Economics 101

by Baker Lee
in FOH at Large
Illustration by Andy Au
Illustration by Andy Au

Much like everybody else on the planet, I have recently been distracted by the daily news and non-news reports regarding the present administration. Since the inauguration, new shocking and head-scratching revelations have been brought to light on a daily basis, thereby making our collective reality seem like an episode of the television shows, House of Cards, Veep and Homeland all rolled into one. While it is amusing and entertaining to watch the heroes and heroines of these shows melt down and self-destruct due to their self-serving attitudes, the comedy and irony of these scripts is lost when translated into our real-life experience.

›› Indicators

One of the realities that has been noted during the first few months of the new administration is that tourism is down, and the travel website, Kayak, has stated that interest in traveling to the United States has waned in 2017. Online searches for U.S. destinations have fallen and the hotel rates for NYC, Las Vegas and Los Angeles have been cut by as much as 30 to 40 percent. Since Jan. 20, 2017, tourism to the U.S. is down by about 17 percent. To understand how dramatic this drop is, it must be noted that U.S. tourism generates approximately 8 percent of the GDP, and a drastic plunge in numbers can easily lead to loss of jobs and revenue. The travel industry generates about $60 billion dollars annually for New York City alone, and for those of us who provide audio services, these numbers could prove to be problematic.

›› Audio Effects

I have already noticed that, in the first few months of 2017, the event business has been down between seven to ten percent from the same time in 2016. At the moment, there is no solid proof that this is a direct result of the current administration and its changing policies, but if people are hesitant to come visit the country for pleasure, then the concern would also be that there are companies who might take their business elsewhere to stage their trade show or event. If certain bands are denied entrance into the country, that too could be the cause of revenue loss as certain events revolve around the specific bands.

The entertainment business is different than other businesses, and sometimes seemingly immune from changes in the marketplace, yet it is still capable of succumbing to the politics and financial fluctuations of the day. When oil prices rose in the late 1970’s, many of the large touring bands had to rethink their 15-trailer shows, as they had not budgeted for the huge oil price increase. During the recession at the beginning of this century, many top name acts such as Rihanna, The Eagles and Lilith Fair all had to cancel shows or cut back their tours, as it was difficult getting enough people to shell out for the high ticket prices.

In the 1980’s, live events made up a third of the revenue that album sales provided. In the 90’s, concert sales brought in half as much as recordings. In the 2000’s, the album sales had a small lead, and by 2010, recorded sales dropped to about a third of concert sales. Considering that the touring market has come to be more financially viable than recorded sales, it would be a real blow to the pocketbooks of the people depending on live shows if some official government policy were to infringe upon ticket sales.

Despite recent attacks in nightclubs and theaters, the fear of terrorism has not kept people from going to live concerts or events, and this bodes well for us in the live production field. Unfortunately, the revised immigration laws are keeping certain people at home and also quite a few from visiting the country. As travel around the globe for professional and personal reasons becomes more difficult, it would appear that our industry is likely see a drop in revenue due to an inhospitable atmosphere of isolationism. This same attitude is also beginning to be mirrored by European countries that, citing a more stringent protocol, are also making it difficult for traveling bands.

During the 1990’s, as jingle houses and recording studios began to lose out to the home studios, a Broadway contractor told me that the session player who was making $100,000 a year was then cut to only making half of that. The studio musician making $50 grand dropped to $25 grand a year, and the guys making $25K had to leave the business altogether. I assume some went into a different line of work, but many of them followed the money trail, which was the live performance market.

While the administration is hard at work making a case for a travel ban to the U.S., the actual risk of foreign terrorism in the U.S. is very low, and statistics show that a person in the U.S. would be far more readily felled by a car crash or a heart attack than a terrorist attack. While it is important to keep our borders secure, it seems reasonable that we, as a country, should also make sure that people feel welcome to come as tourists as well as for business. According to the Global Business Travel Association (GBTA), since January 2017 the tourism industry in the U.S. has so far reportedly lost $185 million dollars — some of which might have found its way into the pockets of the live entertainment industry.

Our livelihoods depend upon selling tickets to people who want to go out and have a good time. Draconian laws and a repressive environment do not do much in the way of attracting the required peopled needed to fill seats and fill our coffers. Flight demand to the U.S. has dropped in 94 out of 122 countries — and not just from the countries that were hit with the travel ban. Interestingly, while flight search demand was down in a majority of countries, the one country where the search demand was up by 88 percent was Russia — go figure.