In Other News: June’21 (3/5) Growth, Consolidation & Hubris

The largest single operator within the live music industry is Live Nation, formed in 2005 following its spin-off from Clear Channel Entertainment, and since its subsequent merger with Ticketmaster in 2010 (described at the time by The Economist as ‘a union of pariahs’ – https://www.economist.com/business/2010/01/28/a-union-of-pariahs), the acquisitive conglomerate has experienced a dramatic increase in concert revenues, audience and managed events.

In its last Pre-Coronavirus Annual Report (https://investors.livenationentertainment.com/sec-filings/annual-reports/content/0001335258-20-000028/0001335258-20-000028.pdf) Live Nation stated ‘we are the largest producer of live music concerts in the world …. connecting nearly 98 million fans to more than 40,000 events for over 5,000 artists in 2019.’

The precise market share that Live Nation and Ticketmaster has developed in North America and elsewhere varies, primarily due to an internal or external perspective, from a competitive 30% to an aggressive and monopolistic 70%, and then some.

Anti-trust scrutiny and/or competition regulation is normally triggered by an agreed definition of market with accurate measurement of its leading operators, something that the live music industry (or regulators) has seemingly been unable to calculate with no agreed clarity regarding who are (like-for-like) sector competitors, clear definition of GTV, revenues, or actual ticket sales etc. and with little apparent desire for such sector transparency.

Nevertheless, in July 2020 Live Nation agreed with the DOJ to extend for a further five years, various anti-trust undertakings relating to the 2010 merger with Ticketmaster (‘Final Judgement’ – https://www.justice.gov/atr/case-document/final-judgment-180) and ‘to abide by certain behavioural remedies and to provide periodic reports to the DOJ about our compliance’ for a further five years (https://www.justice.gov/opa/pr/court-enters-judgment-significantly-modifies-and-extends-consent-decree-live).

The reason for this extension was, according to Assistant Attorney General Makan Delrahim of the Justice Department’s Antitrust Division, Live Nation apparently ‘broke the promises they made to the court and to the American People’ (https://www.musicbusinessworldwide.com/doj-says-that-live-nation-broke-the-promises-of-the-american-people-as-court-enters-judgment-that-modifies-and-extends-consent-decree/).

Additionally, in the UK Live Nation is understood to control approximately 25% of all music festivals above 5,000 capacity with the Association of Independent Festivals (AIF) amongst others calling for an investigation from the Competition & Markets Authority (https://www.billboard.com/articles/business/8472591/live-nation-growing-market-share-indie-festivals-aif-research).

Live Nation Entertainment’s concert revenues 2008-19 (US $Bn)

© Statista / Live Nation

However, Live Nation within its SEC filings and other public pronouncements continues to declare that competition in the live entertainment industry is intense. It further stresses that it competes primarily on the ability to deliver quality music events, sell tickets, and provide enhanced fan and artist experiences, arguing that its track record, reputation, and fiscal stability are key strengths. (Not withstanding the substantive addtional $1.2Bn debt taken on to weather the COVID-19 crisis.)

Despite the ‘enviable market share’, especially in North America, and its growing international network (https://www.livenationentertainment.com/global-sites/) there are still a number of sector competitors including: AEG Presents; Caesars Entertainment; Evenko; FKP Scorpio; I.M.P.; Kilimanjaro Live / DEAG; Ocesa / CIE; TEG Dainty / TEG Live etc.

Albeit economists have noted the oligopoly market structure, with a consolidating number of larger multi-territorial operators increasingly dominating the industry and deterring new entrants from competing for significant market share.

This live sector consolidation follows a decade-plus period of growth, with more venues, whether nightclubs, theatres, arenas, stadia, or greenfield sites, in more international territories, increasingly attracting sponsors and promotional partners for a growing number of events enthusiastically attended in greater numbers by consumers (rebadged as fans), who increasingly pay more, and more, to see their favourite Artists perform.

The Power of Live

© PwC Global Entertainment / Live Nation (2018) – https://livenationforbrands.com/wp-content/uploads/2019/04/LN_Power-of-Live_WhitePaper.pdf

In the live music industry the Artist / Attraction / Star is the prime economic beneficiary of concerts, residencies or tours, albeit that promotion, marketing & ticketing distribution has historically been key to event monetisation.

So the incentivisation of talent has been a key obective for the live music industry – in order for others to then earn their margin (For further analysis of live music economics and net Artist earnings: ‘Putting The Band Back Together’ Jason Bazinet, Mark May, Kota Ezawa et al. (2018) – https://www.citivelocity.com/citigps/music-industry/).

As noted by the Wall Street Journal in December 2019, live revenues then accounted for some 75% of (gross) musician’s income (Anne Steele ‘Why Concert Tickets Are So Expensive. Over the past decade, the average ticket price for the top 100 North American tours has increased 55% to $94.83’ – https://www.wsj.com/articles/why-concert-tickets-are-so-expensive-11577371024) and the immediate future seemed assured for the live industry.

In a triumphant, if not hubristic, Pollstar 2019 end-of-year report:

‘Perhaps the best way to sum up our industry’s phenomenal growth for this year, the past five years and for the decade would be to reference a song title by this year’s Artist of the Year, Pink.

Her ‘Beautiful Trauma Tour’ topped 2019’s Worldwide Tour Chart with $215.2 million dollars and she’s No. 16 on our Decade Chart, grossing a massive $626 million. As an artist who doesn’t mince words, she might say the many successes of this business are ‘Fuckin’ Perfect’ (https://www.pollstar.com/article/pollstar-2019-year-end-special-142982)

And then came the pandemic.

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To be continued ….

In Other News: June’21 (1/5) ‘Bread & Circuses’ – https://tjchambers.com/2021/06/10/in-other-news-june21-1-5-bread-circuses/

In Other News: June’21 (2/5) ‘How Big Was Big?’ – https://tjchambers.com/2021/06/10/in-other-news-june21-2-5-how-big-was-big/