Below is the first of a series of podcasts interviewing practitioners in nightlife. This will explore their business models, attitudes to risk, and approaches to marketing and experience design (with emphasis on Fluency Vs Disfluency). Practitioners tend to learn ways of working from practical experience, driven by financial forces governing their actions. So whilst concepts discussed in this research project (such as Extremistan Vs Mediocristan, Optionality, Antifragility, Cognitive Fluency Vs Disfluency etc) might not be in their vocabulary, it exists in their actions.
John Burgess has been a music promoter for 24 years, promoting DJ-led club events in cities all over the UK and Europe, and is now based in London. He is founder and director of Field Day Festival (one of London’s biggest and most established music festivals), The Mighty Hoopla (a pop-music inspired LGBTQ festival), and Bugged Out! Weekender.
This was a fascinating conversation, with two main topics in particular germane to my study.
The first was the negative effects of relying on talent, particularly in an environment of intense competition. Burgess discusses the increased power of booking agents (the representatives of DJ talent), and the ever-increasing prices of such talent.
If the audience is given the name of an artist as the primary attraction of a night, then obviously it is that name creating the value in the eyes of the audience; since the promoter is one of many willing to promote such talent, an agent is able to command most of the value; if a promoter like Burgess baulks at the price, there is a queue of others willing to step in.
This explains why after 24 years Burgess discusses how tough things are – events one does not own do not add any cumulative value to the promoter, only to the artist. The promoter is essentially spending advertising revenue on making an asset more valuable which they themselves will subsequently be in an auction for.
Burgess discusses how the artist Disclosure played Field Day despite higher offers from elsewhere, because of the reputation and credibility of the festival versus a rival. The reputation of the event adds value, which is the essential point – promoters are paid in accordance with the value they add – hence the power of a narrative or experience created and owned by the promoter. They then cease to be merely a conduit for an external commodity.
Second is Burgess’ attitude to risk. Traditional economics, and behavioural economists such as Sunstein &Thaler assume risk is (or should be) accepted or rejected on the basis of the absolute odds of success. Taleb argues that it is the absolute downside which is the real driver or risk tolerance – that is, how ergodic the downside can be. Can this risk end one’s operations in the future?
Burgess’ story is illuminating. On the basis of selling 4000 tickets per week in Liverpool, he created a weekend festival which broke even at around that number, with what he describes as ‘a killer line-up for the time’. The absolute odds of success for this event were very high by his own assessment. His losses were huge, to the point of wiping out all savings he had, and having to take out an additional loan to cover these losses. The event was almost catastrophic, and by his own admission led to a risk averse attitude going forward. Now, ergodicity is the key to his risk assessment – literally checking the downside of any given venture against his bank balance – and not taking on potentially lucrative opportunities if they fail that test.
How does this relate to my study? Optionality. Burgess is governed by talent costs, and having to commit to an event with high downside for this reason – therefore his only mechanism of risk management is to pass on potentially lucrative opportunities. Therefore the business model lacks optionality and is fragile.
The next podcast will demonstrate a radically alternative model.