In the fall of 2008, it was a buyer’s market in automobiles.\u00c2\u00a0 Wall Street had crashed and not only were manufacturers in trouble, dealers were scrambling too.\u00c2\u00a0 After all, it may say Lexus on the dealership, but it’s owned by a third party, which is financing inventory and has to get rid of it or go bust.\u00c2\u00a0 Prices for autos were at rock bottom.\u00c2\u00a0 You could buy below wholesale.\u00c2\u00a0 Dealers were desperate.<\/p>\n
But once those autos were gone, the deep discounts disappeared.\u00c2\u00a0 Possibly to never return again.\u00c2\u00a0 Unless we’ve got another economic crisis.<\/p>\n
Automotive sales are now back up.\u00c2\u00a0 The business is much healthier.\u00c2\u00a0 There was a lot of pain along the way, but in order to succeed manufacturers have to create products the consumer wants to buy and not produce vehicles in excess of demand.\u00c2\u00a0 As a result of the continuing economic malaise, sales are not at pre-2008 levels, but they’re strong, because you can only drive the clunker for so long.<\/p>\n
Live Nation has too much expensive inventory.\u00c2\u00a0 They’re blowing it out at sale prices.\u00c2\u00a0 Having already committed to payment, they want as many people at shows as possible, to pay for parking, food and merch.\u00c2\u00a0 But in a matter of months, all these dates will be played off.\u00c2\u00a0 Then what?<\/p>\n
According to Live Nation, everything will be fine when the media stops complaining and superstars go back on the road.\u00c2\u00a0 This is like GM saying its problems were not endemic, that there was a huge demand for Pontiacs.\u00c2\u00a0 Or that Chrysler’s business model did not require a reduction in dealerships.\u00c2\u00a0 Or that Ford didn’t have to kill Mercury.\u00c2\u00a0 No one’s resting on their laurels in the car business, hell, Ed Whitacre keeps firing people at GM.\u00c2\u00a0 If only non-producing\/non-visionary people were fired at Live Nation!\u00c2\u00a0 GM is fighting for its survival.\u00c2\u00a0 If only Live Nation admitted it was in a similar bind, it too would make the painful decisions to insure its continuation.<\/p>\n
In other words, Live Nation has to present shows people want to see.\u00c2\u00a0 Not enough to fill a season at their amphitheatres or to satiate sponsors.\u00c2\u00a0 This is like car companies manufacturing for rental companies.\u00c2\u00a0 Who wants those pieces of shit in terrible colors when the rental company is through with them?\u00c2\u00a0 Furthermore, the rental companies are hurting too.\u00c2\u00a0 They’re buying fewer cars and holding on to them longer.\u00c2\u00a0 Which is why you now have a hard time getting a car on the road and have to pay if you cancel.\u00c2\u00a0 Business realities have forced discipline.\u00c2\u00a0 I see no discipline at Live Nation.\u00c2\u00a0 Only prayer.<\/p>\n
Furthermore, one can ask whether Live Nation’s business model works at all.\u00c2\u00a0 Does centralized buying of national tours deliver good results?\u00c2\u00a0 Or do you need a local promoter, who knows the marketplace intimately, what competing shows are coming into town, what drains money from the marketplace.\u00c2\u00a0 Only the grandest of the grand, and that seems limited to GaGa and Swift, can appear any night at any price.\u00c2\u00a0 Everybody else is scrapping for dollars.<\/p>\n
Yes, the economy is in the toilet.\u00c2\u00a0 Retail sales are off.\u00c2\u00a0 But nowhere close to the drop-off in concert attendance.\u00c2\u00a0 But the real question is, when the economy recovers, will people once again pay exorbitant amounts to hear live music?<\/p>\n
You can’t drive a beater forever.\u00c2\u00a0 You want reliability.\u00c2\u00a0 And you’re willing to trade unanticipated repair bills on your old model for monthly payments on a new ride.\u00c2\u00a0 But do you need to see the classic rock acts again?\u00c2\u00a0 At inflated prices?<\/p>\n
And what is a fair price?<\/p>\n
Now that concerts are ten bucks, now that Live Nation has taught consumers you’re better off waiting to buy tickets, that you’ll not only get cheaper ducats, but oftentimes better seats, will the pre-2010 mania of pre-sales at inflated prices and an inflated secondary market return?<\/p>\n
It’s like music is a fad.\u00c2\u00a0 And once it’s done, you can’t give away the merchandise.\u00c2\u00a0 Manufacturers wholesale it out to a jobber, who blows it out for pennies on the dollar.\u00c2\u00a0 Only today the jobber is Live Nation, which is devaluing its own inventory.<\/p>\n
Price stability returned in autos by decreasing inventory with the knowledge that replacement is inevitable.\u00c2\u00a0 There’s way too much inventory in the concert sphere and we’ve never been able to replace the Beatles and we don’t even seem capable of replacing Bon Jovi!<\/p>\n
So we’ve got old product or crap new acts and both are overpriced.\u00c2\u00a0 What exactly is going to make people shell out their dough to see live music?\u00c2\u00a0 Especially when they know if they just wait, the promoter will beg them to come, almost let them in free.<\/p>\n
Furthermore, when they get inside they won’t be at a recently-refurbished multiplex, they won’t be watching in 3-D, they’ll be ensconced in decades-old shitholes that don’t need to be refurbished, but torn down.\u00c2\u00a0 Yes, the movie business is now tearing down the eighties and nineties multiplexes.\u00c2\u00a0 If you don’t have stadium seating, you can’t sell a ticket.\u00c2\u00a0 You want to see "Avatar" in IMAX 3-D.\u00c2\u00a0 But you go see the act in an environment that’s positively last century. Give Chrysler credit, it’s coming up with new products, not only a new Grand Cherokee, but Fiats.\u00c2\u00a0 And Ford revitalized the Mustang and Chevy came out with a new Camaro.\u00c2\u00a0 Niche products that enhance the brand.\u00c2\u00a0 We’ve got niche product in the music business, but we don’t let it seep into the mainstream, we’d rather jam the purveyor of the radio hit of the moment down people’s throats.\u00c2\u00a0 And it turns out no one wants to see these evanescent stars, certainly not in quantity, and not for long.<\/p>\n
In other words, to survive Live Nation has to be developing acts, that flourish based on their music, not their media notoriety.\u00c2\u00a0 But that’s too slow!\u00c2\u00a0 But at what time do you retool for the future?\u00c2\u00a0 A future where fewer people want to go and everybody wants a deal!<\/p>\n
You can’t get a deal on an Apple product.\u00c2\u00a0 Prices are sky high and people are lining up to buy them, just check yesterday’s earnings report.\u00c2\u00a0 There’s heat.\u00c2\u00a0 If you’re in the commodity business, like Dell, you’re in trouble, there’s just not enough of a profit margin.\u00c2\u00a0 And now I’ve switched metaphors, from cars to computers, but it’s all product.\u00c2\u00a0 But in music, we always sold something more, something elusive, we didn’t want to debase the concoction by calling it product, but that’s what it’s become.<\/p>\n
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