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Live Nation Expects Artists to Absorb Higher Cancellation Costs in 2021

By Anders Bylund – Jun 18, 2020 at 1:52PM

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The Ticketmaster parent is lowering guaranteed artist payments and expecting the performers to carry a larger share of the financial risk in arranging and promoting live events.

Live Nation Entertainment (LYV 1.04%), the parent company behind Ticketmaster and a leading arranger of live events, is making dramatic changes to its boilerplate artist contracts. Next year, when the concert circuit gets back on track again, guaranteed artist payments will be 20% lower and the artist will carry a larger financial burden when an event is canceled.

Big changes

Music magazines Rolling Stone and Billboard obtained a memo sent from Live Nation to leading talent agencies.

"We are in unprecedented times and must adequately account for the shift in market demand," the memo begins, moving on to outline the market uncertainty that was triggered by the COVID-19 pandemic. The company hopes to "renegotiate" many thousand shows that were postponed to 2021, including several dozen music festivals.

A tired rock star stares at himself in a large mirror.

Image source: Getty Images.

"The changes could mean a fundamental change in the business model, shifting substantially more risk to agents and artists while potentially leveling the playing field for independent promoters and festival owners as they struggle to recover," the memo continued.

Selected policy changes

  • Guaranteed payments will be 20% below the guarantees given in 2020.
  • If poor ticket sales result in a canceled show, the artist will be paid 25% of the guarantee. Industry standards have called for a 100% guarantee payment under these circumstances.
  • Artists who cancel a show in breach of contract will owe the promoter two times the expected artist fee.

Artists will also be required to assist with promotion efforts through social media posts, and they agree that all events will be filmed "for use in a live television broadcast, a live webcast, on-demand streaming, and/or live satellite radio broadcast."

The memo concludes in an apologetic tone:

"We are fully aware of the significance of these changes, and we did not make these changes without serious consideration."

Anders Bylund has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Live Nation Entertainment. The Motley Fool has a disclosure policy.

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