In any year, gauging the health of the touring business is no easy task, but we’ll go out on a limb here: Business is good.
Historically, when relying on anecdotal indicators, the relative health of this business often depends on whom you’re talking to. Similarly, although Billboard Boxscore numbers are effective in quantifying the success of certain tours, as a broad indicator of business those statistics can be skewed dramatically by one or two tours.
Read All Our 2012 Year In Music Coverage and Charts HERE
Boxscore charts depend on the consistency and accuracy of reports from promoters, venues and managers. Unfortunately, those reports are received in such an erratic way, they aren’t the most reliable metric in gauging the overall performance of the business.
Still, if we analyze the numbers and balance them with what the industry tells us, we can still truly get a fix on how things are going out there. So, when comparing what we hear and what Boxscore numbers show, this year we are relying more on what those in the industry tell us: The touring industry is healthy. That healthy diagnosis comes from the seller side.
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“Business is very strong,” William Morris Endeavor (WME) head of music Marc Geiger says. “It’s strong in a multitude of areas that are going through high growth: pop, country, electronic, indie, festivals, international. We’re bullish.” And that diagnosis also comes from the buyer side.
“Across the board, by every metric that we use, the business was better than the year before,” says Charlie Walker, partner in Austin-based promoter C3 Presents. Key executives at the nation’s largest promoter agree. “Live Nation had a great 2012 selling tickets in North America and around the world, and we see tremendous opportunity to expand our business,” Live Nation Global Touring chairman Arthur Fogel says.
Mark Campana, co-president of Live Nation North America Concerts, adds: “We feel the industry is healthy, and the shows seem to have a bright future for us going into next year as well. We are categorizing 2012 as a strong year.” Input from other industry stakeholders echoes these sentiments. In fact, despite what Boxscore reports tell us (we’ll get to that in a minute), we believe business is near the record levels of 2009, the year prior to “the great slump” of 2010, a year marked by cancellations, postponements and industry finger-pointing.
The down year of 2010 also lead to a large-scale cessation in Boxscore reporting that has, for the most part, not resumed to any great degree. But evaluations of a healthy, growing live business by those in the trenches does contrast with what Boxscore tells us, specifically that 2012 global Boxscore reports for gross (totaling $3.8 billion) and attendance (more than 53 million) are both down approximately 10%. For North America, the numbers are less disconcerting, with gross up 1.7% and attendance down 6%.
But, when considering the dynamic behind the Boxscore reports, rather than actual business trends, two factors account for the poor numbers. First, the two primary growth areas of the industry today are festivals and international business, both of which are among the most difficult numbers for Boxscore to obtain. Second, following the record year of 2009 — when global Boxscore grosses hit $4.4 billion and worldwide attendance reached 73 million — and after both the business and Boxscore reporting took a hit in 2010, one of the most important metrics that boosted the reliability of Boxscore data also dropped a notch.
That key metric? The overall number of shows reported. Nowhere is that more evident than at Live Nation, the world’s largest promoter. Live Nation reported more than 9,085 shows to Boxscore in 2009. But midway through 2010, the promoter stopped reporting all shows as a matter of course — although it still does frequently report certain top-end tours upon request and all shows from its global touring division. (Venues and managers also report tours promoted by Live Nation, but not consistently.)
Last year, Live Nation reported 1,693 shows to Boxscore, and this year, 1,661. Not to single out Live Nation, but when there’s that kind of drop-off in data collection, the numbers are skewed mightily. Then there’s the inherent cyclical nature of who’s touring in a given year, what sort of business is reported to Boxscore and, more importantly, what’s less likely to be reported to Boxscore.
The sectors of the live business that are less likely to yield Boxscore reports include casinos (extremely active buyers of talent), a large number of fairs and festivals (the latter particularly strong), international dates (a growing sector), small-venue shows (which are enjoying huge volume these days) and stiffs. Conversely, a rising tide not only lifts all boats, but also lifts Boxscore, and the highest tide ever for touring rolled in last year with U2’s record-shattering 360° tour.
“There are a handful of huge superstar acts like U2, Bon Jovi,| Page 3
THE PROMOTERS
As a public company (the only one in the concert industry), Live Nation may not regularly submit its numbers to Boxscore but, on the other hand, the company can’t distort them, either. If Live Nation says it had a good year, that has to be so, because, as Campana puts it, “All of our numbers are public.” Campana, with co-president Bob Roux, led a shift two years ago in the company’s business philosophy to decentralize to a degree, and rely more on input from local and regional market divisions on matters ranging from marketing to pricing.
Read All Our 2012 Year In Music Coverage HERE
He says that approach is coming to bear. “We stayed true to those very basic fundamentals: “Let’s watch over the number of shows we’re putting into the various markets, and let’s make sure that we price them right,'” Campana says. “We had a good partnership in 2012 with the artist community on those two fronts. It’s the fundamentals that are allowing us to enjoy a strong year.” Along with a season that mixed the perennials with a strong midsection and wealth of newer acts, Live Nation also promoted all or the majority of dates on global mega-tours by Madonna,
PRICE IT RIGHT
Following 2009, there was clearly a renewed focus from all industry stakeholders on pricing, specifically on providing value. For Live Nation, the impact of offering a $4 beer, along with other value propositions, was significant.
“We know that value in this economy is really important,” Campana says. “We took a big haircut when we reduced service charges over the last two years, all in an effort to say to fans, ‘We get it.’ You can’t keep drilling the fans with high ticket prices, [or] no options in terms of beer and food prices.” A massive discounting program in 2009 from Live Nation, primarily aimed at boosting soft-selling shows, might have provided some short-term relief, but in retrospect created a PR problem, particularly among the hardcore fans who bought tickets early and at full price.
