Sunday, May 29, 2005
This is simpler than managing cross-border taxes (pic courtesy:Tomko Consulting)
Jethro Tull lead singer Ian Anderson (he of the shining steel flute, wild eyes and deep, resonating voice fame) told this writer, in the course of an interview in an expansive sea-facing hotel suite in Bombay that one of his biggest headaches was not, as many thought, the hardship endured in his spirited stage performances. The question pertained to the source of his boundless energy which he dismissed to passion and love for music.
Anderson and Jethro Tull, for those not acquainted, average some 100 live concerts a year. A somewhat taxing schedule you might admit. Yes, particularly if you were born in 1947 (that makes you 58 today) and your first album (This Was) was released in 1968.
Lets put it this way; not many, including much younger rock musicians, can leap across the stage, wave a steel flute menacingly, pose like a heron, with one foot lifted up, touching the other knee, in addition to playing the flute, acoustic guitar, mandolin and harmonica and of course, singing too. At Anderson's age, most folks are either gardening or planning their post-retirement holidays.
The headache, as Anderson, who also runs a successful salmon farming business in Scotland told me, was international taxation. “Why is that ?” I wondered. “Well, we perform all over the world and reconciling the income and tax payouts across countries is a bloody pain.” So, thrashing out the intricacies of cross-border taxation was critical if not as important as repairing to the barn with the boys and stringing new melodies.
Money from Gigs…
A few weeks later, quite co-incidentally, a partner at audit firm Ernst & Young mentioned in conversation that they were quite familiar with the tax issues performers like Mr Anderson faced. E&Y, he said, ran a successful practice which catered just to this segment of clientele, managing the tax and audit requirements for performing stars and groups. One should have guessed actually.
Jethro Tull is not alone in its tax predicaments over concert incomes. For, the fundamental nature of revenues in the global music industry has changed. The big rock groups and stars, including Jethro Tull which is not in, lets say, U2 or Metallica league in size, often earn far more income today by way of performances than they do by way of CD sales.
Earnings from concerts have soared in the last six or seven years even as CD sales have either remained steady or dwindled. Actually, few artistes make real money from CD royalties. Visit a music shop today and a large, prominent section, even in stores like Rhythm House, Bombay, is devoted to DVDs of live concerts of popular rock groups, pop stars and even blues artistes playing for Black Entertainment Television (BET). Thus, its the DVDs which are the new arrivals not the CDs of long ago.
On The Road, For Money
A recent New Yorker article on the new touring economics is most revealing. Take the case of Metallica which still sells CDs from its back catalogues and has cut just one album in six years. Dying out, you might ask ? Well no. The New Yorker goes onto say that two years ago, the band earned almost $50 million from its Sanitarium tour and last year, it earned $60 million from its Madly in Anger with the World tour.
Last year, the article says, 13 different artistes earned more than $40 million each at the box office while Prince alone earned $87 million. Music lovers might hesitate to pay $19 for a CD but willingly shell out several hundreds of dollars for a live performance, the New Yorker says.
It’s a global phenomenon. Most of us would hesitate to pay more than a few hundred rupees to buy a Mark Knopfler CD but gladly paid Rs 3,000 a few months ago to stand on muddy ground and watch him live on a warm summer evening in Bombay. And it was an old Knopfler, seated most of the time, not the youthful, energetic British rocker who recorded Money for Nothing two decades ago.
The New Buffettonomics
It’s a phenomenon that's almost inexplicable. Stars of yester-years are back on the music circuit with their concerts. Today, record sales promote tours, unlike earlier, when tours were chiefly a means to promote records. The DVDs of the concerts often attract more attention than perhaps their CDs, creating a new cycle of earnings. If the early visits of singers like Ricky Martin to India represented the old trend, Sting and Joe Satriani represent the new order. And the almost bizarre part is: it’s the oldies who are scoring the most..
How old ? Well, have you heard of Engelbert Humperdinck ? If not, it might be worth trying to, either from your parents or Google, whichever you can access first. Tickets for the crooner’s auditorium concerts in Bombay, Delhi and Bangalore are expected to, if rumours are to be believed, sell for for a cool Rs 7,500 for the front seat and Rs 3,000 and Rs 1,000 for the back benchers. Humperdinck (The Last Waltz, Release Me) was born in 1936 in Madras which makes him, well, just 69.
Or try country singer Jimmy Buffett, born 1946 in Pascagoula, Missisisipi. He might be a year younger than Tull’s Anderson and his concerts far less strenuous but that does not stop him from being one of the top concert grossers in the world ! Trade magazine Pollstar (who New Yorker quotes liberally for the article referred here) says in 2004, Madonna aged 46 drew an average $5.7 million per city. Elton John, now aged 57, stood at $3.9 million and Jimmy Buffett, two years short of 60 years, an average $1.3 million.
