The Lesson From Astroworld: Deny the Numbers? Pay the Price

It’s Rather Simple: Listen to the Insurance Industry

Festival Safety: The Unpleasant and Uncomfortable Conversation About ‘Genres’ Needs to Take Place.  The Good News is that the Research Has Already Been Done and We Know Who Can Make it Happen.

One of the many headaches and expenses facing a music festival producer is the matter of liability insurance coverage.  The show won’t go on without writing a check for this beforehand.  It’s a must for the personal and business financial protection of the creative team and for the fact that it will be required by the local permitting authorities, the site’s landowner and the event’s production partners.

The insuring company at the other end of this arrangement has as its primary mission determining the proper pricing of the coverage policy.  How much does it cost to assume the payouts of civil judgments arising from various negative scenarios that DO have the chance of occurring? Not to mention building in a hefty profit as well.  Their tool for coming up with that proper $ number?  Risk Analysis. 

Risk Analysis is the science of determining probability. In the festival biz, that means “what are the chances (odds) that there will be some sort of incident that results in a successful liability claim against the producer at a certain music festival?” After that is % is determined, it can confidently put a price tag on an insurance policy whereby they then assume that risk, unburdening the policyholder (concert organizer).  The higher the coverage amount, the higher the premium.  It’s not any different than any other industry. —  or one’s automobile insurance.

Some insurers will not touch a music festival.  “Nope, No thanks. Nada.  We’re not in that biz.” There is something in their research that tells them it’s not in their best interest to take on this specific risk.  But others will, so the shopping continues.

Photo by Erika Goldring/WireImage

Other firms will offer coverage on a tiered pricing scheme; primarily based on the number of attendees.  Under 1,000 might be $X, 1001-5000 is $XX and $5001-10000=$XXX, etc.  Their risk models tell them that the more people involved, the higher the probability of a problem. Makes sense; no? 

A subset of that group will take it a step further: it is concerned not only about the scale of the event but some other aspects of it as well.  Increasingly, the matter of MUSICAL GENRE is part of the equation. Certain genres have a history of frequent (and sizable)  problems/incidents and subsequent claims, while others do not. Pricing, then, reflects those differences.

The Top Three “problem” genres in these actuarial tables are Rap, EDM, and Country. Interestingly, they each have their own “type” of problems: Rap’s are more crowd-oriented;  EDM’s are often associated with drug issues; country music tends to see more small-scale issues (one-on-one fistfights, alcohol misuse).  The insurance consequence is a reaction to this research: it will cost more to insure a rap show than it does a country music show, which in turn costs more than a reggae show which is more than a jazz show, etc, etc.  Note: classical music is rather inexpensive!

This reality is not based on anything other than that of  “it’s the numbers doing the talking.”  Data talks, BS walks.  Or at least it should.

Now, the point to our walking through that background exercise is to pose this question:

  • If the global insurance industry’s massive research machine is concluding that certain genres tend to be more problematic than others when it comes to matters of safety / injury / deaths / litigation, then wouldn’t other parties be well-advised to take advantage of this hugely expensive conclusion that they are getting for free and act accordingly when it comes to public safety?

This leads us to Astroworld and the Blame Game…

Astroworld was primarily a rap music event; at least the headlining performance was just that. The simple fact that there were 50,000+ rap music fans gathered together in that one spot created a scenario where the potential for some serious problems rose to an above festival-average level. This is simple stuff: 50K+ rap fans = A Big Risk, from a liability standpoint.

The math makes a good case that this particular event should never have been staged (as it ultimately was executed); based on two very simple factors: 1) Scale; and 2) Genre

But this is where the conversation typically goes sideways at this point. Here are the two immediate reactions, followed by the proper counter-arguments from this end:

Reaction 1: “But most rap fests don’t end up with people dying, or even having any major issues.”

Counter:  True. The use of “most” here is legit. But the data isn’t claiming problems at every single one of them. Instead, it is claiming a rise in the probability of problems occurring at them (as a whole) vs other genres. The numbers (% and $) for some of them are (or should be) concerning.

Reaction 2: “This is starting to sound snobbish/racist (take your pick); given that rap is both critically disdained +/or it is a ‘black’ genre.

