Once upon a time you saw the Beatles on "Ed Sullivan" and wanted to be a musician.\u00c2\u00a0 Now you read the "Wall Street Journal" and want to work for Live Nation.<\/p>\n
Kind of like Nathan Hubbard.\u00c2\u00a0 Once upon a time Mr. Hubbard was one half of the musical act Rockwell Church.\u00c2\u00a0 Despite having diehard fans, the road was a grind, compensation was meager, so they broke up the band, Mr. Hubbard got his MBA and just got paid $5.7 million to be the CEO of Ticketmaster.<\/p>\n
I won’t say that Mr. Hubbard is doing a bad job.\u00c2\u00a0 Still, his $626,00 base salary is excessive and exactly why does he deserve all those bonuses?<\/p>\n
Nathan Hubbard making $5.7 million is like a wannabe band getting paid the same amount.<\/p>\n
But that’s the difference between entrepreneurship and working for the man.\u00c2\u00a0 It doesn’t pay to be an individual, it doesn’t pay to risk, to do something new, you’re better off working for the company, where a circle jerk of directors controlled by the Chairman compensates all the key employees under the fallacy that if they don’t overpay them, someone else will.\u00c2\u00a0 Tell me again, who else is going to pay Nathan Hubbard $5.7 million?<\/p>\n
But it’s even better to screw up and be fired.\u00c2\u00a0 Jason Garner, Live Nation’s inept Global Music CEO, got paid nearly $7 million to go away.\u00c2\u00a0 Now that’s the kind of money I want to make.\u00c2\u00a0 That’ll allow me to make my health care payments after the Republicans eviscerate Medicare.<\/p>\n
What the hell has happened to our country?\u00c2\u00a0 I thought one got paid for creating, for doing good.\u00c2\u00a0 Now you get paid for creating illusory balance sheets and laying the whole thing off on someone else too stupid to understand the core business.<\/p>\n
That is the plan, right?<\/p>\n
Let’s go back to the beginning.\u00c2\u00a0 What exactly was the synergy Bob Sillerman saw in rolling up the concert promoters into SFX?\u00c2\u00a0 The only beneficiary was the acts, who were ultimately overpaid.<\/p>\n
The whole thing was laid off on Clear Channel under the concept that there were incredible synergies in owning radio stations and a concert promotion company.\u00c2\u00a0 This is like ESPN owning sports stadiums, but even worse, in this case government regulations prohibited preferential treatment to the concert promotion company by the radio stations.<\/p>\n
So Clear Channel wrote off billions and spun off the company.<\/p>\n
Michael Rapino survived to win.\u00c2\u00a0 And that’s the key element, that’s Rapino’s main skill, killing those around him and surrounding himself with loyalists.\u00c2\u00a0 In other words, if you’re not Canadian, don’t bother starting a career at Live Nation.\u00c2\u00a0 And what exactly does Steve Herman do again?<\/p>\n
And Irving Azoff does an incredible job of extracting cash for his artists.\u00c2\u00a0 But whenever he’s been the buyer instead of the seller, he’s failed.\u00c2\u00a0 He couldn’t make money at MCA Records and he couldn’t make money for himself at Giant, not in any significant amount.<\/p>\n
But somehow, Azoff, the ultimate manipulator, smarter than everyone involved, i.e. Warner and bankers and even Barry Diller, convinced these entities to play ball with him.\u00c2\u00a0\u00c2\u00a0 To the end result of compensation of $22.8 million.<\/p>\n
Now Rapino, Azoff and Hubbard are no different from the rest of the corporate titans.\u00c2\u00a0 Remember this, Michael Eisner started off as an employee of Disney and ultimately became the company’s largest shareholder.\u00c2\u00a0 That’s like playing for the Yankees and ending up owning the Yankees.\u00c2\u00a0 No, that’s not an accurate analogy…\u00c2\u00a0 The team truly depends on its players. But does it depend on the manager?\u00c2\u00a0 Using Eisner rules, Casey Stengel’s family should own the Yankees.\u00c2\u00a0 And Tommy Lasorda should own the Dodgers.<\/p>\n
The players in Live Nation’s case are the musicians.\u00c2\u00a0 And Live Nation might still overpay, albeit not by as much as in the past, but you’re still better off working for the company than taking the stage.\u00c2\u00a0 Your career will be longer!<\/p>\n
