It might not have blazed a trail for touring, but 2007 has been a dynamic year for the live music industry. Allan McGowan scratches his chin and digs through the headlines…

This year, according to many observers, the live industry has entered a golden age. Certainly, this has been the year in which everyone wanted to get into live. Record companies, publishers, venture capitalists, investors, brands, secondary ticketers, telecoms, music trade conferences et al, they all want a slice of the pie, and like society, we are learning how to deal with this ‘immigration’.

It might not have blazed a trail for touring, but 2007 has been a dynamic year for the live music industry. Allan McGowan scratches his chin and digs through the headlines…

This year, according to many observers, the live industry has entered a golden age. Certainly, this has been the year in which everyone wanted to get into live. Record companies, publishers, venture capitalists, investors, brands, secondary ticketers, telecoms, music trade conferences et al, they all want a slice of the pie, and like society, we are learning how to deal with this ‘immigration’.

In this final issue of what has been a highly eventful year, we look back at some of the reported stories and comments of 2007 – the good, the bad and the ugly (nothing personal!) and attempt to identify and review some of the main resulting trends and themes that have concerned and affected our still growing and hopefully maturing industry.

Knowing Our Worth

One increasingly apparent problem is that while everyone else is banging on about the live sector’s ‘land of riches’, we don’t really know our own collective worth: mid-year results from the ever dependable Pollstar and Billboard indicate that the bubble shows no sign of bursting, but, we need much more comprehensive reporting, particularly from outside the US, to really see the bigger picture.

In an age of media fragmentation, digital disruption and rampant piracy, live music is one of the few parts of the entertainment industry to be enjoying impressive growth. In the US alone, ticket sales grew by 16% last year to $3.6billion [€2.46b], up from $1b [€0.7b] a decade ago according to Pollstar, one of the few research firms attempting to measure the fragmented business. The audience has grown by 50% in that period and average ticket prices have more than doubled.

Andrew Edgecliffe-Johnson – Financial Times: 15 September 2007

This year, a Mintel report found that the live music industry in Britain – Europe’s largest market – has grown 8% over the past year and is worth an estimated £743million (€508m). Very good – but none of us really know how they arrived at that figure; perhaps in 2008 we need to encourage the industry to be more open about their results.

"The rest of the world market is bigger in every sense than North America, so to have no accurate way of tracking box office figures across those territories is plainly absurd.”

Ed Bicknell – head of international music, William Morris

Health, Safety and the Elements: (Take Care Out There!)

We are responsible for our audiences and our workforce, so taking care of business involves taking care of people. The identification of a need for recognised qualifications in Health & Safety has helped achieve new standards of professionalism in 2007, realised by much closer industry and local and national authority cooperation and education. However, the year still brought more than its fair share of crowd incidents involving accidental death and disaster resulting from factors ranging from weather conditions to organisational inexperience. Chris Kemp of Bucks New University in the UK, Chrissy Uerlings of Peter Rieger Konzertagentur in Germany and the members of the ILMC Safety Group in cooperation with Yourope and others are developing training programmes that can help to avoid these tragedies in the future.

"The training of event stewards is very important and some countries still need to learn what is required, but good cooperation and increased international exchange is providing great improvements. Following the hard work of the past 2 or 3 years, 2007 has seen the most progress in all these areas, with results becoming obvious and concrete."

Cristof Huber - chairman, YOUROPE

Crew deaths and injuries were also far too prevalent, there were probably more that we don’t know about, but we reported the unfortunate deaths of three riggers, and two injured, and of course to quote Robbie Wilson of R&R Logistics, “One death is far too many.”

“We have the Work at Height Regulations already. It’s complying with the law that counts. What we need is the culture, which seems to be sadly lacking!”

Andy Lenthall – UK Production Services Association

Festival Futures

The major festivals continued to thrive, again with tickets for next year seemingly going on sale as the last bedraggled punters were leaving the site, and selling out before they got back to their computers! Around 450 events took place in the UK alone. But not all succeeded, either as a result of too much choice, too few attractive acts, or the weather. (The wettest summer in the UK and Northern Europe since records began brought chaos and cancellations to the festival programme as mud topped the bill).

