Live Nation's Michael Rapino Wants to Upsell You, Talks Streaming and Madonna-Like 360 Deals
Ten years and one merger with Ticketmaster later, Live Nation has grown its concert business to 25,000 shows and 73 million customers annually. At the helm of that now-global live-events empire is president and CEO Michael Rapino, who sat down recently with Recode’s Peter Kafka to talk shop -- and explain what he means when he says "we’re closer to a travel company than we are to a record label."
ON WHY ARTISTS HIT THE ROAD: "For the first eight years, Wall Street would say to me, ‘Oh my god, what's this summer gonna be like?' -- they wanted to equate it to the movie studios. ‘Where's your Spider-Man?' And I would always say that I have no supply problems this summer. I am not worried that there's not gonna be enough great artists. Why, because 95 percent of the revenue any artist is gonna make is on the road. And artists have bills just like you and me. So artist need to go on the road… It's really good economics."
ABOUT THAT BUSINESS MODEL: "We're gonna promote 25,000 shows this year. The reason that we've been able to deliver that kind of growth and also be in the artist management business is the artist does believe that we are artist-centric. We're gonna put the artist where ever is best for the artist. So what we do, our biz model is once we have the consolidated content, it's to figure out whatever venue will pay us the best economics to bring that scale. So it could mean the Barclays Center or MSG is better economically for me than Jones Beach. Because they're gonna pay me an ongoing fee and rebate to bring content there. So our job is to figure out where the best economics are to put the content."
ON THE ART OF THE (UP)SALE: "At the core, we’re closer to a travel company than we are to a record label. 73 million fans will come to a Live Nation show this year and an average customer goes to two-and-a-half shows a year… So our business, if we can get that customer to three shows a year… or quite honestly, whether 73 million people if I sell them one dollar more a year right, if I can upsell you. If I can get you to buy the VIP package versus the P1, if I can get you to buy the upgraded t-shirt, if I can enhance your experience… my business will do very well if we can just continue to figure out how to superserve 73 million fans, grown 73 million fans by incremental shows, incremental events, and incremental spend."
ON TICKETMASTER’S FIGHT SCALPERS/SECONDARY MARKETS: "It’s an $8 billion industry… That’s like cocaine money. That's going to attract a lot of good people."
ON 360 DEALS (AND THAT TIME THEY ADDED ALBUM DEALS TO THE MIX): "It's an insurance policy for the band. That motive to us is the best. We're fully vested, we've got sponsorship, we're trying to bring deals to the table to build the pot. At that point, what happened is, when we started talking to the U2's and the Madonna's about this kind of deal, they'd say ‘geez, to buy my rights to touring for ten years, that's 85 percent of my value… why don't I just throw the record on top of that. It's almost like a cherry on top of the… We didn't wake up thinking we wanna be a record label but we went, ‘I get it,' because that's their leverage, so let's do it. Now, we didn't do it with U2, which was smart — we just stayed to our knitting. Madonna, we ended up taking the cherry."
ON WHY IT DIDN’T WORK: "We're not in the rights business. Back then we didn't have any secret sauce on how to distribute that record than somebody else. That's why we thus sold Shakira and Madonna back to the label to recoup our record investment."
ON WHETHER THEY’LL DABBLE IN STREAMING: "I think we'll leave the streaming arms race to the big boys right now. I think Spotify's done a fabulous job. Apple has the scale and muscle to keep getting it better and better and… obviously we're partners with Jay Z and our non-investors but huge supporters of Tidal."
Listen to the full interview here: