Are Livestream Concerts Worth it for Bands? A Detailed Financial Analysis.

UPDATE, December 16: We have published a new article with revised finances based on information obtained after this one was published. Read that update here.

Original Post:

The livestream industry has exploded as the pandemic has shut down live concerts for the past nine months, with no visible end on the horizon. With their primary source of income completely gone, bands have been experimenting with the format in an attempt to generate some money for themselves while keeping their fans engaged.

But how successful have those efforts been? Putting on full production livestream shows is expensive, and while the opportunity to sell tickets to the entire world with a single performance certainly opens up the income pool well beyond what any one date on a standard tour would offer, it’s unclear whether that makes up for the massive cost of doing so.

By and large, bands and their handlers are still very much experimenting with the formula, trying different combinations of formats and tools. But some new information released by Underoath, who in July streamed three individual performances under the Observatory moniker, may help shed some light on the issue.

Tucked away in a press release announcing that Underoath have now made one of those livestream performances available for purchase (video) or free streaming (audio) was this revealing nugget about the series’ finances:

“After their groundbreaking, unparalleled, and influential Observatory livestream series this past July, which grossed almost $800,000 in total sales (including tickets, merch, and vinyl) across 54 countries…”

If we’re to take that figure at face value and assume no financial shenanigans are afoot, $266,667 gross per show is certainly nothing to sneeze at. But how does the band make out after expenses are taken out? And how does that compare to what they’d earn on a full tour?

Let’s do some math.

First, it’s important to note that expenses for livestreams can vary greatly depending on a number of different factors, and all of those details are impossible for us to know with exact precision.

For example: what did the venue cost to rent out? How many camera operators were on hand? What fee did the streaming service charge? How much did those sick lights cost?And so on and so forth. We do not have this information, but we’re able to make some educated guesses for the sake of this analysis.

An industry insider I spoke to who has put on several livestreams for his clients broke it down for us as best as possible, explaining the ranges of the various expenses involved in livestreams. Based on that conversation, here are some estimates for expenses on each one of Underoath’s three streams:

$20,000: live event production (venue rental, camera operators, live video switcher, lights, monitors, audio mixer)
$40,000: broadcast platform fee (20%)
$30,000: management (15%)

Those are hard costs, so $90,000 comes off the top right away. Those estimates might be low — the sky is the limit for production (but conversely, if the venue is owned by a friend of the band, the cost could be lower), and broadcast fees can run as high as 30% for some platforms.

But that’s not all for expenses. Underoath’s gross figures include merch sales, so how do we figure out what that merch cost to make?

One interesting tidbit that our source told us: for the events he has run, “Almost everybody who bought a ticket also bought merch.” He estimates that for an event with 10,000 tickets sold, it’s likely that between 8,000 and 9,000 of them bought merch, and that ratio has held firm at both lower and higher levels of attendance. That’s really impressive.

Here’s what we do know: tickets for each Underoath stream cost $15. Without any merch sold at all, that would mean the band sold 53,333 tickets for all three shows combined which, of course, is not the case. If we use an average figure of $30 spent per person, that number drops to half. $40 and it drops to 20,000 tickets sold, $50 and 16,000 tickets. And so on and so forth.

Let’s be nice to Underoath and guess that the average amount spent per head was $40, meaning 20,000 individual tickets were sold. By our source’s estimation, that would mean approximately 17,000 of them also bought at least one piece of merch. Shirts (cost to band: $6 each) and vinyl (cost to band: $10) were both on offer, so let’s call that an average of $8 per head (we assume most people either bought a shirt OR a record) that the band spent to print and manufacture merch. If the band printed shirts on-demand, costs are higher: a multi-color design printed on-demand could easily cost $10 each. But, again, let’s be nice to Underoath and call it $6 cost per shirt OR $10 cost per vinyl, averaging those to $8 Underoath had to spend to make merch for each person who bought something.

And so: 17,000 x $8 = $136,000

Let’s also consider that some fans most certainly bought more than one piece of merch. This is where we venture into purely speculative territory, but let’s add in a flat $10,000 of costs to account for what those people bought.

Yikes! All of a sudden our top line is starting to shrink. Take that $136,000 + $10,000 in merch expenses and add it to the $90,000 in hard costs, subtract all that from the gross average of $266,667 per show and all we’re left with is $30,667 profit.

Which isn’t bad, despite how it looks compared to the gross! A booking agent we spoke with estimates that amount would be on the high end of what Underoath would earn from a regular headlining show. Assuming all six band members are paid equally (not necessarily the case), each would walk away with a little over $5,000 per show — so $15,000 for the three.

But! More expenses: with band members living in different locations, flights, hotels and other travel arrangements needed to be made for these shows to happen, in addition to the same for the crew, local ground transportation, feeding everyone, etc. That’s another $5k-$10 off the top, easily. Now we’re down to $20k-$25k profit per show, which is roughly $3k-$4k per band member.

It bears repeating: our numbers are estimates. Expenses could have been considerably higher in a number of areas, as we detailed above.

Still, if our math is correct, the band walked away doing alright on these livestreams. Not GREAT, and income from three shows isn’t going to replace a full tour — let alone multiple tours a year — but it’s something, and it proves that the concept works (at least before diminishing returns with each successive livestream come into play — would fans continue to pay for similar events in the future?).

Not all bands are at Underoath’s level, of course, and it would be foolish to assume that just because it worked for Underoath it will work for other bands regardless of size. What’s more, again, our numbers are estimates and the real figures might not track with them.

But at the very least, it looks like the concept can work. If expenses were higher than we’ve estimated, Underoath know where to cut corners next time. If expenses were lower than we’ve estimated, they walked away from these streams with very nice paydays.

With proper touring unlikely to resume until fall of next year at the earliest, bands will surely look to host more livestreams in 2021. And now that there’s a model, and a proven demand, I reckon bands will continue doing special one-off livestream events even when touring does return. There’s some gold in them there hills for sure.