The entertainment industry is quite unique in that it is affected by the economy differently than other industries. In 2008, the financial meltdown caused a disruption in the economy and caused hardships for many people. In Hollywood, pain was felt as consumers were not as willing to spend their money. There are few industries that remain immune to economic recessions. In fact, the entertainment industry braced for cuts in production jobs and writers. Viacom cut seven percent of their workforce. The music industry’s growth was stunted by the financial crises due to banks being much less willing to lend money. Music artists and studio owners alike need money to fund projects. New music business ventures became much more difficult to fund with startup capital. In the meantime, consumers feeling the pinch turned to online piracy, which lost a great deal of sales for record labels. Despite these difficulties, the entertainment industry has shown its abilities to endure financial troubles in the past, and continues to impress and surprise. During the depression, the entertainment industry thrived and many new forms of entertainment actually came about. A great example of how new forms of entertainment can come about during financial problems is Red Box. It is a video rental company that even shocked the founder of Netflix, has been thriving. The company has grown at an alarming rate and has been greatly successful. Still, investors and studios are much more conservative with funding projects.
Although there have been several negative consequences for the entertainment industry due to the rough economy, there have also been surprisingly positive aspects as well. Many venues have seen steady business or sometimes even a boom in business as customers want to escape their own problems caused by a recession. Busy venues are great for everyone. Security people remain busy, the bartenders never stand still, audio engineers have a constant flow of work, and the artists have plenty of shows to play. During tough times, people become more selective about where they spend their money and it seems that small independent local venues benefit the most. People want to have a more intimate experience at a small venue and feel that the money their spending remains in the local economy.
What also has happened during the recession is that people are starting their own business venture, whether it is a band, a venue, or a studio. Local artists, small venues, and start up studios tend to be more affordable and more likely to draw a customer’s attention. Huge venues sporting national acts become much less accessible to people of lower economic status, so they end up going to the local venue to enjoy a few drinks and listen to their favorite local band. The recession is indeed tough on all industries, but the entertainment industry has also found ways to thrive and continue to reinvent itself during tough times. The entertainment industry is truly a unique industry that appears somewhat independent of how the rest of the economy is doing.