Recent conversations that play into the current economic climate affecting our industry
First, a conversation with a soundco owner in the Midwest who said he was busy but broke. “Not a box or an amp in the shop — everything is rented. But cash flow is down significantly.” As we talked we figured out that clients are not paying as quickly as he would like and that “some checks are better than others.”
That one is obvious in its connection to what we do. The second one is less so on the surface. A musician I know took a double whammy lately when a regular gig he had dried up because tourism is down. At the same time, this person’s “dream day gig” as music director for his church also “went away.” As this person put it, “when money is tight tithes go down and they lost the budget for the position.”
So what does it all mean? If I knew that I would be making big bank as a financial advisor and not editing a magazine, but if I had to guess it would go like this:
Entertainment has traditionally been somewhat immune to economic downturns, and that will probably remain true. But it all depends on what it is you do. If you are in the touring industry, margins will be down as management grinds us all for every dollar, but touring will be largely okay. Ditto local and regional companies who do shows for acts that are touring without production and rent in each town they stop in. (And expect to see more and more of this happening.) No one is selling records so everyone and his brother will be on the road and often doing smaller gigs than they are used to.
If your specialty over the past few years has been installs, I would buckle in and prepare for a bumpy ride. There are at least a half-dozen big projects in Las Vegas alone that are on a kind of permanent hold. Stocks for gaming companies are way, way down, and there is talk of some actually having to declare bankruptcy due to the lack of easy credit and people spending less money even when they do come to town.
And, yes, this applies to house-of-worship specialists as well. That has been one area that has been robust and largely immune to downturns lately, but two things are at work. First, most of the large installs for churches have been done in the past five or so years, and my guess is that few of the mega-churches will be doing upgrades or spending a lot on audio production for a little while. Smaller but still large-ish churches may continue with plans for installs but the progress will likely slow and systems will likely be downgraded to reflect financial reality.
But the area that I expect to see hit hard are the companies that specialize in corporate conferences and other events. No matter what side of the political spectrum you are on, I would be hard pressed to find much of anyone who is not pissed about the greed and mismanagement that has put us in the pickle we find ourselves in now.
Bottom line — those lavish Christmas and New Year’s parties? Expect the budget to go down, if the event even happens at all. Many of us will find gigs we have done for years just not happening this year. And corporate retreats and conferences will be fewer and farther between with smaller budgets. I have talked to at least a dozen mfgs. in the pro audio industry who are scaling back in trade shows because doing a big conference is expensive and marketing budgets are not going up.
For most of us in 2009, and likely into 2010, “flat” will be the new “up.” If we can hold on to current clients, or replace those we lose with enough to stay even, we will be winning the race. There will be consolidation and some smaller companies — and a few big ones — will likely go away.
It is like the small furry mammals who outlived the dinosaurs, though they lacked the size and strength of their foes. We need to be smart, flexible and quick on our feet to stay healthy. But one of the great things about people in this business is that they are used to having curve balls thrown at them on a daily basis. This is nothing new; it is just more intense than normal. Keep your head down, work hard, stay smart and you’ll make it.Oh, a chicken: You have likely seen it, but if not go to the www.fohonline.com/roadie and check out a commercial called “If Roadies Ran the World.” Really funny because it is so right on. But it also points out how much better off we would be with leaders who know how to “turn and burn.” Take an unexpected situation that looks bad and turn it into the best show of the tour. If you can do that, you’ll come out of this just fine.