Just like Goldman Sachs and the rest of Wall Street no longer make anything but money, we’ve yet to see Live Nation build anything that wasn’t there before.<\/p>\n
Dynamic pricing might be a godsend.\u00c2\u00a0 But why wasn’t Mr. Hubbard’s compensation tied to success?\u00c2\u00a0 What kind of screwed up world do we live in where the bonus is given BEFORE performance!<\/p>\n
And come on…\u00c2\u00a0 Michael Rapino gets compensation for almost meeting performance targets when 2010 was an utter disaster?\u00c2\u00a0 Isn’t that like letting Bernie Madoff keep some money because he didn’t blow it all?<\/p>\n
Where exactly is the upside at Live Nation?\u00c2\u00a0 The screwed over proletariat cannot afford to go to more than one show a year and the lion’s share of the sale of theoretical ancillary items will go to Mr. Azoff’s acts, or to those of another manager, who is never going to agree to let Live Nation keep most of the money when the concert receipts are divvied up on a 90\/10 basis.\u00c2\u00a0 Hell, there’s never even any divvying up, because of excessive guarantees.<\/p>\n
But the real problem lies with the incentive.\u00c2\u00a0 It just doesn’t pay to be artistically creative anymore.\u00c2\u00a0 Used to be entertainers made all the money.\u00c2\u00a0 Entertainers were rich.\u00c2\u00a0 If you think today’s entertainers are rich, you’re dumb.\u00c2\u00a0 Corporate titans and bankers make much more and they do it for decades, whereas an entertainer’s career can be done in months.<\/p>\n
So the best and the brightest don’t become engineers, don’t become teachers, don’t become entrepreneurs, they go into finance, where they use their degrees to come up with ever more incomprehensible products that yield profits to them, but add nothing to the economy.\u00c2\u00a0 It’s like our entire nation has turned into Las Vegas.\u00c2\u00a0 With everybody betting instead of creating.\u00c2\u00a0 But the poor bet on winning the Lottery.\u00c2\u00a0 That’s their only hope of making the kind of money a CEO earns.<\/p>\n
Yet we do have incredible tech innovation, because in Silicon Valley you can still make money.\u00c2\u00a0 But music is a joke.\u00c2\u00a0 Come on, admit it.\u00c2\u00a0 Coachella the brand eclipsed any of the acts that took the stage, most of them will be forgotten moments from now.<\/p>\n
And Warner Music was raped and pillaged by bankers and executives.\u00c2\u00a0 The company’s worth about the same as it was when they bought it.\u00c2\u00a0 Talk about creating value…\u00c2\u00a0 Meanwhile, what great acts were developed?\u00c2\u00a0 Paramore, with their vaunted 360 deal?<\/p>\n
Turns out greatness does not come from the corporation but from the individual.\u00c2\u00a0 When Mr. Azoff controlled the hottest talent of the seventies he worked for himself and reported to nobody.\u00c2\u00a0 He ran a renegade outfit that dictated to not only concert promoters, but politicians.\u00c2\u00a0 But that was back when musicians were leaders, with something to say, instead of poor people trying to get rich, too uneducated and dumb to go to work for the man.<\/p>\n
Rapino, Azoff and Hubbard are doing nothing the rest of corporate America is not.\u00c2\u00a0 Only this time, they’re doing it in our own backyard, in a business we can understand.\u00c2\u00a0 And we ask ourselves…\u00c2\u00a0 What have these men done?\u00c2\u00a0 Create the iPad? The Prius?\u00c2\u00a0 What can we point to that explains this level of compensation?<\/p>\n
Nothing.<\/p>\n
It’s like everyone in America is shrugging his shoulders and saying "It’s not my fault."\u00c2\u00a0 Then I must ask, whose fault is it?<\/p>\n
Enough with the tax cuts for the rich.\u00c2\u00a0 Enough with the trickle down theory.\u00c2\u00a0 I want a world where the musician makes more than the executive.\u00c2\u00a0 Because without the musician, there’s nothing.<\/p>\n
But that ain’t the world we’re living in now.<\/p>\n
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