The Other Half: How Alan Hsia’s clubs in Taipei and Shanghai survived the coronavirus

Behind every great dance artist, music festival, club or dance label, there is a business partner: otherwise known as The Other Half. Every month, we talk with these power players of the Asian dance music world — those that are behind the scenes, yet hugely influential. Through exclusive interviews, we’ll look at the hot topics of the moment, speaking with “those who know”.

For our first installment, we speak with Alan Hsia, co-founder of theLoop. Based in Taipei, Alan is a pioneer in the Asian dance music industry with twenty years of experience running clubs, launching music festivals and managing artists. Founder of some of Taiwan’s premier venues including OMNI, KOR and ALTA, as well as Shanghai’s incarnation of KOR, Alan has seen first-hand the development of the dance industry in the region from its early days through today.

We recently had a wide-ranging conversation about the business of running clubs and managing artists in Asia.

Alan, thanks so much for being here. Luckily, Taipei was spared by the worst of the coronavirus outbreak, but there were some tough weeks in the club world there. How did you adjust your business model and cut costs to make it through the difficult time?

"In Taipei, there never was a mandatory government shut down of the clubs. However, we were the first ones to voluntarily do so, out of caution. Actually, we received a lot of praise for this move, as it paved the way for other clubs in the market to follow suit. Our employees were overwhelmingly behind this as well; they knew it was the right thing to do. I’m glad we were able to set an example. In total, our venues were closed for about six weeks because the government did an outstanding job controlling the outbreak."

As far as cost cutting to get through this period, I’m proud to say we were able to keep on 100% of our staff. We all took pay cuts, with the senior management bearing the biggest cuts – completely eliminating our pay through that period. The other staff were able to maintain most of their salary during the period. Also, for those employees with special situations, we listened and helped out as best we could, on a case by case basis. So, while nobody wished for this situation, in the end, I think it even helped bring our team closer together, because it was clear to the entire team that we were all in this together.

One reason we were able to keep salaries going was that my team and I have always been naturally conservative with our cash management, and we maintain a cushion for shocks like these. I launched my first club in 2001, and SARS hit two years later. I learned a lot from that experience. You need to plan for shocks to the business. It might be virus, or political shocks, or something else…you never know what will happen, especially in this business. So, we had the advantage of having a conservative mindset – based on our two decades of experience and seeing the ups and downs of the business. Our past experience helped prepare us for this specific crisis."

What new measures are in place now at your clubs regarding safety and operations? And has this added to your cost of operations?

"We were lucky in that we were prepared for this. Our club OMNI has been used by a church every Sunday for the past three years. The church donated a hospital-grade air purifier to the club. So, we had top quality equipment in place as we re-opened. We’ve moved to purchase similar purification systems for our other venues, as well. So, we are really going out of our way to make sure the air is clean and circulating properly.

As to other costs, there is some additional expense for disinfectant and cleaning supplies, as we’ve increased the frequency of cleaning. Also we provide face masks to the staff and offer them to customers who ask for it. Actually, even this was a bit complicated, as we had to apply to the government for the right to distribute masks, since the supply was being controlled by the government, as they were being hoarded and were in short supply for a while. But we made sure we got these to our staff and guests."

Do you think things have changed forever in clubbing due to this virus? What will be the long-lasting effects on the business in Taipei and Shanghai?

"A lot of people are saying that clubbing will never be the same. I don’t believe it. Bars, restaurants and clubs will definitely come back. It returned after SARS, and will do so now. The fact is, people are social; they want to go out and let off steam. It will always be that way.

However, one interesting change is now taking place in Shanghai due to the virus situation. Club owners have realized they don’t actually need to be open for seven days a week – they can focus on the weekend. In the past, they would stay open every night – stocking the club with “actors” on off-nights. That’s too expensive and not sustainable now. Post-virus, Shanghai clubs have come to realize it’s ok to close down three nights a week, and focus on the weekend period. Taipei has always had a three days a week club culture. It's better to be profitable those three or four nights, and keep costs down the rest of the week. I think this will be a big change in clubbing culture in the future."

Live event streaming has really taken off during the pandemic. Do you think streaming is here to stay? Will it co-exist with live events, or will its importance recede as people go back to clubs?

"Actually, we’ve been looking into streaming for over four years; it just took the virus to finally make it take off. Personally, I don’t see streaming as hitting the same market as the club crowd. I think this model expands the potential customer base and helps reach a new audience. In our experience, the crossover between audience – streaming and clubs - is less than 10%. Streaming reaches an entirely new market.

We’ve had a lot of experience with streaming and have realized that the success of the shows depends on building the personality of the artist, rather than purely showcasing their craft. It’s about getting to know that person; seeing the personal side of the DJ. So, it’s a supplemental platform, and can reach a wider audience than just club goers. It appeals to people who want to see engaging personalities and learn something about more about the artist."

