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The transformation of a trader dealing with ten-thousand-people concerts "Now, Compass Culture, which is led by Xue, has begun to reform. His solution is to have content from upstream."

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admin 2015-11-15 Collect Review (164)

On the evening of September 30th, there was a celebration party of Wang Feng concert. Xue Liping, the founder and CEO of Compass Culture, was busying toasting to Wang Fang, the agent, the executive team, and other partners. While posing for a group photo, they laughed and patted shoulders of each other, saying, “You’re so great!”

It seemed that everyone was in the thin fog. The bright lights reflected a thriving image and some were getting drunk. Within an hour, Xue’s face turned red. CMBN asked him, “Can you continue to talk?” Glass in hand, Xue answered clearly and enthusiastically, “It’s no problem for me to talk another hour!”

Before the concert of Phoenix Legend, we met Xue at Compass Culture office which located in National Olympic Sports Center. We left before 12 pm on that celebration party.

“When was the party over?”

“It was around 3 am.”

“Did you drink much after each concert?”

“Almost. We have celebration party after each
concert.”

“How many parties do you have in a year?”

“At least 40.”

Wang Feng was ill after the concert, and almost lost his voice after drinking. It was also his last concert in the future three years. For this reason, people were a bit crazy and sentimental.

Xue was graduated from China Conservatory of Music in 1999. Before starting his own business, he was the executive vice president of marketing company of CPAA. No matter ten years, or five years as a promoter. Xue has high sense of crisis and is good at discovering or solving problems. He also likes to challenge himself.

Two most representative cases are he brought mainland artists from concert of thousand scale to ten thousand scale. One is Phoenix Legend. The other is Wang Feng. The former is the most popular band with square dance boyle. Its box office is very stable. The latter is a first-class rock singer, as well as the mentor of Voice of China, whose three years touring became better with time going.

Though occupying an important place in the mainland performance market, Xue still felt confused. He kept asking himself what the competitiveness of sustainable development of promoters is and what is left by the company. He could not see it, which was the most terrible thing.

At the beginning of the business, Xue wanted to do something with passion and financial freedom. One scene after another, Xue always wanted to expand his business. He felt that he could change the mass of mainland performance market, but it was very hard.

Now, Compass Culture, which is led by Xue, has begun to reform. His solution is to have content from upstream.

Self-implementation, linking to local channels

The most famous case of Compass Culture was Wang Feng’s touring which lasted for three years. In 2013, Wang Feng’s concert hit a single concert box-office record of nearly ten millions yuan, with a total box office of 120 million yuan. In May 2015, on the “2014 Best Concert Box Office chart” by Daolue, Wang Feng ranked at the second with 139 million yuan, only behind Eason Chen. Wang Feng was also the only mainland singer in top ten.

Touring in more than 40 cities, including Beijing, Hangzhou, Xiamen, Guangzhou, Shanghai, Chengdu, Xi’an and Nanjing, it was a mega touring of Wang Feng. Ending was another beginning. In 2013, Compass Culture cooperated with Rock Forward Entertainment, which was the agent company of Wang Feng. In 2014, 60% of Wang Feng’s concerts were produced by Compass Culture. As for the rest 40%, Compass Culture worked with others. In 2015, Compass Culture signed the general agent and produced all by itself.

In European and American markets, there are giant companies like Live Nation and AEG Live. However, with a huge population, there is no independent company in China to link all channels. The whole performance market remains at a very traditional phase, which is one reason why the market fails to thrive. At present, the main mode in the performance market is to obtain the general agent and then subcontract out. There are not many companies that are able to directly carry out the concert around the nation. Most companies sell shows to local promoters, depending on the relationship between the promoter and government, sponsorship, promotion and operational ability.

In the first half the 2015, concerts by Compass Culture were all stadium-scaled, with 8,000 – 10,000 seats. In the second half of the year, most are stadium-scaled, some even are larger with 30,000 seats. At present, Phoenix Legend has a stable box office. 500 million yuan would not be a problem. This “national mix” also has an advantage of good sponsorship. Almost all of the six concerts of them have sponsorship.

Within two or three years, Compass Culture will have more programs. It would not be a problem for them to earn money. But Xue desired more. He thought it was right to internal implementation the 2015 Wang Feng project. The team now has local experience and knows about ticketing, security, media, which is quite rare within the chinese performance market.

However, referring to the current situation, Xue thought the growing speed was not as fast as expected. He frowned and signed disappointedly, “I’m studying EMBA in Tsinghua University. Executives in other industry asked how much does performance industry valued. I answered 6 billion yuan. I felt awkward to answer!”

“Most promoters still remain grabbing one to feed themselves today but never think about tomorrow, let alone the development of the whole industry. We’ll organize Eason Chen’s concert next year and Wang Feng’s concert in next round, even other singers’ projects. This is our foundation, but I’m going to change.”

Business is prior to relationship

Sincerely, Xue was very clear that Compass Culture’s competitiveness still relied on relationship with artists. But in a business environment, relation ranked the last. Business should be the priority and relationship was the last.

Xue frankly revealed that currently promoters only transferred the upstream contents to them (ticketing companies). It was the middle stream part that operated in the market. But there was clearly a two-eight rule in the market. Though with lots of artists, only certain few dominated box office. There was no single large independent performance company in China. Hundreds of small companies just operated individually. When artists who have box office increased their performance price, there would be less room of profits. The risk was shifted to promoters. Besides, ticketing giant like Damai began to organize and invested on concerts. They had large cash flow and had the ability to held 30 shows. Thus, the number of projects for middle promoters decreased.

