On April 23, just one day after the release of her soon-to-be No. 3 album on the Billboard 200, Iggy Azalea was onstage at the House of Blues in Boston playing for a sellout crowd of 2,500. A major artist in front of a small crowd – investors call it a “perishable experience”; fans call it a once-in-a-lifetime moment. It plays out over and over in the club world, and it is one reason why the live music business remains at a premium in an ever increasingly on-demand entertainment culture of streaming and DVRs. Live Nation, which commands 21 out of the 25 spots on Billboard’s annual list of the best-attended clubs in North America, reported $2 billion in revenue in 2013, with gross ticket revenue up 30 percent.
Indications are that 2014 will be just as strong, and Live Nation stock has risen 14 percent in the 12 months ended July 31, to $21.16. “Overall for our portfolio, we’re up in show count and ticket sales,” says House of Blues Entertainment CEO Ron Bension. “It’s a good business if you can withstand the cycles, and we’ve been able to do that.” How good? Billboard estimates annual gross ticket sales for Live Nation clubs approaches $300 million annually.
The Live Nation portfolio boasts about 80 clubs and theaters, about 65 of which are clubs under the House of Blues or Fillmore banners, with others including established venues like the Tabernacle in Atlanta (No. 8), the Palladium in Hollywood (No. 14) and Irving Plaza in New York (No. 17).
“Four years ago, Live Nation created this organization and put all the clubs and theaters under one roof, and they committed to it,” says Bension. “We’ve doubled our portfolio in the last three years of venues we operate or exclusively book into. But, more importantly, we’ve made a huge commitment to artist development. We’re starting to help [developing acts], and we’re seeing evidence of that as we see bands work with us from 300-capacity rooms to 3,000-seat theaters.”
Bension believes Live Nation clubs are successful because the venues are great music rooms, with an emphasis on sound, lights and sightlines. “They’re intimate and they provide the essentials,” he says. Beyond that, “we’re just the best marketers in the country.”
The club business is not without its challenges, though. As festivals have exploded in the last five years, radius clauses – which prohibit bands booked at festivals from playing elsewhere within a certain geographic radius and time frame – have become a common complaint from club operators. “Where bands used to play a festival and a bunch of clubs, they’re now playing a bunch of festivals and a couple of clubs,” says Bension. “I understand [protecting] the headliner, but if you’re the [two-in-the-afternoon] band on the third stage at a festival, and you’re being told you can’t play 100 miles away, that’s crazy talk. It’s protectionism for no reason. What could be better than a band playing 100 miles away saying, ‘We’re going to be playing this festival, so you should go’?”
Live Nation is the biggest festival producer in the world, an irony not lost on Bension. “We compete with ourselves. That’s just the way it is,” he says. “What’s good for the bands is good for us, and ultimately it’s good for Live Nation. That said, you do feel some impact in the late second quarter and early third quarter.”
It has been said that you never get a second chance to make a first impression, and for many bands, that first impression comes from a club performance. “There’s nothing more important and longer-lasting than the relationships you establish at the beginning of your career,” says Seth Hurwitz, president of Washington, D.C.-based promoter I.M.P. and co-owner/operator of 9:30 Club (No. 3). “The more solid that relationship is, the longer-lasting it is.”