Can Live-Streaming Ever Replace Live Gigs? Pt.2: Making Money

A few weeks ago, I wrote a piece discussing live-streaming’s prospects and potential to replace live gigs as the dominant way for fans to attend music gigs. I summed up some of the challenges that might prevent this, but also wanted to highlight that we were in the early days of this medium, there’s a lot left to learn. Ultimately, it seemed that a bright future of live-streaming was a long way off. 

Then it happened. BTS happened.

For the uninitiated, BTS are the biggest band on the planet. They have 12 million monthly listeners on Spotify alone, and their collaboration with Halsey currently clocks in at half-a-billion listens. Their appeal is a potent blend of a parent-friendly clean-cut image, a cynically-devised but nonetheless compelling ‘universe’ of content, and a good old-fashioned upbeat pop style that’s just interesting and varied enough to keep their fans listening on repeat.

On Sunday 14th June, BTS hosted their Bang Bang Con live-streaming concert, drawing 756,000 paying viewers, who tuned in for 100 minutes of songs, choreography and general goofing around in aid of celebrating the band’s seventh anniversary. It is currently the highest-grossing live stream gig, an accolade that’s likely to become increasingly contested the longer we’re kept away from the arenas, stadiums and venues that would normally be the home of touring acts.

Perhaps unsurprisingly, this achievement is being held up as proof that live-streaming can break-through and become a permanent fixture of the modern touring act’s arsenal. So let’s examine this claim, by pitting the world’s most profitable live-stream concert against the world’s most profitable venue tour.

EARNING POWER

So, let’s start with the big numbers. Tickets to the live-stream sold for $35 for regular punters and $26 for members of BTS ARMY fan club. Let’s assume that the majority of people tuning in were hardcore fans. If three quarters of viewers were paying the ARMY ticket price, the gig probably turned over somewhere in the region of $21,357,000. This means that they earned gross revenue of $3,559 for each second they were on-air.

Ed Sheeran’s Divide Tour is the highest-grossing tour of all time, earning $775,000,000 in gross revenue over a two and half year tour, across 255 dates. This means a take of approximately $2,960,000 for each individual date on the tour. The average ticket price was 2-3 times higher than the BTS live-stream at $88 per ticket, meaning 8.8 million people saw the gig; that’s an average attendance of 34,536 per date.

We also need to consider the outlay for running these events. The costs of running an arena tour across multiple cities, countries and continents are manifold; taking a cut are session musicians, ticket sellers, hospitality staff, runners, hotels, travel etc. It’s estimated that as much as 30% of the ticket price covers these overheads, before the remainder can go to the artist and promoter. While there will have been tech, marketing and production costs associated with BTS’ Bang Bang Con, it’s easy to see how much cheaper the entire project can be to broadcast.

In short, the live tour earns less revenue per gig and costs substantially more to put on. Live-streaming is the way forward, right?

Not so fast. One of Ed’s gigs only reaches a small proportion of his fanbase, but a whole tour adds up to a whole lot more...

GLOBAL VS LOCAL

Much of the coverage has focused on how much revenue live-streaming can generate on a per-gig basis; on this metric, Bang Bang Con clearly blows the individual dates on Ed Sheeran’s tours out of the water. There are no venues on planet earth that can accommodate 700,000 people safely. The biggest stadiums in the world top out at 100,000 people. Even the world’s biggest festival only allows 350,000 people onto the site at any one time.

However, while Ed Sheeran is “only” able to draw 35,000 punters to each date, he’s able to travel the world and perform 255 dates, which adds up considerably and allows the artist to unlock more of their fanbase. Bang Bang Con, by contrast, is global by design; there are no travel challenges or capacity limitations that would prevent anyone from attending, so Bang Bang Con isn’t a date in a tour; it IS the tour. Assuming there are no limitations on ticket sales, then pretty much everyone who would want to pay to view the live-stream probably did. 

Using the measure of fans-to-attendees, calculated by working out tour attendance vs. total monthly Spotify listeners, Bang Bang Con drew 6% of BTS’ 12 million listeners, while the Divide tour drew 16% of Ed Sheeran’s 53 million listeners. This seems to bear out the hypothesis that live touring has a higher headroom for attendance compared to live-streaming.

Live tours are also able to charge more per ticket, and the increased cost of a live ticket is more than enough to offset the higher production, travel, personnel and admin costs of delivering the experience. 

In short, Ed Sheeran’s live venue tour managed to reach a higher proportion of his fan base and generate more value-per-fan than the BTS live stream. So touring is actually the better option after all, right?

Not so fast. Ed Sheeran’s tour took place over the course of two and half years. BTS generated 100% of their revenue in a single evening...

THE FREQUENCY FACTOR

So we have to consider the frequency at which someone might be willing to pay to view their favourite act live stream over a given span of time. The nature of touring is that the artist can only be in one place at one time. For instance, over the course of Divide’s two-and-a-half year run, Ed Sheeran returned to London only five times. By contrast, BTS could conceivably perform to the same global audience every month, week or day if those people are willing to pay for it.

As it turns out, audience frequency is the major determining factor for live-streaming’s profitability versus touring. A tour packed with dates can typically top out at a gig every two days, on average. It’s gruelling, but it’s achievable. To keep finding new paying audiences, the act needs to continually travel. 

The below chart shows how total revenue grows linearly in line with average number of ticket sales per person. The blue lines indicate roughly what kind of frequency this amounts to over a two-and-a-half year tour. For example, if someone buys five-six tickets over a two-and-a-half year period, this is approximately bi-annual. If someone buys 30 tickets over two-and-a-half years, they’re buying a ticket every single month on average. 

Assuming that Ed Sheeren can attract 6% of his fanbase to each live-stream gig, and charges the same as BTS at $35 per viewer, he only needs to gig twice per year to earn the same amount of revenue over a two-and-a-half year period as he did playing 3.5 gigs per week on the Divide tour. And he could conceivably achieve this without setting foot outside of his home.

CONCLUSION

I appreciate that some assumptions and hypotheticals have had to be made in order to feel our way through this analysis, but I believe most of the assumptions are at least reasonably grounded, and at least get us to the right conclusion even if the finer details might vary.

Assuming that there is a subsection of the artists’ fanbase who are happy to pay for live-stream gigs and that this subsection doesn’t shift massively over time, the viability of live-streaming as an alternative revenue stream for musicians seems to stand or fall on how frequently they can persuade this group to buy a ticket for a live-stream gig. Within the realistic range of how often someone will buy a ticket for a live-streaming gig is the difference between being more or less profitable than touring; that’s how crucial this factor is.

This is all theoretical, and just as there are theoretical opportunities, there are also theoretical challenges, such as revenue lost through co-viewing and the possibility that live-streaming doesn’t offer a deep or sustainable enough experience to keep fans coming back.

But perhaps I’m being a bit hasty. It’s unrealistic to compare the nascent live-streaming market against the mature touring industry. Perhaps Bang Bang Con is more of an indicator of things to come; a proof-of-concept for a fertile future of live-streaming. In the next installment of this series (yes, there is a next installment!) we’ll explore the format of live-streaming, and go into depth on what lessons need to be learned in order to capitalise on the uniqueness of this medium.