Power 100 Top Exec Live Nation CEO Michael Rapino on the Future of Concert Ticket Pricing and Responding to Terrorism
The head of the world's largest concert promotion company explains why live is now driving the business.
For a man that just wrote a $110 million check to settle a bitter lawsuit, Live Nation CEO Michael Rapino is in an awfully good mood.
Sitting down for his first interview after being named No. 1 on Billboard's Power 100, the native Canadian is tan, smiling and wearing a smart zip down vest, just four days after ending Live Nation's two-year legal battle with Songkick, a fight that began over antitrust and anti-competitive claims and took a sharp turn after two Ticketmaster employees were found to have secretly accessed Songkick’s computer systems.
Did he have any idea this was going on? “No,” he says, adding that Live Nation initially had offered $50 million to settle the case, but Songkick wanted $200 million. After being encouraged to come to terms out of court by U.S. District Court Judge Dale Fischer, the companies landed on the nine-figure payout.
With the lawsuit now behind him, Rapino is free to focus on 2018 which is already shaping up to be a busy year with the acquisition of Frank Productions, one of the largest independent promoters in the country; the launch of his new high-end event production company Red Rock and the upcoming release of Believer, the latest documentary by Live Nation Films featuring Imagine Dragons singer Dan Reynolds on LGBTQ issues and the Mormon church.
With a stock price hovering near record levels and a year-end earnings report expected to show continued growth for the world’s only publicly-traded concert promotion company, Rapino is gearing up for another five years at Live Nation following his contract renewal in December. Billboard sat down with the Thunder Bay, Ontario native at his company’s Beverly Hills headquarters to discuss his top ranking on the Billboard Power 100 and how live entertainment is driving the music business in 2018. Answers below, some of which were used in Rapino's Power 100 profile, are edited excerpts from the conversation
What is Live Nation doing for the artist the labels aren't?
I think the labels are in a transition. They were a gatekeeper to distribution and the concert promoter was their bank. Now we’ve become an important marketing partner for the artist. We’re bundling their CDs and helping them to talk to fans using our data. We haven’t replaced the labels role, we’ve just augmented it.
Does the focus on live change the artist experience?
The artist is still the genius, but the artist and the manager today have an immensely bigger job. You have to be creative, you have to be a social animal, and you have to bring your brand to life across all the social and merchandise channels. Today it's looking at a global audience across multiple pieces of the business that are going to help define your image, social status, your art on the road, and the art that you're distributing. As I've always said, some of these artists are the best CEOs out there, whether it's Jay-Z, AC/DC or the Rolling Stones. These are billion dollar brands being distributed around the world.
If you look at the Billboard Charts, album and ticket bundling is more prevalent than ever. How did you get into the bundling business?
In early days of Live Nation, we really believed it was important to be a direct-to-consumer business, which the labels aren't and no promoter was at the time. By merging with Ticketmaster, we could we give the artist a direct relationship with the fan. Once you have that direct relationship, what can you do with it? How can it help the artist? The obvious low hanging fruit is if we're going deliver a ticket, lets also deliver your music.
In 2018, does the tour support the record or does the record support the tour?
The art is still the fundamental driver, overall. A single still drives your longevity and everything else falls after that. A hit is a hit, and when you have a hit great things happen. In the past, the artist made great art and then it got distributed. The artist didn’t know who bought the album, who listened to it on the radio and who went to the show. The managers of tomorrow, like the guys who manage Drake, want to know everything about Drake’s audience and the more that he can build that audience and deliver them art, the more he can have total control of the business.
How would you describe your management style?
I'm a passionate leader who believes in a mission — this is a mission much more than a job. I came from a small town, and I live in fear of becoming a bureaucracy. I run a very decentralized business. I have direct communication with all my employees. We answer questions instantly, same day. I’m known for having a very small to-do list and a big don't-do list.
As CEO of Live Nation, what is your biggest fear?
There's still a part of me that thinks “Oh my God, it's going to go away. Keep your head down. You could lose it.” I think that fear still motivates me to believe in the artist and then ultimately build a company where your employees believe you actually care about them. Power in Hollywood has done a lot of bad, so I'm a fan of figuring out how to have our employees believe that they are as important to me as the artist.
What's your home life like and what guides you as a father?
There's no cutting corners. I'm an introvert by nature. I don't have breakfast meetings or do dinners. I don't need to have a dinner at night with the manager to toast them. If you deliver the proposition, you deliver the business, you write the check, you do all the right things, you run the business. I don't think relationships are as important as they historically were. I think great products speak for themselves. We've got a lot of great employees that work the relationship angles and that's their strength. I don't let distractions get in my way.
What the most effective way to keep distractions at bay?
My job as CEO is ultimately resource allocation and most people want to take you off your mission and distract your resources. I'm ruthless [about protecting] resources, and my most valuable resource is time. I don't spend a ton of time phoning people. I want you to know how to get a goal started, and I want to make it work.
Where is the growth for Live Nation in 2018?
We're still not a great hospitality business. We have a bunch of people that know how to run venues, make sure they're open on time, make sure they're closed. People will pay for great experiences and the real opportunity is, how do you drive the per spend on site? If you're thinking about starting a festival, you're probably thinking about “how do I do a better job of servicing the fans so they have an incredible experience?”
