What happens to concert ticket prices when Live Nation and Ticketmaster merge?
In the late 1990s, a self-made, brash and brilliant millionaire named Robert FX Sillerman jumped feet first into the concert promotion business. He’d made his fortune by buying radio stations and reselling them, and decided to apply the same strategy to live music—gobbling up as many promoters across the country as he could and putting them under the same umbrella, SFX Entertainment.
His sale of radio stations (for $2.1 billion) netted him $250 million, and as a result he had much more capital to work with than many of his competitors—mostly independent promoters who ran shows on razor-thin margins.
Basically, the entertainment company followed the well-known “clustering” model, made most popular by chain stores, which often take over cities blocks at a time, happily opening individual stores that exist in the red in order to increase overall revenue and gain dominant market share. Mom-and-pops shops have fallen like toy soldiers against such militaristic strategies.
Sillerman grossly overpaid top talent, stifling the abilities of his rivals to compete, paying out an astonishing 90 percent of the ticket price while taking a loss on a fair number of shows.
The seed of overpaying grows into the tree of ever-soaring ticket prices. Once you set the bar by paying an act a certain amount, it’s impossible to go back and undercut them; the loss must be made up somewhere else. Since Sillerman’s SFX started acquiring promoters and control in the industry in 1998, the average ticket price for the top 100 tours each year has increased from $32.20 to $67.33.
The most expensive seats in the venue have increased at even higher rates.
By amassing as many promoters as possible (among them Rapino’s concert-promotion biz in Minneapolis) and destroying what few remained, Sillerman could give the impression of an unstoppable juggernaut, which he’d sell to Clear Channel Communications for the tidy sum of $4.4 billion in 2000.
Almost immediately, with the combination of SFX’s promotion muscle and Clear Channel’s roughly 800 radio stations across the country, abuse of power accusations were hurled by, among others, Don Henley of the Eagles. With the power of the new company challenged on grounds of antitrust, Clear Channel decided to spin off its concert promotion arm into a different company, albeit with the same principals on both boards.
The new entity was named Live Nation.
Though Sillerman is gone (he’s since moved on to, among other things, buying Graceland, the naming rights of Elvis and Muhammad Ali, and controlling interest in American Idol), his practices remained—namely, overpaying for artists to such a degree that shows have no chance of being profitable for the promoter, even if they sell out.
“That’s totally the case,” says Sean Agnew, independent booker and owner of R5 Productions, who’s been booking shows in Philadelphia for more than a decade. “At least I can attest to that at the smaller, midsize level.”
How this affects Agnew and promoters of his ilk is mostly in the building of an artist: Smaller promoters can only build a fledgling artist to a limited point before reaching an inevitable fork in the road.
Take this hypothetical, proposed by Agnew, concerning the Dirty Projectors, a Brooklyn-based band that R5 has booked and promoted every time they’ve played Philly.
The band started small. A couple years ago the night before Thanksgiving, Agnew and the Projectors did their first show together at Johnny Brenda’s.
“They got $200,” remembers Agnew.
From there, the group opened for more popular acts—Grizzly Bear, Man Man—before headlining a show of their own at Johnny Brenda’s. Now, with new album Bitte Orca getting a Best New Music nod from influential music site Pitchfork, landing in the pages of Rolling Stone and Spin, and getting airplay on NPR, the band is a hot ticket, selling out a June 17 date at the First Unitarian Church, where Agnew books most of his shows.
“So say if, based on the success of that show and their success in general, I call them up and say, ‘Hey, Dirty Projectors, here is $4,000. Come back and play again.’ This hasn’t happened, by the way. Just being theoretical. I would guess that a Live Nation offer would be like, ‘Oh, here’s $8,000,’” Agnew says with the sting of a man who knows he’s up against this kind of perilously inflated market.
“And then, basically, the bands have to make a choice. ‘Do we make the extra $4,000 or do we stick with the guy we’ve developed this relationship with?’”
That choice, especially of late—now that money from record sales have dried up, the stigma of “selling out” is almost nonexistent, the span of a career is shortened to all but nothing—has become an easy one for most bands.
Agnew has gotten good at coping.
You may recall that earlier this year, as we reported, Live Nation abruptly ended its involvement with the third annual Popped! Festival, which was planned to happen last month at FDR Park in South Philly and feature a slew of big name bands (it wound up being a far more modest affair, folded into the [...]