Dance Business Asia: Is the Chinese dance sector immune to the coronavirus?

Dance Business Asia: A new monthly column. Mixmag Asia is pleased to announce a new monthly feature article focusing on the business of dance music in the region. Dance Business Asia will dive deep into the business issues confronted by artists, managers and promoters. We'll look at the economics of dance music in Asia to see what's working, what isn't and how issues can be addressed. The column will also interview movers and shakers on the business end of the industry in the region. Your guide, Otto Clubman is a music industry executive with over twenty years of experience in the dance business.

Apologies in advance. I sincerely hoped to launch my first column with a more uplifting topic. I mean, almost any subject would be more heartening than this awful virus spreading rapidly through China. I’d rather write a column about the greediest agent on the planet or the most overpaid DJ of all time than this horrible mess. But, it can’t be ignored.

Since its rapid spread began in late January, anyone living in Asia — or anyplace around the globe — knows that the coronavirus has been wreaking havoc throughout the region. Very few segments of society in Asia are immune. The retail sector, F&B, tourism — they are all getting pulverised. Not to mention the tragic loss of human life.

So, a downturn in the music industry caused by this virus may seem trivial in comparison. That said, it can’t be ignored that music has become a big business in China, especially dance music. Accordingly, it’s worth taking a look at how the virus has already hit this until-recently dynamic sector, causing economic damage that will knock a few decimal points off regional GDP. Also, on a more positive note, we can squint to see some potential silver linings…could this tragedy bring any good news whatsoever to the music economy?

Let’s start with the downside, to get it out of the way

As fans know, clubs have been shuttered across mainland China and large-scale events cancelled en masse. The government has taken aggressive efforts to prevent gatherings in order to halt the spread of the virus. All well and good, given the apparent ease of transmission. But there clearly is an economic cost to the industry, not only in China, but throughout the region. Hopefully this is temporary, but the longer it lasts, losses will mount.

Let’s start with the DJs. Don’t worry about the superstars; they’ll be OK. But take a mid-level mainland Chinese DJ who makes $500 a gig. Let’s say every weekend night in Shanghai, one hundred such DJs perform...that’s $50,000 lost into workers pockets in that city alone. Now, multiply this by twenty nights a month (Monday and Tuesday are always slow), and then by the fifty cities across China with populations of over two million people. That’s US$50 million in lost wages for the DJs alone. Per month!

Then there are the music festivals. A single cancelled festival can lead to millions of dollars of losses for promoters. It’s a risky business by nature, one that I definitely don’t have the stomach for, as a general rule. But even with a willingness to take a risk, this was a pretty unseen event. Ok, maybe promoters have insurance that helps offset the losses (burden passed to Ping An, AIA and others), but given the force majeure nature of this tragedy, it’s likely a lot of losses have been suffered directly by the industry. Promoters have had to cancel or postpone shows, losing serious revenue – lost deposits, sunk costs into marketing and promotion of the events, tens of thousands of hours of planning. Gone. Again, let’s be conservative: Say one festival event per month in ten major cities across China is canceled, with a loss of $1 million per event. This is another $10 million loss. Per month. On top of the lost DJ wages.

Besides the DJs and promoters, other workers – those behind the scenes - that benefit from live events will be hurt. Club staff told to stay home, sound technicians with nothing to mix, talent managers and booking agents losing commissions (ok, don’t feel too bad for them). The point is, the losses will trickle through the music industry to multiple players, not just DJs and promoters. The pain will reach the sizeable support systems around them. And the multiplier effect just compounds the loss…the club staffer refrains from buying the fancy shirt he really wanted, the agent postpones the order for the superyacht, etc.

While foreign DJs who were scheduled to perform in Mainland China will be hurt, they can temporarily turn their attention to other markets around Asia. Alan Walker will survive (barely) without China for a few months. However, mainland Chinese DJs will be hit hard. First, their China shows have come to a screeching halt for now. Second, sad to say, but other countries in the region have been reluctant to book them and pick up the slack. Fear of the virus is circulating, and not all neighbouring countries are willing to take the risk of bringing in a Mainland-based DJ for the night. While the odds may be infinitesimal of the disease reaching a particular club that way, promoters have been gun shy, waiting until there is more clarity around the situation. Accordingly, Chinese artists are being hit particularly hard at the moment.

Of course, it’s not just the money. It’s also about the momentum to the business. It’s about the ability for rising talent to hone their craft in front of an audience. To try out a new track in public. To fine tune a stage show. Yes, hopefully, it’s temporary, but it’s definitely a speed bump.

Ok, enough doom and gloom

Yeah, we are in for a tough few months, so batten down the hatches. That said, are there any silver lining in this mess?

In mainland China, hundreds of millions of people are home, bored out of their minds. Public events, school, work: these have been cancelled for weeks around the country. Luckily, music is still streaming. Early reports show that music consumption has been up in China over the last month. Makes sense, people are home with nothing to do and music is playing in the background. At this moment, fans have more "downtime” to discover new artists, hear new songs. So, for those artists sitting on tracks, this actually may not be the worst time to release them. People are listening; they need to be entertained. As for the major streaming services, they may even end up seeing a bump in their income streams during these difficult months.

As for the artists themselves, this downtime can be put to good use. When a DJ plays 100 shows a year, it's difficult to find time to be reflective, to write new quality material. So, this forced slowdown may give producers a moment or two to swap the busy road life for the studio and create some great music. I would expect some solid tracks to come out of this period.

Look, don't get me wrong; there are no "pros" to this virus, we all wish it would just go away. That said, we can at least grasp at these straws of a silver lining. So, yes, Asia, we are off to a shaky and uncertain start in the dance music economy in 2020. Typically, I'd love to blame some music industry player for this bump in the road — maybe an avaricious promoter? But this time it's pretty much out of our control. Stay strong. It will get better.

Photo via Qilai Shen/Bloomberg