Can Concert Promoters Become The New Record Labels?

from the time-to-find-out dept

A little over a year ago, the recording industry was surprised to learn that Madonna wasn't signing a new record label contract, but instead was signing a deal with Live Nation, a big concert promoter, to handle pretty much everything having to do with her business, including releasing new CDs. The WSJ Magazine is running a long feature story about Live Nation, its founder and its ongoing strategy, wondering if it's the new business model for the recording industry. Basically, the guy behind Live Nation knows that there's good money in concert promoting, but that the margins are low. So, he's betting on a few of these "360 deals" where he gets a much larger margin on all other aspects of the business.

It's an interesting strategy that appears to be a step in the right direction, but it's unclear if it really is the future of the industry. Live Nation's strategy seems pretty risky. It involves huge upfront payments for a small number of star performers (whose older, more well-known, music is still under the copyright of earlier labels). It also doesn't seem to do much to embrace new technologies and distribution methods. Instead, it's just this guy making a grab for some big names, and trying to consolidate all their sources of revenue, taking a cut of each one. There's something to be said for that, but it would probably work better in combination with newer technologies and music distribution means -- and without those huge upfront costs that may sink the whole operation.
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Filed Under: 360 deals, business models, concert promotions, concerts, madonna
Companies: live nation

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  1. identicon
    Anon2, 10 Dec 2008 @ 12:46pm

    Don't assume anything

    I'm not sure, Mike, how you can comment on the company's approach to new technologies and distribution models based on this article, or any of the other articles that have been written about Live Nation over the past months or year. Based simply on the team Rapino has assembled and some of the pieces he's now got in place, and with no real inside knowledge of their business plan, I am still quite certain that he's already putting resources into those areas, and that they are very much part of the company's ever-evolving business model. Rapino is not at all one to sit idly by and just work the old system, and the people he's hired are all known to be innovators and break-the-mold types. Just because he is not explicitly talking about the things that interest you the most with respect to the music business does not at all mean that he and his people are not spending loads of time thinking about and deploying resources to work on them.

    The concept of 360 deals is one that will require a lot of time to fully test, and it has its share of intelligent and informed critics. But as with so many other "innovations" in this industry, it's not really all that new; there have been grassroots players doing such deals in different ways for the past decade or so, even if they didn't slap a label on them or structure them precisely the way they are now being structured. It's worked for some, and been a failure for others, and the smart ones are learning from both successes and failures. But instead of just jumping on the 360 bandwagon when the major labels started to tout it a few years ago, Rapino watched closely, acquired some of the necessary pieces and built out others internally, pulled in some of the smarter people who were innovating in one way or another, and picked up a company or two that were actually already providing full-service (or nearly full-service) deals to those artists within their worlds who were interested in doing them (and offering a la carte services to those who weren't).

    I've been in pretty antagonistic positions with Live Nation when it was still part of ClearChannel, and with some of the other giants who dominate or dominated the landscape. And while a few have been using the terms "artist-friendly" and "artist development" for a long time, most weren't even close. Once CC spun off Live Nation, though, and Rapino had some time to reorganize the company and make some personnel changes, it began to transform itself in some pretty positive ways. It's got a long roe to hoe, but it is pretty much top to bottom already a very different company than it used to be, and even at the club level, the dinosaurs are being replaced by younger, more energetic and creative people who truly are devoted to artist development and to creating better experiences for the fans. Though it doesn't make the headlines or big stories, it is not at all just about the U2's and Madonna's of the world.

    We'll all just have to see whether this, or any of the other experiments with business models going on, are going to succeed or not. In this case, though, with the old model throwing off a 5% margin (and that required squeezing everyone and leaving nobody happy in the least), there can be nothing but upside or utter failure for Live Nation, because it's taking a bet-the-company risk by putting itself in a position where its success is going to be linked very closely with the success of the artists and the willingness of the fans to fork over their increasingly precious dough. I think you gotta admire Rapino for that, most execs in his position wouldn't dare even try to pull this off.

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