Surprised. So was Buffett, apparently. In a recent interview to a journalist, he said, “What gets so surreal to me is that I figured this was going to peak some time ago. I thought everybody would start going to somebody else’s shows. But it hasn’t happened.” Buffet, as I discover, has something in common with his namesake and legendary investor Warren Buffet ! The singer owns shares of Berkshire Hathway and sang a two-line ode that was played at the company’s AGMs in 2003 and 2004 ! He’s also friends with Warren for more than two decades.
And Buffet mania continues.. Pollster, in an article a few weeks ago, questioned the $100 parking fees for a Jimmy Buffet concert in Pittsburgh, Pennsylvania next month. The parking company which controlled the lots said they felt fans were willing to cough up since they had paid (the concert’s sold out) anything between $46 and $126 for tickets. The company was now looking forward to a Rolling Stone concert where they hoped to levy similar if not higher parking charges. Buffett has 6 concerts in June.
36 Years & Going Strong
The Allman Brothers take the proverbial cake. Records of the band are tough to find in India, Allan, a close friend, is a fan, sings their songs, strums the chords on his guitar and yet one senses a fading association, that has lost connect over time, pretty much like when someone attempting an imitation of the Delta blues musicians of the 1950s and 1960s.
Allan ought to take a little detour in his next visit to the US. The Allman Brothers, founded 36 years ago, is playing to sell-out crowds later this month at Milwaukee, Wisconsin. The day after, they are at Toledo, Ohio and two days later at Augusta, Memphis. They close the week at Manchester, New Hampshire before returning the following week to Ohio to perform at Cleveland.
Greg Allman, all white hair and beard, will perform in 14 concerts in July and 13 in August, from Rosemount, Illinois to Canandigua, New York. Tickets are more affordable when it comes to the Allman brothers. An internet ticket booking site I looked up showed tickets at Milwaukee going for around $20, excluding a building facility charge of $8.15 and convenience charge of $7.80.
Pay & Be, Up, Close & Personal
Welcome to the performance economy, where folks dish out huge premiums just so that they can see, experience perhaps even touch a performer. For instance, most of us would hesitate to pay more than a few hundred rupees to buy a Mark Knopfler CD but gladly paid Rs 3,000 a few months ago to watch him sing live to us on a warm summer evening in Bombay. And it was an old Knopfler, seated most of the time, not the youthful, energetic British rocker who recorded Money for Nothing two decades ago.
Have you heard of Englebert Humperdinck ? If not, it might be interesting to find out, either from your parents or Google, whichever you can access first. Tickets for the crooner’s auditorium concerts in Bombay, Delhi and Bangalore are expected to, if rumours are to be believed, sell for for a cool Rs 7,500 for the front seat and Rs 3,000 and Rs 1,000 for the back benchers.
And it all adds up quite neatly: Margins on performances are much higher (almost 50%) and can be collected more or less upfront, unlike CDs where royalties at a maximum of 12% of sales and will arrive only after a host of other commitments, including studio time, packaging costs etc have been met. Yes, its hard work.
The new performance economy will ensure countries like India get a better share of live gigs in coming years. Yet, the US is way ahead. A big band can do 12 to 15 sell-out concerts in just five or six north American states – in one month. Allman Brothers is contemplating a Europe tour for some years now, they just don’t have the time. America still has a huge and hungry populace waiting to see, watch and experience them.
The performance economy has its own economies of scale, Milwaukee to Toledo can be achieved in a day, Bombay or Delhi cannot. Distances are not much in developed country terms but transporting gear from Bombay to Bangalore or Delhi can take two days and is a process fraught with risk.
And its just three or four cities in India which can command the ticket support required to host the big gigs, contrast that with 12 concerts in four or five states, with of course much easier transport logistics. And average ticket prices have to be higher to pull in an Elton John (avg price: $158) or Madonna ($144) and Celine Dion ($136).
Huge sponsorships accompanied by complicated accounting jugglery typically involving donations to causes like Aids awareness have to be put in place to balance the costs. Cities like Bombay are plain hostile to gigs. Entertainment taxes have been relaxed but the logistical strain has not reduced. A constant bugbear is politicians to senior policemen wanting free tickets.
And yet there is hope. A few concerts are happening, driven clearly by the performers’ desire to earn an income rather than, perhaps, the public’s desire to see them live. Pop artistes are hitting the road, traveling to smaller towns, beginning with Chandigarh and ending up at Bangalore. Bollywood’s playback superstars don’t see much potential on the concert trail though, the organization is missing as is perhaps the deep rooted desire.
Which is perhaps why Bollywood leans on the same model and flies to America with exhaustive stage shows managing at one go to satiate diaspora appetite, beat piracy and of course, as many claim, salt away the dollars somewhere..That's performance economy for everyone !