Recessions and Event Video

[Ethan Cooper]

I could very well be jumping the gun here because I really don't know any better, but I've been hearing a lot lately about a possible economic slip this coming year. I know the news media loves to pile on a story and make more of it that it really is, or in the case, could possibly be, but do you guys see a recession coming and how would it impact a wedding videographer like myself?
I see the product we sell as being a luxury item and if there are harder economic times ahead will people continue to buy what we sell?

Don, were you doing weddings full time back in the early 90's when the bottom last fell out? What was your experience?

[Don Bloom]

Yep, sure was. Although things slowed down (it seemed like quite a bit but really wasn't as much as I thought) I still worked and probably was doing 25 to 30 weddings a year. However I will say that the "sell" was a little more difficult than in the years after the economic slowdown. That's was one of the main reasons I tried to get as much non wedding work as I could.
Today (IMO) the slowdown COULD turn some people away from video but frankly with more and more B&Gs doing professional video it may not be as bad as it was then. What I mean is that more and more B&Gs are going for professional video and while they all might be looking for "a deal" IMO a large percentage of B&Gs WILL still go with it. I could be wrong but I've been talking to a friend of mine and his company already has 40 or so weddings for 08. He's more of a production house so I can't compare what he's got to what I have for 08 but so far I'm about the same bookings for 08 as I was this time last year for 07. Of course the economic slowdown hasn't really hit yet across the country so it's hard to say. I'm still going after more non wedding work for a number of reasons and I don't book any more weddings for 08 I would be OK with that.
I don't think anyone has any real answers it's one of those things where you have to wait and see.
just as an aside, I remember in the last 70s (I was doing still photography at the time) the mortgage rates were in the 17 to 22% range. The builders that were building large developements were dieing but the custom builders that were building the large very expensive homes were doing just fine. I know this because I did a lot of photography for them for brochures and print ads. Point is that the people that make a lot of money, while they are affected, aren't affected as much as the middle income folks so my advice, go after the big budget weddings ;-)
Don

[Ethan Cooper]

I love the voice of experience...

[Don Bloom]

Heh,
Experience has 2 definitions.
1) Experience is something that happens to you that you wish had happened to someone else.

2) Experience means, I'm old

OO
\_/

Don

[Peter Wiley]

From today's New York Times:

"Citigroup announced a steep cut in its stock dividend and another big investment by foreign investors on Tuesday after taking more write-downs related to subprime securities and posting a $9.83 billion loss for the fourth quarter.

Beginning what is expected to be a grim week for financial company earnings, Citigroup said it was writing down $22.2 billion because of soured mortgage-related investments and bad loans. The bank is also cutting its dividend by 41 percent and obtaining a $12.5 billion cash infusion to strengthen its balance sheet, including big investments by its former chairman, Sanford I. Weill, and the Government of Singapore Investment Corporation.

Facing rising expenses and deepening losses, Citigroup is expected to embark on a major cost-cutting campaign that could result in at least 4,000 layoffs. And thousands more could be in the offing in the coming months.

The write-downs caused Citigroup to swing to a loss for the fourth quarter. The fourth-quarter loss translated into $1.99 a share, compared with a profit of $5.1 billion, or $1.03 a share, in the period a year earlier. Revenue fell 70 percent, to $7.22 billion from $23.83 billion."

This recession is going to be quite different because it will (and is) affecting the well-to-do

[Ethan Cooper]

I think Don's point earlier was that the well to do can afford to take a few body blows in bad times while still being able to afford luxury items such as expensive weddings.
Not saying they won't feel it, just that it probably wont preclude them from spending on things like a nice wedding video.

[Don Bloom]

Slow economys have always affected the well to do and the not so well to do, just in different ways.
Think about it. A family that makes $50,000 a year (almost 2 times the national AVERAGE income per the US government studies) and a family that makes $500,000 per year. Do their kids go to the same schools? do they drive the same kind of cars, live in the same neighborhood, go on the same vacations? No they don't and who gets hurt more in an economy that has say a 10% downturn? do the math.
I know some people that, thru hard work over the years, have made millions and millions and even today are in that upper bracket. They live debt free, no mortgage, no car payments, credit cards paid off every month... Imagine if you didn't have any debt and made what you are making right now how much better your lifestyle would be. Anyway, one guy I know very well, in one bad day in the market lost $600,000. Did it hurt? Sure it did. Did he recover? You bet with a bunch left over. Can you imagine if you lost $600,000 in one day. Hell, I lost $6,000 and it hurt big time.
Being broke is different for different people. Hopefully no one will go totally bust but it has happened and I've seen it happen to people I knew.
Not saying the upper brackets won't feel the pinch, but get serious, their little girl's wedding budget is $100,000 and up while the average is $22,000.
So if the economy is taking a dump the $22,000 wedding is going to feel it a lot more than the $100,000 wedding. The latter might have to get something other than the imported shrimp or whatever while the former WILL go with a less costly DJ, less expensive photog, chicken instead of beef and oh yeah, I guess uncle Harry will have to videotape the wedding unless we find someone CHEAP!
I seen and been a part of both and frankly I prefer the $100K gig. Besides it pays better:-)
Don

[Peter Wiley]

I don't really disagree, Don, but I have to correct your numbers.

The average household income in the US in 2005 was $63,344. The median household income was $46,326. U.S. Per capita (income per person) in 2005 was $34,586, or roughly half the average household income.

Only 2% of U.S. household have incomes over $250,000. Only 20% of households have incomes of over $91,705. There are a lot more households at the low end. 60% of households earn less than $57,660. So, when I think about the well-to-do (opposed to the very small number of rich folks earning $500,000), I'm thinking of the folks making $60,000-$90,000, like many of the 4,000 that will lose their jobs at Citibank.

If I had to rely on income from middle-class wedding gigs, I'd worry a bit. The high-end market is going to be a very small one in most places, and probably dominated by companies that already serve it.

The data come from http://www.visualizingeconomics.com/...-distribution/

[Don Bloom]

Hmmm, interesting figures because the one I saw from the US government last year based on income tax returns for the year of 2003 placed the average income in this country, low to high including Bill Gates, Warren Buffett and the others in their spectrum as well as those on welfare at less than $25,000 per household.
Which ever the numbers the point is the same. Those that make the big money will not be as affected as much those that don't. While I love doing the high end big budget weddings there are simply more of the average budget weddings in this country and those are the dollars most wedding videographers are fighting for. If the economy tumbles as many predict it will (I hope not) those dollars will be harder and harder to get as people with the average budget weddings will be cutting certain "non-essential" things and you know who falls into that catagory.
Regardless of the numbers whatever they might really be, those that got it will spend it and those that don't won't. Heck I didn't want to do 45 or 50 weddings this year anyway ;-) More time for golf!
Don

[John Moon]

My take on this is that it is really dependent upon many things but I tend to lean toward this: I look at wedding budgets for the most part like vacations. When you have a specific purpose in mind for a wedding, you have probably saved or set money asside for that. Its the same for that cruise you saved for or a trip to Barbados. I don't believe that videography is an impulse buy and there is usually a lot of thought placed behind whether we get hired or not. For 2008 weddings,for the most part, the budgets have already been established and they know what they have to work with. We are already have bookings for 2009 so they must know somewhat of what their budget is for 2009. Now, people are going to loose jobs and that will cause some pull back of expeditures but that happens anyway. Some of you already work in markets that are "recession like"...especially those areas that are heavy in the auto industry. What we have now that we didn't have in the 80's was the internet. This, if done, correctly will open up markets you didn't think of. I do agree that if there is a recession you will have to work harder on the marketing side.