Whether you're a stakeholder in the touring industry or just an enthusiastic concert fan, the list of acts touring in 2012 looks very good on paper. Ultimately, however, the only paper that matters on the business end of things is the green stuff.
With a 2012 concert schedule that features Radiohead, Roger Waters, Van Halen, Coldplay, Nickelback, Kiss/Mötley Crüe, Aerosmith, Bruce Springsteen, Madonna and Lady Gaga, a number of major touring superstars are bringing tickets to market.
Add to that list about a dozen or so other live favorites, including Dave Matthews Band, Jimmy Buffett, Red Hot Chili Peppers, Kenny Chesney (see story, page 16), Jason Aldean, Justin Bieber, Wiz Khalifa/Mac Miller, Enrique Iglesias/Jennifer Lopez and Drake, along with mega-festivals Coachella, Jazzfest, Bonnaroo and Lollapalooza, as well as such multi-act events as American Idols Live!, and it could be a sensational year.
But, as the double-digit downturn of 2010 proved, big names aren't always enough. On the bright side, heading into the summer of 2012, these acts are doing what they're supposed to do: Sell tickets. Combined with the boom in the festival business, the growth of newer artists in hip-hop, electronic dance music (EDM), rock and pop; and the ongoing popularity of several enduring live acts, the touring industry should continue the rebound that began last year, and is positioned well for the future.
"It's going to be a good summer," says Dennis Arfa of Artists Group International, the New York-based booking agency for acts like Billy Joel, Metallica and Linkin Park. "The unknown is still out there, except for a handful of tours where the story has been told in terms of success. But, overall, a lot of tours look good, and hopefully they'll sell through."
Mark Campana, who shares the co-president title with Bob Roux for North American concerts at Live Nation, says ticket sales are outpacing last year's numbers by 25%. "We're seeing people getting excited about going to shows," he says. "We still have some nose winds in regard to the economy and how things are progressing. We're not out of the woods yet, but to see this type of year-over-year ticket sales is one of the strongest indicators in what's going on."
Nederlander Concerts CEO Alex Hodges says the Greek Theatre in Los Angeles improved from last year's boom season by 26% in admission dollars and 5% in ticket sales. Nederlander is seeing a similar trend at other venues where it promotes shows. Volume is pretty much even with 2011, and ticket prices are skewing a bit higher due to the talent mix.
"I don't want to say the economy is back to 2007 levels, not by any stretch of the imagination, but there's much more positive feeling and actual sales that are beating 2009, 2010 and even 2011," Hodges says.
After 2010 was marked by cancellations, postponements, downsizing and overall malaise, the concert industry was up last year, with double-digit percentage decreases in gross and attendance turning into modest upticks for both heading into 2012. Many reasons can be cited for the improvement-of course, touring has always been a cyclical business - but one major factor was a back-to-basics approach to routing, pricing and packaging tours and a focus on providing value to the customer. There was a clear consumer revolt in 2010, much of it likely driven by the economic downturn.
"You hate to say that you're blindsided by a recession, but the depth of the recession was shocking to us because we had a good season booked at all of our venues," Hodges says. "We just hit walls way too soon on all of the shows. We adjusted our prices down in 2010 and managed our business better, but we were a little down even though we managed our profit-and-loss sheet better."
As the world's largest concert promoter, Live Nation bore the brunt of the 2010 downturn, rebounding nicely last year with strategic approaches to pricing, routing and marketing. "We talked a year ago about getting the train back on the track, and staying true to good pricing and packaging," Campana says. "It turns out that last year was a good recovery year for us. This year, we're continuing on that same trajectory."
Campana says the Live Nation team was able to get the season booked earlier, and then put shows on sale earlier, which is a contributing factor to the current increase. "When people have tickets in their hands for a show, they become the best marketing tool we have," he says. "The 25% [increase] will not hold up for the whole year - the schedule and calendar will start to catch up - but we will definitely surpass last year's sales."
While Live Nation is still sensitive to pricing, it has avoided the deep discounting seen in 2010. Hodges says Nederlander has dropped its average ticket price for two consecutive years. "This year, show mix is a part of it, certainly, but we feel cautiously bullish about ticket pricing," he says. "We're seeing people open up their pocketbooks and, in a competitive market, if other people are saying the same thing, then we've got to pay a little bit more for talent. But there's still a good mood among agents, artists, managers and promoters being ticket price-conscious."
Another factor is smart talent buying and targeted, efficient promotion. Digital marketing, while not at all new to the concert business, has never been used more effectively, with promoters, venues, ticket sellers, artists, agents and other parties all driving awareness. Digital marketing is also relatively inexpensive. When marketing budgets are smaller, that trickles down to ticket prices, and few would argue that a more affordable ticket drives attendance.
Most ticket prices begin with how much a promoter pays an act, and Arfa says the free-wheeling, open-checkbook days are gone. "Sometimes there's a little pushback from the promoter community in how far it would go," he says, "and you see venues much more aggressive, engaged and also in the subsidizing mode. There's more risk and backing with promoters than ever before."