Read All Our 2012 Year In Music Coverage HERE
“You would think on the surface that fans would like having cheap tickets and discounts, but the reality is the real fans are the ones that are buying tickets early, and they don’t want to find out three months later that they could have gotten the ticket cheaper,” Campana says. “[In the past two years] we not only delivered value, but we stayed to the approach of, ‘We’re going to give you good prices upfront, and don’t be looking for 50% off or “$10 Tuesday.”‘ Fans are starting to believe and trust our pricing systems again.” Ticket prices are directly related to artist guarantees, and the general consensus among talent buyers and sellers is that pricing should be conservative, at least beyond the superstar acts.
“I wouldn’t say everybody, but most people are pretty conscious of what the market will bear,” C3’s Walker says. “[This year we] were able to buy everything at what we consider reasonable prices. When you’re selling out shows, you have them priced right.” The agencies, managers and artists ultimately dictate talent prices, and obviously have to be onboard with any pricing strategies. “There has been continued cautiousness in the marketplace on pricing and guarantees, and I applaud that for the long-term health of the business,” Geiger says.
“Every artist, every manager, every agent approaches it differently,” CAA’s Light says. “I would like to think that my team approaches it with a real keen eye to what’s the right price, what’s the right package, and I hope we communicate that well to our managers. Is the whole industry doing that? Hard to say, but at the end of the day the people who do pay attention to it and are intelligent about it tend to do better.” Geiger expects that rationality toward pricing to continue. “There’s no market ebullience,” he says. “The last [sector] that got a little ebullient is the electronic market, and that has had a nice settlement to it. There’s still a lot of activity there, but I don’t think that there is the irrationality that there was for a short period of time in that marketplace.” In terms of box-office clout and what the market will bear, certain artists simply command a higher ticket price. “The industry is being fair at looking at the whole field — the field is not made up of all superstars,” Campana says.
“[Superstars] sell a lot of tickets, they’re very important in the marketplace, they’re going to receive top dollar, and we don’t begrudge them at all,” Campana continues. “Where we’ve got a great partnership going with guys like Marc Geiger and Rob Light and the fellows down in Nashville, when they look at their talent mix they’re making sure they’re not pushing too hard on a marginal show. They’re maxing out on the superstars, and we’re OK with that.” After all, it doesn’t behoove anyone for promoters to lose money.
“The agents in the last couple of years have told us flat out: ‘We want your business healthy,'” Campana says. “When Live Nation is healthy, when AEG is healthy, the industry as a whole is healthy. And we sell more tickets when the ticket prices are more reasonable — that’s just simple math, and I think they see that. I believe the partnerships in the concert business are stronger than ever.” There are, as ever, areas that require even more attention to pricing.
“Where I feel the decrease may be is in bands that tour every year for five or six straight years. If some of those are off a little bit, that’s just natural attrition,” Light says. “For some of those sorts of bands, packaging is always important. Markets that haven’t had as much traffic and suddenly get a lot of traffic may have shows that are off. But when we’re smart in ticket pricing and smart in packaging, it can win. The only time you’re really off is when you’re not shrewd about your pricing and your packaging.”
BUILT TO LAST
So the final verdict is that the touring industry was robust in 2012 and is teed up for continued growth, despite the difficulty in quantifying that success.
“I see what the festivals are doing, I see how people go to shows in different ways — it’s hard to calculate what’s up or down,” Light says. “How do you judge Coachella or ACL going to two weekends? How do you judge all the shows happening in Vegas? All the fairs that took place that may not report but are doing boatloads of people? It’s healthy and it’s solid.” While the slump of 2010 seemed more consumer revolt than a natural cycle, touring is, after all, a very cyclical business. And the current cycle feels good.
“There are waves, years when a bunch of acts break and there is lots of excitement, and then there are lull years because of who puts out records or what happens musically,” Light says. “When music is more exciting, people are more excited to go. When it hits lulls, that’s just the creative ebb and flow. We’re seeing right now some interesting moments that are the confluence of EDM, singer/songwriters, urban, rock bands, country artists. Part of the rebound, or whatever you want to call it, is there’s just great music out there. It’s exciting out there. I just feel really good about it.” Few would argue that touring is an evolving marketplace, which is coming to bear most in marketing, promotion and artist development.
“A lot of the mechanisms that used to matter more — video play or things that cause a lot of repeated impressions, radio play — have changed,” Geiger says. “Retail placement really changed. Somebody betting that they can sell out an arena or stadiums, and maybe raise the price, behind a record has left many artists holding the bag. That has been a real noticeable change.” From Live Nation’s standpoint, Campana says continued success in the live space boils down to fielding strong talent and ensuring fans know when that talent is coming to town.
“Making sure the pipeline continues to be filled with compelling shows is really important, and [through] that partnership between promoters and agents and managers — the sell side — we’ve got to make sure that the shows are compelling to the fans,” Campana says. “And when we’ve got a show coming into the marketplace, we’ve got to make sure that we develop our marketing plans in such a way that every fan knows a particular show is coming. That keeps us up at night. When you get research back that says, ‘I would have gone to a show had I known it was in town,’ that’s terrifying.” Geiger believes that as the market gets better at utilizing the new and efficient tools at its disposal, more artists will grow their touring base.
“As [new marketing] gets better and more sophisticated and far-reaching, you’ll have a natural additional growth as people do know bands are coming,” he says. “Marketing efficiencies will help — not just costs, but actually from an information standpoint. That’s a big factor — like globalization, which is still a factor — and will be for a long time.”