“In 1996, Jam Productions produced approximately 130 arena concerts, which was the most profitable segment of our company. By 2025, that number had fallen to just 4, a 97% decline.”<\/p>\n
Jerry Mickelson Congressional testimony: https:\/\/www.c-span.org\/clip\/public-affairs-event\/user-clip-jerry-mickelson-founder-of-jam-productions-at-joint-congressional-forum-on-live-nation\/5200452<\/p>\n
That’s a pretty striking statistic.<\/p>\n
But the devil is in the details.<\/p>\n
The reason Jam Productions could not get those arena dates is primarily because Live Nation made overall tour deals with acts.<\/p>\n
But Live Nation is not the only one. AEG does this too. And Jerry Weintraub pioneered this half a century ago.<\/p>\n
The essence of a tour deal…<\/p>\n
I pay you a lot of money and I get every date.<\/p>\n
Now why is this good for the act…<\/p>\n
If you went market by market, selling to independents, you traditionally were able to make more money, however you were subject to the vagaries of life and climate. I.e. if there was a snowstorm, or another unforeseen event, you could do bad business in one market even if you were selling out elsewhere, even if you normally sold out in this market. And just a few bad dates can sink profitability for an entire tour.<\/p>\n
This was how it used to be done. But the deals were different, the guarantees were smaller and the upsides were bigger, i.e. the potential to make more money. But as just illustrated, you could lose money!<\/p>\n
An overall tour deal eliminates the risk.<\/p>\n
And most of the major acts today do tour deals. Louis Messina, who is aligned with AEG, promotes Taylor Swift and Ed Sheeran and Eric Church and others exclusively.<\/p>\n
So if you’re an independent…<\/p>\n
Nothing is keeping you from offering a tour deal yourself.<\/p>\n
But…<\/p>\n
Do you have that much money?<\/p>\n
Do you want to risk that much money?<\/p>\n
Now the basic issue under Mickelson’s statistic is how Live Nation got so much money that they could offer these expensive tour deals. Did they leverage Ticketmaster such that they could increase compensation to the acts?<\/p>\n
That’s a reasonable question to ask.<\/p>\n
But let’s be clear, we are not going back to the past. We have seen this happen in one sphere after another. A business is innovative, run by renegades, and then it matures and consolidates into just a few companies.<\/p>\n
Remember how many computer hardware producers there used to be?<\/p>\n
How many car companies before Ford’s assembly line and the Model T?<\/p>\n
Yes, Walmart eviscerated downtowns, but it turned out their overall buying power, based on volume, delivered low prices that the mom and pop shop couldn’t.<\/p>\n
And the consumers flocked to Walmart for low prices.<\/p>\n
Hardware stores? It used to be the land of independents.<\/p>\n
Pharmacies?<\/p>\n
And the funny thing is as big as Amazon is, what exactly is their overall market share?<\/p>\n
Then again, some of Amazon’s policies… Needing to purchase advertising for your product, usage of their fulfillment… Yes, the deck is stacked. Then again, online real estate is endless.<\/p>\n
But how much of the overall spend online goes to Amazon?<\/p>\n
You’d be stunned how small it is.<\/p>\n
That’s the question that is raised by Live Nation.<\/p>\n
As for the loser in consolidation…<\/p>\n
The acts aren’t making less, they’re making MORE! And anybody and everybody in the business knows that ticket prices are high not because of Live Nation owning Ticketmaster, but because of market demand. That’s why prices have soared. Period. Oh, at the trial they had some “expert” saying that the public spent between one and two dollars more on tickets… But come on, take a dollar off a hundred dollar ticket and that’s the difference between whether someone wants to go or not?<\/p>\n
Now thirty years ago, Bob Sillerman convinced the independent promoters to sell to SFX or…be wary of competition. Jerry Mickelson did not sell out, nor did John Scher. But that does not mean their businesses should be protected from what SFX\/Clear Channel\/Live Nation has become.<\/p>\n
Come on, we read all the time about companies who refuse to sell out whose businesses crater to zero. Even ones that survive, like Vice, have a fraction of their old value.<\/p>\n
And today Concerts West, an AEG company, promotes the Rolling Stones, but the band has been making overall deals with promoters for decades. Michael Cohl was responsible for creating the modern tour deal.<\/p>\n
As for how Live Nation can pay all that money…<\/p>\n
Well, there’s sponsorship and other revenue streams. As well as the ownership of buildings, which Mickelson mentions. But AEG owns buildings too, and they’re not the only ones. As a matter of fact, Jam owns buildings… The fact that Live Nation created a company with more purchasing power such that it can own more buildings…is that a bug or a feature? It might mean that Mickelson and Jam can’t compete, but we’re going to prevent companies from expanding? We can debate whether Live Nation has a monopoly in amphitheatres, but overall…they don’t own most of the arenas that Jerry is talking about in this clip.<\/p>\n
So the question becomes how is Live Nation able to afford to pay these guaranteed sums to artists in tour deals? Did they garner those monies via monopoly? If so, then a remedy is necessary.<\/p>\n
But that does not mean tour deals are going away.<\/p>\n
Let’s not try to go back to a past that wasn’t so good anyway.<\/p>\n
Acts know that Live Nation, a public company, is good for the money. This was not always the case with independent promoters in the past.<\/p>\n
So, on the surface the drop in Jam’s arena shows looks dramatic and possibly unfair. But if someone can pay more, as a result of consolidation and market power, is that a bad thing? Or the willingness just to take more risk?<\/p>\n
Once again, we can investigate why Live Nation can pay more. And see if there are monopoly practices allowing them to do so, but…<\/p>\n
Overall tour deals are here to stay.<\/p>\n
<\/p>","protected":false},"excerpt":{"rendered":"
“In 1996, Jam Productions produced approximately 130 arena concerts, which was the most profitable segment of our company. By 2025, that number had fallen to just 4, a 97% decline.” Jerry Mickelson Congressional testimony: https:\/\/www.c-span.org\/clip\/public-affairs-event\/user-clip-jerry-mickelson-founder-of-jam-productions-at-joint-congressional-forum-on-live-nation\/5200452 That’s a pretty striking statistic. But the devil is in the details. The reason Jam Productions could not get those […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[3],"tags":[],"class_list":["post-23311","post","type-post","status-publish","format-standard","hentry","category-live-shows"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p96vPs-63Z","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/lefsetz.com\/wordpress\/wp-json\/wp\/v2\/posts\/23311","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/lefsetz.com\/wordpress\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/lefsetz.com\/wordpress\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/lefsetz.com\/wordpress\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/lefsetz.com\/wordpress\/wp-json\/wp\/v2\/comments?post=23311"}],"version-history":[{"count":3,"href":"https:\/\/lefsetz.com\/wordpress\/wp-json\/wp\/v2\/posts\/23311\/revisions"}],"predecessor-version":[{"id":23314,"href":"https:\/\/lefsetz.com\/wordpress\/wp-json\/wp\/v2\/posts\/23311\/revisions\/23314"}],"wp:attachment":[{"href":"https:\/\/lefsetz.com\/wordpress\/wp-json\/wp\/v2\/media?parent=23311"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/lefsetz.com\/wordpress\/wp-json\/wp\/v2\/categories?post=23311"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/lefsetz.com\/wordpress\/wp-json\/wp\/v2\/tags?post=23311"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}