“To have succeeded launching of EDC China might have been with such timing system, but there’s still a huge challenge in the future.” Speaking of the introduction of that influential foreign IP, Eric He, CEO of Zebra Media, with slight excitement showing in his eyes.
Last June, Eric went to Las Vegas with several friends and participated in the Electric Daisy Carnival, which, also commonly known as EDC, is one of the biggest electronic dance music festivals in the world based on attendance. That year, the number of audiences surpassed half million, and he was deeply impressed by the spectacular scenes. Six months later,Eric himself brought this brand into China market without any expectation. Back then, Eric was serving as vice president of A2live, also as the co-founder of Storm EDM Festival, which is the largest EDM festival in China.
Two months later, Eric was appointed as CEO of Zebra Media by Chinese Culture Group Co., Limited ( as CMC Holdings below ). At that time, Zebra Media was already an inter-media music marketing service company out there for 10 years, also with some mature brands like Zebra Music Festival and Zebra Electric Run.
At the beginning of 2017, Zebra Media acquired a funding from CMC Holdings. By the end of the year, CMC Holdings completed its acquisition of Zebra Media. Before Eric He took charge of Zebra Media, CMC Holdings has actually already had a plan to introduce EDC into China, but there was never an ideal candidate to actually implement this idea. After returned from Las Vegas, Eric talked re-mentioned this idea to CMC Holdings, and both sides immediately clicked with each other. At that time, EDC also wanted to have a piece of cake in China market. With everything convenient, the done-deal partnership with EDC official only took 3 months to have finished.
Although everything went smoothly in the early stage, but when things went down to all of details, Eric kind of fell apart, because every piece of task needed to implemented and communicated. “ So far, most of domestic music festivals still look like the mixture of concerts, and they can’t have more ideas except for the acts line. Basically, most of audiences only care about some certain artists, because they are fans of the performers, instead of the festival itself. With the partnership building, the whole expectation of launching EDC China is to improve self-abilities, and it’s meaningless to only have this name. Therefore, the offline entertainment business is actually the combination of opportunities and challenges.” Eric Said.
Globally, what are the differences in expansion tactics among EDC, Ultra and Tomorrowland, the 3 most well-known EDM festivals.
Eric : There’re always many people who want to introduce international EDM festivals into China. But EDC is not a very aggressive brand. Even though it’s already had splendid impact on American audience, EDC only expands to a few new markets like Mexico, India and Japan. EDC has high requirement on this brand, from acts, stage productions, art installations, amusement infrastructures to the control level of the management team, so it always has a whole set of its own strategy, which usually leads to the failures due to being substandard for most of festival organizers. As far as I know, it took a long time for the Japanese organizer to have negotiated with Insomniac to finally have EDC landed in Japan last year, because there were a lot of procedures which they had to deal with, such as copyright negotiations, event budgets, performance organizing etc.
The biggest difference between Ultra and EDC is that Ultra has more experience in copyright trading, their requirement is comparably simpler, and the soul of Ultra is the combination of artists and stages, which is why Ultra has landed in a lot of cities around the world.
In the meantime, many domestic organizers have also tried to introduce Tomorrowland into China market, but I think all of the organizers who have talked with the owner of Tomorrowland are well aware that Tomorrowland is not an easy target to communicate with. They have too many requirements that are totally impossible to implement in China, such as the number of audiences, venues and some other hardware conditions, which are impossible to acquire in the country, and make the cooperation such a difficult mission. And after a series of internal reconstructions, the communication and collaboration between Tomorrowland’s parent company and the Belgian production team also becomes a problem, so it does not make much sense to just take a name.
The choice of having introduced EDC, instead of Ultra and Tomorrowland. What is the biggest advantage there?
Eric : Among these major 3 festivals, only EDC can be sponsored in a brand title, which is the biggest advantage of EDC among the three brands. From the perspective of the sponsor’s consideration, overseas well-known IPs do not need to spend too much on publicity and promotion. After all, it already has fame, and then it could just go with the flow, which saves a lot of marketing budget.
EDC is actually a carnival, in addition to visual and hearing enjoyability, and amusing, but also very suitable for China. Despite of the threshold, the mind of EDC team is more open, and they are willing to make some changes based on local scenario, also to absorb some new things. For example, fireworks is forbidden in China, so we just have other things to make up for it, and so far we have solutions. These devices will be shipped directly from overseas. It will certainly be a surprise for the audience because they have not seen before.
We also spent a lot of time thinking on communication with Insomniac. First, Insomniac demanded that the U.S. dance team needed to be brought in too, but the cost was too high. So when the management team of ED came to China, we showed them some of the foreigners’ performances in China and turned out they actually liked it. Because these dance groups were younger and more beautiful than the original EDC line. Eventually, they decied to accept it.
