Yesterday, (March 11) the World Health Organization (WHO) officially categorized Coronavirus (COVID-19) as a “pandemic”.
US President Donald Trump responded to WHO’s declaration with a travel ban on 26 European countries, sending global stocks into free fall.
The Dow Jones is now reportedly on track for its worst day since 1987 and $160bn was wiped off the FTSE 100 today, with the likelihood of a global recession now looming.
In the music business, amidst fears of the virus spreading, Live Nation Entertainment (LNE) continues to see its market cap valuation take a nosedive, and it’s come to light that South By Southwest (SXSW) – cancelled and uninsured – won’t be refunding ticket-holders, with a third of its staff also out of work.
The UK’s legendary Glastonbury Festival, which announced its lineup today in spite of unpredictability in the Northern Hemisphere’s events market, could stand to lose up to £100m if cancelled, according to a report published in Metro.
In Italy, the nation hardest hit by the outbreak – after China, where the virus originated – life has come to a complete standstill for most, with the entire country on lockdown until at least April 3.
Travel is highly restricted and restaurants, bars, cafes, venues and theatres are all closed – with the only shops permitted to stay open those selling food and medicine.
Speaking to MBW today, Claudio Ferrante, founder of prominent Milan-based distribution company and record label Artist First, describes the situation as “depressing”.
“The impact is catastrophic.”
Claudio Ferrante, Artist First (pictured)
Founded in 2009, the company has around 50 employees and reported a turnover of €10m in 2019. Ferrante tells MBW that his company was “enthusiastic” about its outlook for 2020… before the Coronavirus “nightmare”.
He estimates that monetary losses likely to be sustained in Italy’s live business over the next three months to be around €200 million.
“The impact is catastrophic,” he says. “Maybe in June, July, August, we will start [recovering], but live music has lost a lot.”
One of the only good things to come out of the lockdown for the music business, says Ferrante, is that people are streaming more whilst at home.
“Streaming is going up,” he says, “and [it’s] the only thing giving people [in the industry] hope to take some money home.”
He adds: “We need to [communicate] the positive side of this. Of returning back to our roots, of listening to vinyl; staying home. Self-consciousness. But it is a tragedy for all of us…”
What is the mood like in Milan at the moment?
It is very depressing. Loneliness is basically one of the elements of depression. If the government is forcing the population to stay at home, there’s no possibility to work.
On every Skype call, you see people in kitchens or in their bedrooms, with their children and wives, worried – worried about the economy and the collapse, which is a possibility, of their companies; not only in the music business, but in any field.
Do you feel like the Italian government’s response has been adequate?
I think so. At the beginning, when they released the first statement and they [implemented] the first action to contain the virus, we discovered that something was happening in our region. Codogno is the [town] where everything started and Codogno is very near to Milan.
The virus [was] very near to Milan, which is the capital of the economy, and of course, the music industry. Many multinational companies are here. When they declared the red zones, we discovered the inaccessibility [to the red zones] from the inside and the outside.
“the virus has been underestimated [by international community].”
At the beginning of the story, when they decided to declare the red zones, we [thought] it was an overreaction from the government. And most people were very upset about it, because we didn’t feel [that it was a] problem on February 23.
We then discovered that the virus was very dangerous for our hospitals and for intensive [care units] two weeks after, so Friday (March 6) last week. So the action taken by the government has been appropriate, in my opinion.
Seeing how things have developed in your region, do you think that other European countries’ responses have been adequate?
No, I think, [the virus] has been underestimated. Something is going [have] to happen in the UK in the next few hours or in the next few days. Also in France, and in Germany because it’s of concern for the entire Europe, not only Italy.
How are you keeping your business going?
We are keeping the business going in a bad mood. All the digital guys are working very hard now because we would like to take on the [best possible] service for our labels and for our artists.
Physical distribution, which is basically 40% of [the total market for Artist First] in Italy now, has stopped. We still have streaming. Streaming is going up and the only thing [giving] people hope to take some money home, from [streaming on] Netflix or Spotify, Apple music or Amazon Prime Music etc.
“In the past years, my company has put away]a sort of fund for emergencies like this. So, my employees are comfortable for at least one year.”
We are taking all the procedures to avoid job losses. In the past years, my company has put away]a sort of fund for emergencies like this. So, my employees are comfortable for at least one year.
We are facing a big crisis of the [entire] Italian system. I hope that the government will do something to avoid the collapse of the banking system, the financial system and the credit system.
When was the decision made for your staff to start working from home?
