Live Music is a Dying Industry
The death of Frank Pallett etched the fate of The Chance Theater in stone. A mainstay in Poughkeepsie’s live music scene, The Chance was a theater with over a century of heritage that offered a venue to Count Basie, BB King, and The Ramones when their music careers were still in their infancy. Pallett took ownership of the theater in February 1995 and spent the rest of his life developing it into a place worthy of acts like Bowie and The Rolling Stones, as well as making it a launchpad for local bands to cut their teeth as live performers. When he died in 2021, Poughkeepsie mourned the loss of a local hero, but the city pondered the fate of this historic venue. The venue permanently closed its doors in October 2023. Chai Developers, the new owners, plan to renovate the theater while maintaining its heritage; however, the theater’s indefinite closure indicates the end of an era and reflects a greater global grassroots music venue crisis.
Reportedly the ‘worst year’ for grassroots music venues; 2023, according to the Music Venue Trust, a UK-based charity protecting grassroots music venues in the country, saw 125 small music venues permanently close and another 365 report financial losses. While the industry contributed £501,101,118 to the British economy, the sector’s expenditures were £498,615,115, meaning that the grassroots live music industry in the UK is operating at a net profit margin of 0.5% (Music Venue Trust, 2023). These razor-thin margins mean that smaller music venues are forced to sell out their shows, limiting the ability of artists without a proper following to perform at these venues. Grassroots live music venues cannot afford to take risks, and even if they don't take any, rising costs may still eat them alive.
Yet, from a birds-eye view of the live music industry, things seem relatively healthy. Live Nation Entertainment—a corporation that accounts for an estimated 51.8% of total live entertainment revenues (IBISWorld, 2023)—reported a 36% increase in revenue and a 90% increase in net profits; up to $22.7 billion and $563 million, respectively (Live Nation Entertainment, 2024). A live music crisis is happening during a period of growth for the industry, indicating that the root of the problem is not a lack of demand, but a separate externality adversely impacting those at the lowest level of the industry. The live music crisis is not a ‘live music’ crisis—it's a housing crisis.
Soaring rent and utility bills, with an average rent increase of 37.5%, according to Music Venue Trust (2023), are suffocating these venues. The BBC cites Pauline Forster, owner of London’s George Tavern, as an example of rising venue costs: “‘The electricity bill shot up 300%...and that’s before heating…Worse still, many insurers increasingly deem live music spaces ‘high risk’...They think we’re all going to go bust’” (Forster, as cited in Taylor, 2024). These rising costs are drowning live music venues—and this is despite customers having to pay more for their tickets. At this point, one begins to look outside market forces and turn toward the government for potential solutions. This will manifest itself in governmental subsidies to either small music venues, or to the developing artists expected to perform at these venues.
‘A firm unable to stand on its own should fall,’ this is the essence of industry in a free market. If there is insufficient demand for live music to justify an increase in ticket prices relative to the cost of supplying the show, then it is an industry not worth saving. ‘What responsibility does a government, and therefore the taxpayer, have in saving an industry unable to stand on its own?’ This argument, although coming from a hypothetical strawman, represents a common line of dialogue amongst dissenters of governmental investment in the arts, and presents a pertinent counterargument to government subsidies overall. Lawrence W. Reed—current Interim President for the Foundation for Economic Education—argues against government subsidies, as this “‘public investment’ simply displaces a certain amount of private investment” (Reed, 2003). While this makes sense for financial returns, with Reed arguing that it is not the government’s responsibility to determine which investments are sound on behalf of its populace, this argument doesn’t account for the cultural returns, often unable to be financially measured, that investment in the arts has the potential to bring.
The point at which a government subsidizes an industry, as explained by Dr. Andrew Kosenko, Professor of Economics at Marist College and Columbia University (personal communication, February 23, 2024), is “whenever there are positive externalities to something, such as music, or public health. The market would underprovide the good or the service, and the government would step in to provide more of that [good or service].” This concept of ‘positive externality,’ or the indirect, social benefits of a good or service, is key to understanding the viability of government intervention in this industry, yet remains a concept that, at least for live music, is difficult to accurately measure.
