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2010 in Touring: Tough Times on The Road
Any way you look at it, 2010 was a challenging year for the touring business.
There are, of course, plenty of ways to look at it. And, to be sure, business wasn't down for everyone. Certain sectors -- including country, most major festivals and tours by superstars in pop, urban and dance/electronic-performed well. The enduring draw of superstars is reflected by the achievements of the year's top touring acts, including Bon Jovi, U2, AC/DC, Lady Gaga and the Black Eyed Peas. Other veteran talents account for the balance of the year's top 10 tours: James Taylor/Carole King, the Eagles, Metallica, the Dave Matthews Band and Paul McCartney.
THE LIVE NATION FACTOR
When trying to get a handle on the success of a given year, per-show averages are a good barometer, more so than ever this year. But the news is still not good. On a global basis, the average gross per show in 2010 is $225,262, a 14.4% decrease. Average attendance per show is 3,729, a 13.4% decrease.
In North America, the average gross and attendance per show are down 12.1% and 10.3%, respectively. Of course, with fewer shows reported, and the best-performing shows more likely to be reported, these numbers probably paint a less dire picture than what really happened out there.
Even so, while the year was unquestionably challenging for the touring industry, it wasn't historically bad.
This was the lowest number of shows reported since 2003, the lowest worldwide gross reported since 2005, but only the lowest attendance since 2008. If there is a silver lining, this may be it: Fans still went to see shows-and things could have been much worse.
There is a big caveat to all these Boxscore numbers, and it has everything to do with Live Nation, the world's largest promoter.
In June, Live Nation Entertainment opted to stop reporting box-office data to Billboard Boxscore. While we received a substantial number of reports on Live Nation shows from other sources, including agents, managers and venues, the impact of the world's largest promoter not reporting the bulk of its shows clearly can be seen.
In fact, it's surprising this didn't have a bigger impact, considering that Live Nation reported 46% fewer shows than in 2009.
FOR SOME, NOT SO BAD
While they occur every year, there did seem to be an inordinate amount of postponements and cancellations in 2010, and one could assume that Live Nation didn't stop reporting Boxscores because the dates were over-the-top strong.
Among the tours or concerts postponed, canceled or reconfigured, and cited in the opening of this story, all were to have been promoted entirely or in part by Live Nation.
But for many acts, particularly those with perennial star power (Bon Jovi, U2), current heat in the marketplace (Lady Gaga, Justin Bieber, the Black Eyed Peas), great value (think country music) or a fresh concept (James Taylor/Carole King, Roger Waters' Wall tour), tickets sold briskly in 2010. Many of the year's biggest successes were Live Nation tours, along with tours and events promoted by AEG Live, independent promoters or on a market-by-market basis.
This was clearly not a year where "same old, same old" was the way to go.
"The bands that did well were the bands that you absolutely had to see, and the ones that you didn't have to see were the ones that suffered the most," says Chip Hooper, head of the Paradigm Agency's music division.
Dennis Arfa, president of Artists Group International (Billy Joel, Metallica, Rush), puts it this way: "2010 was a good year in touring, depending on who you are."
One would be hard-pressed to say 2010 was a good year in touring for Live Nation, operating under its first year as a merged company with Ticketmaster. Live Nation reported $1.5 billion in grosses from 5,296 shows, a 40% decrease in gross and a 41.7% decrease in shows. The lack of reporting hurts Live Nation's representation in our analysis, as apparently its internal numbers beat ours by a large margin. According to CEO Rapino, "Our show count was flat year over year, our total global attendance was down about 10%, and revenue [is] down about the same."
Live Nation's decreases in grosses and attendance per Boxscore are down about the same percentage as the number of shows it reported. In recent years, Live Nation had been out-pacing overall industry numbers and promoting fewer shows while focusing on per-show profitability.
Live Nation, as a public company, attracts more public scrutiny than privately held companies like AEG. "If they weren't public, people wouldn't be focused on this [downturn] as much as they are," AEG Live's Phillips says. "Because the largest supplier of talent and producer of shows is a public company, the warts of our industry become more public than they would normally be."
For AEG Live's part, the promoter reported $813 million in box-office grosses to Boxscore, about a 10% decrease from 2009, and slightly more shows at 2,558 reported. Those numbers reflect gross, not net, and Phillips says AEG Live enjoyed the second-best year in his nine years at the helm of the company, "and we only missed the best year by about $500,000 in EBITDA [earnings before interest, taxes, depreciation and amortization]," he adds. "That's a function of making the right bets."
Among those bets were global tours by Bon Jovi, the Black Eyed Peas and Taylor Swift (with the Messina Group). But Phillips says AEG Live's regional offices also did well. "All we've done is we didn't buy everything," he says. "Sometimes in life you succeed by what you don't do as much as by what you do."
That's not to say AEG Live succeeded with everything, Phillips notes. "We took hits. We're not perfect," he says. "However, we learned from our mistakes. And this year, I tightened up the reins of the company. I made sure we had a handle on our booking philosophy and didn't deviate from it."
THE PRICING DILEMMA
The industry consensus is that in 2010 the amphitheaters took the hardest hit, and many of the reports of slagging sales and show cancellations were from amphitheater tours.
Amphitheaters sure took a hit in the Boxscore reports, with 2010 shed grosses down 34%, attendance down 40% and the number of shows down 39%. But with the sheds, the average gross per show was actually up 7.8% by Boxscore reports, while average attendance per show was down 1%.
