Sitting on the black leather couch in Michael Rapino’s office I was reminded of Steve Jobs’ legendary reality distortion field.\u00c2\u00a0 How in his presence, the world looks just a little bit different, how it seems to favor him, how you’re powerless in the face of his presentation.\u00c2\u00a0 That’s how it is hanging with Michael Rapino.\u00c2\u00a0 Hours later, after this man from Thunder Bay finally stops laying out his story, you’re on board, you believe he has the answers, you’re with him.<\/p>\n
The music business is controlled by old farts.\u00c2\u00a0 Who remember going to the Fillmore night after night and getting high with all the players, bonding in the rock and roll circus.\u00c2\u00a0 It’s just that the rock and roll circus ain’t what it used to be, it’s a shadow of its former self.<\/p>\n
The major labels keep merging and firing and rejiggering to balance their books, to cope with a future they’re completely unprepared for.\u00c2\u00a0 Those acts that survive, who people want to see, depend on their live business to sustain them.\u00c2\u00a0 The tour used to be an advertisement for the record, now it’s reversed, the record just heightens awareness, so people will go see you in concert, and you can make real money.<\/p>\n
Enter Robert Sillerman.\u00c2\u00a0 This carpetbagger instantly took the business from the dark ages into the present.\u00c2\u00a0 Used to be that the country was comprised of fiefs, the captains of which all promised fealty to one king, Frank Barsalona.\u00c2\u00a0 It was a medieval system.\u00c2\u00a0 A very profitable medieval system.\u00c2\u00a0 But suddenly, touring had a national landscape, an INTERNATIONAL landscape, and all the old farts were freaked out.\u00c2\u00a0 But they shouldn’t have worried too much, for Clear Channel Entertainment was run by their brethren, old farts too.\u00c2\u00a0 It was business as usual, except for the fact that there were a lot more zeros involved.\u00c2\u00a0 Those buildings had to be filled.\u00c2\u00a0 And the agents and managers knew this.\u00c2\u00a0 And suddenly, the price of talent, and concomitantly ticket prices, went WAY UP!<\/p>\n
Michael Rapino thinks this would have happened anyway.\u00c2\u00a0 He trots out show statistics, illustrating that the number of dates at Clear Channel amphitheatres actually DECLINED over the last five years.\u00c2\u00a0 But I don’t buy it.\u00c2\u00a0 I know agents and managers.\u00c2\u00a0 They were filled with glee.\u00c2\u00a0 They knew they held the promoters hostage.\u00c2\u00a0 They were raking it in.<\/p>\n
And then the world started to crash.\u00c2\u00a0 Clear Channel’s numbers were less than stellar and attendance was down.\u00c2\u00a0 So Michael Rapino tried to fix the business.\u00c2\u00a0 But the old farts wanted no part of it.\u00c2\u00a0 They wanted their money, or else they’d take their talent to AEG or HOB or whomever would pay the freight.\u00c2\u00a0 They’d teach Michael Rapino a lesson.\u00c2\u00a0 And he learned.\u00c2\u00a0 Rapino is no longer on a mission to bring the sellers in line.\u00c2\u00a0 He’s just gonna pay the going rate and make his profit elsewhere.<\/p>\n
I asked him why the stock was so high.<\/p>\n
Michael said Live Nation had no debt.\u00c2\u00a0 And then he started spinning his yarn.<\/p>\n
The labels are fucked, Wall Street knows this.\u00c2\u00a0 But they see this talent, and a welcoming audience.\u00c2\u00a0 SOMEBODY’S got to reside at this nexus.\u00c2\u00a0 Why can’t it be Live Nation?<\/p>\n
Live Nation is no longer in the concert promotion business.\u00c2\u00a0 Oh, don’t get me wrong, that’s the ESSENCE of the company’s business, it’s all built on selling 60 million event tickets a year.\u00c2\u00a0 But that’s not where the company plans on making its MONEY!<\/p>\n
Rapino wants to be in business WITH the acts.\u00c2\u00a0 To help them maximize income.\u00c2\u00a0 By selling merchandise, by filming shows and distributing them, by leveraging his relationship with concertgoers to the advantage of talent.\u00c2\u00a0 And selling food and ancillary elements at the show and on the Web to these same patrons.<\/p>\n
Let’s go back to the beginning.<\/p>\n
Those 60 million tickets sold.\u00c2\u00a0 That’s more than the NBA and the NFL and the NHL combined.\u00c2\u00a0 The only entity that sells more ducats than Live Nation is Major League Baseball, which issues 74.4 million tickets per year.<\/p>\n
