The Message in Live Nation's Q3 Earnings: Breathe Easy
-- As the bellwether of the concert business, Live Nation is looked upon as an indication of the health of live music. With continued economic problems in the U.S. and elsewhere, people hoping the concert business is headed in the right direction may have been holding their breath before Live Nation's latest earnings announcement.
No need to panic. The economic climate means challenges remain, but Live Nation's third-quarter results give no indication that 2010's touring slump has turned into a prolonged sickness. As CEO Michael Rapino said during Thursday's earnings call, "demand has held up" in spite of "further economic uncertainty."
Concert revenue was $1.28 billion in the third quarter, down 7.3 percent from the prior-year period. Ticket revenue was up 9.9 percent to $287.1 million. Although they represent smaller amounts, revenue was also up in the Artist Nation (9.4 percent), eommerce (41.9 percent) and sponsorship (4.6 percent) divisions. In total, third-quarter revenue was down just 2.5 percent.
But Live Nation did more with a little bit less. While revenue was down slightly, operating income and net income were up 3.6 percent and 1.4 percent, respectively. It reduced the number of amphitheater shows by 15 percent and grew per-show profit by 18 percent. Its clubs business improved -- show count was up 13 percent and adjusted operating income up 30 percent. It has launched 10 new festivals and has produced 45 year to date. Electronic festivals, which Rapino called "a growth opportunity," have doubled to six this year.
These numbers indicate Live Nation is reacting to market conditions. Last year I was asked during an interview -- I believe it was NPR -- if the summer of 2010 spelled doom for the company. I replied that Live Nation is too large and too successful a company to go out of business because of one bad year. Concert promotion allows for relatively quick adjustments. Many products require years to design the product, build manufacturing capacity and sell it to consumers. But in many ways the live music starts anew each year. Lessons from one year can be applied the very next year.
The future also looks steady. Rapino said October saw "solid demand" for live concerts and that 85 percent of fans say they plan to attend as many or more live events next year.
Here are a few miscellaneous items from the earnings call:
- Ticketmaster has sold 103 million tickets through the first nine months of 2011, up 11 percent year-over-year. Sales were up 2% in October.
- Ticketmaster now has more than 12,000 clients, up 10 percent year over year. Global client retention rate is 86 percent and is expects to close out the year at 90 percent. GrouponLive has provided "meaningful sales" through 2,000 offers and 1.2 million tickets sold through October.
- Chairman Irving Azoff called Live Nation's partnership with Universal Music Group "a work in progress," and said the two companies will "find new ways of making money together." The partnership was announced in September.
- The NBA lockout will have an impact on Ticketmaster. Live Nation is (conservatively) assuming there will be no NBA games through the end of the year and expects a loss of 700,000 tickets. The league has already canceled some games, and more cancellations are expected. "I doubt they will have a full year," Rapino said. The NBA's regular season was supposed to start this week.
iTunes Match Debut Near?
-- October has come and gone yet iTunes Match has not yet launched. The company gave a vague launch time of late October at its Oct. 4 media event that unveiled the iPhone 4S. The cloud service will cost $24.99 per year and will create a match of a user's music collection on Apple's servers. The cloud component of the service, iCloud, is already live.
iTunes Match's debut appears to be near, however. According to various reports, the service has been included in the new version of iTunes that is now available to developers. A post at the Mac Rumors blog quotes an Apple message to developers that "iTunes Match is also available for testing on Apple TV."
Sony's Pop Market Turns 1
-- Sony's Pop Market celebrated its first birthday on Tuesday. The daily deal site calls itself a "shopping club for music fans" and offers limited-time sales on physical product. Many of the items are box sets and classic reissues with excellent packaging. So, yeah, the deals are aimed at an older audience. Consumers are alerted about deals via email, Facebook and Twitter.
Anti-Piracy Law: Before of Alaramists
-- The next time somebody tells you a proposed anti-piracy law will "break the Internet," remember some comments about a law that clearly did not break the Internet -- the Digital Millennial Copyright Act (DMCA). Here is an excerpt from the Berkeley Technology Law Journal, as quoted by the Copyfight blog:
"The post-DMCA Internet will feature even more of those damnable '404 -- file not found' messages than it currently does. As media companies expand their demand-letter operations from commercial 'piracy' to include negative commentary, transformative uses, and what they deem to be a little bit too much sampling or quotation, the ranks of the independent Internet publishers will be radically depopulated."
That excerpt comes from an article written in 2000, just two years after the DMCA become law. As we all know, the scenario described did not happen. Copyright law is never perfect and always deserves healthy public debate -- which is happening now that the House has introduced the PROTECT IP bill. But just beware of alarmists.