The cultural sector, or more broadly what is defined as the “creative industry”, is one of the areas most affected by the crisis caused by the coronavirus, perhaps only behind the tourism industry.
With the help of Erick Krulikowski, director of iSetor (http://isetor.com.br/negocioscriativos/quem-somos.php) and expert in the area of creative economy, we took stock of the situation, also trying to understand what scenarios are expected in the short and medium term in this sector.
According to IBGE (equivalent of ISTAT in Brazil), the creative sector employs approximately 1.9 million people (3.7% of the employed), of whom 44% work independently. According to FIRJAN, the sector was responsible for around 2.61% of the Brazilian GDP 2017 (around US$ 34,3 billions). Since the beginning of March, the dynamics of the creative economy have undergone the shock of the determinations necessary to control the pandemic, such as the closure of spaces, the cancellation of shows and the suspension of the production of new movies and records, just to name a few examples.
Music and concerts
The music sector chain includes many areas and professionals. In addition to the artists, technicians, organizers, show houses, communication vehicles, technical and logistic suppliers are involved.
In many cases they are freelancers or small companies, now in extreme difficulty due to the cancellation or suspension of concerts and shows. Without liquidity, many companies in the sector – especially smaller ones – are destined to go bankrupt in the coming months. And for freelancers, whose week-long wages pay the costs of the next week, it will be months in which it will be difficult to even shop for the family at the supermarket.
Several famous musicians are promoting online concerts and performances, some with interesting economic results. The duo sertanejo Jorge and Mateus has created a live event with 3.2 million accesses through the streaming platforms and the sponsorship of an important brand of beer: it is estimated that the turnover was around 110 thousand dollars, 95 thousand generated by the views and 15 thousand from the sponsor. Gusttavo Lima, another sertanejo singer, will launch an exclusive app to do shows. And to take back control of this initiatives, in the last month, beverage brands such as Heineken, Budweiser and Devassa started to promote online events with various artists.
For minor artists this type of initiative can allow to maintain a connection with their audience, but the problem of how to monetize the performances remains.
In the case of large shows postponed to a later date, the organizers are asking those who bought the tickets not to request a refund, pending the definition of the new dates. This can allow to reduce the impact on cash flow, at least in these first months of stop.
ECAD estimates that, if the isolation lasts for four months, approximately € 30 million in copyright will be “lost”. Money never recoverable, because it is not collected in closed rooms. Despite this, ECAD and other associations will advance approximately R $ 14 million to 22 thousand composers, musicians and performers.
The trend is still uncertain even for the post-pandemic period. It is likely that even when social distancing measures are abolished, many people will not want to participate in large events or attend crowded clubs. And it is difficult to predict whether the cost of tickets for live shows will remain at the same level in recent years.
The government has not yet defined a specific line of support for the cultural sector in general, nor specific for the music sector. Projects approved through Lei Rouanet and now suspended cannot draw on the resources available, which can only be used in the face of proven (and now obviously suspended) disbursements.
Instead, private cultural institutes are beginning to move. Itau Cultural has launched a contest to stimulate and reward the production of unpublished musical compositions and studies on Brazilian music. The winners (120 in all) will receive between 550 and 1100 dollars in prize money.
In other cases, the transformation of events and demonstrations from in person to virtual is being studied, although the unknown factor remains on how to solve the economic equation. This is the case of the Marte Festival (www.martefestival.com.br), for which it is being decided whether the 2020 edition will be transformed into an online event or postponed to 2021.
Cinema and TV
The “cinema and TV” sector is suffering differentiated impacts according to its position. The greatest impact, at this moment, concerns the production phase and the exhibitions in cinemas.
The productions are all stopped, which will lead to a decrease in new releases next year. Those who have already produced and are in the post-production phase (editing, etc.) have an advantage, because they will be able to launch the products in the second half of 2020 or in 2021; but those who were preparing to produce or were in the middle of filming will face delays of no less than six months.
In the television sector, all telenovelas productions have been discontinued. The famous Casablanca film production company, which produces programs for the TV Record network, has already dismissed all freelancers collaborators involved in the production of novelas since March, 23.
In all networks, the new novels were canceled from the program schedule and replicas were broadcast.
Variety and information programs involving the presence of the public have been canceled or reformulated. In some cases, reruns are airing.
After the success of the “live” performances of artists on social networks, commercial televisions are trying to report these performances on their channels, to stem the loss of audience and consequent advertising revenue.
To give more coverage to coronavirus news coverage, many programs have been suspended or downsized.
As for the music sector, those who suffer most are the technicians, very often precarious and without any contractual safeguard. Netflix has donated € 1 million to the ICAB (Brazilian Institute for Audiovisual Content) to be distributed to technicians in the sector who have remained unemployed.
The advertising sector, closely linked to the television sector, is also facing a severe crisis. Campaigns canceled or suspended and production of new commercials interrupted have led to the resignation of many freelancers and technicians who work for advertising agencies or production companies. The main associations in the sector have asked the government for support measures to preserve jobs and the survival of companies, in a severe liquidity crisis.
Impact on the movie sector
With the cinemas closed, all the programmation is obviously suspended. Some cinemas are trying to offer the viewing of author films online, without opposing the giants of streaming, to generate alternative revenues and pay at least part of the very high fixed costs.
Being an agglomeration place par excellence, cinema will surely be one of the last activities to start again and will have to do it using great precautions. The necessary social distancing will cause a significant decrease in seats and therefore a sharp drop in revenues, which many rooms will unfortunately not be able to resist for long.
Contrary to the television sector, which arriving directly in homes has fewer restrictions, in the case of productions intended for cinemas there are only two alternatives: wait for the reopening of the movie theater or schedule the launch of the movies already produced directly on the streaming platforms, with heavy economic consequences.
Even if in Brazil the social isolation of the entire population in order to avoid contacts and the spread of Covid-19 is not as coercive as in other countries, the immediate consequence of the crisis was in any case a significant increase in the permanence of people in their own homes.
With the increase in “forced” leisure and in a scenario of great sadness and frustration, people seek refuge or distraction, making sure that the home entertainment industry manages to grow despite the economic crisis. Right now people are “forced” to exchange normal outdoor social activities with alternatives inside the house, an unwanted but necessary “cocooning” effect.
For this reason, Netflix’s actions, for example, have shown a growth of 38% since the beginning of the crisis (21 February 2020) to today (23 April 2020), in sharp contrast with the negative trend of the market average .
Some Brazilian companies that offer streaming content, such as Sambatech, have also seen the demand for access increase and other initiatives are being created to take advantage of this market opportunity (such as http://www.poloaudiovisual.tv/).