For the planning of the venue and facilities, the EDC team also had many ideas. If there’s some content which currently do not meet the national conditions will be difficult to implement, thus needed to make some adjustments and changes. However, we do not want to reduce the quality of EDC in China because of this. If the overall quality does not reach the standard of EDC, then it would haven been meaningless and valueless to only have its name. We were hoping that through the communication and cooperation with the foreign team to enhance our own ability. Although the US team at EDC is very mature, they are still willing to accept new things while constantly improving themselves. At that time, they even went to some bars when they were in China. Because of that trip, they completely changed their stereotype about this market, also felt so fresh-minded, because there are many fun and new stuff in Chinese nightclubs which the United States ones do not have.
What is the cooperation mode with EDC like?
Eric : We share EDC China’s copyright IP with Insomniac, which accounts each other for 50%. As to the future, we will be developing merchandises too, which will be broader, and with more room of imagination. Rather than just bought a show, we would operate the IP with US team together.
The investment we put in production will be much more than other festivals do, so we try to keep the earnings predictable while retaining the IP value. In addition, the US team has veto rights for the appointment of Chinese team members.
During the early period, EDC China will not do too much. We are gonna give it a try this year, and strive for the slightly loss, or even balance. In the future, we may launch some different events each year because we do not want to make it as the touring form. Whether it is the EDC or the Zebra Festival, we hope that all of brands would land in the cities and succeed eventually, also will be very dynamic in content. For example, we hope to make a bigger and more wonderful electronic festival in the cities outside of Shanghai, so that everyone would fly from all over the country to see the show. I mean, never confine your resources only surrounding the comfort zone, get out of there.
Since EDC strictly demands high quality for its partner, have you ever met some problems while landing it in China?
Eric : There were indeed many challenges in the process of having EDC landed . For example, domestic recreational facilities can not exceed 17 meters as required. Exceeding the standard requires approval by the government, but the assessment takes long time. So we also needed to put some time in on studying how to solve this problem . Currently, there’re some cultural real estate projects are looking forward to cooperation with us, many of them are building amusement park, music park and other projects, and they can help us plan a suitable area for the EDC usage. We are also talking to the CMC Holdings team that specializes in cultural real estate and entertainment part. They will help us find a place more in line with the EDC standards.
What kind of artists is EDC China keen in to book? Is it expensive to invite big name DJs now?
Eric : We will consider inviting artists who belong to different genres. During this process, we will always keep in touch with the U.S. team and try our best to satisfy the needs of fans. The main stage will invite those artists who have big influence and public appeal of box office, other stages will invite to all kinds of big names. Especially for other stages, we put a lot of thoughts. This is like eating Western food, we can’t just serve five or seven entrees, we have to take into account the different mix, trying to give Chinese audience a different experience.
The big-named DJs are comparably rare, artists who come to China will raise their prices, because they think the Chinese market is better. EDC China also has some requirements on the exclusiveness of performing artists, so the cost will be even greater.
In the past two years, the domestic EDM festivals are basically everywhere, how do you think of the trend of this market?
Eric : This is a good thing. After all, everyone only cares about the performing artists at the primary stage, but in the long run, there will be contrast to the audience. With competition, music festival organizers will put more thoughts into the creativity. To those outstanding music festivals overseas, the audience would pop in getting the tickets before the organizers announce the acts lineups. For these audience, the brands are pretty persuasive. A lot of people are going to EDC every year without concerning about artists. Because they trust the brand itself and are willing to pay for it.
At present, most of the music festivals in China are still similar to the format of a playlist concert. Apart from the fact that the artist lineup, they can not think of anything else. Many festival-goers simply go there and see certain artists, because they are fans of the artists instead of the festival. So we want to put more interactive and conceptual things in the festival. This year, a large part of the budget will be invested in the collaboration between artsy facilities and artists at the scene. We hope that EDC China can’t only prensent good music, also provide more sensory experience to the audience.
Compared to the mature markets abroad, what makes the domestic market different?
Eric : Let’s talk about domestic ones. At present, the profit model of domestic music festivals mainly depends on sponsorship. Sponsorship accounts for 40% ~ 45% of the total revenue of the festivals. The rest of the income consists of box office and beverages. In the past two years, many people who have invested in electronic music actually had their eyes on the drinks part. Some of them even can make the revenue increase 20%, and this part of the income also make up for the lack of box office income.
Secondly, as far as the entire industry is concerned, the level of electronic music production in China still needs to be greatly improved. What we lack is the entire industrial talent and the atmosphere of creating talents as well as education and training, and we need more production teams of the middle and late stages. In fact, there is still a gap on the level of domestic electronic music production compared with foreign countries.
Your origin is traditional media background, but right now, you are managing an offline entertainment business, and the main revenue of these projects relies on sponsorship. How do you think in this industry to build a great BD?
