Industry

Les M. Goldberg on the Value of Competition

The impact of commoditizing audiovisual services on the live event industry 8/03/2015 9:45 AM Eastern
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The live events industry is driven by service and results, and there is a
great benefit in paying competitive pricing for quality people, equipment and support. Companies that commoditize audiovisual services, leading with price as the main differentiator in supporting an event, create a model
that is not sustainable for the industry, if high end service is to remain at
the forefront. Competition is a positive thing and beneficial to the industry—it keeps people on their toes. It compels companies to operate at a
higher level, promotes innovation, and ongoing investment in technical
expertise. Good competition results in amazing shows.

Today, a new pricing trend is emerging in the live events industry within an environment of consolidation and dwindling competition. When bidding on a show, some companies are turning to offering below market pricing, willing to take on a project at a low margin in order to win the business. A model of this nature, leading with price, is simply not sustainable over the long term to support an industry historically driven by service, and providing quality equipment and talented people for live events. Equipment providers that treat audiovisual as a commodity should be considered a red flag for event producers when working through the bidding process.

First off, let’s answer this question: is audiovisual service a commodity–“a good or service whose wide availability typically leads to smaller profit margins and diminishes the importance of factors other than price?” In the live event industry some standard audiovisual products may be widely available through different providers but unless the situation involves simply dropping off a box of equipment to a client, then other factors aside from price will always be of paramount importance. Even in a rental transaction, a client wants assurance of equipment to be in good condition upon arrival, requiring inventory maintenance and quality control procedures, which can vary among providers. Unless the situation involves each provider quoting the same equipment in a similar working condition, without technical labor, audiovisual cannot be considered a commodity.

Yet, some equipment providers are currently vying to win business using “loss leader” tactics by cutting prices well below normal market rates and/or offering to give away parts of the show. For example, if the client awards the provider the video portion, the bidder will include the lighting at no extra cost. Although this ‘great deal’ can seem very appealing to a client trying to accomplish an event within or under a budget, event producers should be cautious and understand that a pricing model well below the current market is not a long term solution. Factors outside of price, such as technical expertise and knowledge, experience and training, equipment maintenance and quality control, and customer service make the difference and drive competition in the live event industry.

Pricing will vary among equipment providers and can greatly depend on different circumstances including event location, time of year, and current demand. In good competition, the pricing will normally differ about 15-20% among the providers quoting for the event. Anything outside this range is a red flag. Think about this: when seeking out several prices for a service, such as a home improvement project, did you ever get one price that was drastically below the others? Did you hire that vendor, or did the phrase “you get what you pay for” run through your mind? Event producers should be cautious because significantly lower pricing can come at a cost that may might not be realized until it happens. Remember, in the live events business you only get one chance to get it right.

Ask specific questions in regards to the level of support to expect throughout the process, such as who has accountability should an issue arise onsite or after hours. No one is going to brag about the great deal if a problem occur that impacts the event. In a show environment, service, expertise, and response time is critical, and an event producer should ensure these support measures are in place when hiring any provider.

There is a huge value to fair competition within the live events industry. Competition drives providers to constantly upgrade and enhance service and technology offerings, which requires investment. A company that sells below market pricing simply cannot sustain that model and be successful over the long term. Without continued investment, a company cannot stay up to date with the latest technology, maintain their inventory, or buy more equipment to support clients on an ongoing basis and grow over time. When hiring equipment providers at competitive pricing, the live events industry benefits as a whole. It promotes competition and continued investment in innovation and technical expertise.

In the short term it may seem tempting to follow a great deal, but it’s important to avoid being “penny wise and pound foolish.” A great deal on gear up front may end up costing much more in the long run. Ask yourself whether you are willing take additional risks with your show and weigh the long term costs and effects should a problem arise. In addition, it may impact the range of choices available to event producers when searching for quality providers to support high-level events with technical sophistication. By driving the pricing model down across the market, companies that operate with a higher service level will finder it more challenging to maintain the cost structure to provide a consistent quality product with talented people.

The live events industry is driven by service and results, and there is a great benefit in paying competitive pricing for quality people, equipment and support. Companies that commoditize audiovisual services, leading with price as the main differentiator in supporting an event, create a model that is not sustainable for the industry, if high end service is to remain at the forefront. Competition is a positive thing and beneficial to the industry—it keeps people on their toes. It compels companies to operate at a higher level, promotes innovation, and ongoing investment in technical expertise. Good competition results in amazing shows.

Les Goldberg founded LMG, LLC, a national provider of video, audio, lighting and LED support in 1984 with a small loan from a relative. He also acts as CEO of Entertainment Technology Partners, LLC, the parent company of a collection of exceptional brands within the live event and entertainment technology services industry. For more information, visit www.lmg.net and www.lesgoldberg.com

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