Agents may be the sellers, but it's not as if they have complete control over pricing. "Sometimes, the agent is just the messenger," Arfa says. "The artist or manager will say, 'You have to get this for me,' and if you don't, someone else will claim they can. An artist has certain overhead or production costs, and many times that will lead to a more expensive guarantee. It's more challenging to get a bigger guarantee today than it's been in a long time. You try to maneuver. Some acts show flexibility, some don't. So you do what you have to do."
Competitive bidding by promoters for tours can indirectly drive up ticket prices."There's always somebody that says, 'We're going to lose a show to the Greek - let me just add another $25,000-$30,000 into the equation and steal it back,' just to get it away from us," Hodges says. "A lot of people are really working well with us in that realm of paying attention to ticket price. If we're too low and the agent thinks we can charge more, we'll listen to that and work together on the show. If we're too high and the agent says, 'You're outpricing our market,' we'll say, 'We've got competitors who'll pay whatever, so let's discuss the ticket price and see if together we can't assess what's fair.' That level of diligence has increased substantially in the last two years, and we're seeing it pay off this year even more."
Fragmentation Can Be Good
Music has been on a path of fragmentation for many years, which has been problematic in terms of traditional marketing. As niche acts become more mainstream and social media takes hold, the diversity of live music can be a positive. Classic rock still sells tickets to a multigenerational audience, but Latin, hip-hop, alternative, pop, EDM, R&B and country (the lattermost genre being the least fragmented, in terms of radio) are all fielding proven artists.
"There are all kinds of diverse tastes and ethnic backgrounds out there," Arfa says. "A lot of people may only go to a couple of shows a year, but there's something for everybody . . . Also, as expensive as a concert is, it's not like a vacation, a college education or buying a house. It's a night out. It may be expensive, but people need to live."
Live Nation is addressing that diversity by offering a range of concerts and events to hit varied musical tastes and demographics. If there's a scene that's happening, Live Nation is there, whether it's classic rock (Waters, REO Speedwagon/Styx, Def Leppard/Poison, Aerosmith, Van Halen), hip-hop (Drake, Khalifa/Miller) pop (Gaga, One Direction, Jason Mraz, Nicki Minaj), country (Aldean, Brad Paisley, Rascal Flatts), metal (Iron Maiden, Kiss/Crüe), dance (Madonna, LMFAO) or rock (Coldplay, Radiohead, Nickelback, Dave Matthews Band).
"We're not just selling one type of music now, so that diversity has really allowed us to see these ticket sales," Campana says. "We're not just going back to the classic rock market again and again."
While slow to come onboard with U.S. festivals, Live Nation is going full bore this year with acquisitions and startups covering a wide range, with new events including Mixtape, Jay-Z's Made in America, the River's Edge festival in St. Paul with Dave Matthews Band and Tool and a new country fest called Watershed at the Gorge in George, Wash., home of the Sasquatch! festival.
"We looked at that business closely over the last three or four years, and we've added some events into our mix that we think can grow to the same stature as Lollapalooza, Coachella or Bonnaroo," Campana says. "We want to feed markets that are hungry."
AEG Live, the second-largest concert promoter worldwide, is also tapping into that diversity, with tours currently on sale yielding strong results including Iglesias/Lopez, American Idols Live!, Chesney and Tim McGraw playing stadiums and a June on-sale date for a Bieber tour that begins in the fall.
AEG Live president/CEO Randy Phillips predicts Iglesias/Lopez will sell out "by the time the acts hit the stage." AEG Live's last major tour of 2012 is Bieber, but AEG is starting ticket sales months earlier, at a time when probably more shows go on sale than any other period of the year. Cynics have their own notions why the promoter is making such an early move. Phillips says of the strategy, "I want to go up when the album's out, so we have all this media banging at the same time. And, he's got a monster single [in "Boyfriend"]. Remember, we did over $120 million with him the first time around - without a hit single."
Phillips says the Idols tour will likely do better than 90% business, and Leonard Cohen also looks strong in presale activity. Beyond that, AEG's festival division is off to a strong start with Coachella, Stagecoach and the New Orleans Jazz & Heritage Festival.
"We're conservative buyers," Phillips says. "We buy the things we believe we can make successful. Between Chesney/McGraw, Justin Bieber, Enrique/J.Lo, American Idols and Leonard Cohen, I can honestly say to you that the state of the concert nation seems to be pretty solid."
Arfa is also optimistic about 2012 ticket sales. "As a whole, it's very healthy. There's a lot of money in it," he says. "Live could be the last golden goose of the music business. I'm optimistic for my business and for the live business in general."
Hodges has a similar take, and points to "Keep On Smilin'," an early-'70s hit by Southern rock band Wet Willie, as his inspiration. "You go through every year wondering what it's going to be, and I feel really good," he says. "If you've got a problem, you've got to face it and if you don't have a problem, everybody's smiling. So far, we're smiling."