As Wall Street reacts to the coronavirus, will the music business get sick?
If stock markets represent the wisdom of crowds, such as it is, the smart money now says that the global economic slowdown that the coronavirus set off will be here for some time. Unsurprisingly, companies with businesses that depend on public gatherings have fared especially poorly: Since Feb. 24, the stock price of Live Nation has dropped 51.2% to $36.20 as of March 12, while that of German promoter and ticketing company CTS Eventim has declined 39.
So far, market reaction seems purely anticipatory: Live Nation has twice said publicly that the coronavirus hasn’t affected ticket sales, and anecdotal evidence suggests that Americans are still going to see concerts and sports games. The decline is also happening at a time when many publicly held music companies have been thriving: Even with the recent 16.6% drop in Live Nation’s stock price, investors who bought into the company five years ago would be up 50%.
At bigger companies, it could complicate everything from the retention of employees who are compensated partly with stock options to planned capital-raising public offerings. The resulting uncertainty could affect smaller players that depend on investment from larger firms, and a substantial pullback in spending could devastate any number of businesses downstream — from sound- and lighting-equipment rental companies to merchandisers who supply concert T-shirts.
The one bright spot for some music companies is that digital entertainment shouldn’t be hurt by the turmoil — and could even thrive. From Feb. 24 to March 12, Spotify shares decreased only 13.6%, compared with the New York Stock Exchange’s 28% drop. The rest of the industry can only hope that increased in-home listening will eventually fuel demand to see live music once the coronavirus abates.
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