Festival tourism and touring festivals became more noticeable trends in 2007 and in early November, Serbia’s Exit Festival won ‘Best European Festival’ at the UK Festival Awards. Organiser Steve Jenner said, “We opened our doors this year to European festivals, in recognition of the significant contingent of British tourists who now attend these events.”

With UK festival brands moving into the US and Australia, Australian events moving into Asia and South Africa, and a decided growth in the US festival market generally, there is a growing concern that there will be insufficient attractive acts to fill the bills in 2008.

In Asia, this year saw the launch of SINGfest, a fairly modest two-day festival, which will be expanded to three days in 2008. Midas Promotions Michael Hosking says, “There are several discussions as to how Asian promoters can leverage opportunities with multiple acts heading to Australia and Japan for festivals and in time I believe that Asia will develop its own festival circuit rather like Europe.”

Time to Get Green

Luke Westbury, co-founder of agreenerfestival.com, reviews progress in this area…

2007 was the year when political leaders and the public finally and abruptly realised that we might actually be on the threshold of the Earth’s climatic ‘tipping point’ and it is time to put the environment at the top of the political agenda. Some festivals have championed green lifestyles over the last few years and whilst it may have undergone divisional criticism, Live Earth at least focused poignantly on the message of global climate change and raising the level of international awareness.

In England, Glastonbury has its Greenfields and onsite composting, Scotland’s T-in-The-Park went carbon neutral and across Europe many festivals have adopted the green ‘n’ clean ethos. However, it was up to some of the newer festivals like Sunrise Celebration, Peats Ridge, Bonnaroo and Latitude to pick up the challenge of climate change and take it to the next stage – leading the way in the use of alternative power and comprehensive recycling, as well as promoting the ethos of reduce, reuse & recycle. Is it enough? Well, probably not – the thousands of unwanted tents left scattered across many a festival campsite and the lack of public transport at many events remain problems that still need addressing.

2007 was a wake-up call – now the live music industry needs to put some good ideas into action and embrace not only sustainable live music events, but a carbon neutral, waste free future. Hopefully it’s not too late!

My – Haven’t We Grown! The Corporates Continue

"Live Nation owes its window of opportunity to the rise of the live show as a profit driver – instead of the records and CD sales as in previous years. Thankfully for our business, the centre of that pie has really become the live show now."

Michael Rapino, Live Nation president and CEO, speaking at a Goldman Sachs conference in September

Of course, there would rarely be an issue of any live music industry journal that did not include mention of the ever-restless giant that is Live Nation (LN). Undeterred by a reported loss in 2006, but buoyed up by an increase in revenues, in 2007 it became even more obvious that when the going gets tough, the tough go shopping! In January, Spanish and French promoter outfits joined the fold. In March, after being told by the UK Competition Commission that they’d actually have to sell something – two venues to be precise – LN’s joint venture with Irish promoter Denis Desmond’s Gaiety Group was given the governmental go ahead to purchase 56% of the Academy Music Group chain.

Not content with these splurges, and figuring I suppose that ‘bigger is better’, in September, the remaining 50% of Michael Cohl’s CPI was bought in, followed by his instalment as vice-chairman of the board. Having dusted down after producing the highest grossing tour in history when A Bigger Bang wound up at The O₂ on 27 August, Cohl was to become involved with a really spectacular shopping trip with LN’s cheque book – but more of that later.

Global expansion also continued in China. A 2007 highlight for Colleen Ironside was setting up and staffing Live Nation’s Beijing office. She reports: “We are now fully operational and working on numerous events for 2008 which is obviously going to be an exciting year for China given the forthcoming Olympics.”

"I’ve come in from the cold; I’m full-time with the company. I’m about to become vice-chairman, and I am the largest individual shareholder, so I’m there. I’m up to my neck in Live Nation.”

