Billboard’s Top 10 Concert Tours of 2012: Is Asia Irrelevant?

According to Billboard, the top 10 grossing concert tours in 2012 were:

RANK                      ARTIST

1.                             Madonna
2.                             Bruce Springsteen & The E Street Band
3.                             Roger Waters
4.                             Michael Jackson: The Immortal World Tour
5.                             Coldplay
6.                             Lady Gaga
7.                             Kenny Chesney & Tim McGraw
8.                             Van Halen
9.                             Jay-Z  & Kanye West
10.                           Andre Rieu

Of those on this list, only 1 (Lady Gaga), performed in Asia. A potential takeaway from this may be that Asia can be considered an optional rather than a necessary component to world concert tours. A more accurate takeaway would be that this is a reflection of the current system with existing challenges for mainstream artists from North America and Europe holding concerts in Asia and is actually inhibiting their greater tour success.

Challenges arising from differences in language, culture and distance are obvious, but there are 2 systemic challenges in particular that merit highlighting:

1.            Lack of Trusted Networks and Infrastructure –

Organizing a world tour involves a myriad of players: artists, agents, managers, labels, venue operators etc. Central to this process is a level of comfort and trust gained through reputation and having worked with each other in the past. Moreover the community of the main players is small such that the CAAs, Live Nations etc. have established understandings and working relationships into which they plug. With strong networks and presence throughout North America, Europe and increasingly South America, the responsibility and accountability chain throughout the planning process can be readily traced.

The landscape is much murkier when it comes to Asia as no such visible infrastructure exists. Rather an informal network of local concert organizers and partners must be relied upon to undertake all the necessary details for a successful concert. In addition, there is a higher degree of turnover among the local concert organizers. Ultimately, this creates an environment with a level of uncertainty that makes the decision makers back in North America and Europe think hard about adding Asian cities to a tour schedule.

2.            Unique Concert Economics –

The amount of money (the performance guarantee) that a concert organizer in a city is willing to pay is central in securing an artist. However this current model when applied to many Asian cities creates friction in the economic feasibility of holding these concerts there. Compared to the North American or European markets, there are country-specific business factors to consider in Asia. To illustrate with a hypothetical example:

A concert organizer in Singapore wants Band X to perform in Singapore. The performance guarantee per show is $500,000 plus production. Some of the issues the concert organizer must resolve include:

Venue – The only large scale venue appropriate for this type of concert would be Singapore Indoor Stadium which has a capacity of 12,000. If this is booked during the time Band X is available, there are no alternative options.

Ticket Prices – Ticket prices must be in a range that Singaporeans would be willing to pay. Key determinants of this range include the country’s overall economic development and affluence, the total amount of the performance guarantee and the production costs, and the level of popularity which is further discussed in the point below. For Singapore which was reported to have the highest per capita income in the world, as well as a large base of wealthy ex-pats who are fans of Band X, ticket prices may be largely inelastic. However the scenario can play out very differently in other parts of Asia.

Level of Popularity – Band X may be a globally recognizable rock band, but its level of popularity is unlikely the same across all countries. Rather its fan base might be the strongest in the US and emerging in a country such as Singapore. The standard industry practice is to require a uniform performance guarantee across all cities (or potentially higher if a bid process is used). However if there is not a sufficient level of popularity for Band X in Singapore, there might not be enough ticket demand nor sponsorship opportunities to make this viable for the local organizer.

Extra Layers – The concert organizer in Singapore is also adversely affected by the “Lack of Trusted Networks and Infrastructure” mentioned above. They likely must wade through a quagmire of middle players (ie brokers claiming to have the rights for a Band X concert, people touting an ‘in’ with Band X’s management, other organizers willing to overpay for the concert rights, etc.) which requires additional time, effort and funds. Increasingly this creates a new reality where the objective of holding the concert becomes less about producing a good ROI and more about sustaining a position in the market or trying to establish such a position. With this objective as a key driver, the turnover rate for concert organizers in this space is high.

The end result in light of these challenges may be that no concert takes place in Asia. The missed opportunity of this is significant as mainstream artists are losing out both in the present as well as in the future. In the present, Asia currently accounts for 60% of the world population. Already there is a huge market that is currently being underserved. Moreover in the future, by 2050, the Wealth Report predicts:

• the world’s wealthy citizens will be dominated by Asia with the highest estimated per capita income in: Singapore $137,710, Hong Kong $116,639, Taiwan $114,093 and South Korea $107,752; and
• the only western economy projected to remain in the top five is the US, with an estimated per capita income of $100,802.

With Asia’s sheer market size and position to become the center of global affluence, the time is now for the mainstream music industry to build the firm foundations and in roads necessary if it has any desire to capitalize upon this region in the future. Currently the appetite for live concerts in Asia is being satisfied with huge success by artists from Korea, such as Girls’ Generation, Big Bang, 2NE1 etc., who are managed by one of 3 powerhouse talent companies: SM Entertainment, YG Entertainment and JYP Entertainment. It may become increasingly difficult to access Asia if these main players become further entrenched in the Asian markets.

Based on the above, the question should not be “is Asia irrelevant for world concert tours?” rather “how can Asia be better tapped into for world concert tours?” Currently the system is too rigid with emphasis placed on short term gratification over long term sustainability and growth. Overall a more symbiotic relationship needs to be created between the mainstream music industry and Asia. This requires a multi-faceted approach: (i) finding and nurturing a cadre of key local partners in various strategic Asian countries rather than looking at Asia as a singular entity; (ii) creatively incorporating brands and related events as ancillary elements of the concert tour; and (iii) leveraging technology to increase reach and engagement. Luckily all the necessary parts currently exist, and is now a matter of putting it together and executing on a large scale.