We talked a lot in the last year, especially at Billboard, about slow ticketing and competitive pricing. Are we approaching a cap on what customers can be charged?
We're in a transition now. That 10 a.m. onsale and instant sellout is like a drug, even if the reality is it was a high percentage of bots and scalpers that bought the tickets. So over time, if you believe that the artist is going to be more empowered, they’re going to go from working behind the platforms to working in front of them. We want to make sure we are solving the artist's job going to market with the best pricing strategy. As deep as you want to go, we want to take you there on pricing dynamically. We want to show you that you should not leave much on the table. Number Two, we should figure out how to lock down the pricing you want. If you really want to charge $129, even though you can get $250, we have to figure out how you the artist and we the distributor can deliver that ticket to your fan for that price. It's just the start of the artist becoming more involved, and as he prices the house better, and technology delivers digital ticketing and more of a direct relationship, I think those two come together .
What was the artist reaction to seeing their tickets on secondary sites like TM+?
There are artists who don’t want to play in that space. They say “I just want to price it my way, and I want the fan to get the ticket at whatever price I want." So, that's when over the last two years, we kept cooking in the oven at Ticketmaster looking at how we verify fans. What would be the steps? Do we use Facebook? That idea had been brewing and this year we were able to bring it to life and give something to artists that allows them to price it as aggressively as they feel good about and then lock it down.
What do you mean, "Lock it down?"
If you want to charge $129, then figure out how to make it $129, and make sure no one else makes any money on that so your fan is getting it at $129. Ultimately, that will be digital tickets that replaces barcodes and allows us to deliver a true ticket directly. We talk about our great data, but in theory you have 80 million barcodes that went to the show. Sometimes I can figure out who they really were, but a lot of times they were a scalper. I don't know who's at the show. The minute we go to a more verified presence strategy, I actually know who is in the venue. One it's great for data, two, it's just great for engagement, right? Now I really get to say, "Do you want to upgrade your seat? Merch? You want to come to another show?" I mean it really brings our audience to life.
Let's talk about the challenge of terrorism. What was your reaction to the attacks in Manchester and Las Vegas late last year?
I mean, they're both horrible. In Las Vegas, our promoter Brian O’Connell was texting us from the event while hiding underneath the trailer. They didn't know where the bullets were coming from. And Brian has taken artists to perform for troops in Iraq and Afghanistan, and it's sad that the most horrific event of his life ends up being in a parking lot in Vegas. These are horrible events in a crazy world. First, we have to check on our staff. Is anyone injured? How do you get to them? And, how do you support them? In Manchester you have security guards seeing horrific things. How do you over deliver on everything they need from support, and counseling, and financial support? How do we get people out of there that next day? How do you get them flights?
How do you process these attacks?
It's a tough world out there. Could we have any way looked at Vegas or predicted Manchester? I don't know. Many shows are not at our venues. We don't have control of everything a lot of times. [But now] we’ve got to be the best in the world, at making sure that fans have a safe experience. Obviously, I can't say that we can stop shootings and [other terrorist attacks] from the outside, but protecting the venue and around that venue is gonna be a key part of what being an event producer is.
How do you keep people safe without over-policing or even scaring them?
Arenas now are sophisticated. They've got this built in for their sports business already. You're safer at the Staples Center than you probably are at the Manchester, which doesn't have an NBA team. It doesn't have that level of security. Our job is to work with the artist and the venue to have a global standard. And then hopefully technology will keep providing us better and better tools to help us keep an eye on the audience. Whatever industry you are in, terrorism has been around for a long time. Other countries have dealt with this for many years. It will always be some part of your business but when you put this in perspective, the amount of shows that are happening every day around the world, you know it's still a very, very small piece of what will affect a fan overall. So, we think it's important, we have to be better at it, but we don't think our fans are looking for a lockdown yet either.
Has there been a drop in attendance following either Manchester or Las Vegas?
No. The audience is resilient. Again, compare the amount of (terrorist) activity versus the hundreds of thousands of shows that are happening around the world. It's still a very, very safe place to go out.
Let's pivot to streaming. Does the growth of Spotify present an upside for ticketing and the live entertainment experience?
The average fan only goes to two or three shows a year. This is a huge endeavor for them, so when you're going to a show, you're a committed fan and it's an expensive, great Kodak moment. They don't treat it like buying a lip gloss on the way out of grocery store. It's not an impulse buy. People will research for two weeks to find the best ticket and spend time trying to organize their group of friends. It’s not easy. If we had a mile-wide front row of Justin Timberlake tickets, sure, I guess we could, in theory, pop up after someone heard "Filthy" on Spotify and say, "Do you want a ticket?" But the problem is the great tickets are already sold. We don't find that path is a great conversation.
What are the major differences between the streaming business and the ticketing business?
The concert business is a commerce business. Streaming is a consumption business. They spend a fortune just trying to figure out how to get you to spend $7.99 a month. I'm trying to get you to spend $190. That's a different exercise. Buying a ticket is a very, very methodical, well thought out exercise for most fans and can use data to go find them. We're not hoping that we hit a needle in a haystack. Rhianna has 100 million followers. I have 500 million people who bought tickets on Ticketmaster and 80 million who went to live nation, I have a whole sea of data to mine.