For over thirty years the record label was king of the hill, bands toured to support the sale of their albums and singles and the live events promoters and managers were the last on the food chain, but then the internet came along, and everything changed.
The internet has dislocated the record label model and empowered the live events model and now going on tour is how an artist makes their money and the live events manager is now the king of the hill, and there is no one higher than Live Nation Entertainment. (LN).
From 2005 (when LN was born out of a split from Clear Channel Communication, the largest owner of radio stations in the US) LN has steadily become the world’s leading and largest live events company. Last year (2012) LN put on 22,000 events (including festival such as Wireless, Download, and through its 51% share in Festival Republic; Leeds & Reading and Glastonbury Festivals), managing 230 artists (Coldplay, Madonna, Jay Z, Kings of Leon, U2 and One Direction) , owning or having an interest in 239 global venues (House of Blues, Filmore O2 Academy Group, Motorpoint Arena). Over 800 Sponsors and advertisers promoting at LN events.
This has been achieved by creating and taking over and reforming the four global market leaders in live entertainment;
TicketMaster, global event ticketing leader
Live Nation Concerts produces over 20,000 shows annually for more than 2,000 artists globally
Front Line Management Group is the world’s top artist management company, representing over 250 artists
Live Nation Network leading provider of entertainment marketing solutions, enabling over 800 advertisers to tap into the 200 million consumers
Using the collective power of these four market leaders Michael Rapino (Chief Executive Officer of LN) has LN on a “mission to connect fans to artists” and through their dominance of every aspect of the industry that mission seems to be well on course.
This saturation and dominance of LN over the live music industry has meant that in 2012 over 49 million people globally attending a LN event and the company made over £3.8Billion in sales, and had the third highest global transaction revenue, with only Staples (2nd) and Amazon (1st) . Through LN’s leadership and control the live events’ industry is now the stable party of the music business and in doing so ensured that they themselves are now the king of the live events hill.
One of the key ways that LN has revolutionised the industry has been through their development of the 360 Deal which unities record companies and artists in all aspects of their career, These deals will see the management company control the concerts, merchandising, touring and sales of music, website, dvds, music related TV, fan club and associated sponsorship deals, this unifies all aspects of an artists commercial makeup under one contract. Acts on this deal include Madonna, U2, Jay Z, Nickleback and many more. When asked to comment on the 360 deal Music Week said that with these deals LN
“have reinvented their business for the digital age. Marketing and promoting their music intelligently through every channel available. They have diversified their revenue base and this has established a solid platform for future growth as the transaction to a majority digital business continues”.
This is a view supported by the artists themselves, Madonna who in 2007 signed a 10 year 360 deal with LN said:
“the paradigm in the music business has shifted and as an artist and a businesswoman I have to move with that time…For the first time in my career, the way that my music can reach my fans is unlimited. I’ve never wanted to think in a limited way and with this partnership the possibilities are limitless”.
Many newer artists no longer see a record deal as an integral part of their business plan at all, and as a part of a 360 deal the traditional recorded music will be used as a free or nearly-free way to build an artists brand, working towards a longer term commercial strategy based on creating a sustainable economy out of merchandising and touring.
Not everyone has been so appreciative and positive of the control that the 360 deals have over acts, or how sustainable they are within the music management scene, Panos Panay, CEO of online music platform Sonic Bids said:
“If you want to find out the future of the 360 Deal look at Motown in the late 60s. Motown was the pioneer of the 360 deal…they owned your likeness, your touring, your publishing, record royalties, told you what to wear, told you how to walk…it made for great entertainment but if you look at each one of those artists, what happened? Sooner or later they said “i’m not going to go on the road for 200 show because you tell me so, i’m an artist, a creative person!” Eventually all these artists left…there is two things we know about creativity; you can’t force it and you can’t control it.”
Live Nation have been leading the Music Industry’s response to climate change with the development of “Green Nation”, an internal assessment system as part of its broader environmental strategy and developing opportunities within its promotional, production, managing and ticketing strategies for improving environmental performance within its global operations and influencing the entertainment industry as a whole.
“we at Live Nation Entertainment believe that it is vitally important to pay more than lip-service to addressing the issues before us. Hence we have been major supporters of Julie`s Bicycle since inception and try to do our best to both follow their guidance, and lead on initiatives. By engaging dedicated staff throughout our venues and festivals as “environmental champions” we hope to improve our performance wherever we can. Live Nation Entertainment is happy to share our learnings with anyone in our industry as the global ecological challenge goes way beyond competitive advantage.”
Paul Latham, President of UK Music & Venues at Live Nation
Several of LN’s Leading UK venues have already been awarded for their ability to turn corporate green strategies into actual climate beneficial changes, with Wembley Arena being the first commercial venue to undergo the Industry Green Certification process and the first to meet the Industry Green criteria for 2 Stars, other UK Live Nation venues to have been awarded an Industry Green 2 Star are Motorpoint Arena Sheffield, O2 Apollo Manchester and Southampton Guildhall. The O2 Apollo in Manchester have also appointed a Green Nation Champion who focuses exclusively on environmental issues, and Live Nation was the first company in the Music Industry to appoint a full time Sustainability Officer.
Micheal Rapino, unsurprisingly, believes that the future is bright for LN:
“live events continue to show that they are inherently non-duplicate able, in high demand and globally transferable”
Rapino certainly isn’t looking to rest on his laurels either, and continues to make advancements into new musical genres and aims to grow their 400 million ticket sales business even further by but continuing to work their way into the Electronic Dance Music genre and related festivals having joined forces with both Cream and Electrical Daisy Carnival both in terms of tours and festival. Hosting the first Electrical Daisy Carnival Festival in London’s Olympic Park this Summer
I think there will be many changes and challenges facing the music industry as a whole over the coming years. The labels are still changing and adapting to the new world and many artists still rely on label support and its services. With regards to the live music industry, it is a great time for us with an ever growing market. However, we need to be careful of over saturating the market with too many shows and festivals.
With the growth of any empire criticism has been close to follow, one venue owner in Canada noting after his venue was sold to LN that:
“…almost immediately calls for cuts on operational costs were made. “There’s a river of nickels and dimes out there” was the mantra. We hear a lot about how the concert industry is in a tailspin. I can say categorically that it has everything to do with Live Nation’s stewardship of the industry. Live Nation produces 7 out of 10 shows in North America. As operational expenses are cut, each show suffers. On the venue side, services at shows by ushers, ticket takers, security, and parking attendants were all cut. On the concert production side, qualified production managers, marketing managers, sponsorship reps, ticketing staff, and accounting staffs were all cut. These decisions culminated in the creation of a poor entertainment option.”
This is a damning indictment of the venues and shows that are being created and produced by LN, after all an unpleasant experience for the fan at a venue is going to have a direct negative effect on the artists involved, but with the growth of LN events fans for the most part seem to be happy with the arrangement, will this continue only time will tell, but for the minute in an economy of decline and recession, with even major global cities declaring themselves bankrupt, fans in their millions, whilst increasingly more unwilling to spend their money on singles and albums, they continue to flock to LN events.
But even LN themselves can’t see what’s around the corner but face that future with an optimistic view and a realism that their own dominance could ultimately lead to future problems:
“ there will be many changes and challenges facing the music industry as a whole over the coming years. The labels are still changing and adapting to the new world and many artists still rely on label support and its services. With regards to the live music industry, it is a great time for us with an ever growing market. However, we need to be careful of over saturating the market with too many shows and festivals.
Live Nation 2014