Michael Cohl – VP, Live Nation

Thomas Johansson, Live Nation’s chairman of international music, summed up 2007 in the most direct and practical way a corporate promoter can – by producing the figures, with the words, “What an amazing year! We are really proud!”

Further personnel moves were reported as LN remained constantly on the move. The company reported healthy second and third quarter results, but so did German heavyweights DEAG and CTS Eventim, and along with rumours that UK MD Stuart Galbraith was defecting to AEG, it was becoming clear that Live Nation didn’t have the playground entirely to themselves.

More Big Boys in the Game:

Philip Anschutz’s Entertainment Group, AEG, has not been letting the grass, or the astro-turf, grow under their feet either. 2007 saw Live Nation’s main contenders in full flight, the disappointment of The O₂ not becoming the UK’s first super-casino was partly made up for in June by the one million ticket pre-sales for events at what was previously the much-mocked Millennium Dome, now London’s new world-class 20,000-capacity arena.

Well-dressed, multilingual and spanning a wide range of ages, as they file past uniformed greeters and a branch of Starbucks into a vast, 20,000-capacity arena that boasts seats designed to improve the acoustics, they are also vivid proof of how the live music business is growing up.

Andrew Edgecliffe-Johnson – Financial Times, 15 September 2007

More new venues followed, including the 7,000-capacity Nokia Theater in Los Angeles and in November, Hamburg’s Color Line Arena was purchased, meaning that, in addition to O₂ World in Berlin (set to open in the autumn of 2008), the Anschutz Entertainment Group will own and operate two top-class multi-functional arenas in Germany. Also, 2010 will see the opening of a new 20,000-capacity arena in Las Vegas as well as plans for a big push in China where they already have an office; as of course do Live Nation.

In October, David Maloney and Mikael Tillman left EMA Telstar, quitting the LN gang to start up AEG’s Swedish chapter, and although Stuart Galbraith is restrained by Live Nation from revealing his plans until January 2008, AEG Live head Randy Phillips confirmed (exclusively to IQ) that he is in fact being funded to to run an independent promoting company called Kilimanjaro.

We make sure we have our core business covered, but if opportunities arise – like David Maloney’s availability or Stuart Galbraith’s contract hiccup with Live Nation – and we can grab a really strong executive, we’ll go for it.”

Randy Phillips – president and CEO, AEG

Ganging Up in the Middle Ground: The 360-degree model.

Meanwhile, back at the ranch, the other boys were getting together and increasingly substantial partnerships – structured on the much-touted ‘360-degree’ business model – began to operate in the middle ground behind the concert giants. This area was previously inhabited by the Sanctuary Group prior to its collapse under the weight of its own ambitions.

In August, MAMA Group bought Mean Fiddler Holdings from LN-Gaiety for £6m (€8m). The AIM-listed MAMA now manages 18 UK venues having also acquired the Hammersmith Apollo and The Forum – the two that Live Nation had to sell, remember? With an artist management business representing top bands plus producers and songwriters MAMA’s half-year revenues rose 43.5% to £5.48m (€7.66m), fuelled, according to analysts, by the live music boom.

In Sweden in August, Petri H. Lundén (see Comment section in this issue) became chairman of the board of the largest artist management company in the Nordic region, when Hagenburg, the law, media and management company acquired his company Talent Trust.

In September, a new music and entertainment company was formed in The Netherlands by a strategic merger between four existing companies. Artist management firms, MSF Music and Mana Music joined forces with former Mojo employee Willem Venema’s concert promotion and booking agency, The Alternative, and Dutch full-service entertainment firm The Entertainment Group, operating under the moniker of The Alternative.

Buying into Live

"It used to be that the tour was there to sell the record. Now with compact disc sales collapsing, it is the other way round.”

David Glick – Edge Performance VCT

In 2007, the record companies, desperately seeking revenue streams to shore up their continuing losses, and having instituted artist deals demanding shares of live performance income, made further inroads into the live industry. In August, when Universal bought the ailing Sanctuary for £44.5m (€62.2m), the acquisition of booking agency Helter Skelter and merchandiser Bravado were their main interests. SonyBMG set up an in-house booking agency and purchased German management company MTS, and at least one of the EMI labels is said to be following suit.

