State Champ Radio analysis
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Once upon a time, most artists performed live to promote new albums. For most acts, the real money was in music sales, so they went “on the road” with schedules and strategies to maximize them.
These days the live business is a juggernaut of its own, with higher ticket prices, adjacent businesses like merch and VIP seats, and schedules, plus strategies of its own. So creators at all levels of popularity are starting to realize that it may no longer make sense to tour the whole country, or world, to promote a new release. In some cases, there isn’t one; in others a tour can boost an entire catalog. The old model of touring focused on building an audience, which meant artists would play cities where they weren’t so popular. Now touring is a revenue stream, so many artists double down to play more shows in cities where they’re already big.
The economics of touring means that acts run up costs every day they are on the road but only bring in revenue when they perform — so it makes sense to play bigger shows, in fewer places, with fewer days off. Metallica’s M72 tour consisted of two-night engagements and a no-repeat pledge to motivate fans to see both. The international legs of Taylor Swift’s Eras Tour involved more shows in fewer places — she covered Asia with four shows in Tokyo and six in Singapore and the Nordic region with three in Stockholm. The natural end of this thinking is a residency, or a few of them, and Adele took the summer off from her Vegas residency to play 10 shows in Munich at a custom-built venue with a capacity of 74,000. Why go to fans when fans can come to you?
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As it happens, this solves another problem with the touring business. As increasing competition for concert dollars inspires more elaborate productions, costs are skyrocketing — and many of them involve transportation and setup rather than a performance itself. For Metallica, much of the cost is in “load-in” — moving and building a doughnut-shaped stage with standing room in the middle, plus eight towers of speakers and monitors that weigh 11 tons each. The resulting expenses, which involve 87 trucks and several days of setup, make single shows difficult. Adele’s Munich show used what’s said to be the world’s biggest video screen, plus fireworks, confetti, smoke, fire and a string section. As expensive as that must be to build, imagine the cost of moving it and setting it up again a couple of times a week? How many venues even have room for a 220-meter-wide screen?
Doing more shows in fewer places also makes it practical to deliver events, rather than just concerts. Touring artists have to compete with festivals, which offer fans a lot of acts for their money, plus an experience to remember — and, not incidentally, share on social media. A memorable production, whether that means the world’s biggest screen or 11-ton speaker towers, can do the same. Personally, I don’t think Metallica or Adele needs any of this — I’d be just as happy to see either in a club, in front of a brick wall — but bigger productions seem to create a sense of FOMO.
Fans have certainly demonstrated their willingness to travel. When I saw Metallica last year in Hamburg, most concertgoers came from other German cities to see both shows. Swift’s European tour debut in Paris was filled with fans from the U.S. and Canada who realized that tickets there and a trip to France cost about the same as tickets back home. To some fans, Swift’s show is a vacation — Paris is just something to see on the way there.
In crude economic terms, concert travel essentially reallocates expenses from acts to fans — artists travel less, so concertgoers travel more. Most people don’t want to pay more than a certain amount for a concert ticket, but they seem more willing to spend on related travel. (I just spent about $300 to go to Stockholm to see Bruce Springsteen, an amount that seems too high to spend on a ticket, even though I essentially went to see the show.)
There are other costs and benefits, too. Younger fans can’t always travel alone. And as several European publications pointed out in their coverage of the Adele residency, this isn’t exactly good for the environment. (I think it makes more sense to tax travel rather than to object to a specific type of travel.) Residencies can also be more pleasant for artists — there are no songs about how nice it is to cross the U.S. in a tour bus. The flexibility is nice, too: Munich is a lot nicer in the summer than Las Vegas. Playing a few nights a week makes it easier to have a family life.
As much as I loved the Metallica and Adele shows, I think I still prefer the old model — although it’s easier for me to say that because I’m fortunate enough to live in a major city. I think there’s still long-term value in building a fan base the hard way. And I worry that fans who spend more money traveling to concerts will end up seeing fewer shows as a result. None of that changes the economics of touring, however, and organizing a profitable and artistically effective tour means understanding that.
In 2022, Will Page, the former director of economics at Spotify, encouraged a U.K. committee looking into streaming economics to consider how collecting societies have divvied up fixed pots of cash for more than 100 years. A fairer system for paying royalties, he said, might consider how long a person listens.
Page’s suggestion wasn’t a new, radical idea. Other royalty accounting systems already take listening time into account. In the U.K., collection societies such as PRS For Music and PPL apply a “value per second” rule to royalty payouts. So, Page explained, Queen’s “Bohemian Rhapsody,” which clocks in at 5:55, earns twice the royalty as “You’re My Best Friend,” which runs just 2:52. A similar approach is codified into U.S. copyright law: Songs over five minutes long receive a higher mechanical royalty than shorter songs.
