By Marco Scotti.
Nightclubs have a long and rich entrepreneurial history. It was when Disco arrived in the ‘70s that nightclubs took on their now familiar form. For decades nightclubs – currently valued at $25bn globally – have formed the backbone of the nightlife sector. However, since 2008, nightclub attendance has been falling in the UK and other Western nations.
Tightening noise restrictions, changing social attitudes and negative press have all contributed to falling attendance and the closure of famous institutions including London’s Fabric and Turnmills. Nightclubs have also lost their competitive edge in England and Wales with the introduction of 24-hour alcohol licensing.
Will this all these changes force nightclubs to evolve and create a new golden age? I believe so. A grassroots movement known as #savenightlife has gathered the support of record labels, agencies, promoters, and revellers in the UK to try to reverse the decline. Meanwhile, new and innovative, technology-driven ideas are evolving the concepts of nightlife and nightclubs themselves.
In this article, I aim to assess the deep roots of the nightclub business model, the technological solutions that have made – and are making – their way into the industry, and how they could, with the magic of some entrepreneurial drive, bring clubs into a new golden age.
Analysing the nightclub business model
The top three components of the nightclub business ecosystem are:
- Nightclubs – the places customers pay to experience
- Promoters – effectively the nightclubs’ salespeople
- Clubbers – the customers who pay to live the nightclub experience
Nightclubs and promoters both act on the business side and customers occupy the consumer category. I believe that promoters – particularly in the luxury nightlife sector – could be the key to the industry’s future. Promoters make money by earning a percentage of the total spending of their own customers in the club – the European and US average is 20%. Customers are either engaged by club promoters or contact them to access the club and/or book tables. They’re then greeted and escorted through the night by promoters – ultimately the only figures customers have a meaningful business relationship with.
This relationship allows nightclubs to function as a place where the experience happens – music is played, dance moves are unleashed, and drinks are sold. Nightclubs are the stomping grounds of promoters – the true central business figures in the industry. However, for this ecosystem to thrive, clubs need to attract a new, tech-savvy generation of clubbers, promoters need new tools to find and engage customers, and clubbers need new platforms and incentives to facilitate their experiences.
Nightlife and Technology
While new technology has been disrupting one established industry after another, the nightlife sector has lagged sorely behind. Promoters, nightclubs, and their brand managers have made some attempts at embracing technology, largely in the form of social media. Yet, the industry’s decline proves that advertising and brand awareness alone is not enough to increase attendance and save much loved clubs. Just as street flyering has lost much of its impact, so have Facebook promos. This technological gap sees the industry fail to attract younger generations – especially millennials – who are accustomed to using their devices to discover products and experiences. Many young, innovative companies, however, have caught onto this.
Nitechain, a Blockchain-powered nightlife marketplace will soon use Nitecoin – its own cryptocurrency – to incentivise its clubbers to stay active and engaged within the nightlife ecosystem. Nitecoin will reward its users for attending clubs, recommending venues, and bringing along friends. The platform is bolstered by its partnership with Nightset, an award-winning nightlife app which allows its users to find and access events and club nights. Solutions like this are key. Otherwise, those outside the circles of well-connected clubbers and their promoters – or those travelling to a new city where they don’t have connections – find it incredibly difficult to access amazing nightlife experiences.
Even more difficult to find – and afford – is a table, particularly for groups of fewer than 10 people. This is despite VIP Table bookings making up a massive 60% of club revenues. While tables offer clubbers the most exclusive experience possible; line skipping, security, bottle service, etc., the enforced minimum spending has caused costs to skyrocket. The minimum cost per table is £1,500 in London and $3,000 in Miami! Meanwhile, promoters struggle to expand their customer portfolio and increase table sales. Without a technological solution, it’s tough for promoters and clubbers to find one another, and for clubbers to connect with others, book tables together and split the costs.
Figaroo (sometimes dubbed “the Uber/Airbnb for promoters”) focuses on club promoters – the true connectors of the industry. Despite having the most influence on demand, trends, and clientele, promoter technology is still a relatively young, unorganised, and fragmented sector. Figaroo links them with invite-only customers, giving them greater visibility and allowing them to fill tables. It also connects clubbers with one another – another important method to boost attendance and reverse the nightclub decline.
The stagnation of today’s nightlife industry is also owed to the swathes of homogeneous nightclubs – barely differentiable by their music, format, and overall experience. Many venues are using technology to set themselves apart from the competition and gain the edge over late-licence bars. Experiential technology from the likes of Zuzor is used to create interactive displays, many of which are used to bring club walls to life. This may see fixtures imitating the motions of a dancing clubber, “cartooning” them, and turning them into the conductor of a psychedelic lightshow.
Interactive bars and tabletops such as Touch Magix, TableFX, and spinTouch, work on a similar concept. Filled with vibrant coloured lights, these futuristic surfaces respond to your touch. So, clubbers can expect to see butterflies land on their hands, create water ripples, and launch shooting stars launch as they sip their cocktails.
With a combination of these innovative ideas, and the many more yet to emerge, technology offers new hope to nightclubs and the wider nightlife industry. Over the next decade, the way clubs and promoters locate and attract clubbers will look completely different. The new technology is exciting. With entrepreneurs at the helm surely we can reverse the current trend, breathe new life into the clubbing scene and create a new golden age.
Marco Scotti, is an experienced entrepreneur and founder of Figaroo – a platform that connects clubbers with promoters and invite-only clubbers, allowing access to the VIP experience usually enjoyed only by high-net-worth individuals who make up 68% of all nightclub spending in a $25bn industry.