Path to success strewn with more risks than gains, says industry veteran

Even though he has managed several big-ticket events in China, the 48-year old Luo Xiaochuan still feels that the live performance industry is a lot like gambling.

Though he was one of the first entrants to the live performance industry in 1996 with his Beijing All Culture Communication Co, Luo, the general manager of the company, says that despite the glitz and glamour the risks far outweigh the rewards.

For the moment, Luo, is however, riding high after successfully convincing noted Greek pianist Yanni to make a second trip to China for concerts in Beijing and Shanghai next month.

The Greek pianist first performed in China in 1997 and since then many companies have been trying to convince the new age musician to make a second trip.

Though he has managed to outsmart his rivals and land a coup of sorts, Luo is still not too happy. "To bag a big contract like Yanni's China tour, small companies like ours have to put our entire resources and capital for the effort. Once the money is paid out it would be next to impossible to recover it from the overseas markets, no matter what happens," he says.

"Most of the times we feel like we are gamblers in a casino."

Luo says that the contract success was the result of hard work that started almost a year back.

After lengthy negotiations with a Hong Kong-based agent of Yanni, it boiled down to the issue of payment. Though Luo declined to reveal how much he was supposed to pay, he says normally performers like Yanni can command amounts in excess of 10 million yuan, with about 20 percent of the payment to be made as down payment.

Luo says his sixth sense and several years of experience in the industry told him that something was not right about the whole deal and the company.

Through his sources he made further enquiries and much to his chagrin found that the company did not have an actual authorization from Yanni as it claimed.

Though Luo tried to approach the HK company again, he found that the name of the company had mysteriously disappeared from the website.

With over 15 years of experience in the industry, Luo says that though ticket prices for live performances have been going up steadily, the quality of performances has been declining.

"Unlike building a house or a shopping mall, which have standardized practices for budgeting, we normally have to price the tickets based on past experiences and our own judgment," he says.

He says tickets for the forthcoming Yanni concert range between 380 yuan ($59) and 2,680 yuan. Luo says the high-priced tickets are essential advertisements for such high-octane performances.

"Nowadays every big concert or show will price their most expensive ticket at 2,000 plus. If we do not follow suit, audiences will think that ours is a low-end performance."

The real money flows from ticket sales in the 380 yuan to 880 yuan bracket, with the target audience being the average income viewers. "If they are willing to pay the price for the tickets, then the performance will automatically turn profitable."

On the other hand, lack of industry standards has also led to several malpractices, Luo says.

"The general market situation is that there is more packaging and less quality," says Luo. "For good venues like the Great Hall of the People, Chinese promoters tend to jack up ticket prices."

He says almost all the shows in the Great Hall of the People, where Chinese lawmakers and top leaders meet, are priced high, no matter if the organizing cost is 100,000 yuan or 1 million yuan.

"Even if only 10 percent of the tickets are sold, the organizers can get back their investment," he says.

Most of the current trend is also partly due to spending patterns of Chinese consumers.

"Most people lack a clear judgment of fine art. They buy tickets for performances that have exaggerated promotions and advertisements just because the venue is a high-profile one," says Luo.

In December, there are usually about 70 New Year Concerts in Beijing. Most people do not care about what repertoire the band is playing; the fact that they are listening to a concert in the New Year gives them more satisfaction, says Luo.

Luo's company started its business with Russian ballets in 1996, but has since changed its focus to commercial concerts and musicals in recent years because classic performances are a more difficult business.

With fewer than 20 employees, the company holds 200 shows every year on average.

(China Daily 09/09/2011 page11)