Everybody in the U.S. carps about Live Nation’s amphitheatres, that they’re a dying business.\u00c2\u00a0 But, they’re only twenty percent of Live Nation’s gross.\u00c2\u00a0 Live Nation promoted 9,000 events worldwide last year.\u00c2\u00a0 Furthermore, although there are some loser outdoor venues, ones in Boston and elsewhere are home runs, they do phenomenal business and the public loves going there.<\/p>\n
Yes, Rapino knows about his public.\u00c2\u00a0 He’s trying to inject science into the ticket-selling equation.\u00c2\u00a0 He had Irving Azoff in his office the day before.\u00c2\u00a0 Michael showed Irving his research demonstrated that after $40, demand for Christina Aguilera tickets declined substantially in Seattle.\u00c2\u00a0 Should tickets cost the same in each market?\u00c2\u00a0 Is anybody else asking these questions?<\/p>\n
But let’s go back to the statistics.<\/p>\n
AEG a true competitor?\u00c2\u00a0 Well, AEG only promoted 987 shows last year to Live Nation’s 9,054.\u00c2\u00a0 AEG’s revenue was less than one third of Live Nation’s.\u00c2\u00a0 Live Nation sold 32.5 million concert tickets.\u00c2\u00a0 AEG sold 6.8.\u00c2\u00a0 As for House Of Blues?\u00c2\u00a0 They did 2,898 shows.\u00c2\u00a0 And 6.3 million tickets.\u00c2\u00a0 And 250 million in gross ticket revenue.\u00c2\u00a0 And now those numbers are Live Nation’s.<\/p>\n
Now you’re crying monopoly.\u00c2\u00a0 I hear you.\u00c2\u00a0 But, if it weren’t Live Nation, wouldn’t it be somebody else?\u00c2\u00a0 And why did Live Nation buy HOB?\u00c2\u00a0 TO OWN MORE MID-SIZED VENUES!\u00c2\u00a0 Because that’s where the profit is.\u00c2\u00a0 In the small halls.\u00c2\u00a0 There are superstars, and then a ton of mid-level acts.\u00c2\u00a0 The key is to maximize this revenue in the middle.\u00c2\u00a0 And then grow the acts, i.e. artist development, which certainly the labels are not doing.\u00c2\u00a0 Furthermore, there are the thousands of club shows Live Nation does.\u00c2\u00a0 Which fuel the concert business fire, even if they oftentimes lose money.<\/p>\n
Okay, okay, let’s look at the negative.\u00c2\u00a0 Where are tomorrow’s superstars?\u00c2\u00a0 Where’s the wealth of new talent?\u00c2\u00a0 NOWHERE TO BE FOUND!\u00c2\u00a0 Not in the States anyway, overseas…there’s a lot of burgeoning talent.<\/p>\n
And that’s the play here, that’s where the growth is here, the WORLD!\u00c2\u00a0 Wall Street likes that Live Nation owns and\/or manages a plethora of venues.\u00c2\u00a0 And that it’s expansionist.\u00c2\u00a0 And, there’s a lot of territory out there, and a lot of far-flung promoters who would like to be in business with the outfit that promotes U2 and Madonna.<\/p>\n
And speaking of those acts, and the Rolling Stones, you come to Michael Cohl.\u00c2\u00a0 That’s the model Rapino wants to employ.\u00c2\u00a0 Pay the acts a shitload of money and then maximize their revenue.\u00c2\u00a0 By selling high class merchandise, VIP tickets, rebroadcasting shows, live ringtones?\u00c2\u00a0 If you think this is just about putting on a show, you’ve missed the point.\u00c2\u00a0 Live Nation’s money is going to come from what they do with all those people who come to the show!<\/p>\n
The goal is to establish an ongoing relationship.\u00c2\u00a0 Like their "grasshopper" plan.\u00c2\u00a0 Buy three sets of tickets to an amphitheatre and the computer will generate an e-mail allowing you to upgrade from the lawn to unsold hard seats closer to the stage for only ten bucks per person.\u00c2\u00a0 Don’t come to a show all year after attending one the season before?\u00c2\u00a0 The computer will e-mail that you can come FREE!<\/p>\n
It’s amazing what you can do with data.<\/p>\n
And Rapino is mining data.\u00c2\u00a0 He’s hired a slew of young Silicon Valleyites to run his digital side.\u00c2\u00a0 They don’t come from the b.s. live show infrastructure, they’re not hobbled by what’s come before, they’re a fountain of ideas, and they live in the PRESENT!<\/p>\n
As does Rapino.\u00c2\u00a0 He realizes people have to believe in Live Nation.\u00c2\u00a0 So he’s put feedback buttons on the Web.\u00c2\u00a0 To allow people to complain.\u00c2\u00a0 And he sometimes answers some of the hundred e-mails a day himself.\u00c2\u00a0 That’s what people want, answers.\u00c2\u00a0 Furthermore, the GM at every building now has the power to make things right, up to $10,000.\u00c2\u00a0 Rapino isn’t a guy who’s worried about the way it used to be, he wants his customers to believe in Live Nation, FEEL GOOD about Live Nation, and people haven’t felt good about promoters since…Bill Graham?<\/p>\n
