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Blue Note’s Journey from Beijng to Shanghai CMBN sat down with Blue Note China's founding member to discuss its past and future in China.

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Three years ago, Blue Note entered the Chinese market with a location in central Beijing. And this year, on the mid-autumn festival, Blue Note’s second location opened up in Shanghai.

It all begins when famous musician Jonathan Lee (李宗盛) brought the founder of Winbright Media (瀛寰文化), Tian Tan to see a show in Blue Note New York in 2013. Later that night, Tian and Lee knocked on Blue Note’s manager’s office door.

Danny Bensusan founded Blue Note in 1981 in Greenwich Village, with the vision of providing New Yorkers with the best Jazz performances, comfortable environment, and great food. It later became one of the most famous jazz clubs in New York. Blue Note has always been cautious in opening up new locations and vetting its franchisees. This effort has paid off. International locations contribute significantly to Blue Note’s profitability.

China has a booming middle class, the majority of which are millennials who have the money, the appreciation for aesthetics, and the appetite for experiences go become jazz concert goers. According to the China New Middle-Class Report 2018 published last year, there are 33.2 million middle-class households with a minimum net worth of 3 million RMB in Mainland China. One-third of these households recently became middle class, and they are mostly millennials. The market condition is ripe for Blue Note to enter China.

Both Tian and Blue Note headquarter originally intended to open its first location in Shanghai. They later decided to start with Beijing because Tian and his team are based in Beijing and know the market there the best. After a three-year search for the real estate that complies with Blue Note’s strict rules, Tian had his eyes on a 3000 square meter (32,291 square feet) basement space near Tiananmen Square where the American embassy used to be. It is a risky choice with substantial upfront costs. Blue Note Beijing spent 6.5 million USD on renovation alone.

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On September 13th, 2016, Blue Note Beijing opened for business. At first, the management team arranged frequent concerts, but ticket sales weren’t ideal. So the team reduced the frequency of shows and started working on cultivating its customer base.

Li Si, the Vice President of Winbright Media and the general manager of Blue Note Shanghai, told us, “Things started to come together in the second year. In May 2018, we began to do two bands, four shows per week, and now we have six shows per week because the market became more mature. Currently, sponsored events have become one of the most important sources of revenue for Blue Note Beijing. Besides renting the venue out to companies, Blue Note Beijing also co-hosted shows with Mercedes-Benz and American Express.

Presenting Beijingnese audiences with performances by internationally renowned Jazz musicians is still a priority for Blue Note Beijing, with names like Kamasi Washington, Roy Hargrove, Robert Glasper, and Jacob Collier on its list.

Blue Note Beijing has 240 seats on the first floor with portable chairs and tables. The second floor consists of seven balconies of various sizes.

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Bar seat tickets are usually 160 RMB each; side tables seats are 260 each; the main table seats are 360 each. The prices for a 5-10 seat balcony range from 3300-6600. The size of the box office celling of each show so Blue Note can only increase the frequency of the shows. In three years, Blue Note Beijing hosted more than 300 bands, 1000 shows, and more than 200 thousand people. It is now one of the most famous music venues in Beijing. The number of shows has been shooting up 1.5 times year on year. Customer membership, merchant sponsorship, attendance rate, relationship with catering, and service partners are all on the right track, which led to Winbright’s decision to expand to Shanghai.

Tian told us Blue Note Shanghai will still focus on the high-level international jazz musicians’ performances. This strategy can differentiate Blue Note from a smaller Jazz at Lincoln Center Shanghai, and a Chinese musician dominated JZ Club.

Ideally, Blue Note China could be very cost-efficient if bands or musicians can perform at both locations in one trip. However, Jazz-club-goers in Beijing are mostly music enthusiasts who love classical music concerts and operas alike. And Shanghainese go to jazz clubs mainly for the ambiance and lifestyle.

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Blue Note Shanghai is more than 1700 square meters (18,300 square feet) and can hold as many as 300 people. The rent discount from the landlord significantly reduced the financial burden of Blue Note Shanghai. The headquarter of Blue Note China will remain in Beijing. The Shanghainese team is recruited locally.

Facing the choice of spending money on decorations to cater to bougie Shanghainese or spending it on musician compensations, Tian chose to prioritize music quality. Blue Note Shanghai kept the music quality and simple decoration style but made the tables smaller and the environment more intimate.

Below is a selection of our conversation with Blue Note Shanghai’s president Li Si.

Q:  In the past three years, what insight can you draw from ticket sales?

A: We can see customer preferences from ticket sales. Most Jazz fans have their cup of tea in terms of style, and they stick to it. The classic jazz trio, quartet, and quintet mostly attract jazz fans. But the general public can’t appreciate it. Ticket sales are much better when there’s a singer in the group. Larger jazz ensembles are also better received by the general public. We are trying to diversify our audience base and market accordingly.

Q: How many members do Blue Note Beijing have, and what’s the member/new customer ratio at a typical show?

A: Our Wechat account now has 50 thousand followers, and we have 20 thousand members. Typical show attendance is more than 50% non-members and 40%-50% members. Registered members come here regularly.

Q: What would you say is the turning point for Blue Note Beijing?

A:The first year was tough, the second year we were turning around and the third year we substantial growth.

Q: What are the differences between performances in Mandarin in China and performances in foreign languages or instrumental?

A: Performances in Mandarin mostly attract the fan base of the singers. Instrumental performances attract jazz fans. We also try to recruit more Chinese jazz band players, but there aren’t enough of them. So we are looking to help local jazz band players by hosting lectures.

Q: What’s your take on the increasing popularity of music-related business among commercial real estate companies?

A: Commercial real estate is entering into the era of lifestyle. We are in the business of jazz also because we believe in the potential of jazz as a lifestyle. It makes sense to help each other out in terms of sharing risk and fix costs.

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