US based touring behemoth Live Nation has set up shop in Australia. In a press release issued on Monday US time, the touring conglomerate announced that it had appointed Luke Hede, currently working for Live Nation Asia in Hong Kong and Roger Field, formerly of Michael Coppel, to run the company in Australia. The company intends to bring international tours to Australia and New Zealand, as well as booking national tours.
This has the potential to really shake up the live touring business in Australia. Concert touring and promotion is a cut throat business with potentially lots of profit (and loss) at stake, and no more so than in Australia. Locally, it’s a bit of a boys club, with a select number of promoters vying for the big ticket international arena and stadium tours, with smaller operations bringing out international indie bands and local promoters all competing for smaller slices of the pie. Australia is also a lucrative market for promoters with a huge gig going culture (particularly for bigger acts) and a very favourable exchange rate making touring US and UK acts in particular a very attractive proposition for promoters.
Australia and New Zealand combined are the seventh biggest concert market in the world. Approximately 10 years ago with the Australian dollar buying barely $US0.50 ticket prices rose massively as acts demanded to be paid in US dollars and promoters blamed soaring ticket prices on the exchange rate and ‘increased production costs.’ Despite the exchange rate generally improving considerably since; promoters have since had Australians willing to pay prices that would have caused an outcry in the Northern Hemisphere, while pocketing what is often a hefty profit.
It’s unsurprising that Live Nation has decided it wants some of that pie. A company that barely existed six years ago, Live Nation was spun off from the Clear Channel Communications in the USA several years ago and floated on the New York Stock Exchange. Clear Channel owns over 1,200 radio stations in the US and has a vice like grip on what is played and said on these radio stations. It also owns a huge percentage of the outdoor billboard market in the US and Europe, and has a 49% share in one of Australia’ biggest outdoor advertising companies, APN outdoor. Clear Channel and Live Nation are separate companies but still share board members.
Live Nation has turned the business of concert promotion on its head with a unique approach to putting on concerts that has copped much criticism. Put simply, Live Nation likes to own everything. It buys venues, festivals, ticketing companies and websites, merchandise and catering companies, sponsorship companies and artist management companies so that it controls the live music process from end to end. Or as it so innocently puts it: ‘Live Nation seeks to innovate and enhance the live entertainment experience for artists and fans: before, during and after the show.’
Now you might think that temperamental artists would keep them on their toes, but this is where they excel at tying up all the loose ends. The company has pioneered what it calls ‘artist 360 deals’ where it signs top name artists (who are usually looking to flee their record companies as they bleed like stuck pigs amidst the collapse of the recorded music industry) to deals where it gets a hefty cut of all merchandise, touring, record sales and publishing.
The company wrote headlines across the world when it signed Madonna to a gasp inducing $120m deal over 10 years to tempt her away from her record company of 25 years, Warner Bros. This was quickly followed up with similarly massive deals for the likes of Jay-Z, Shakira, U2 and errrr, Nickleback.
So how does it afford these deals? According to its website, ‘in 2009, Live Nation sold 140 million tickets, promoted 21,000 concerts, partnered with 850 sponsors and averaged 25 million unique monthly users of its e-commerce sites’. It also raked in $US4.2 billion in revenue which is the kind of money that lets you buy up artists as they do.
In 2009, Live Nation also merged with ticketing conglomerate Ticketmaster, which had revenue of around $US1.5 billion for the 2009 calendar year. Despite howls of disapproval from many quarters which claimed this would reduce competition, the US Department of Justice approved the merger in January of this year. Live Nation has also announced that it will be hopping in to bed with Ticketmaster in Australia.
So what does this mean for the live music fan in Australia? Based on Live Nation’s rap sheet overseas, this is what we can expect.
Firstly, it should in theory promote competition amongst promoters in Australia who although at times fiercely competitive, are also generally all mates; happy to keep the status quo. However, as promoters usually bid to give touring artists the best offer, it may potentially only push ticket prices up as promoters seek to recoup.
Secondly, expect to see a LOT of competition as Live Nation seeks to sign up Australian artists to exclusive deals. Very few record deals are on offer in Australia these days, making an artist’s touring their main source of income. Generally artists in Australia have been signed to separate recording, publishing and touring deals, with touring the distant poor cousin of the other two. However, artist management companies have recently been competing far more to sign bands and solo artists to exclusive live representation. Generally, these contracts had provided artists with a cut of the door takings after costs for promotion and so on are taken out. Expect to see Live Nation trying to sign Aussie artists to their exclusive and far more attractive deals, particularly those who may not have had a hit in years but still have a loyal live following.
Thirdly, expect new venues to open and existing ones to go up for sale. Most inner city venues catering to less than 200 people won’t be expecting to see Live Nation cheque books, but those mid and large sized venues and theatres will most likely start being taken over or bought by Live Nation, particularly on the East Coast.
Fourth, expect Live Nation to start buying festivals. Many of Australia’s festivals are privately owned and operated and they’ll be a prime target.
Fifth, expect to be cross promoted to. You’ve given all your info to Ticketmaster in the past – expect Live Nation to gather data on you and cross analyse it with Ticketmaster so they can track what gigs you buy tickets for, what venues you see the gigs at, what festivals you go to and what merchandise you buy.
Sixth – the big IF. The merger between Ticketmaster and Live Nation was supposed to deliver ‘synergies’ (i.e. savings) to these companies to offer punters cheaper prices. The reality is that once these ‘synergies’ in Australia kick in, they probably won’t. Without getting into cultural studies theory too much, the ‘star system,’ or the exclusivity of the artist is not designed to deliver mass production and competition. Unlike say cars, you can’t design a whole bunch of similar artists and compete to offer them as cheaply as possible. Popular music doesn’t work like that – when you’re hot, you’re hot and when demand outstrips supply for any given artist, don’t expect Live Nation, nor any other promoter not to capitalise on that.
– Jim Murray
