherent in digital concerts, ticket pricing can be much more malleable, with price and volume capable of being considered separately. With ad placement during streams becoming more commonplace, artists with large followings can capitalize on their existing fame by offering free-to-access streams, earning royalties or ad share revenues, and benefitting from the added exposure of larger distribution.
Will the demand for digital concerts continue post-pandemic? It’s hard to say. Music is as popular as it has ever been before. Spotify, for example, has seen record subscribers, with over 144 million active users as of the end of 2020, with no expectations of these numbers falling off post-pandemic. It’s clear that people are not only still very much into music but are consuming more and more of it even as their commutes have been reduced and in-person concerts have been put on pause. It stands to reason that there is likely a world in which in-person concerts can be simultaneously live-streamed without cross-cannibalization. There will always be a market for in-real-life experiences but the market for digital ones is just beginning to develop and will likely grow at a much quicker pace than observers would have anticipated pre-pandemic.
With the vaccines rolling out in greater numbers and a multitude of digital options blossoming before our very eyes, music fans will soon get to choose between attending shows in person or streaming them from home, or both!
