Drinking Less From The Fire Hose: Q’s with Professor Marco Aponte-Moreno On Leadership In A Challenging Market

With the live industry showing signs of contraction, with some tours and festivals canceling, less-than-full rooms and fests, downsized tours, ticket price reductions, we could be heading for a down business cycle. It could just be a market correction after a roaring two-and-a-half-years, where “drinking from a fire hose” was our industry’s overused metaphor. Soon, we may revert to words heard way too often during the pandemic like “pivot,” “innovation” and “diversification,” or pre-pandemic terms like “pricing,” “packaging” and “consolidation.” We’re not there yet, thankfully, but with this Pollstar Impact 50 issue featuring the industry’s top executives, we thought it would be beneficial to consult an expert, in this case Professor Marco Aponte-Moreno, a Professor of Clinical Management and Organization from USC’s Marshall School of Business, on how businesses can best prepare for a contracting market.

Pollstar: We only see anecdotal signs of a challenging market with tour and festival cancellations and it’s not industry wide. Also, following the pandemic, this industry had its best years in terms of attendance and grosses. Now things may be softening, is that a pattern we see in business in general?

Professor Marco Aponte-Moreno: Yes, we saw similar patterns. Companies during the pandemic surged and receded. It was amazing. Peloton is an example of that and what they faced after the pandemic when people started going out. The company had to come up with new strategies and ideas. Most companies go through ups and downs, so that’s nothing new; the circumstances here are interesting because it seems like there is an oversupply of events diluting demand.

For the last several years the industry mantra was “drinking from a fire hose” and the biggest difficulty was staffing. Now presumably they’re staffed up, but with possibly less revenues and demand, what do you do?

Well, first the industry, because you work with events, there are a lot of freelancers. Looking at it, almost 60 to 70% of the people working in events are freelancers. Other than making sure there’s transparent communication with the team, not only the full-timers, but especially the people who are freelancing, acknowledging there’s a crisis, talking about it, communicating the plans, this all helps to build trust and then prepare the team for solving potential challenges and continuing working with the company. Communication is key, it’s very reassuring to hear it from the actual company. That’s important for the team. It is also key to make coordination among different stakeholders a priority. So not only with the team and the freelancers, but the artists, the venues, the vendors, etc. Keeping everyone informed and aligned reduces confusion, improves response times when, for example, there are cancellations or other challenges.

What about the importance of strategic planning, meeting with leadership, getting market data, doing analysis and moving forward? For example, Latin and country are doing well this year, maybe pivoting towards those genres?

So the first thing is to monitor closely the business environment so that you can react. Monitoring, observing is important, especially in times of uncertainty.  When it comes to the teams, especially in an industry in which you have a lot of very creative people, promoting innovation, creativity is important in whatever ways the company can do that. We know that innovation drives growth and helps the organization be competitive. So if people feel comfortable knowing they can come up with new revenue streams, unique solutions for problems, and come up with things like hybrid events like combining in-person and virtual — that was somebody’s idea — having teams that are creative is something that come from environments where innovation and creativity are promoted.

All companies have leadership teams looking closely at what’s happening and they’re trying to react as quickly as possible. The ones that tend to succeed are those that are flexible, they’re not attached to their old ways. Sometimes we feel like, “Oh, there’s a crisis” and we try to be very controlling. It’s actually the opposite. We know that when we’re flexible, teams are more likely to adapt to unforeseen changes.

What about pricing tickets in a soft economy, smaller profits, shaky consumer confidence, what should people do who are setting prices, the artists, the agents, promoters, the venues, to not lose consumers?

Tickets are expensive because number one, they’re still a lot of costs you’re talking about. They’ve been reducing the margins, that’s great, but there’s also the business model, the way the prices are created. There are a lot of shares that have to be distributed at the ticketing level and so many moving pieces make it more difficult. They all have to reduce their margins or they will probably lose people. Demand decreases because of pricing.

How important is it to invest in marketing during more difficult economic times?

Investing in marketing, especially in times of uncertainty, is always a good idea. That being said, if the company is struggling, their investments in marketing have to be smart. They don’t have to get the most expensive platform to advertise. Being smart with social media, to an extent, can decrease marketing costs. They can also work with the artists, which is already happening. It’s doing a lot of what they already do, but more intentional.

Interest rates are high and some companies need to remain liquid. What do you suggest about borrowing money at high interest rates? What are the best strategies?

They should focus on short term debt because interest rates can be high for a long time. So chances they’re going to go down are higher than the chances they’re going to continue going up. Then of course, they can monitor the interest rates closely and refinance.

What did Peloton do coming out of the pandemic transition?

We looked at many different companies during that time, like Netflix,  streaming companies went through ups during the pandemic. They are not doing as well as they were. I don’t know if Peloton is going to stay in business for a long time. The key is really fostering creativity and innovation within the whole organization so people can come up with new ideas. It’s being flexible because it’s in a time of crisis, being empathetic with the people who are working with you, prioritizing their well-being, all of that will pay off. Companies like Google know this very well. I’m sure it’s similar in this industry because it’s full of very creative, very artistic people. It’s something to keep in mind to not be rigid, that won’t allow for a changing environment. It’s important to have those meetings and creative brainstorming sessions or take those chances, that’s what’s going to keep your business going.