“An artist must go through years of sedimentation. How many years would you take to establish your music, reputation and image? There are few contents, so raising up price is quite normal for artists. If I were an artist, I would raise up the performance price. This is the limitation of our industry.”

Take Wang Feng for an example, he is a rock singer who once held his concert in the Bird’s Nest. Fans pay for his concert. He has many good songs. In Xue’s opinion, Wang was a singer who was a very diligent person, pursuiting for perfection and writing good works. He admired, “When recording a song, we had recorded a sentence ‘how would you do with me’ for more than 50 times. We felt it was very perfect, but he kept recording regardless of tiny faults. Therefore, it’s reasonable for Wang to have such achievements today.”

On the day after the celebration party, Wang wrote on his Weibo, “Ziyi (Wang Feng’s wife, a famous actress in China) once said to me that every time she finished her movie, she felt like she was seriously ill and scarred. Now, it’s my turn. I was good with the three years’ touring, but fell ill after that. I would be alright if I drunk less on the celebration party. I got acute pharyngitis and was nearly dumb! I had to put on IV drip! I have a concert tomorrow. What should I do? I hope there is a miracle that I were able to sing for my fans tomorrow night. God bless me!”

“After 2013, I felt Wang was increasingly popular. So I asked to talk with him. At that time, I had negotiated with him about the idea and fee of 2014 and 2015 touring. We have a theory which I think is right till now. He is responsible to work for a world-class concert, and our job is to make it better on marketing, such as promotion, planning and so on. ”

The 2014 Wang Feng Touring achieved a huge success. We were well planned. However, in 2015, the box office still went down. We asked Xue about the reason. He answered objectively and reasonably, and also minded his words. First, Wang’s touring had been lasted for three years. It was a bit frequent. Thus, it’s reasonable for the box office to fail. Secondly, the sarcasm from the media and Wang’s negative critics also impacted the box office to some extent. Thirdly, the stock market did not develop well, which influenced people’s willing of buying concert tickets. But Xue also admitted that stock market did not have any relation to the box office, while “frequency” and “media” were the direct reasons.

Earlier, Wang sued media, and triggered heated debate when he questioned the vote on Voice of China. He was the headlines every day during that time. Because he was too serious, his relationship among other became worse. Bai Jiankun, the publicity director of Compass Culture told us that it was very hard to promote this year. When we made ads, those media who were sued all refused to publish. He was too worry to fall asleep but we had to accept it.

Attacks on both sides, the transformation controls “contents”

Show organizers are influenced by both the upstream and downstream. They must transfer. Now that few artists can do ten thousand-scale concert, what about venue and Livehouse?

Xue explained that, first, there was the cost of venue. Venues had around 1200 seats, which meat that the maximum income of selling tickets was 700,000 – 800,000 yuan. Despite the appearance fee for artists, there were costs of the venue rental, audio, lighting, stage design, instrument rental, video recording, broadcasting switch, plus LED screen,
publicity fee, ticketing company share, business tax and so on. It was too hard.

Even the ticket was 300 yuan, which might be very expensive for fans. They only spent 200 yuan on a festival and were able to watch various performances. Why should they go to the venue concerts? He thought rock could not be high in the venue. Also, there were difference between festival consumers and concert consumers in terms of needs and consumption ability. Now that bands were for the concert, they must follow the standard of concerts. It should not be too bad, but the box office was from the former fans.

“It’s really hard. A friend of mine signed 20 shows of a band last year. But he quit after two shows.” Xue said, “You know, the average ticket price is 300 yuan. There are at most 1200 seats, which means that the maximum income is 360,000 yuan. You would lose money.”

What about Livehouse? The market is at the initial period. He has seen that most Livehouse owners are also losing money.

Having thought about it twice, Xue found the limitation of the development of the company was still the contents from the upstream. If he has his own contents at hand, the company would have competitiveness of sustainable development. Xue shared three expansion direction with CMBN:

The first content: Cultivate your own artists. Fans economy is another direction in the future. Recently, Xue invested on a two thousand square meter factory in a culture industry base, planning to make it a comprehensive base for cultivating artists. It aims to create idols and choose the way of Internet fans economy.

The second content: Acquire musical copyright. Xue had thought about how to avoid competitions with small companies. Thus, it needs high threshold contents in hand. He thought this was where the blue ocean of performance market lied. The scale of musicals will increase and at least he can solve the problem through purchasing and introducing musicals.

“The amount of concerts is there. At present, the box office of mature Chinese musical is in Beijing, Shanghai and Guangzhou. Then, it spreads to Shenzhen, Chengdu, Chongqing, and Nanjing. If those markets become popular, the scale is enormous.” Xue said. Musical market is in a developmental progress. The initial investment is large, but the revenues are high. In three or five years, Chinese musical market will be very large. He has been discussed about acquiring musicals with overseas companies.

The third content: Develop new IP and design “venue + performance + parent-child + entertainment” project. It’s not festival, but the upgrade of The Spring Festival temple fair. With fixed venue, brand and time, rich entertainment content, and operating the brand persistently. This is the content with sustainable competitiveness.

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