The Year In Touring 2012: Beyond The Numbers
Looking past boxscore downturn, live industry is bullish on state of the business
In any year, gauging the health of the touring business is no easy task, but we'll go out on a limb here: Business is good.
Historically, when relying on anecdotal indicators, the relative health of this business often depends on whom you're talking to. Similarly, although Billboard Boxscore numbers are effective in quantifying the success of certain tours, as a broad indicator of business those statistics can be skewed dramatically by one or two tours.
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Boxscore charts depend on the consistency and accuracy of reports from promoters, venues and managers. Unfortunately, those reports are received in such an erratic way, they aren't the most reliable metric in gauging the overall performance of the business.
Still, if we analyze the numbers and balance them with what the industry tells us, we can still truly get a fix on how things are going out there. So, when comparing what we hear and what Boxscore numbers show, this year we are relying more on what those in the industry tell us: The touring industry is healthy. That healthy diagnosis comes from the seller side.
"Business is very strong," William Morris Endeavor (WME) head of music Marc Geiger says. "It's strong in a multitude of areas that are going through high growth: pop, country, electronic, indie, festivals, international. We're bullish." And that diagnosis also comes from the buyer side.
"Across the board, by every metric that we use, the business was better than the year before," says Charlie Walker, partner in Austin-based promoter C3 Presents. Key executives at the nation's largest promoter agree. "Live Nation had a great 2012 selling tickets in North America and around the world, and we see tremendous opportunity to expand our business," Live Nation Global Touring chairman Arthur Fogel says.
Mark Campana, co-president of Live Nation North America Concerts, adds: "We feel the industry is healthy, and the shows seem to have a bright future for us going into next year as well. We are categorizing 2012 as a strong year." Input from other industry stakeholders echoes these sentiments. In fact, despite what Boxscore reports tell us (we'll get to that in a minute), we believe business is near the record levels of 2009, the year prior to "the great slump" of 2010, a year marked by cancellations, postponements and industry finger-pointing.
The down year of 2010 also lead to a large-scale cessation in Boxscore reporting that has, for the most part, not resumed to any great degree. But evaluations of a healthy, growing live business by those in the trenches does contrast with what Boxscore tells us, specifically that 2012 global Boxscore reports for gross (totaling $3.8 billion) and attendance (more than 53 million) are both down approximately 10%. For North America, the numbers are less disconcerting, with gross up 1.7% and attendance down 6%.
But, when considering the dynamic behind the Boxscore reports, rather than actual business trends, two factors account for the poor numbers. First, the two primary growth areas of the industry today are festivals and international business, both of which are among the most difficult numbers for Boxscore to obtain. Second, following the record year of 2009 -- when global Boxscore grosses hit $4.4 billion and worldwide attendance reached 73 million -- and after both the business and Boxscore reporting took a hit in 2010, one of the most important metrics that boosted the reliability of Boxscore data also dropped a notch.
That key metric? The overall number of shows reported. Nowhere is that more evident than at Live Nation, the world's largest promoter. Live Nation reported more than 9,085 shows to Boxscore in 2009. But midway through 2010, the promoter stopped reporting all shows as a matter of course -- although it still does frequently report certain top-end tours upon request and all shows from its global touring division. (Venues and managers also report tours promoted by Live Nation, but not consistently.)
Last year, Live Nation reported 1,693 shows to Boxscore, and this year, 1,661. Not to single out Live Nation, but when there's that kind of drop-off in data collection, the numbers are skewed mightily. Then there's the inherent cyclical nature of who's touring in a given year, what sort of business is reported to Boxscore and, more importantly, what's less likely to be reported to Boxscore.
The sectors of the live business that are less likely to yield Boxscore reports include casinos (extremely active buyers of talent), a large number of fairs and festivals (the latter particularly strong), international dates (a growing sector), small-venue shows (which are enjoying huge volume these days) and stiffs. Conversely, a rising tide not only lifts all boats, but also lifts Boxscore, and the highest tide ever for touring rolled in last year with U2's record-shattering 360° tour.
"There are a handful of huge superstar acts like U2, Bon Jovi, the Rolling Stones, and when they tour, it disproportionately skews the whole year," says Randy Phillips, CEO of AEG Live, the nation's second-largest promoter. "When you look at stats on touring and you're trying to get a handle on it, you really have to discount the fact that there are these occasional mega-tours that dominate a year, but that doesn't make it a healthy year." Touring's top end last year -- U2 -- was alone responsible for nearly $300 million in box office, whereas this year's top tour -- Madonna -- comes in at more than $70 million less for the year, a testament to what an anomaly U2's numbers were.
Other than U2, the business generated by touring's elite artists is nearly identical for 2011 and 2012, with the top 25 tours for both this year and last generating about $1.8 billion in box office. Seven tours grossed in the $100 million-plus range this year, up from five in 2011, and seven tours topped 1 million in attendance both this year and last.
