Live Nation Will Dramatically Reduce Performing Artist Payouts In 2021 — Here’s the Leaked Memo

Owing to the immense fiscal and operational impact that the novel coronavirus has had on the live music sphere, leading concert promoter Live Nation is preparing to dramatically reduce artist payouts in 2021.

Live Nation officials recently shared the corresponding memo with talent agencies – and possibly artist managers – and the document subsequently made its way onto the web.

The announcement opens by emphasizing the “unprecedented” nature of the COVID-19 pandemic, particularly for crowd-based live-event companies. (Live Nation put its concerts on ice back in March and is in the process of testing socially distanced concerts in New Zealand.)

Because of the coronavirus’s effects, Live Nation “must adequately account for the shift in market demand, the exponential rise of certain costs, and the overall increase of uncertainty that materially affects our mission,” per the memo.

Most notably, next year will see Live Nation’s artist guarantees drop 20 percent from 2020 rates. Additionally, in the event that an artist cancels a performance “in breach of the agreement,” he or she will be required to pay the promoter twice the show’s agreed upon compensation.

Artists stand to secure 25 percent of their performance fees for concerts that are canceled due to low ticket sales – a potentially significant point, depending on how many fans feel comfortable returning to gigs.

The far-reaching list of changes also notes that Live Nation artists are now “required” to “maintain” their own performance insurance. When Live Nation concerts are nixed due to “an event of force majeure,” or an unforeseeable circumstance such as the COVID-19 crisis, promoters will not pay artists the contractually specified fees. Rather, artists are “responsible for obtaining any cancellation insurance.”

Lastly, artists will receive a 10 percent deposit one month out from their scheduled performances – a figure that appears to reflect the difficulties Live Nation and other concert promoters faced in the immediate wake of the coronavirus pandemic, when a number of fans pushed to receive refunds for their tickets.

At the time of this writing, Live Nation’s shares, traded under the symbol LYV, were down slightly on the day, to just under $48 apiece.

Read the full text of Live Nation’s artist compensation memo here:

The global pandemic has changed the world in recent months and with it the dynamics of the music industry. We are in unprecedented times and must adequately account for the shift in market demand, the exponential rise of certain costs and the overall increase of uncertainty that materially affects our mission. In order for us to move forward, we must make certain changes to our agreements with the artists. The principle changes for 2021 are outlined below.

Artist Guarantees: Artist guarantees will be adjusted downward 20% from 2020 levels.

Ticket Prices: Ticket prices are set by the promoter, at the promoter’s sole discretion, and are subject to change.

Payment Terms: Artists will receive a deposit of 10% one month before the festival, contingent on an executed agreement and fulfillment of marketing responsibilities. The balance, minus standard deductions for taxes and production costs, will be paid after the performance.

Minimum Marketing Requirements: All artists will be required to assist in marketing of the festival through minimum social media posting requirements outlined in artist offer.

Streaming requirements: All artists will be required to allow their performance to be filmed by the festival for use in a live television broadcast, a live webcast, on-demand streaming, and/or live satellite radio broadcast.

Billing: All decisions regarding “festival billing” are at the sole discretion of the promoter.

Merchandise: Purchaser will retain 30 % of Artist merchandise sales and send 70% to the artist within two weeks following the Festival.

Airfare and Accommodations: These expenses will be the responsibility of the artist.

Sponsorship: The promoter controls all sponsorship at the festival without any restrictions, and artists may not promote brands onstage or in its productions.

Radius Clause. Violation of a radius clause without the festival’s prior authorization in writing will, at the festival’s sole discretion, result in either a reduction of the artist fee or the removal of the artist from the event, with any pre-event deposits returned to the festival immediately.

Insurance: The artist is required to maintain its own cancellation insurance as the promoter is not responsible for the artist fee in the event of a cancellation of the festival due to weather or a force majeure.

Cancellation by Artist: If an artist cancels its performance in breach of the agreement, the artist will pay the promoter two times the artist’s fee.

Cancellation Due to Poor Sales. If a show is cancelled due to poor ticket sales, the artist will receive 25% of the guarantee.

Force Majeure: If the artist’s performance is canceled due to an event of force majeure – including a pandemic similar to Covid-19 – the promoter will not pay the artist its fee. The artist is responsible for obtaining any cancellation insurance for its performance.

Inability to Use Full Capacity of the Venue: If the promoter – either because of orders of the venue or any governmental entity – is not permitted to use the full capacity of the venue, then the promoter may terminate the agreement, and artist will refund any money previously paid.

We are fully aware of the significance of these changes, and we did not make these changes without serious consideration. We appreciate you – and all artists – understanding the need for us to make these changes in order to allow the festival business to continue not only for the artists and the producers, but also for the fans.