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Tomorrowland’s Pioneering Virtual Festival Struggled to Turn a Profit, But Plans to Return

Tomorrowland, the first major global festival to charge for a livestream during the coronavirus pandemic, fell short of turning a profit after selling just under 140,000 tickets on a royalty-sharing compensation scheme based on overall ticket sales. But the two-day event was enough of a success that the Belgian organizers say they are planning a second virtual-reality event over New Year’s Eve, Billboard has learned.

The dance music festival turned heads in the music industry in July when it staged a pay-per-view livestream that transported fans to the digital island of Pāpiliōnem, a lush fantasy land shaped like the Tomorrowland icon. Amid the pandemic, organizers say they risked €5 million ($5.9 million) to put on the festival, which involved employing Epic Games’ Unreal Engine software — used by video games and Hollywood studios to create the virtual world — as well as filming the artists in green-screen studios on four continents.

Industry sources previously told Billboard that the festival cost about $10 million overall. Michiel Beers, the festival’s co-founder, says Tomorrowland’s contribution was closer to $6 million, including money spent on talent and production. With additional financial support from sponsorships, partners and media deals — which were not included in the $6 million — Beers says the festival overall “about broke even.”

Beers says he was satisfied with the ticket sales from the digital festival, which totaled €1.3 million ($1.5 million) for day and weekend passes. (The festival sold about 30,000 more tickets in party packages, and another 30,000 through media deals.) “Tomorrowland Around The World,” he says, was an investment in a new livestream model that could become an annual event — more likely in the winter — that complements the live festival held every summer in Boom, Belgium, which typically draws 400,000 fans from more than 200 countries over two weekends.

“We believe that digital will exist next to live,” Beers says. “We also believe that we have to create moments that people really want to see [us] livestream in a special way, and really see it as a small event.”

Where other major EDM festivals have canceled or postponed their events, most until 2021, Tomorrowland organizers decided in April to hastily adapt their plans and create a virtual festival with a limited, star-heavy lineup, which also included Martin Garrix, Steve Aoki, Tiësto and a 15-minute medley set by Katy Perry. Over the two days, 67 artists appeared digitally, compared to more than 1,000 that appeared live last year in Belgium.

The festival charged viewers about $15 for a single-day ticket and $24 for a weekend pass, but it paid no guaranteed up-front fees to any of the artists who participated in the digital event, Beers says. Instead, Tomorrowland paid all the artists on a royalty-sharing model that calculated overall compensation based on a ratio of euros multiplied by overall tickets sold. Tier One (the lowest tier) performers were paid €0.01 cents per sold ticket, according to a festival deal term sheet reviewed by Billboard, while headlining artists made higher fees based on negotiated ratios tied to their market value.

The Tier One DJs made about $1,650 apiece, based on total ticket sales of 139,324. For headliners like David Guetta, the per-euro ratio would have had to be 100 times higher to make even $165,000, a relatively low fee for the French DJ. Beers declined to discuss what ratios the festival agreed to pay the bigger-name artists. “We tried to set up a royalty model which was as fair as possible to every artist involved,” Beers says. “Our company is not in a situation now to take huge risks and make huge losses.”

While most festivals require artists to cover their own travel and production costs, Tomorrowland paid all out-of-pocket expenses related to the artists’ green-screen performances.

With the pandemic laying waste to summer touring, a number of artists were happy to support Tomorrowland’s experiment regardless of the financial outcome. Olivia Nervo, one half of Australian EDM duo NERVO, says she and her sister did the digital edition “as a favor” to the festival. “I don’t think for any of the DJs this was about making money,” Dutch DJ Don Diablo tells Billboard. “Obviously, it’s a fraction of what you would normally be making. Once that code is cracked, it can definitely be a new model.”

With Facebook, Instagram and YouTube “cracking down hard on livestreams” over copyright concerns with DJ sets, Danish techno DJ Kölsch says he welcomed the pay-per-view opportunity as a chance to play unreleased music. “But the royalty deal, I mean, I didn’t ever expect anything to come out of that because it seemed so minuscule,” he says.

Still, some artists walked away disappointed. One headliner who expected to make a five-figure royalty fee ended up making four figures, one person close to the artist tells Billboard. “Maybe it was ambitious, but we were led to believe they would sell 1 million tickets, or at least 500,000,” this person says.

