Looking past boxscore downturn, live industry is bullish on state of the business
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."