Given that so many amphitheater shows weren't reported to Boxscore, to get a better handle on the amphitheater business, it's helpful to go to Rapino again, as Live Nation owns the majority of sheds in North America. And he says show count at the amphitheaters for Live Nation was up 5% and "attendance was flat, because we did price promotion to drive attendance," he says, meaning attendance would have been worse without the massive discounting.
"If we did not do some promotion, we would have been down around the industry level of 10%," Rapino says. "So it shows if you price it right, you will drive volume."
Many would counter that it is better to "price it right" on the front end rather than discounting reactively after the most loyal fans have already purchased tickets. In fact, "discounting" has become a four-letter word for many in the touring business, both within Live Nation (off the record, of course) and outside the company, and among many agents and managers.
On a panel at the Billboard Touring Conference in November, Concerts West/AEG Live co-president John Meglen said of discounting: "We hate it. I think it's a terrible thing for our business. To me, we do have a commodity that, for whatever reason, still has a value in this chain, and I believe it has strong value."
Meglen stressed the need for such strategies as flexible pricing rather than discounting. "Or people are just playing in places that are too big compared to where they should be, or they charge too much and that's why the tickets aren't selling," he said. "But the integrity of the ticket is something that we have to protect."
Rapino seems to acknowledge that the discounting strategy has its downside and will undergo scrutiny heading into the next season. "In 2011, we hope to better align demand and scaling from the beginning and use promotions more tactically," he says.
While admitting it's "hard to figure out," Geiger would like to see "pricing that is much more reality-based all around, including the artist pricing, but also the ticket, the ticket fees and everything else," he says. "The hot stuff still sells, and we still price it more by our gut than science, and there is still a lot of wishing things were hotter or bigger, or betting on past fees that screw up the business. There is a lot of work that needs to be done on that front."
Geiger says the "financial pressure" that dictates pricing comes from a lot of places.
"I wish it was easy enough that we could point at one party and say they're the problem, because then they would be the fix, too. There is no one person in the value chain that typically controls price," he says. "If you have a strong, powerful management company, they can definitely be a strong influencer on price, there's no question. If you have a promoter that has a real point of view that sells it appropriately, they can be very influential on price, and so can the agents, artists or anybody."
The entire touring industry community needs to be onboard when facing such challenges as pricing, Geiger believes. "The problem is, even in our case, the promoter and agent can be on the same page and then someone else isn't," he says. "Managing [the] price of a scarce product is just not that simple. This summer in a lot of the tours that ended up going away, restructuring or discounting, there's just not enough of pure [analysis]: 'What's right? What would produce a sellout? What's the right pricing? How do we get some market testing?' "
Beyond pricing, there seems to be disillusionment-some would say outright backlash-among concert fans toward not only pricing but the entire concert experience.
"The business isn't measured on customer satisfaction, and it should be," Geiger says. "Price is clearly one of those things, but not the only thing."
Pricing and customer satisfaction issues are "the wake-up call of what this summer produced, but I have my own skepticism [about whether] there's a collective effort" in addressing these issues, Geiger says. "I'm still worried the competitive forces are stronger than the eye on the consumer."
Asked if consumers were disillusioned with the concert experience, Rapino responds, "The research says if a consumer is debating to go to a show, price and seat availabilities are the two big drivers. With the challenging economy, we all have an opportunity to make some changes to drive fans to the show, and we are working through some plans that we will execute in 2011."
Many of those plans revolve around Ticketmaster.com, which Rapino points out is the third-largest e-commerce site in the world.
If Live Nation is looking to do its part in the war against customer dissatisfaction, Ticketmaster.com would be on the front lines. "We are excited about some upgrades we are making in this business that we believe will drive sales for all shows posted online," Rapino says.
Rapino says 2011 looks like it will bring a "great lineup of artists on the road. So the year will not be about show count-it will be about the fan and did we all make some changes to drive that 10% back to the shows."
Paradigm's Hooper says he's not yet sure how 2011 will shape up. "That story is yet to be written," he says. "We just all have to [plan] each move very carefully and thoughtfully with every specific band as to whether to tour or not to tour, and if you do tour, how to price it ticket-wise. It would be foolish not to be cautious after a year like this. And those that are most thoughtful will be the ones that do best."
Phillips believes the economy is coming back and his company is well-positioned for 2011. "I'm not going to change a thing we're doing," he says. "The old saying is, 'There's no bad tours, only bad deals.' We're not in the market-share business; I could care less what our market share is. I care what our bottom line is."
The lessons of 2010 aren't new ones, Geiger points out, and all relate back to knowing fans and addressing their needs.
"The schmuck who comes to five Springsteen shows gets treated like a schmuck on the sixth one," he says. "Until the industry-the artists, the managers, the agents, the promoters, the parking people-figures out that as a baseline, we'll continue to have these issues."
Like the music business at large, the live industry is undergoing a seismic shift. "We can't underestimate that no matter what's going on with Live Nation or AEG or what people want to gossip about, we're in a time of unprecedented change, and the change is the responsibility to the consumer," Geiger says. "The concert industry has a set of challenges in front of them that is all of our responsibility to figure out. If we can meet those challenges and make the business better for the consumer, we'll have a long-term healthy business. We've just got a lot of work to do, and I hope that all the leaders and everybody involved in it thinks about the year-end and how do we do this better so we don't repeat the mistakes."