The New York Times nabbed interviews with Live Nation chiefs Irving Azoff and Michael Rapino for a lengthy Sunday article. Most of the piece is a re-cap of things we know - only 380 words of this 4,996-word article look into the future. But, this part of the piece takes at look at Live Nation’s immediate plans.

Now that Live Nation Entertainment is a reality, how does it intend to grow? Mr. Azoff and Mr. Rapino are still coming up with answers. They want to improve Ticketmaster’s e-commerce site and look for ways to sell merchandise, fan club memberships and so forth to people buying tickets. The two executives talk about new pricing models and a better fan experience.

Potentially, these changes are revolutionary…But as Live Nation Entertainment tries to create this fan-friendly concert experience and improve its margins, it has tough trends to fight. The number of new bands with arena-packing power is dwindling. The company has made few inroads in hip-hop and rap. We live in a world of downloadable singles, but albums and artists’ repertoires are what traditionally sell big tours.


Revolutionary? The very structure of the company is certainly revolutionary. Never before has a promoter, ticketing company and artist management company combined to form a vertically integrated entertainment company.

But fine-tuning ticket prices is not revolutionary. Selling more T-shirts is not revolutionary. And neither needed a merger to happen.

David Pakman of venture capital firm Venrock looks at Live Nation’s initiatives in pricing and the secondary market and sees not a revolution but a lack of growth. In a blog post titled "The Sad State of the Old Media Business," Pakman calls Live Nation’s plans “the bellweather of its end.”

The rise of secondary ticket markets like StubHub showed us that there were more efficient and orderly ways to maximize profit. But massive consolidation and monopoly-building usually signals that there are no other growth opportunities left for a market — the market participants grow by consolidating and raising prices. Azoff’s belief that Live Nation’s upside is in selling t-shirts and fan clubs to the fans sounds like something I heard in 1997 during internet 1.0 days. It’s not only not innovative, it is precisely the opposite of what fans are looking for from the music industry…We will continue to pay Mr. Azoff’s company’s service charges for the privilege of seeing great live music if and when our favorite artists reach big arenas. And fewer and fewer artists will. But if you are going to bank your future on nothing more than raising prices and selling me more expensive t-shirts, the fall will be mighty indeed.


In truth, Pakman is reading a bit too much out of too little. The Times’ article wasn’t exactly a detailed look at Live Nation’s ten-year strategic plan. The truth is we don’t know what Live Nation has planned five to ten years from now. Company executives might not yet have thought that far into the future.

However, we do know is Live Nation has competitive advantages and it is lead by old school music executives who plan to take advantage of its unique strengths. And why shouldn’t Live Nation pick the low-hanging fruit? Through Ticketmaster, Live Nation has a dominant position in a market that has not been decimated by the reduced barriers to entry of digital content. The act of selling a ticket is relatively protected from the disruptions that face the artists selling those tickets. That puts Live Nation on a different time line. Record labels must transform themselves now. Live Nation can wait – and profit in the meantime.

But based on what we do know, Pakman has a point. New pricing strategies not only have limited upside, they signal a lack of truly transformative ideas. After all, Live Nation was built to protect the strengths of old entertainment companies, not create a company to cope with the changes brought by the fragmentation and decentralization created by the Internet.