The Heightened Harms of Radius Clauses in the Post-COVID Live Music Industry
With shows and festivals selling out all across the country, there is no question that live music is rapidly making its post-COVID comeback. After nearly two years of shuttered venues and stay-at-home orders, ticket sales for in-person events, from sports games and concerts to conferences and expos, are through the roof. In June 2021 alone, more than $1.6 billion worth of live events was scheduled across the United States.
This is a much-needed change for the live events industry, in which estimated losses totaled more than $30 billion due to the pandemic in 2020. The music industry was particularly hit hard, with venues and artists losing the majority of their incomes from nationwide tours due to widespread lockdowns and travel restrictions.
But even with loosened restrictions and the rising demand for live shows, artists and smaller venues are still facing hurdles to success in the post-COVID touring market, in some part due to radius clauses—a form of contractual non-compete clause used by promoters to restrict the ability of an artist to play a show within a certain radius for a certain period of time after playing in the region. For example, after playing a festival in New York City, an artist or band might be restricted from playing within several hundred miles of the city for months on end. These clauses are generally used to ensure that the investment by promoters into booking a venue and an artist will pay off without watering down the market for ticket sales by allowing the same artist to play frequently in the same area.
For smaller artists who have been out of work for nearly two years and who have historically relied upon touring to financially survive—not to mention small independent venues that have had to rely on the National Independent Venue Association’s efforts to lobby Congress for emergency funding throughout the pandemic just to stay alive—these radius clauses are more harmful and anti-competitive than ever before.
Courts have rarely considered the harms caused by radius clauses in the live music industry—possibly because smaller artists are most detrimentally impacted by these restrictions. These artists do not have access to the resources necessary to protect their best interests while they are negotiating contracts with promoters. When issues regarding these clauses have made it into court, they have generally been viewed as antitrust matters and have been resolved in a promoter-friendly manner.
In one particularly egregious case, a Chicago-based festival in 2017 imposed a 500-mile restriction for periods of 60, 90, and 120 days, depending on the artist, preceding and following the event—making it impossible for any of that festival’s artists to play anywhere else in the Midwest for up to several months. Despite the economic burden placed on these artists, who very well might rely on touring for their survival artistically and financially—not to mention the harm done to venues across the Midwest who might rely on these artists’ tours for income of their own—a federal district court deemed that the radius clause did not constitute a per se violation of the Sherman Antitrust Act. SFX React-Operating LLC v. Eagle Theatre Entertainment, LLC, No. 16-13311, 2017 WL 3616562, at *18 (E.D. Mich. 2017). On the rare occasion that similar cases have reached a judge’s ears, the outcome has generally been the same.
Still, some courts have expressly left the door open for antitrust law to serve as a basis for invalidating harmful radius clauses. See It’s My Party, Inc. v. Live Nation, Inc., 88 F. Supp 3d 475 (D. Md. 2015) (finding that “exclusive dealing arrangements, such as contracts between a national promoter and artists requiring the artists to work only with the national promoter via exclusivity clauses or broad radius clauses, may be an improper means of acquiring or maintaining a monopoly power”). With ticket sales at an all-time high and artists and venues alike attempting to make up a salary deficit from the two-year absence of tours, antitrust law could be used as a solution to expand artists’ access to the touring market and increase revenue for small and independent venues. And for those of us fans who have gone nearly two years without access to live music, the absence of radius clauses might just mean more opportunities to see our favorite bands and artists live as restrictions continue to be loosened.