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Since the coronavirus pandemic began, the music industry has taken a big hit. With many shows canceled worldwide for the foreseen future, companies such as Live Nation, AEG and Ticketmaster have faced huge financial losses. With reports predicting that large scale live events won’t resume until the latter part of 2021, Live Nation is already planning for when that time arrives.

Now, Live Nation is reportedly telling its partner companies to prepare to make various changes next year. Included in this new reported memo is a financial penalty artists will face if shows are canceled.

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Back in May, Live Nation furloughed over 2000 North American employees as part of its cost-reduction plans. Its partner company Ticketmaster has also faced various financial troubles since the pandemic began.

As the largest live events company in North America, Live Nation couldn’t predict the financial loss it would take when coronavirus emerged. As shows and tours worldwide continue to be canceled, the company is facing various complaints and lawsuits over ticket refunds.

Now, Live Nation is reportedly outlining the financial changes it plans to enact once the live music industry resumes. Largely, if future shows are canceled, these policies protect the company from financial ruin.

In the reported memo, the company plans to shift most of the financial burden to artists. Live Nation wants to decrease the monetary guarantees promised to artists before an event by 20 percent. The company states that if a concert is canceled due to low ticket sales, it will give artists 25 percent of the guarantee. This is opposed to the 100 percent that promoters are currently expected to pay.

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So, if an artist is in breach of an agreement and cancels a show, they will have to pay the promotor two times the artist’s fee. According to Billboard, this type of penalty is currently unheard of in the live music industry.

Recent polls show that many are reluctant to attend large gatherings without a coronavirus vaccine available. As well, some predict that ticket prices may be lowered if the economy goes into a recession. These are big factors that could lead to future canceled shows and low ticket sales for artists.

Live Nation reportedly states that its aware of the backlash the company may receive over these new policies.

“We are fully aware of the significance of these changes, and we did not make these changes without serious consideration,” Live Nation reportedly says.

Live Nation’s anticipated 2021 policies also include changes to artists’ payment terms, streaming requirements, billing, merchandise, airfare and more. The full reported memo is available to read below.

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. [As well as] 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. 

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.

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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.

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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 canceled 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.

What do you think about Live Nation’s reported 2021 changes? Are they fair to artists? Let us know in the comments below.

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