Music Biz Economics – How does the money flow when music bands tour? Do they “rent” out the theatre/stadium, or does the facility “hire” the band? Who takes the hit if tickets don’t sell?
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Assuming you’re talking about a well established and famous band on a tour. There are many intermediaries. Broadly speaking, the band gets a cut of ticket sales and, if they’re big enough, probably also a guaranteed payment on top of that. The tour producer (a separate company) will be responsible for the logistics, booking venues, arranging ticket sales etc. The producer gets the remainder of the profits.
For smaller bands, the model can vary more. If they’re tour is more of going to established music places (studios, clubs, etc), the payment can be different. It might be more of a fixed amount negotiated with each venue.
From what I remember, the label’s promoters schedule and front the concerts. The band gets their money from ticket and merch sales. They get a percentage with a guaranteed minimum. promoters and the venue get their piece as well. Promoters can take a bath on a cancelled concert, but they have insurance to cover that.
The worst part (if you ever watched VH1’s Behind the Music) is the record label gets the profits from album sales and radio play and the band gets their money from the concerts. That’s why so many bands tour themselves to death while enjoying great radio play. And the songs’ royalties go to the songwriter for each air play. That’s why a lot of songs now list every band member as a contributing writer.
Venue and Band or manager negotiates a contract for who gets how much of ticket sales and sometimes the venue only makes its money on concessions or beer or parking. Sponsors of events also contribute to booking acts.
There are also huge players like LiveNation aka ticketmaster who manage entire Tours and bands across all their partner venues https://www.livenation.com/venues around the world handle all aspects of scheduling and tours
Everything is negotiable but here is a reasonable breakdown
The headliner gets a share of the tickets. Sometimes a flat fee or fee + share. But really it’s Usually a share of tickets. The bigger the act you are the better share you can negotiate. Lots of specific details can change in this about how much they get and what share. The venue makes their money on ticket sales and concessions. To a degree, some venues basically operate as bars with the ticket acting as “door fee” to get in.
The headliner though has to pay all its costs, people, transport, etc. this adds up to a lot they can even lose money in really big expensive productions. So the headliner takes a part of ticket sales, pays all their expenses, then get whatever is left over and divide it up between the band, manager, etc and anyone else who gets a piece. Since it’s split so many ways, individual band members may end up with a lot less than you’d expect.
The opening bands are either hired by the headliner (generally at a flat fee) or by the promoter. There’s some leniency in that a big time band taking non-headline spot may get part of tickets or a bigger fee. This band also needs to pay its expenses too.
Your local opening band playing first just that one gig in your city is probably getting little to nothing in payment.
Oddly enough one of the side things negotiated hard is how many free “comp” tickets bands get as they always have people clamoring for free tickets and the venue does not want to give them out.
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