Everyone likes to work with superstars, but the industry depends on a wide range of artists, venues and events to make for a robust touring economy, and that mix seems to be healthy right now. "I thought  was a really solid year, on a host of levels. Across every discipline, we continue to grow," Creative Artists Agency (CAA) managing partner/head of music Rob Light says. "The live experience has never been more important. People want to congregate, to experience memorable lifestyle events. What I most appreciate about ... what's happening right now, is people aren't locked into saying, 'This is what I like and only what I like.' There's a real mix of people enjoying everything, and that's great for the overall health of what we do." WME's Geiger adds, "You're seeing a lot of touring growth from artists that are succeeding in ways that are hard to measure." We understand.
As a public company (the only one in the concert industry), Live Nation may not regularly submit its numbers to Boxscore but, on the other hand, the company can't distort them, either. If Live Nation says it had a good year, that has to be so, because, as Campana puts it, "All of our numbers are public." Campana, with co-president Bob Roux, led a shift two years ago in the company's business philosophy to decentralize to a degree, and rely more on input from local and regional market divisions on matters ranging from marketing to pricing.
He says that approach is coming to bear. "We stayed true to those very basic fundamentals: "Let's watch over the number of shows we're putting into the various markets, and let's make sure that we price them right,'" Campana says. "We had a good partnership in 2012 with the artist community on those two fronts. It's the fundamentals that are allowing us to enjoy a strong year." Along with a season that mixed the perennials with a strong midsection and wealth of newer acts, Live Nation also promoted all or the majority of dates on global mega-tours by Madonna, Lady Gaga, Roger Waters and Bruce Springsteen & the E Street Band. Just as retail relies on the holiday season, the concert business needs a strong summer, and that's particularly true for Live Nation in North America, where it's by far the largest owner/operator of amphitheaters.
As of Sept. 30, show attendance for Live Nation-owned-and-operated sheds was up 15% over 2011, according to the company, and the number of shows was up 15% for the same period. "When you're doing a few more shows, and the shows you're doing are selling well [and] attendance is up, that's when you know you're winning," Campana says.
For its part, AEG reported grosses totaling $576.4 million (down from $797 million in 2011, a year driven by a Bon Jovi blockbuster tour). AEG reported attendance of 8 million (11 million in 2011) to its 2,121 shows (2,134 in 2011), and any decrease is based more on the cyclical nature of who's touring, Phillips says.
"One of the advantages we have in being private," Phillips says, "is in a year that you could almost call an off-cycle year, where there weren't that many triple A tours, we don't have to just buy tours for the sake of buying tours and market share. We stood down on a bunch of things." What AEG didn't stand down on were tours by Kenny Chesney and Tim McGraw (with TMG Live), Enrique Iglesias/ Jennifer Lopez, Carrie Underwood and Justin Bieber. And AEG also did well on the festival front as a partner in the New Orleans Jazz & Heritage Festival and parent of Goldenvoice, producer of the Coachella and Stagecoach festivals.
"The festival, as a form of entertainment and a place for consumers to spend their disposable entertainment dollars, has become a preferred way to experience music," Phillips says. "The festival concept has really exploded, even more so than touring. A festival like Coachella, Bonnaroo, Glastonbury or Electric Daisy Carnival in the EDM space, these are probably the ultimate social-media communities." Walker of C3 Presents, producer of the Lollapalooza and Austin City Limits (ACL) festivals and now the largest indie promoter in the United States, says that both its promoter business and festivals experienced growth in 2012.
C3 reported nearly $80 million in grosses to Boxscore for 2012, up from $71 million in 2011. That sort of growth will continue as C3 expands its festival footprint in markets like Australia and South America.
"The world gets smaller every day, and there is a lot of opportunity outside of the United States," Walker says. "We want to be in the best locations we can be, not only in terms of the city, but also where the show is actually going to be. For people, including us, trying to put festivals in just any location, there's risk associated with that." In the States, other promoters also showed Boxscore growth, including Nederlander Concerts, Another Planet Entertainment, Jam Productions and Frank Productions.
PRICE IT RIGHT
Following 2009, there was clearly a renewed focus from all industry stakeholders on pricing, specifically on providing value. For Live Nation, the impact of offering a $4 beer, along with other value propositions, was significant.
"We know that value in this economy is really important," Campana says. "We took a big haircut when we reduced service charges over the last two years, all in an effort to say to fans, 'We get it.' You can't keep drilling the fans with high ticket prices, [or] no options in terms of beer and food prices." A massive discounting program in 2009 from Live Nation, primarily aimed at boosting soft-selling shows, might have provided some short-term relief, but in retrospect created a PR problem, particularly among the hardcore fans who bought tickets early and at full price.
"You would think on the surface that fans would like having cheap tickets and discounts, but the reality is the real fans are the ones that are buying tickets early, and they don't want to find out three months later that they could have gotten the ticket cheaper," Campana says. "[In the past two years] we not only delivered value, but we stayed to the approach of, 'We're going to give you good prices upfront, and don't be looking for 50% off or "$10 Tuesday."' Fans are starting to believe and trust our pricing systems again." Ticket prices are directly related to artist guarantees, and the general consensus among talent buyers and sellers is that pricing should be conservative, at least beyond the superstar acts.