Charging for a festival livestream may have surprised many global EDM fans, since major festivals like Tomorrowland and Ultra Music Festival have been streaming their live events for free for years as a promotional tool. “All of a sudden it’s like, ‘Oh, I’m getting exactly the same thing, but now I have to pay for it,’” says Don Diablo. “That’s kind of where we made a miscalculation, maybe.”

Beers says tickets sales were constrained by the fact that an average of eight people watched the festival together on each ticket, according to a Tomorrowland survey of viewers. That means that more than 1 million people watched Tomorrowland overall in most of the world — yielding only about $3 per viewer, the festival says — with the United States, Belgium, Germany, Mexico and Brazil among the biggest ticket-buying countries. Many viewers made a weekend of it, watching an average of 17 of the 60 hours of content, according to the festival survey.

The festival brought in additional revenue from merchandise and party packages ranging from €45 ($53) to €290 ($343) for an assortment that included bracelets, LED sticks and a Tomorrowland JBL speaker. Sponsors and media partners also invested in the event. One notable media deal, with Tencent Music Entertainment, drew another 10.6 million unique viewers from mainland China, who watched the livestream on Tencent platforms (which are geo-blocked outside of China). In that deal, Tencent paid Tomorrowland a flat fee, which Beers declined to disclose, which was divided by the price of a weekend ticket and then multiplied by the per-ticket ratio to calculate artist payments.

Some artists, at least, are slated to make more money to perform in a green-screen environment for the New Year’s event. The ratio offered was “much higher” than for the July event, says Henrik Olsen, Kölsch’s manager. (Beers declined to comment on the deal terms). “It is definitely baby steps,” when it comes to livestreams properly compensating artists, Olsen says. “But it is moving very fast in the right direction in terms of compensation.”

“Flying DJ booths” and pleas for “aliens in the audience”

Beers likened the struggles of the first digital edition to when he and his brother, Manu, created the first Tomorrowland in 2005, which 8,200 people attended. It took five years of investment before the festival was ultimately profitable, he says.

Tomorrowland organizers had only two-and-a-half months to prepare the digital event in July, with little to no blueprint to draw from. Making hundreds of virtual fans’ heads move in the digital audience was a new challenge for Unreal, an open source video-game engine developed by Epic Games for online video game Fortnite; It has also been used by Disney’s The Mandalorian and HBO’s Westworld. The festival crew, working with Unreal, also had to write custom computer code to emulate aspects of the live-performance world, including the jobs of light jockeys and laser jockeys, Beers says.

Then there was the dreaded “flying DJ booths” problem, the co-founder says. “You’re watching the show and then suddenly you see Armin van Buuren on a flying carpet,” he says, describing how the filmed performers tended to drift around the computer-generated world. “The real environment is not as stable in the virtual environment.” (The team resolved the issues in post-production.)

For the green screen performances, festival programmers had to finely tune Unreal’s 3D tracking system — which Hollywood productions normally use to film scenes in multiple takes — to capture the Tomorrowland artists in single takes. “You can’t ask David Guetta, ‘Hey can you do it again?’” Beers says. “It needs to be one good spontaneous-as-possible performance.”

Festival organizers were so pressed for time that some plans fell by the wayside. Don Diablo says he had worked out some pre-arranged moves where he would outstretch his arms and “angels from the sky” and other visuals would appear behind him. “They were like, ‘leave it to us, just throw the gestures,’” Diablo says. But the festival team later apologized for running out of time to render the scene as planned, the DJ says. “If this was my production, I would have come down hard on my team,” he says. “But because it’s Tomorrowland and I have a relationship with them, I have a lot of love for them.”

Kölsch wanted to see an even more unreal world depicted, with “aliens in the audience” or the artists “performing on a spaceship” (Katy Perry, at least, flew in on a hot-air balloon). “I just love the idea of if we’re going fully absurd, we might as well capture the moment and take it to completely another level,” Kölsch says.

The Danish DJ says Tomorrowland should consider doing a future livestream in so-called augmented reality. Beers rejects that suggestion, and also dislikes the idea of a show geared towards VR headsets or smartglasses “because that’s very individual.” Instead, he promises that the festival is working on how to better connect attendees from across the world so they can talk to each other within the virtual festival in real time. (The Tomorrowland survey showed that 52% of viewers felt there was “not enough interaction with other attendees.”)

“We want to work on better special effects, more beautiful environments and crazier camera angles, more realistic crowds and on interactivity between visitors,” Beers says. “We’re just trying to focus on what we did last time and do it better.”

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