Nightclubs have a long and rich history ‒ with the first credited as being Webster Hall in New York, built in 1886. Originally they were social halls for music, dancing and political activism. It was only when Disco arrived in the ‘70s, however, that nightclubs took on their more familiar form.
From the 1980’s, nightclubs – currently valued at $25bn globally –formed the backbone of the nightlife sector. Yet, since the 2008 economic crash, nightclub attendance has been falling in the UK and other Western nations.
Negative press, tighter noise restrictions, and changing social attitudes have all contributed to falling attendance rates and the closure of famous institutions such as London’s Turnmills and Fabric. Nightclubs have also lost their competitive edge in England and Wales with the introduction of 24-hour alcohol licensing.
Is it the end or will these changes force nightclubs to evolve into a new golden age?
Personally, I believe the latter.
In the UK, a grassroots movement #savenightlife has gathered support from record labels, agencies, promoters, and revellers 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 nightclub business model, the technological solutions that have made – and are making – their way into the industry, and how they could bring clubs into a new golden age.
The nightclub business model
To explain the mechanisms that make money flow into nightclubs, let’s identify the main actors and their role in the business ecosystem.
The top three components are:
- Nightclubs – the places customers pay to experience
- Promoters – effectively the nightclubs’ salespeople
- Clubbers – the customers who pay to live the nightclub experience
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 contacted by 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.
Technology and Nightlife
While new technology has been disrupting one established industry after another, the nightlife sector has lagged 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.
And club nights themselves? With all this exciting new technology, they may end up looking more like Blade Runner than Saturday Night Fever. Hopefully, we can reverse the current trend, breathing new life into the clubbing scene, so that complete strangers can become firm friends dancing late into the night!
About the Author
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.
Figaroo is crowdfunding now on Crowdcube, the UK’s largest crowdfunding platform, until Dec. 22.