Counter: No. This isn’t about the actual musical offering or even the personalities performing. It’s about the type of crowd that the genre attracts.  Yes, that’s a hard truth but that’s data talking. This is how US commerce and risk management has long operated.  Not to mention: live rap music shows are dominated by white fans.  Again, it’s about the attendees’ demo- and psychographic makeup (to use the marketing world’s terms), as supported by the nonfiction story being told from the archives of past events. 

Proof? If we magically were able to go back in time and substitute the Astroworld attendees with 50K randomly chosen Americans in that very same field to observe the very same performance by the very same artists, would there have been nine deaths? We would predict NO (or more accurately: a near-zero chance) .   Likewise, put FarmAid in that venue in front of 50K of their own fans. Problems? Minor; with near-certainty of an absence of stage rushes and crowd-crushing.

So back to that prior point: shouldn’t all this research be of value to other interests than just the insurance industry.  We would argue YES.

Particularly, it should be of interest to the Show & Festival producers themselves.  If one’s insurance premiums are telling you where the problems are; it should have some bearing on what type of events one goes about staging.  ‘Should’ being the key word here.

LIVE NATION (the majority owner of Astroworld’s producer/promoter) doesn’t seem to have the motivation to be overly concerned. Why should it? Its headaches that are now arising from Astroworld are really the concern of their carrier, not them.  It can then easily roll with next year’s insurance premium hikes by just raising future ticket prices by a buck or two.  Besides, Wall Street doesn’t seem overly concerned about their fate.  

Photo by Amy Harris/Invision/AP

But local permitting authorities can –  and should — be concerned.  Likewise, they can –  and should –  read the tea leaves (those actuarial tables) and act accordingly in the name of public safety.

This burden, then, needs to fall on them. 

What does this look like? It’s really rather simple: if a Town has a festival space for 20K, it should consider a tiered attendance cap system.  For example: maybe the reasonable general cap is safer at 10K?. From there, maybe an EDM, rap, or country show is further capped at 5K. Or maybe it declines on certain genres, just like some of those insurers do.

Such a system certainly won’t make the big industry players (the mega promoters, artists, labels) happy. But who cares?  It’s about keeping people alive and safe, not furthering the bottom line of global corporate entities that have long been targeted as a root cause of the decline of this industry and art form we all love.  Besides, this new world that arises from local awakenings might even help push some of the rewards $$ away from those.001 big shot megastars to the smaller players that better fit into the smaller gatherings. Who knows…

But the concern here is that the local / permitting reaction will be something different.  We fear a knee-jerk of uber burdensome regulations, paperwork, liability requirements, staffing requirements, oversight, etc across ALL FESTIVALS, regardless of size or genre.   That would really suck, for the certain result would be a wave of fold-ups among the smaller promoters and festivals.  

The winner here would be; who else but…  Live Nation!

It sure would be a lot cooler if that didn’t happen.

  1. Herb Carter Jr says

    One of your better articles Bob.

  2. Rudy says

    You have some interesting points Bob, I am a veteran of 40 plus years in Risk Management and Safety/Insurance. 2 of my employers were/are extremely active in the Liability insurance in the entertainment industry ( the now defunct Fireman’s Fund and the once powerful AIG). There is a force working against Live Nations and all other players that is independent of all this. A hardening insurance market. As with all commodities, pricing goes in cycles, we are in a hardening market where the carriers are licking their wounds and demanding price increases and policy nonrenewals. Concert promoters of all sizes are subject to this. It puzzles the business involved how their so desirable business becomes a pariah and hard to insure. This will force tighter managment controls (crowd controls, limiitng concert size etc). If they are to survive, they will be forced at one point to carry their own financial risk (a larger deductible, additional hold harnless agreements etc. ). This will force them either to leave the business (one claim under deductible can cause considerable financial hemmoraging) and/or adopt tighter controls. I have seen this happen in other industries. After all, entertainment is a business and as a business class they can be noted as being out of control as a class by the industry, look at that recent accidental shooting by Alec Baldwin as an example. The whole area of entertainment can become an insurance desert or the prices will go up ( Lets hope for the best and better self governance),

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