A paper published in Arts and the Market attempts to compare different methods of measuring live music’s value, concluding that “measuring live music is a complex, multi-faceted phenomenon…enhanced by the fact that measuring live music is not a neutral activity, but itself constructs a vision on how live music ecologies ought to function” (van der Hoeven et al., 2021), arguing that, while measuring the external value of live music, the researcher imposes their own biases on the importance of the live music industry. Despite this unquantifiable value of live music, there have been efforts from both venues and governments to preserve this industry; from venues filing as non-profit organizations (Gage, 2023) to San Francisco offering a monthly basic income of $1,000 to qualifying artists (Borecka, 2022). Even if unable to be quantified, populations still recognize the value of live music.
Grassroots music venues are not just vessels for entertainment, they are the industry’s research and development facilities. It is here where the biggest acts in the world begin their careers, both as public figures and as professional live performers, testing their efficacy in an industry that relies on their performance skills. Ed Sheeran, Coldplay, and even acts like The Beatles, would not have become the phenomena that they became if it were not for the small, grassroots music venues that hosted them. The potential cultural value of an artist or band developed at this level is impossible to measure; however, the risk presented by these venues closing, therefore limiting the possibility for acts of this caliber to develop, is too great a gamble to bet on. Because of this, governments should subsidize these venues and save the grassroots live music industry from the housing costs that are eating it alive.
So, what does this mean for live venues like The Chance? At present, the future remains uncertain. Jay Blumenfeld, the COO at Chai Developers, offers an air of optimism for The Chance Theater, saying that the company ‘took it upon [itself]’ to revitalize and restore the venue (as cited in Ferris, 2023), and this will be true for the rest of the grassroots live music industry. An entity, or several entities, whoever they may be, will have to come in and take it upon themselves to bail these venues out. Hope, and individual support for these venues, are all that the industry can currently hold on to, and while this is concerning, I remain hopeful for the future.
Works Cited
Ferris, M. (2023, September 17). The Chance in Poughkeepsie to close temporarily. Times Union. Retrieved from https://www.timesunion.com/hudsonvalley/culture/article/chance-theater-poughkeepsie-closing-18366840.php
Arno van, d. H., Behr, A., Hamilton, C., Mulder, M., & Rozbicka, P. (2021). 1-2-3-4! measuring the values of live music: Methods, models and motivations. Arts and the Market, 11(2), 147-166. doi: https://doi.org/10.1108/AAM-09-2020-0041
Gage, J. (2023, June 28). How Independent Music Venues Will Survive. Rolling Stone. Retrieved from https://www.rollingstone.com/music/music-features/how-independent-music-venues-will-survive-1234774162/?sub_action=logged_in
Borecka, N. (2022, January 23). SF tests guaranteed income program. San Francisco Chronicle. Retrieved from https://www.sfgate.com/sf-culture/article/sf-tests-guaranteed-income-program-16791353.php
Reed, L. W. (2003, April 1). What’s Wrong with Government Funding of the Arts? Mackinac Center. Retrieved from https://www.mackinac.org/5422
Taylor, A. (2024, January 24). Grassroots live music venues suffer ‘most challenging year’, report says. BBC. Retrieved from https://www.bbc.com/news/entertainment-arts-68050664
IBISWorld. (2023). Live Nation Entertainment Inc. Company Overview. Retrieved from https://my.ibisworld.com/us/en/company-benchmarking/10039/company-overview
Live Nation Entertainment, Inc. (2024, February 27). Form 10-K. Securities and Exchange Commission. Retrieved from https://investors.livenationentertainment.com/sec-filings/all-sec-filings/content/0001335258-24-000017/0001335258-24-000017.pdf
Music Venue Trust. (2024). MVT 2023 Annual Report. Retrieved from https://www.musicvenuetrust.com/wp-content/uploads/2024/01/MVT_2023-Annual-Report_Digital.pdf.pagespeed.ce.8gLcgJ--QC.pdf