And have artists been able to drive revenue from these streams?

"As far as monetizing the streaming events, it can actually happen very fast. Our artist RayRay is a good example. Within a month, she was offered a Twitch partnership and was able to start monetizing her streams. So, for the right artists that have a compelling image, it can create a new revenue stream in a relatively short amount of time."

Given that Western DJs have been unable to travel to Asia to perform for the last few months, do you think this has provided an opportunity for local DJs to get more stage time and experience, helping to spur the development of local talent? Has this been a silver lining?

"Yes, but it goes beyond that. My view is that regional promoters can, and should, play a big role in promoting Asian artists. Promoters have a lot of leverage; they should be backing local DJs with the same passion that they promote international artists. Local promoters should put real effort – time, resources, marketing budget – behind the talent, not just in the time of the pandemic, but always. One thing that has helped regional DJs emerge was the fact that the international DJs were just getting too expensive – it wasn’t sustainable and promoters needed to look elsewhere. As a result, even in the months before the pandemic, Asian artists have had more of a chance to shine."

You have clubs in both Taipei and Shanghai. Is the “business” of running the clubs very different in each location?

"The customer base isn’t too different, actually. Maybe the crowd in Tapei is still a little more willing to be challenged. Whether it be more advanced cocktails, or more esoteric music…but in truth, people everywhere are looking for the next big thing. One main difference we have learned is that Shanghai clubs tend to be heavy on sales — booked tables — and relatively light on creation. Taipei is more of the opposite. So, in Shanghai it’s about a “push” strategy, while in Taipei is more of a “pull” strategy.

Really, the major difference between the two markets is the respective government’s attitude toward the club scene. Maybe surprisingly, the Taipei authorities can be extremely restrictive and very disruptive to the industry. In Shanghai, on the other hand, the authorities are generally open and welcoming with respect to club culture, seeing nightlife an important business and tax and employment driver.

In Taipei, the police conduct systematic raids. The cops will come into the clubs, have us turn on the lights, check IDs and make a big scene – but there is not even a suspicion of any crime. They don’t catch anyone doing anything, so it's wasted time and effort. They violate human rights and customer rights in the process. The laws were written in the 1980s when clubs were mostly under mafia influence…it’s not like that anymore. But the government’s mindset has not changed. They don’t view the clubs as a legitimate business; which, obviously, they are. It’s just embarrassing and holds back the growth of the industry. The government and police need to change their views. If there is a specific issue or complaint, fine. But these general raids are counterproductive and useless.

In Shanghai, it’s the opposite. If the police suspect a specific problem, they will come in and investigate. But they don’t have these useless raids for no reason. They realize clubs are a legitimate business and treat them with more respect…the same way that they would treat any other businesses."

You manage RayRay. She is one of the Asian artists that really has a chance to “break big” on an international stage Actually, she’s already doing so, in many ways. What has been your strategy with her?

"Well, in the beginning, one of the reasons we started developing local artists was that foreign talent was getting way too expensive. We needed to work on our own supply chain. And luckily, we found RayRay.

Our main strategy for her is to try to work with the best partners possible in every category. We have a great booking agent at Supermodified, a strong PR firm… just good partners across the board. We made sure RayRay has the best around her from ranging from music to physical fitness to mental well-being. Regarding producers, we’ve partnered with Yellow Claw, who co-manages her now. So, it’s really important to put the right team in place. As a manager, we are very willing to share economics with parties that can bring the best value to help the artist grow and achieve their full potential."

And what about your geographic expansion plan with her?

"As far as geographic strategy, first and foremost, we want to cement RayRay’s influence in Asia. Producers and artists from around the world want to be in Asia now — it’s about exchange of influence. So, we need to make sure she is dominant in this region before we really focus on wider markets. We need to be able to demonstrate her influence here, at home, which we have been doing. Taiwan was our first priority. Then, Southeast Asia; it’s a natural regional extension. After that, Europe and the US.

Actually, we plan to save Mainland China for last. This may seem odd, as, for course, it’s such a huge market. The thing is, China is so big and attractive, it’s almost too easy to get “stuck” there. If an artist does well on the Mainland, they can devote their entire career to that market – make a lot of money and do very well. But then it’s hard to break out. The artist’s mentality can be assimilated into the “China way”, which is different from the rest of the world. So, it may be hard to break out – creatively and financially – once one becomes too comfortable there. The money is good there, some artists lose motivation to seek opportunities in other markets. For that reason, we are saving the Mainland as the last stop in our expansion plan.

Regarding our management style, the truth is, a manager can open the door, but the artist needs to walk through it. RayRay is such a hard worker; so motivated, and loves what she does. We are there for her, but her ambition and hard work has so much to do with it."

Read more about theLOOP Group here.