"We thought from the very beginning it was important not to be at the mercy of the record company, so we had to have a parallel [live] career. In those days, nobody foresaw the extraordinary inflation in ticket prices. [But] now record sales and the publishing income that goes along with those sales is a much smaller part of our total business – probably no more than a quarter."

Paul McGuinness – manager, U2

The guitarist of the American hardcore band Anthrax expressed the changing relationship between records and live rather neatly: "Our album is the menu," he explained. "The concert is the meal.” Also giving a perfect example of the worth reversal of CD and ticket, between August and mid-September, Prince performed 21 sold out nights at The O₂ arena after giving away his new album to ticket holders and as a covermount with the Mail on Sunday. 

"Looking ahead, the music industry will make most of its money from selling T-shirts and other music-related stuff, with recorded music making up just 30% of its earnings.

Gerd Leonhard – music business ‘futurist’

“Labels are trying to grab at anything they possibly can. They’re getting sucked into this vortex but they’re going down with their nails grinding.”

Terry McBride – Nettwerk Music Group

A Two-Way Street

Whilst the record companies are moving towards live, Live Nation make the first countermove with their raid on the Warner Music Group. In October, Live Nation signed Madonna to a 360-degree deal believed to be worth $120m (€82m), the first signing to Artist Nation, a new division headed up by Michael Cohl. With three albums still to be provided to Warners and surely some time before the next tour, the wisdom of this massive deal was questioned by many. However, Live Nation president and CEO Michael Rapino had never made any secret of his desire to use the company's relationships with artists to get into related businesses, having often talked about selling T-shirts, parking passes, VIP party passes, DVDs, broadcasting shows live and secondary tickets. Gaining direct access to fans through ticket sales is seen as a crucial building block to collecting other event related profits.

Tickets – Secondary and Too High?

"Everyone is looking at ways they can provide more value to their clients and consumers and artists. The road is not always smooth,”

Sean Moriarty – CEO, Ticketmaster

The secondary ticketing debate is not new to 2007 but throughout the year the practise continued to attract headlines and produce inconclusive debates and repeated calls for ‘anti-tout’ legislation. The majority of promoters are still totally opposed to what they see as fraud – pure and simple. In October, at the In The City conference, Harvey Goldsmith says: "We in the live industry are suddenly allowing all of these parasites to take over .The truth is we don't need them. We never really needed them but we let them come in and take over and it's a big problem. It's something that's going to bubble up to the surface and if we don't get on top of it, it will take us over, and it will kill the industry.”

On the other hand, Michael Rapino told a Goldman Sachs audience that he’d love to be in the secondary ticketing business. Also, a leaked internal Ticketmaster memo indicating that its deal with Live Nation is unlikely to be renewed when it expires in late 2008 fuelled talk of the company becoming its own primary ticket outlet. Many observers are of the opinion that the Madonna deal is partly aimed at breaking the hammerlock that Barry Diller's Ticketmaster has on online concert ticket sales.

Legal expert Ben Challis says: “Secondary ticketing is partially an industry-generated problem. In the USA, New York, Florida, Illinois and Minnesota have led the way by repealing their state anti-scalping laws in 2007 and this is almost certainly going to be followed in other states. I wouldn’t hold my breath about UK or European legislation on touting in the near future.”

"I don’t think it will continue long term. The primary market will decide to dampen the secondary market by closing the gap that exists between them and it’s going to be to the detriment of the public."

Rob Ballantine – chairman, UK Concert Promoters Association

Ticket prices continued to rise in 2007; many put this down to the fact that artists now see the concert as their main earner as record sales dwindle. Back in the 1980s, a seat at a concert by a superstar cost about the same as one CD album, but as noted by music writer Robert Sandall, “On Madonna’s last tour you could have bought her entire catalogue for less than half of the £160 [€224] it cost to see her perform at Wembley Arena. Seemingly, people were so happy earlier this year that The Police had reformed that nobody balked at the £90 [€126] it cost to see them play at Twickenham, UK in September.”

