Compaq built a blockbuster business providing a product IBM would not.  Personal computers containing the latest chip.

Not only did Compaq’s PCs contain the latest hardware, it was tested a multitude of times, Compaq was Mercedes-Benz.  A very profitable business satiating a growing customer base.  Until its lunch was eaten by Dell.

Dell said computer hardware is trustworthy enough, it doesn’t need to be tested.  And if we sell PCs direct, made to your exact specifications, you can buy what you want at an unheard of price.

Compaq crumbled and was sold to HP.  Dell ruled.

Until PCs became commodities.  When suddenly no one cared about brand name or what was inside, but price.

Computers went from a labored decision, like buying a house or car, to an impulse buy, at retail, instead of mail order.  HP ate Dell’s lunch by producing laptops to Wal-Mart’s specifications at extremely cheap prices.  Now people decide what to buy on cost.  Fifty dollars more or less and they’ll purchase an HP, Dell, Lenovo or…

Well, really there are only a few computer companies left.  Because it’s almost impossible to make any money selling them, the margins are just too thin.

Is the same thing happening to concert promotion?

Once upon a time there were regional promoters, who controlled their territories and made a handsome living doing so. But as time went by, agents ate away at their profit margins, and before Bob Sillerman rolled up the regionals Michael Cohl blew up the game with international touring models, bypassing the regionals completely, maybe employing their production services for a low flat fee.

In other words, there’s no loyalty.

Used to be the promoter lost money on you in the club, but made it back at the arena.  The promoter was there for your development and was paid back accordingly.  Now acts go to the highest bidder.  And they want almost all the money.

Concert promotion has become a commodity.

Sure, there’s an issue of what buildings to play.  But if you’re going on an arena tour and AEG commits more capital than Live Nation, Randy Phillips gets the tour, or the opposite takes place and Rapino pays.

Where’s the little guy?

Left without enough capital in a market that’s shrinking in margins.

I’m not saying indies will disappear.  Just that the middle and top will be ruled by deep-pocketed players.  And these behemoths will win because they can pay the acts more money.

That’s what an agent wants to hear.  On the same tour, I can make more working for Live Nation than AEG or vice versa.

How do you make more money?

Employing data and the upsell.

If the data says visitors to the arena eat at Ruth Chris’s before the gig, and a coupon can be sold with the ticket and the act gets a cut, that’s more money in the act’s pocket, the act goes with that promoter.

In the world of commodities, only the big survive.  Who drive costs down to nothing.  Who can buy better and perform.

Look at flat screen TVs.  Everyone agreed the Pioneer plasma was the best.  But Samsung killed Pioneer, literally, by making LCDs much cheaper that were almost as good.  Scale allowed Samsung to do this.

There’s little brand loyalty in the commodity world.  Do you really care what kind of milk you buy?

But what about SERVICE?

Speak with all the electronics dealers who were put out of business by mail order and Amazon.  Turns out the public only cares about price when it comes to commodity items, just like acts.  Does it REALLY matter who produces your arena show?

And if the promoter can show you how to sell those tickets so you can sell out the building, you’re all ears.  That’s an agent’s job, to get the most money for playing the biggest hall the act can sell out.  If you make a million dollars playing an arena to a thousand people you’d better save your money, because your career is toast.

How do you scale the house?  Promoters pull the numbers out of their asses, as they do with ticket prices.  Sure, they look at past demand, but they don’t have any real time data.  And that data is now available.

In other words, Perez Hilton could not compete with TMZ, because of the latter’s scale.  Turns out gossip is a commodity, we go to whichever site breaks the most stories first, we don’t care about the rest.  Same deal with links pages.  Does the HuffPo have a lock on great links?  No.

Now when done right, art is not a commodity.  Nor is love.  Each act and relationship is unique.

Unless you’re using the usual suspect writers and producers and are going to a whorehouse.

Focus on your art.  Be different, be unique, that’s how you survive.

But just like there are no MP3s that sell for ten bucks, concert promotion will end up a commodity, a service that very few provide.  It was inevitable.  Bob Sillerman may have started the process.  Live Nation may not be the ultimate survivor.  But someone will be.