Predicting the Death of Big Entertainment Venues

I have always loved live entertainment events. Concerts, comedians, music festivals; you name it. But, I have noticed an interesting shift over the past couple of years. I no longer have the patience for large venues. With the increasing quality of home entertainment systems and faster broadband pipelines, the entertainment decision is becoming harder. Do you go out for an event and endure skyrocketing ticket prices, challenging commutes and parking, standing in line, and crowded venues? Or, do you simply stay home and watch an event in HD with surround sound on the comfort of your living room couch?

Last summer, I visited the Mountain Winery in Saratoga, CA to see Brian Regan, one of my favorite comedians. The Mountain Winery is actually a pretty small venue, with incredible views of the Valley (image in this post). And, I had what I thought were pretty decent seats. But, I wasn’t in the first couple of rows directly in front of Brian. He’s a very physical comedian and I came to realize that a great deal of his impact is due to his facial expressions. I was far enough away and to the side that I really couldn’t see his expressions clearly enough. That made all the difference in the performance. After that disappointment, I decided that I would no longer go to large venues for comedy. Another one of my favorite comedians was in San Francisco recently. But, the venue was fairly large and I didn’t get tickets early enough to be in the front rows. So, I passed. Now, I won’t even bother going to a show unless I can get a great seat in a small venue. Just not worth the hassle.

Check out this Huffington Post article from Michael Kaiser, President of the John F. Kennedy Center for the Performing Arts, where he shares his own concerns that live arts will become irrelevant:

For two tickets to an opera you can now buy a computer and watch Leontyne Price and Joan Sutherland on YouTube for free! No wonder so many people have stopped going to performances. A recent study by the NEA showed that a huge number of people are getting their arts exposure on-line and fewer are coming to the theater. No wonder so many arts organizations are suffering. Without audiences we receive no ticket revenue and the audience members we lose cease to donate as well. The claim that the arts are irrelevant is getting difficult to dispute.

A recent NY Times article also highlighted this issue, specifically referring to the financial troubles the Philadelphia Orchestra has been facing. And this isn’t unique. Several orchestras in the US are suffering in this economy.

And, it isn’t just the music industry. It is pretty clear from this LA Times article that sports has been taking a hit too:

Nearly every sport and sports team took hits, from layoffs to dips in ads, attendance and sponsorships. The Arena Football League canceled its 2009 season. The NHL’s Phoenix Coyotes filed for bankruptcy protection in May.

Several sports economists blame the downturn on a trend that started 20 years ago, when many major sports leagues shifted their focus from typical middle-class fans to corporations. That shift led to bigger stadiums and steady increases in prices all around to help pay for them.

Certainly part of the problem is the economy. It is hard to justify spending a lot of money on these events if your job is at risk or you’re struggling to cover the basics. But, part of this change is also due to a faster-moving shift to online entertainment. Improved systems performance, easier online transactions, micropayments, and the ability to interact and engage with others through social models have all created a more engaging and immersive experience. And, I think that is the key. There is a critical element here that is similar to the effect in really small entertainment venues:

You enjoy an interaction with the artist, the performer, and the other audience members that simply isn’t possible in large venues. In some sense, you are creating part of the experience yourself and that is where the new value will be created. As Max Levchin, CEO of Slide, stated in this recent Forbes interview:

The things of value inside these worlds have to be primarily created by the participants. That’s where our plans are. The real open question is whether these virtual worlds are a stepping stone between the shift from real economy to a completely virtual economy.

So, what are the venues going to do to survive? Basically, for large venues, they better start creating new and engaging experiences that offer much more than a consumer can get from the best high-speed, HD, surround-sound experience. Give us a reason to attend. Create an experience that we can only truly enjoy if we are physically there. And, instead of packing larger and larger audiences into mega-venues, I believe they should also focus on expanding into smaller, more intimate venues to acquire broader, more local audiences.

And, what are entertainers going to do? Some are already embracing the shift to online. Rather than bemoan the drops in attendance at physical venues and complaining about digital piracy, they are engaging with the game industry, social sites, etc. to weave themselves into new forms of performance art. And at least one orchestra that I know of is dynamically responding to these shifts in consumer behavior by providing a service where the audience becomes part of the experience. Literally. At a recent Yahoo! offsite, we had a surprise performance from a small orchestra that was seated amongst us. I have never enjoyed classical music in such an up close and personal experience before (well, not since when I used to play). Nothing like standing right next to talented musicians as they pour their souls into their instruments. That was indeed a transformational experience and they accomplished their goal of reminding all of us of the beauty of live music and pulling us back into an intimate venue and off our couches.