Ticket inflation with smaller bands is less intense, but more telling is the ubiquitous presence of touts outside low-key venues where no secondary market for tickets existed ten years ago.

Robert Sandall – Off The Record, August 2007

Martin Schruefer, chief editor of Event since 1 September and previously vice-chief editor of Musikmarkt & Musikmarkt LIVE! says: “I will remember 2007 as the year that finally brought the topic of ticket-prices to the crossroads. To say it can’t go on like this would be an understatement. The reactions to the tour of an icon like Barbra Streisand in Europe showed that consumers have become so angry about unacceptable ticket prices that they either start a storm of outrage – as in Italy – or keep the money in their pockets. The live entertainment industry is still doing fine, but the risk of acquiring a negative image is bigger than ever. Promoters should be seen as creators of events and strong personal experiences – not rip-off merchants.”

High prices present a particular problem in the developing markets. T.Venkat Vardhan, managing director of DNA Networks Pvt Ltd in India sounds a warning: “Artists should be more aware of what fees to charge since the Asian markets and its consumers cannot afford nor do subscribe to high ticket costs hence this is a possible disconnection for the business to grow.”

"Competition for the consumer dollar normally drives down prices, but in the concert business, promoters scramble to offer artists the highest guarantee to snag them for their company. What's killing our business are these high ticket prices. The competition for the groups is so torrid that you pay them more than they're ever worth. The only way to recoup that is to raise ticket prices."

Barry Fey – promoter: Denver Post: 27 October

“The economics of touring have become heavily stacked in the performers’ favour. In the 1960s and 1970s, it would have been hard to describe the artists as all-powerful but they are now. The rule of thumb now is that 85% [of the ticket revenues] goes to the artist."

Melvin Benn – Festival Republic: Financial Times: 15 September

The Other Side of the World

According to Michael Chugg, 2007 was the best it’s ever been for the touring business in Australia and New Zealand. He says: “We’ve kept ticket prices down and introduced more price breaks, up to four in some venues. We’ve been able to take advantage of new, quality venues, where you can sit at the front or the back and still get a good show. We’re selling all our own tickets, so we’re not bothered by the secondary market, we’ve got outlets to corporate credit cards and frequent flyer clubs, getting to people who might not normally buy – we watch it all very carefully.”

Chuggi is optimistic about the business, at least in Australia, Europe, the UK, Canada and Asia – particularly with more festivals featuring new acts – but he thinks the US is a problem area.

In Asia, Colleen Ironside has been responsible in 2007 for presenting 16 shows throughout the region and says, “These are just Live Nation shows and if you take into account the shows presented by other promoters as well, there is substantial growth in the live music industry in the region.” Michael Hosking agrees, saying: “Over the past three years we have seen a growing number of acts visiting the region and next year looks like it will be busier still.”

“Asian economies are booming. The need for the hour is good infrastructure and venues etc. The time is right for overseas venue experts to look to India for such investments.”

T.Venkat Vardhan – managing director, DNA Networks

See You In 2008
It’s been a busy year in live, and trying to fit everything into one article is akin to stuffing killer whales into jam jars. Space considerations in the world of print have forced us to leave much on the cutting room floor, so we’re sorry if some of it was yours! For instance, we haven’t reviewed the important factors of smaller venues and new talent development, but these are very well addressed in this issue’s Comment section.

Overall we seem to be in good shape, but going into 2008 we need to watch our weight! The current zeal for live carries advantages and disadvantages, there is more to this business than may first appear to the new immigrants; a sense of responsibility is required and there is never room for complacency. We need to make sure that, in the words of dependable cynic, Neil Young, ‘After the Goldrush’ there will still be enough to go round!

Let’s discuss all this in March at ILMC 20

ALLAN MCGOWAN