"I wouldn't say everybody, but most people are pretty conscious of what the market will bear," C3's Walker says. "[This year we] were able to buy everything at what we consider reasonable prices. When you're selling out shows, you have them priced right." The agencies, managers and artists ultimately dictate talent prices, and obviously have to be onboard with any pricing strategies. "There has been continued cautiousness in the marketplace on pricing and guarantees, and I applaud that for the long-term health of the business," Geiger says.
"Every artist, every manager, every agent approaches it differently," CAA's Light says. "I would like to think that my team approaches it with a real keen eye to what's the right price, what's the right package, and I hope we communicate that well to our managers. Is the whole industry doing that? Hard to say, but at the end of the day the people who do pay attention to it and are intelligent about it tend to do better." Geiger expects that rationality toward pricing to continue. "There's no market ebullience," he says. "The last [sector] that got a little ebullient is the electronic market, and that has had a nice settlement to it. There's still a lot of activity there, but I don't think that there is the irrationality that there was for a short period of time in that marketplace." In terms of box-office clout and what the market will bear, certain artists simply command a higher ticket price. "The industry is being fair at looking at the whole field -- the field is not made up of all superstars," Campana says.
"[Superstars] sell a lot of tickets, they're very important in the marketplace, they're going to receive top dollar, and we don't begrudge them at all," Campana continues. "Where we've got a great partnership going with guys like Marc Geiger and Rob Light and the fellows down in Nashville, when they look at their talent mix they're making sure they're not pushing too hard on a marginal show. They're maxing out on the superstars, and we're OK with that." After all, it doesn't behoove anyone for promoters to lose money.
"The agents in the last couple of years have told us flat out: 'We want your business healthy,'" Campana says. "When Live Nation is healthy, when AEG is healthy, the industry as a whole is healthy. And we sell more tickets when the ticket prices are more reasonable -- that's just simple math, and I think they see that. I believe the partnerships in the concert business are stronger than ever." There are, as ever, areas that require even more attention to pricing.
"Where I feel the decrease may be is in bands that tour every year for five or six straight years. If some of those are off a little bit, that's just natural attrition," Light says. "For some of those sorts of bands, packaging is always important. Markets that haven't had as much traffic and suddenly get a lot of traffic may have shows that are off. But when we're smart in ticket pricing and smart in packaging, it can win. The only time you're really off is when you're not shrewd about your pricing and your packaging."
BUILT TO LAST
So the final verdict is that the touring industry was robust in 2012 and is teed up for continued growth, despite the difficulty in quantifying that success.
"I see what the festivals are doing, I see how people go to shows in different ways -- it's hard to calculate what's up or down," Light says. "How do you judge Coachella or ACL going to two weekends? How do you judge all the shows happening in Vegas? All the fairs that took place that may not report but are doing boatloads of people? It's healthy and it's solid." While the slump of 2010 seemed more consumer revolt than a natural cycle, touring is, after all, a very cyclical business. And the current cycle feels good.
"There are waves, years when a bunch of acts break and there is lots of excitement, and then there are lull years because of who puts out records or what happens musically," Light says. "When music is more exciting, people are more excited to go. When it hits lulls, that's just the creative ebb and flow. We're seeing right now some interesting moments that are the confluence of EDM, singer/songwriters, urban, rock bands, country artists. Part of the rebound, or whatever you want to call it, is there's just great music out there. It's exciting out there. I just feel really good about it." Few would argue that touring is an evolving marketplace, which is coming to bear most in marketing, promotion and artist development.
"A lot of the mechanisms that used to matter more -- video play or things that cause a lot of repeated impressions, radio play -- have changed," Geiger says. "Retail placement really changed. Somebody betting that they can sell out an arena or stadiums, and maybe raise the price, behind a record has left many artists holding the bag. That has been a real noticeable change." From Live Nation's standpoint, Campana says continued success in the live space boils down to fielding strong talent and ensuring fans know when that talent is coming to town.
"Making sure the pipeline continues to be filled with compelling shows is really important, and [through] that partnership between promoters and agents and managers -- the sell side -- we've got to make sure that the shows are compelling to the fans," Campana says. "And when we've got a show coming into the marketplace, we've got to make sure that we develop our marketing plans in such a way that every fan knows a particular show is coming. That keeps us up at night. When you get research back that says, 'I would have gone to a show had I known it was in town,' that's terrifying." Geiger believes that as the market gets better at utilizing the new and efficient tools at its disposal, more artists will grow their touring base.
"As [new marketing] gets better and more sophisticated and far-reaching, you'll have a natural additional growth as people do know bands are coming," he says. "Marketing efficiencies will help -- not just costs, but actually from an information standpoint. That's a big factor -- like globalization, which is still a factor -- and will be for a long time."