With concert tours being where the real money is in music, Beyoncé just joined the growing number of celebrity venture capitalists by investing $150,000 in Sidestep, a concierge app for buying concert memorabilia online and having it shipped directly home.
Beyoncé Giselle Knowles-Carter, who had quietly dabbled in venture capital through investments in the music streaming service Tidal, WTRMLN WTR beverage company and the vegan-based 22 Day Nutrition, has decided to lend her celebrity visibility by becoming a seed round investor in Sidestep, a company that is using tech fulfillment to leverage the booming trade in concert memorabilia.
The first half of 2016 saw the worst year for music sales since 1991, according to data analysts at Nielsen Music Ratings. Album sales, including track-equivalent albums (TEA, whereby 10 track sales equal one album unit) were down 16.9 percent; album units overall fell 13.6 percent to 100.3 million total sales; compact disc continued to crumble by wilting 11.6 percent to about 50 million; and digital album sales fell by almost 20 percent to 43.8 million. The only good news was vinyl sales moved up by 11.4 percent from a low base to 6.2 million units.
But in contrast to the crashing recorded-music business, the live concert business has never been bigger. Artists at every level are becoming more and more on concert revenues as their primary source of income as 2015 was up 14 percent to a record year for the North American concert business with the total gross hitting $3.12 billion on 42.08 million tickets sold by just the Top 100 tours. More importantly, the average ticket price has also moved up in 2016 by 4 percent to $74.25.
Beyoncé began her 39-date Formation World Tour on April 27, 2016, at Marlins Field in Miami and will finish at the New York Giant’s stadium in the Meadowlands on October 7. As the top female attraction on the planet, she is on track to sell over $200 million in ticket sales.
But artists like Beyoncé also gets a cut of about 30 percent of gross tour merchandise sales. That percentage could be much higher, but venues always get their 20+ percent of the merchandise in their facilities. It is not unusual for concert goers to spend more on t-shirts, posters and other collectors’ items they paid in ticket prices.
The ability to cut out the overhead charge by the venues, explains why after the first two weeks of Sidestep selling Beyoncé tour merchandise online at her shows, she decided to have her Parkwood management company become an angel investor in Sidestep.
Sidestep CEO Eric Jones told the TecCrunch.com blog that they “wanted Beyoncé’s tour to be very focused on tech”, and liked the idea of “a tiny scrappy startup doing the biggest tour in the world.”
The start-up allows concert attendees to “sidestep” long lines at remote booths and use a smartphone app to order tour merchandise before, during, or even after a show. The concert goer that places an order online receives QR code that they can use at a dedicated pickup spot or can have products delivered directly to their home.
Sidestep only makes a 10 percent service fee they charge to their customer, which means the artist gets the full merchandise revenue minus only shipping and handling costs. Artists like Beyoncé, also get a piece of the action if an attendee at one of her concerts decides to buy some other artist’s merchandise, including name stars like Guns N’ Roses, Fall Out Boy, Selena Gomez, and Weezer that have Sidestep agreements.
Beyoncé joined actor Jared Leto, former Lady Gaga manager Troy Carter and his Cross Culture Ventures, and the previous CEO of the LA Dodgers to raise a total of $1.7 million for the company. Sidestep is reported to have grown revenues to over $2 million this year, up from $200,000 in 2015.
The visibility of having a celebrity like Beyoncé, helped the Sidestep qualify to compete in TechCrunch’s 1st And Future sports startup hackathon in early 2016.
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