Eric : In the traditional media business, it’s easier to find a BD, but finding a good one in this industry is too hard. You need to know which ones can be acceptable by the customer, and which ones are unacceptable. For example, when we are music festival, the stage is not accessible to any sponsor products, music festival is born because of the fans, so first of our tasks to ensure the users experience. Therefore, when communicating with sponsors, there are many insurmountable gaps.
For example, when I was doing the Storm Music Festival before, I talked to a sponsor who built this App, and they did not know what effect the sponsorship fee they paid would be. Later, I gave them a solution based on the social needs of the App, allowing them to build a tall selfie tower building so that people at the festival could climb up and take a selfie and slide down along the slide. The whole thing felt like someone standing on top of someone else’s head, and also was very fused with the stage. The outcome was pretty great, people were keen to go up to take selfies. Sometimes they even had to wait a line for half hour, which helped this App have achieved publicity and interaction.
So a good BD needs to know what he/she has. Which will attract customers, or what customers want. But a traditional media salesperson lacks of such imagination,being in the industry must know how to make the brand and music festival interact with each other. While the number of participants at the festival itself is limited, but to make the brand think It is worth investing so much money in it. Also, you need to take into account the early publicity, more importantly, to know how to secondary transmission.
You have been working on offline entertainment industry for five or six years. What is the biggest predicament you think this industry meets?
Eric : Offline performance industry is actually not a new industry. It has the infamous reputation for its low profit and high risk, especially for those large-scale events. At the same time rising labor costs and the scarcity of relevant personnel is also the plight of this industry. Our company currently has about 40 employees, and we are already really busy operating Zebra Music Festival and Zebra Electric Run every year, now with EDC and a parenting project, everyone is just racing with time. So we are also constantly squeezing various costs and increasing production efficiency.
However, once the company expands to fifty or sixty people, the profits of the events simply can not meet the staff costs. I think the cost of a benign entertainment company should not exceed 15 million to 18 million RMB yuan a year. Overly high operating costs make it very difficult to balance the expenses with the proceeds from activities. If the company is running based on the loss, then once the huge losses on the project will make it difficult for investors to accept. This is why offline entertainment companies usually don’t have high valuations, low profitability and hard to get funded.
We can see that in this context, many companies live for five years at most. Only by lowering the cost, they can make it possible not to lose money while ensuring the quality of the project. They need to weigh in the distribution of IPs to make them more and more valuable. The bottom line is, every move for an offline entertainment company needs to be extra careful, because sometimes expansion and death come to you simultaneously.
Besides EDC China, if there is anything else that Zebra Media would set its foot in in 2018?
Eric : In addition to the Zebra Music Festival, we hope to make the Zebra Electric Run better, because the threshold for the combination of music and running is relatively low, and we want to add more content into this program, such as biking, roller skating, skateboarding and even yoga, and making music as a series, also building some interactive and technological content both for online and offline. For example, after the electric run, participants can create a video by means of technology and send it to everyone after the automatic editing of back-end, or adding some face recognition technology, etc.. Through some fun technological interaction, to put the offline exercise to online platforms.
This year we also will introduce a new experience program,and it is the extreme sports. It would be divided into two sections, one is a non-powered BMX skateboard; the other is a mechanical one, SUVs and motorcycles, and this extreme sports have been there in foreign countries already for many years.
In addition, we are also launching an IP of parenting camp. Nowadays, the demand for the parenting market might even be larger than the festival market, because parents want their children to participate in more outdoor activities. Therefore, we will make a large outdoor event, where there would be children’s musicals, children’s music festivals, interactive sports games, children’s education activities and other sections. In the future, if there is a suitable venue, we also would consider increasing the camping project.
Since it launches this year, so we are planning to make the first-time parenting camp last 9 days. We will have two-weekend family tickets, and non-weekends ones mainly for the spring or autumn tour of the schools. This project is also popular among our sponsors, the previous sponsors would have chosen television shows like “Where Are We Going, Dad? “( a parenting reality TV series originally from South Korea, turned out a hit in China) , and IPs like “Dad?” are pretty much traditional since they mostly transmit via broadcast, while parenting camp is offline. That’s why we really want to make the brand of quality of this IP better.
Now with the background of CMC Holdings, Zebra Media gets a lot of support from it, doesn’t it?
Eric : A lot of new ideas come up in our cooperation with CMC Holdings team. The LBE team of CMC Holdings has given us a lot of chance to communicate directly with the cultural real estate projects. Since they invested in CAA the brokerage firm, we can even make some overseas artists cooperation happen now. At the same time, CMC Holdings also has some input in the domestic music entertainers, so we also have some partnership in this part. Meanwhile, the newly established CMC Live already has 21 performance organizers in China. We also maintain close connection with the local government and other various partners.
For example, in Hangzhou, Zhengzhou, Xi’an and other cities, with their relationship with the local government, we launched some event there. When it comes to launching events in different places, we prefer go with the localize. Through the close cooperation with CMC Holdings and its subsidiaries, I believe we can make more wonderful and better performances and events for the general audience.
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