CMBN: What are your ideas at the beginning of the business?
Xue Liping: When I left T3.com, I hoped to run ticketing business. However, at that time, the threshold was too high, which required 30 to 40 million Yuan to initiate. I hadn’t thought about financing, either. I had some savings, and started show business with housing mortgages
and the money borrowed from my relatives. I have dreams in my show business. I
want to carve a career for myself.
In 2010, we signed long-term partnership with National Olympic Sports Center, so events organized by Compass Culture could be held there. Furthermore, it is also the venue of the first sold-out thousand people concert of Wang Feng.
Why do we decide to contract with it? When I was in the ticketing company, I discovered a great number of Taiwan and Hong Kong artists. However, few of their concerts were full in large venues. On the contrast, in small stadiums with 4000 seats and three stages, tickets were sold out. Additionally, they had won good reputation. Hearing that their tickets were sold out, artists also felt very happy. Another advantage is that the operating cost of small venues was cheaper than that of large ones, such as lower rents, security fee, and publicity expenses. This is my operating way. It’s the priority.
Secondly, I want to follow the mode of an American venue-operating company called AEG Live, which contracts venues. It owns the largest number of venues in the world. I tried to learn from them at that time to operate the stadium. In the past, the stadium did not have any shows. But both the location and buildings were great. It got a huge parking lot outside with three metro lines. However, it turned out to be very hard to copy their mode in China. At last, we focused on large-scale shows.
CMBN: What’s the current situation of concert market?
Xue Liping: The growing speed is still too slow these years. Some people said the speed was at 20%. But I think they exaggerated it. The essential reason is that the industry hasn’t been industrialized yet. Why movies are able to increase exponentially? Because movies can be copied without
limitation. As long as I have screens, I could sell more tickets. Lots of cinemas are built in towns, as well as luxury movie theaters. Personally, by 2000, box office might reach 15 million. Now, Internet companies are more willing to invest on blockbusters. And businessmen are inclined to build more cinemas. The U.S only has a population of about 300 million, but China has a population of 1.4 billion. This market has a bright future as well as fierce competition.
Compared with concerts, the price of movie tickets is affordable for the general public. This is a core issue. Moreover, Chinese commercial show market is more than 6 billion Yuan, but 4 billion Yuan is about theatrical performance or tourism-view shows. The real concert market is only 2 billion Yuan.
There is a two-eight rule of concerts: 20% popular stars account for 80% box office. Here comes a question, which is also the limitation of our industry. Those pop stars are different from movie stars who shoot a film every two year. Our products are fast and the demands are different. As for concerts, how many years would a singer take to have fan base? Wang Feng is very popular in recent two years. How long did it take for BaoJia Street? What about Jacky Cheung and Eason Chan? Jacky is more than 50 years old and Eason also has been a singer for many years. In other word, they have the market because we listened to their songs when we grew up.
Lack of successors is a fundamental problem.
CMBN: There are many mainland artists now. Beyond Wang Feng, isn’t there someone able to have ten-thousand scale concert?
Xue Liping: The Chinese concert market used to be occupied by the Taiwan and HongKong artists. Why mainland artist are good at singing, but their box office is not so good? The reason is that mainland artists and idols lack quality packaging. The difference of artists between mainland and Taiwan or HongKong is the temperament. Some mainland singers are singing on TV every day, but they fail to sell large numbers of tickets even their songs are good, it seems they lack of something.
However, in recent two years, mainland might surpass Hong Kong and Taiwan. For example, Li Yifeng is a hot star, as well as TF boys. The mainland market is better in recent two years, though before I don’t think so.
The box office of old mainland singers with little idol temperament is no less than their counterparts in Hong Kong and Taiwan. However, they are not easy to change. With the economy developing, Internet has influenced the aesthetic of the next generation, such as the teenage who born after 90’s and 00’s usually have totally different aesthetics. In the future, Chinese idol economy has a huge market. We must turn to that direction.
CMBN: In terms of show business, what do you disagree with?
Xue Liping: There is no downstream or upstream. I don’t know where to go, which is the dilemma faced by the vast majority of our performance companies. There won’t be four or five companies in 100 to think about this question. Many performance companies remain to grab the chance of Jacky’s concert now as long as they could feed themselves, or that of Emil Wakin Chau the other day. Where should companies that have dream go? I’m thinking about the future after 3 to 5 years.
Next year, we have 4 to 5 concerts of Eason Chan. I won’t be a problem for us to earn money. As I said before, Eason is the No. 1 in box office, and the second is Jay Chou. Because Jacky hasn’t been in public for three or four years, his box office would be the second or the third. And the fourth is May Day. In the following year, we also have projects of William Chan and others. But what about the year after the next? Where is the sustainable development of our business? This is what I worry about the most. The industry lacks the capacity for sustainable development now.
CMBN: What do you think is the most difficult part for performance companies?
Xue Liping: We should provide contents to others for sell, or operate in the market. We’re at the middle of links. Now, ticketing will press brokers, and it also invest in performance. In the mean time, artists also press us, we have a hard time now.
Ticketing companies have flow cash of billions Yuan, which means that companies like us are a bit passive. We have to rely on relationships with artists. But the fact is that relationship ranks the last in
business. In the world of business, relationship pales in front of profits.
As I mentioned the two-eight rule before, only few artists can earn money, while hundreds of thousands of companies want to grab the chance. Thus, price pushing is quite normal, which means that we are passive. In the end, the space for profits shrinks, while the risks increases.
CMBN: Since the upstream artists are more independent and downstream companies are larger, is it possible for the middle to integrate into a highly concentrated industry?
Xue Liping: It’s possible, but it will be very hard. Live Nation also has problems when artists are more independent or concerts are not profitable. But it operates around the world. It not only has concerts, but also festivals, music copyrights and venues. The good point is that artists and producers share the risks and spill the box office in other countries. But in China, due to the shortage of popular artists, organizers give the money to artists and take all the risks.
Why should we transform? I’m seeking for something with our own contents. Sure, we won’t give up the tradition. For example, we will compete for the concerts of Wang Feng or others in the next round, which is the foundation. But I’m going to change. Is there any possibility for integration? Of course, there is. With the power of capital and business mode transformation, we don’t need to exchang money for concerts with artists. It could be another way.
CMBN: We understand that Compass Culture is influential in high-end market and rich, have you ever considered financing and going public?
Xue Liping: To be honest, lots of people want to invest on us. But I haven’t promise them, because I feel many are cheating for money. I don’t like it. I think we should be responsible to investors. If we fail to convince ourselves and don’t know how to spend the money, it’s the most terrible thing. Our companies has tens of millions Yuan now, if I need more for large-scale show, I could lend some from my friends.
Additionally, many brokers also come to me for the “new three board”. We have over ten million Yuan’s profits in recent years. But, I think the financing scale is a bit small. Beside, getting in the “new
three board” means you have to share your story with others. I think it’s inappropriate especially when you don’t totally understand your own story.
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