Amazon recently announced their move into live music, beginning with a live show from Blondie in London. It comes after their move into other forms of media including streaming movies, music, books etc.
It seems like a bit of a throwback, given that live music is almost the antithesis of how music companies and bands have operated for years. Traditionally, bands and music companies would perform live shows not to make money, but instead to promote albums which would drive the bulk of their revenues. It was a successful strategy for several decades, first with records, then cassettes, then CDs, however this changed when MP3s became more prevalent. In fact, in 2015 there were only 50 million CDs sold in the US, or 0.15 CDs per person in the country.
However, alongside this sharp decline in sales of CDs (although there has been a slight uptick in the number of records sold) has been a dramatic increase in the amount of music consumed per person thanks to music streaming services. Companies like Spotify, Apple, and Amazon now allow people to access millions of tracks for less than the cost of a single album every month. It has reversed the the trend and the biggest fans of a band may have never bought a physical album or single for their favorite artists, meaning that touring and playing live cannot act as a driver of album sales if albums are not being sold.
Instead we are seeing shows dramatically increase in price for a ticket, with tickets for Adele’s four 2017 shows at Wembley stadium costing between £49.50 and £104.50. With a capacity of 90,000 and, for argument’s sake, an average ticket price of £77.50 that nets close to £28m in revenue. When you consider that every play of her songs on Spotify ads up to less than £20m, it is clear that touring is where the bulk of money is made today.
However, this is a model that is not new to the digital age where people can access millions of songs, it was an innovation that originally started in the late 1960s and early 1970s with The Grateful Dead.
Their innovation came at a time when sales of physical albums was the primary revenue driver for practically every band on the planet. Instead of charging the same price as others, they would often give away their albums for free and encouraged people to bootleg them. The idea behind this was to use their albums as promotions for their shows, where they would make the bulk of their money but touring constantly and racking up over 2,300 shows over a 50 year period an average of over 46 shows per year, close to one every week for 50 years. This saw them gain one of the most loyal fanbases in the world, who collectively became known as Deadheads, who would follow the band around the country during tours.
This approach saw them selling only around 35 million albums worldwide, which for a relatively popular band over 5 decades isn’t a huge number, especially considering that the majority of their career was at the time when physical album sales were at their peak. However, their farewell tour in 2015 ‘Fare Thee Well’ was estimated to have made $50m from the box office and $8m in merchandise sales alone. It is also rumored to be the largest ever music pay per view event, with Mashable reporting that 175,000 people paid to stream the event. When you consider these kinds of numbers and the huge length of time that they spent touring, it is clear that this innovative approach was one that was very lucrative for the band. This innovative approach that was used 50 years ago, with albums being used as the promotional material, is something that music companies are going to need to turn to increasingly today as physical sales dwindle, especially for smaller bands.
The Grateful Dead didn’t just think innovatively about how they promote their shows though, they also took a modern approach to selling them through cutting out the middle man and selling ticket directly. Traditionally, bands were forced to sell their tickets through the established networks as they would provide marketing and promotion for the bands in order to sell the tickets. With The Grateful Dead’s approach of using albums as promotion, this was no longer necessary, so they would sell tickets directly and therefore not need cede any control or profit to other companies.
This approach is one that, at least to some extent, bands are more capable of doing today, shunning traditional record labels and distribution networks in favour of keeping control and subsequently not giving money away to other parties. Probably the most famous recent example of this is Stormzy, a British grime artist who is not signed to a record label but his self-released album reached number one in March 2017 thanks largely to the online following he could amass. This was largely following the basic blueprint laid down by The Grateful Dead 50 years previously, cut out the middle men, make yourself accessible, and gain a following.