Industry Op-Ed

Radius Clause Evolution

Sep 10, 2020

5 min read

Radius Clause EvolutionRadius Clause Evolution

No one wrote virtual gigs into the controls. With the COVID-driven disappearance of festivals, all the artists on 2020’s summer lineups have been free to play in the virtual space whenever and wherever they want.

That freedom will not last. 

As it plans for 2021, the music industry is forced to assess how virtual performances factor into touring, and how to manage artists’ performances in a space formerly occupied by festival livestreams. The festival ‘radius clause’ needs to be updated and rewritten, and the theory behind them needs to be reconsidered as new possibilities continue to emerge for livestream performances.

To say this has been a chaotic summer for virtual festivals is an understatement. Everyone is new to this, and it is exciting. The festival space had become rather predictable. Successful festivals repeated year after year, while high start-up costs built a massive barrier to entry. In the virtual festival space, start-up costs can be lower, and that creates access for new players with fresh ideas.

Festivals, artists and entrepreneurs have experimented with virtual shows with varying degrees of success, profitability and audience. Virtual venues are launching daily and will differentiate over time. When the live business returns, the explosion of virtual connectivity will have to be balanced. There is no returning to the time before.

Read more: Artist Spotlight: Sofi Tukker – Freak Fam, House Arrest and life during the quarantine

Pre-COVID, questions about when, where and how talent played for the majority of the year have traditionally been answered by festival radius clauses. These agreements dictated that talent would not play any shows for any other promoter in a certain area for a period of months. 

“You are playing our festival for X dollars,” for example, “so you cannot play anywhere in the state of California, Nevada, or Arizona for three months prior to our show or three months after.” 

Promoters created talent scarcity with the twin goals of selling out the festival and crushing competition. Until this year, festival talent bookers never worried about virtual gigs and neither did anyone else. The reality of festivals was satisfying and profitable enough.

Festival talent agreements usually obligated an artist to agree to a livestreamed performance at no extra cost. Pre-Covid streams gave far-away fans a way to see a show, but they were mostly a flashy lure used to extract bonus sponsorship dollars and attract future ticket-buyers. With this summer’s quarantine-induced run on the digital space, livestreams are now a top priority. People have no choice but to watch online. Most importantly, they’re starting to pay for the privilege.

Adding livestreams in addition to live shows generates many new questions. Will promoters sell access to virtual versions of shows in addition to the in-venue concert? Will promoters require in-venue tickets to sell out before releasing livestream access? Will that access be limited to fans in specific geographic locations? How will VIP experiences, such as backstage meet & greets, be offered for livestream guests? Are promoters even necessary for virtual no audience shows? Will artists continue to do virtual-only performances? How many? How will livestreams be priced?

It’s dizzying, sure, but make no mistake: The competitive landscape has changed. Physical venues are not the only option for artists to connect with their fans in a live context. Artists who relied on tour money have an escape hatch—one where established artists can replace local promoters with technical producers. Artists can perform from home, rent a venue or create a fantasy space using the Unreal engine. It does not have to mirror what happened at their concerts. Audiences will always continue to support the artists they love.

Read more: Industry Op-Ed: VR is the Future

Festival producers, artists, managers and agents will have to add virtual performances into their deals. The industry is going to have to answer these questions in real-time. Given the potential for additional audience and revenue, this is a good problem to have, but the negotiations will, as usual, center on who gets how much.

Summer 2021 may be the first year festivals charge for access to their full livestream – perhaps using summer 2020’s lost revenue as justification. As soon as promoters confirm they can sell sponsorship for a livestream and sell fans access to the livestream, the best version of livestreams will no longer be free. Maybe that drives improvement on the quality of festival livestreams. There has never been a live music equivalent of an NFL broadcast, and for innovation’s sake, there should be. 

Free access to livestreams kept artists from claiming a piece of the sponsorship revenue. If promoters start selling access to the livestream, artists will be in a position to demand a bigger fee tied to the number of livestream purchasers. Artists will also want access to viewer data, aka their fans. The closer the artist’s connection with their fans, the less need for money to flow and be shared with other companies inbetween (promoters, platforms, etc.). This creates strong potential for a win-win scenario where artists could make more money AND charge fans lower prices.

There will be a million different solutions, and that’s exciting. Some ideas will flash and disappear. Others will become a new way forward. 

Established promoters may permit virtual shows during the period covered by their radius clause (i) provided their festival is sold out and (ii) they get to promote the shows and share in the revenue. Established promoters will likely develop or acquire their own livestream performance solutions so artists need not look elsewhere.

Alternatively, artists will have options to produce virtual festivals with their friends, and determine whether they want or need a promoter’s help. Festival livestream performances could be sold as a package or a la carte. Whole platforms or networks will dedicate themselves to raising the bar of live music streams.

No one predicted a year without festivals, but the development of a real livestream business presents tremendous growth opportunities. New businesses are launching. Artists can develop new creative performances and new ways of engaging with audiences. People who could never attend shows in person can access them virtually. 

In the past six months, live performances have taken music to new places in new ways such as empty stadiums, bedrooms, and backyards. The pandemic has both forced and fueled innovations that resulted in increasing access to live music performances. At least in this instance, a little chaos goes a long way to making change.