Oh, it’s not all rosy.\u00c2\u00a0 How the fuck did we get to the point where tickets are a hundred bucks and people hardly go to a show, the average concertgoer attending a show a year and seventy percent of the public NEVER going?\u00c2\u00a0 I don’t buy Rapino’s responses.\u00c2\u00a0 That we were undervaluing the experience and we’ve got to support production.\u00c2\u00a0 Production is b.s., if the music’s there, there doesn’t even have to be a backdrop.\u00c2\u00a0 It’s just as a business we’ve convinced the public to expect to see a live representation of the music video and the acts are over the top and greedy.\u00c2\u00a0 But is that RAPINO’S fault?<\/p>\n
Live Nation has outfitted most of its venues with recording\/TV equipment.\u00c2\u00a0 Depending on the complication of the shoot, for somewhere between $3,000 and $6,000 you can film a show.\u00c2\u00a0 And sell all or parts to Verizon V Cast or DirectTV or…\u00c2\u00a0 Sure, it doesn’t replicate the in-person experience, but not only does it generate revenue, it makes people WANT to go to the show.<\/p>\n
The music business is a thug business.\u00c2\u00a0 And the touring business is thug squared.\u00c2\u00a0 It’s all about intimidation.\u00c2\u00a0 It’s about tribal loyalties.\u00c2\u00a0 It’s not about facts so much as relationships.\u00c2\u00a0 Relationships are important, but they’ve trumped business.\u00c2\u00a0 The label thugs have been so busy trying to protect their monopoly they’ve left tons of money on the table, not having monetized P2P, authorized a legal way for more people to own more music for a lower aliquot per track price.\u00c2\u00a0 Their brethren in the concert business have just been concerned with the guarantee.\u00c2\u00a0 Which is like a computer without software or peripherals.\u00c2\u00a0 Hell, a lot of the money is IN software and peripherals.\u00c2\u00a0 Rapino is concerned with this penumbra.\u00c2\u00a0 And I don’t see any of the old guard making any noise about this.\u00c2\u00a0 Rapino doesn’t want to fuck you, make you take less money.\u00c2\u00a0 He doesn’t want to overcharge the public, he just wants to put on a GOOD SHOW!\u00c2\u00a0 He realizes the acts hold the cards, so he wants to MAKE FRIENDS with them instead of being an adversary.<\/p>\n
Oh, don’t e-mail me that he’s tough, he most certainly is.\u00c2\u00a0 And don’t complain about specific offers.\u00c2\u00a0 Shit, take the offer from AEG instead.\u00c2\u00a0 Or the casino.\u00c2\u00a0 That’s what made Rapino realize he couldn’t control prices.\u00c2\u00a0 Because any act that could do 1,000 tickets a night could play the casinos for a SHITLOAD of money.\u00c2\u00a0 Is Live Nation really the PROBLEM or is it a possible solution?<\/p>\n
The old days are done.\u00c2\u00a0 It’s just that a lot of the old players still have power.\u00c2\u00a0 But Michael Rapino was lucky.\u00c2\u00a0 He wasn’t around in the sixties OR the seventies.\u00c2\u00a0 He’s just too young, not even forty.\u00c2\u00a0 He’s living in the twenty first century.\u00c2\u00a0 He wants to deal with twenty first century realities.\u00c2\u00a0 When seemingly nobody else does.<\/p>\n
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Sitting on the black leather couch in Michael Rapino’s office I was reminded of Steve Jobs’ legendary reality distortion field.\u00c2\u00a0 How in his presence, the world looks just a little bit different, how it seems to favor him, how you’re powerless in the face of his presentation.\u00c2\u00a0 That’s how it is hanging with Michael Rapino.\u00c2\u00a0 […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","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":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[3,2],"tags":[],"class_list":["post-479","post","type-post","status-publish","format-standard","hentry","category-live-shows","category-music-business"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p96vPs-7J","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/lefsetz.com\/wordpress\/wp-json\/wp\/v2\/posts\/479","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\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/lefsetz.com\/wordpress\/wp-json\/wp\/v2\/comments?post=479"}],"version-history":[{"count":0,"href":"https:\/\/lefsetz.com\/wordpress\/wp-json\/wp\/v2\/posts\/479\/revisions"}],"wp:attachment":[{"href":"https:\/\/lefsetz.com\/wordpress\/wp-json\/wp\/v2\/media?parent=479"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/lefsetz.com\/wordpress\/wp-json\/wp\/v2\/categories?post=479"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/lefsetz.com\/wordpress\/wp-json\/wp\/v2\/tags?post=479"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}