But streaming platforms have long paid royalties using a “pro rata” method that treats every song equally. At Spotify, for example, any two songs by Queen are treated the same. But there has been a movement in recent years to make royalty payments fairer to non-superstar artists. SoundCloud adopted a user-centric approach that pays royalties from each listener rather than pool all listeners’ revenue. Deezer has a “user-centric” approach — adopted by Universal Music Group, Warner Music Group and Merlin — which rewards professional artists at the expense of “functional” music.
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Two years after testifying to the committee, Page has released a paper, “A Case for Completion,” that outlines how streaming platforms could reward songs that get streamed in their entirety. The idea is simple: For each stream, the streaming service asks whether the song was streamed to completion. If the song was skipped before the listener got to the end, a portion of the royalties are transferred to songs that were streamed to completion.
The financial model looks like this: Labels earn about 50 million pounds ($64 million) for 10 billion streams. Page estimates that 10% of the songs will not be streamed to completion. Of those songs’ 5 million-pound ($6.4 million) royalty pool, 40%, or 1.3 million pounds ($1.7 million), goes to the completed songs’ royalty pool. That in turn increases the completed songs’ pool from 45 million pounds ($58 million) to 46.3 million pounds ($59.6 million). On a per-stream basis, a typical 0.0048-pound ($0.0062) pro-rata royalty becomes either a 0.0035-pound ($0.0045) incomplete royalty or a 0.005-pound ($0.0064) complete royalty.
Importantly, Page believes this completion-based scheme complements the current royalty accounting system, whether it’s pro-rata, user-centric or artist-centric. “If we are going to depart from the pro rata model, which has served us since Rhapsody got its license in December 2001 — which is 23-plus years ago — then we need a baby step that doesn’t mess with royalty accounting,” says Page. Tracking duration would add too much stress to a royalty accounting system that encompasses trillions of streams annually, accounting experts told Page. In contrast, setting a threshold that creates a binary outcome — either a song was completed, or it wasn’t — is more feasible, he argues.
The proposal may run into naysayers who believe skipping is a critical aspect to streaming. On-demand services with hundreds of millions of songs charge for the right to skip through playlists and algorithmically created radio stations. In contrast, free, non-interactive streaming services such as Pandora don’t allow unlimited skipping. What’s more, decidedly unskippable formats such as terrestrial radio are losing listening time to platforms that give the listener greater freedom. Whether TikTok has reduced attention spans or listeners are impatient in a world of unlimited choice, skipping is simply a way of life in 2024.
But skipping, however prized by today’s music listeners, isn’t necessarily rampant. As Page explains in an interview with Billboard, he gained confidence in completion-based royalty accounting after learning that completion rates surpass 90% once a person has been listening longer than three minutes. To Page, this means shorter attention spans select shorter songs and people willing to listen longer will do so. “Sprinters enter sprints; marathon runners enter marathons,” says Page. “For the most part, people who want longer songs go for longer songs and stay the journey. Jazz and classical have got the highest completion rates from all the genres.”
Paying based on completing a song makes sense intuitively, because in streaming the business goal is listener engagement, and one sign a listener is engaged is how much a song gets heard. From that perspective, a stream that ends halfway through a song is less valuable to both the streaming platform and the rights holders than a song that somebody listens to all the way through. So, rewarding completion makes sense from this business point of view.
It does. And I think a key strength of the proposal, and I’ve road tested it with the great and good in music and tech — I’m very open on strengths and weaknesses and anomalies. I’m putting all my cards on the table here for this to be accepted and be a model to give people even more assurances. But the strength is it’s asymmetrical. I am not promoting completion. If Glenn Peoples does nothing with this listening experience, I do nothing with these royalty calculations. I must be absolutely clear here. I am only punishing incompletion. I take action when you show intent. If you do nothing, I do nothing. If you step in there and say, “I’m done with this song, move me on to the next one,” I’m going to do something with the royalty structure. That’s crucial in terms of the argument. It’s got a strong common-sense property, as you alluded to, but it’s asymmetric. And to be absolutely clear, streaming services don’t pay a penny more or a penny less. We simply reallocate away from the incomplete pool to the complete group.
The deterrence against fraud or gaming the system, whatever you want to call it, seems to be a strong argument. If some artists are making music based on this 30-second threshold, I don’t see how that’s good for anybody. The royalty model shouldn’t be influencing how music is created and released.
Drake had an album where there were like eight songs which lasted between 40 and 50 seconds — skits — and they’re going to get paid the same as a seven-minute jazz composition with McCoy Tyner? These are questions of fairness. The current model has unfair properties in it as well. We have to remember [that] nobody thought about jazz and classical when they invented the 30-second rule. [An on-demand stream earns a royalty if it is streamed for 30 seconds or longer.] Nobody argued for duration.
Now let me allow me to play Devil’s Advocate. As a user of a subscription service, I pay for the ability to skip songs. And if I skip a song 45 seconds in, it doesn’t necessarily mean that song is less valuable. It means that I enjoy that ability to skip songs. If I don’t want to skip songs, I’ll listen to SiriusXM. And the ability to skip songs is one of the best things about an on-demand service. So why should skipping be punished if it has so much value to me?
