Can the Concert Industry Survive After Mick Jagger and Madonna Retire?
More than half of 2012's top 10 highest-grossing acts qualified for AARP membership.
Still, it remains an open question as to whether today's concertgoers will continue to follow a singles artist like Rihanna into her dotage and whether they will pony up for the ever-escalating price for a live-concert experience. "As concertgoers age and inflation increases the price of nearly everything, ticket prices will rise in conjunction," says industry analyst Dan Greenhaus, chief global strategist at BTIG. "When Coldplay play Madison Square Garden with a crowd averaging 50 years old rather than 30 years old, the higher-income-earning crowd will part with more money. The transition from The Eagles and CSN to Bon Jovi and U2 to Coldplay and Foo Fighters might be difficult for some interested parties -- but the transition will occur."
The answer might be to think smaller, says Tom Windish of The Windish Agency, which reps more than 500 acts including Foster the People, Gotye and 20 of the performers at the 2012 Coachella festival. "If I was a promoter, I would be analyzing which markets could use a 2,000- to 5,000-capacity venue and what obstacles are in the way to creating one," Windish says. "As an agent, there are many cities where there is just not a suitable venue for a band who can sell this number of tickets. It takes time to open a venue of this size for many cities, and it can't happen soon enough."
Andrew Dreskin, co-founder and CEO of Ticketfly, one of the nation's largest independent ticket companies, also suggests smaller is better. "We are experiencing what I call the democratization of music," he says. "Today there are fewer arena and stadium acts, but there are more midsize artists, thanks to social media. Today we find out about new artists via what our friends are sharing on Facebook and listening to on Spotify. This is creating a very healthy middle market in the music business -- more midsize bands, clubs, theaters, amphitheaters, festivals, etc. Some of these acts will percolate up and become the arena acts of tomorrow; Arcade Fire, Radiohead, The Black Keys and Muse are good examples."
In search of free-spending music fans, the industry also is expanding into foreign markets. In December, Rapino announced the opening of Live Nation's Moscow office. "Russia and nearby markets have become an important part of our global tours in recent years," he says, "and by establishing a local presence, we can rapidly scale our concerts for over 200 million fans." South America also has become a prominent destination. Lollapalooza Chile and Lollapalooza Brazil debuted during the past two years, while McCartney, U2, Madonna, Lady Gaga and Waters toured through the region.
The Internet has mapped out the new territory, says Jay Marciano, president and CEO of AEG Europe. "Digital exposure has made it easier for new artists to build global fan bases, and it is my belief that mature markets will benefit from new artists who originate from outside the U.S. and Europe. Niche artists actually create more opportunities for promoters."
These niche artists won't headline arenas, like legacy acts do. So there will likely be an increased emphasis on the early mainstays of the touring industry: theaters and large concert halls. As if to underscore this point, Live Nation has built and rebranded clubs named after Graham's Fillmores in Charlotte, Detroit, Denver, Miami Beach and Silver Spring, Md.
In an effort to engage Gen Y music fans, promoters have placed a newfound emphasis on music festivals, which continue to energize the nation's younger concertgoers (with ticket prices upward of $200). Bonnaroo consistently sells out in advance, Coachella has expanded to two weekends, and the Electric Daisy Carnival drew 300,000 attendees over three days to the Las Vegas Motor Speedway last year. "Festivals have become the ultimate real-life community of fans with similar tastes and shared experiences," says Randy Phillips, president and CEO of AEG Live, which owns Coachella and other festivals. "They are also tastemaker filters, like radio used to be, for the discovery of new talent. They have become more profitable for our company and more hospitable for the fan."
The success of Electric Daisy Carnival -- which has evolved from a single-day SoCal rave into a three-day core event in Vegas, with 2013 satellite installments confirmed for Chicago, New York, Puerto Rico and Orlando -- demonstrates that a younger audience still is hungering for an offline, collective musical experience and has highlighted the power and appeal of electric dance music (EDM).
Is it a fad, as critics claim? Absolutely not, say industry experts like Rapino: "When rap, hip-hop, even rock were introduced, people were certain they were short-lived, but as the fan base grows and talent becomes even better, there becomes a lasting space." One who agrees with this assessment is former SFX owner Robert F.X. Sillerman, who announced in June that he would spend $1 billion to acquire the producers of EDM events.
Meanwhile, promoters are trying just about any new strategy to supplement revenues while they can, including taking a piece of the so-called secondary market. The proliferation of online ticket resale platforms such as StubHub and TicketsNow has demonstrated that the true market value of tickets often is higher than the initial face value. Some artists have directly reaped the spoils of resale by directing their own inventory to brokers and online platforms. The bar coding of tickets also allows the possibility for promoters and acts to receive a percentage of resales. Live Nation's Ticketmaster site has the ability to track sales through its secondary platform TicketsNow, and as of January, AEG Live's AXS Ticketing can do the same through an integration with StubHub.
Another increasingly utilized income source comes from selling credit card companies the right to presales. In the case of Justin Bieber's Jan. 18 show at Nashville's Bridgestone Arena, over 40 percent of the tickets were allocated to American Express cardholders. Indeed, so many seats to that performance had been directed to various revenue-building propositions that only 1,000 of a potential 14,000 seats were available for the general public. In response, AEG Live's Phillips acknowledges, "I am not sure why we even have public onsales anymore, since most tickets are now sold in credit card, fan club, venue, sponsor and radio presales."
Not to be outdone, legacy acts offer special "experiential packages," which carry a hefty price tag, pairing choice seats with backstage tours, soundchecks and/or meet-and-greets. Live Nation owns SLO VIP Services, which it purchased from Shelley Lazar, who founded the concept in the '80s as an outgrowth of her years coordinating backstage credentials and comp tickets for Graham and Ron Delsener. Lazar's flagship clients included McCartney, Bob Dylan, Barbra Streisand, The Eagles and The Who. A $750 VIP package for an Allman Brothers Band show during their upcoming Beacon Theatre run includes a front-row-center ticket, preshow reception, merchandise and a collectible laminate.
So will all this work? Perhaps a more pointed question is: Can the live music industry survive the coming generational shift? Will young people show the same passion for live music as their elders -- and do they have the income to support their habit? Tentative signs point to yes, based on festival attendance as well as the rising popularity of such performers as Mumford & Sons, Zac Brown Band, Bassnectar, Grace Potter & the Nocturnals and Vampire Weekend. At its core, the live entertainment industry is built on a certain ineffable, unquantifiable connection between fan and band, which is also why those legacy acts might not be leaving the stage anytime soon.
"In my 43 years of attending concerts and 37 working in it, I find the excitement of live music to be a wonderful constant," explains Michael Marion, general manager of Little Rock's Verizon Arena. "The bubble of the baby boomers continues to roll through our population, and they still want to see the artists of their youth. During their younger years, they came to value the live experience. It was quite often the only time to actually see an artist. There was no MTV, YouTube, TMZ or any other media by which to experience an artist. That sentiment lives on and will continue to play a part in the concert business. Also, we see the younger generation becoming fans of these so-called legacy acts. Artists like Journey, Tom Petty and many others have made a connection with the young people of today. Trust me on this, I have a 16-year-old."
Dean Budnick, executive editor of Relix, is co-author of Ticket Masters, a history of the concert industry.