On Sunday, February 23 we had the first statement from the government and the Prime minister [Giuseppe Conte]. That Sunday I sent WhatsApp messages to all my staff saying that if anyone wanted to not come in, and work from home, that would be fine for us.
But [at the time] we were thinking it was an overreaction from the government, so I said to all the employees that everything would be okay. That I totally disagree with [the strictness of] all these remedies. And so, some of them came to the office, but day by day we experienced an increase of the nightmare.
Every day [brought more] bad news. And so we decided seven days after, on March 1, to work from home and that it would not be safe to leave home and to get public transportation.
You told MBW last month that the live music business has exploded in Italy recently. What are your projections for the short term and the long term impact that this situation will have on the live music business in Italy?
The impact will [last] until the end of May. The May 1 festival, Primo Maggio in Rome will probably not take place. We are talking about €200 million lost in the live music industry in Italy, in terms of ticket sales, in terms of sponsorship. All the releases of albums are also being postponed until [unknown] dates. The impact is catastrophic.
“Maybe in June, July, August, we will start [recovering], but live music has lost a lot.”
Maybe in June, July, August, we will start [recovering], but live music has lost a lot. And if you consider the people, the [freelance] employees who earn money just if they work. They will not earn money for the next three months at least. This will be the strongest impact, because when everything restarts, it will not be so easy to work [again] after a three month, four month [break].
You’re talking about all of the sub sectors involved in live music business, catering, facilities, crew members – a lot of whom are not full time members of staff and are on freelance contracts?
Yeah, the whole chain of the music industry is completely compromised this year – in a year that our forecast in January before this nightmare was so comfortable. We were very enthusiastic [about] our numbers. We expected 20% more business compared to 2019.
So, of course it will not be easy, but we’re doing something. The good news is that we are experiencing something with the artists. Artists that are [staging] concerts from their beds or their couches to sustain and help the intensive [care units] in hospitals [via crowdfunding].
Music can be helpful in this way. The whole music industry system, which is a cultural industry system needs the government’s help, because the artistic system can help with fundraising. But the music industry needs some help now, from the government and from the law.
The whole situation is obviously horrible for your artists and labels and managers, but is there a possibility that they could see a spike in their streaming activity, which might be able to offset any lost live revenue?
As you know very well, the king of the business now is live, but streaming will increase in the tragedy of this coronavirus. People are discovering streaming. The impact of streaming in future will be much more than one month ago. So, in the tragedy, people are discovering the streaming of music and the streaming of movies, because people [are] stay[ing] at home.
So I don’t think that this [is about] losing revenues from live and [gaining] revenues from streaming, but this will help our industry for the next two years. This kind of moment can be one in which people focus on the possibility to stream and to play more music.
Because music can be the only medicine. If you’re in completely good health, you don’t have any fever and you are healthy, you need another medicine now; music for your soul and to avoid depression. I’m talking to a lot of people, but I’m feeling the depression is very tangible, so music can be a medicine to heal the pain.
What are your colleagues at other companies saying about the outlook, whether it’s culturally or economically or mentally?
Mentally, it’s a devastation. For example, when you have to cancel 10-15 tours, and when you have to take care of many employees, much more than my company, or when you have some pre-sale tickets and you don’t sell tickets because of the coronavirus, you can become crazy.
So if you are exposed like many companies in Italy are, in front of the many artists some of the main artists, I think that should be a problem. A problem of perspective. What can we do now? But, on the other side, if you have a company which is not exposed, you can perhaps survive.
When your event [depends] on presale tickets and you [could] sell for example €350,000 [worth of tickets] per day, this will be a problem, because you block a sort economic golden circle. So, before the coronavirus you were selling €350,000 a day and now if you sell zero or €20,000 or €30,000, you are in trouble. It’s a Domino effect, [because] that affects employees, marketing directors. So my colleagues are very worried.
Do you think there’ll be a number of bankruptcies as a result of this?
If the European banks and financial system help our field, I don’t think that they will go bankruptcy, but we need some laws specifically [enacted] for our cultural industry.
You mentioned that you have a fund in place for your employees in case of an emergency. Is that something that you think other companies will have in place?
I haven’t asked them to be honest, But we can survive for one year without making any money. We can survive [even with] all our monthly fees.
“Emergencies, you know? They have no names. They have no face.”
I didn’t expect, to be honest, when I made the decision in 2014 to [pay into] a fund every year for emergencies, that this emergency would be an epidemic, pandemic or virus. I didn’t expect it.
But emergencies are emergencies, you know? They have no names. They have no face.
But I really hope [other companies] have made this kind of decision like me.
I have an obligation to protect my employees and the artists.Music Business Worldwide