I respect that view. I would say that argument is weak because the majority of people are paying for the concierge service. In the vast majority of instances, the act of skipping is a negative signal by the consumer. And for a lot of people, the engagement they have with their music platform is approximately this: in the pocket it goes and that’s it for the day. I’m not paying so I have to skip songs. I’m not paying so I have to select songs. I’m paying to enjoy the music. If you can serve it up for me, I’ll pay, I’ll stay even longer. So I quote [intellectual property expert] David Safir in a piece where there was a heated debate at the NY:LON conference in London. David calmed the debate down by saying, “Hold on, we haven’t even decided who we’re defining fairness for. Is it the creator, the platform, or the consumer?” As the consumer pays for convenience, the act of skipping, or the act of even leaning in, could be a sign of inconvenience. That is negative for the consumer’s experience in terms of willingness to pay and willingness to stay.
When I skip, it’s to sample the big catalog of music. It’s one way to listen to more music — not all of which I’m going to go back and listen to again. But at least I hear it. Again, whether it’s an editorial playlist, or just bouncing around the app, skipping allows me to sample the catalog. And not skipping would really get in the way, I think.
I remember with [Spotify’s] Discover Weekly, we began to wonder whether the reason it was successful is you used to spend a bit of your time searching for music that could involve a lot of skipping, and a bit of your time consuming music. And as time became more precious, you didn’t have any time to search. Nobody went to record shops anymore, and therefore there was even less time to consume. And what Discover Weekly did was internalize the search cost, the experimental costs, the skipping costs, and it gave you exactly what you needed. In terms of what pays everyone’s bills in this business, it might be the skipping — I doubt it. It might be the searching — I doubt it. I think what drives it is I just pull out my phone and it delivers me music and I stay the course. I think it’s that.
The [U.K. Competition and Markets Authority] asked the four streaming platforms in the U.K. to reveal a source of streams and just how much is human editorial: not a lot, 5% back then, probably two and a half percent now. How much is algorithmic? Not a lot. The vast majority of listening is people-owned playlists. That was a bombshell. That shook the industry out of a rut because, wait a second, 85% of listening might not be platform directed.
So, you know, it’s interesting to just think about that context as well. If you’re skipping, and you look at that table, you look at all the evidence, I think that the evidence weighs towards skipping as a negative signal in terms of the attribution, the value, utility that person’s gained from their platform, as opposed to a positive one. People want to stay in the saddle of music. They want to complete.
Reading the paper, I sensed some undercurrents, perhaps, of criticism of how people, especially young people, listen to music these days. You quoted somebody saying that wedding bands only play two minutes of a song because TikTok has ruined its users’ attention spans. Is part of this about trying to get people to listen to an entire song, and get their attention spans back?
I really owe a long-time mentor of mine, Fred Goldring, for that quote. He told the story about a wedding band that played a two-and-a-half-hour medley because people don’t have the attention spans for full songs anymore. I was like, “Oh, my goodness! What has TikTok has done? Is that what the 30-second rule has done to our music? Is that where we’re at?” If I can expand on that, Arctic Monkeys are a very successful band. They played the Emirates Stadium [in London] twice last summer. The first night was predominantly die-hard fans in their 40s and 50s. The second night was teenage girls who had discovered them on TikTok, and they only knew 34 seconds of all its songs. If you stick around after the chorus, we’re going to sing another verse. It’s called a composition, people; we’ve had these things for a long time. Yeah, there is a concern there.
Now, the concern could just be misplaced. I think the concern is actually very real. Songs are getting shorter. Choruses have been moved to the front, and Swedish artists were doing this in 2013. Many artists are doing it now. But in an attention economy, any alteration to pro rata [royalty calculations] that helps music win attention, that creates incentives that compete for attention, has to be good. Because music is in competition with so many other distractions. Now, completion has a different agenda, but it’s going to help this industry think about, how does it compete for attention?
You noted in the paper that complexity could be the opponent of a successful royalty system. I’m wondering to what extent people, and mainly creators, will need to understand how this royalty system would work. You’ll understand it. Attorneys will understand it, as they must. But ostensibly, these new royalty schemes are to create more fairness for creators. Do you think creators would understand this well enough?
Is the consumer aware that under pro rata, that if I’m a light user, and Glenn Peoples is a heavy user, my money is being used to compensate Glenn’s consumption? Probably not. If they were, would they change your habits? Maybe. Maybe that user-centric property is interesting. But I’m not sure how interested the consumer is in the actual royalty model. If you surveyed them and said, “How many people know it takes 30 seconds before you get paid?” Less than 1%.
On the industry side, something as simple as a completion index, a third threshold, I feel fits the curve. Even drummers will understand this. That’s really important. Now, where it could get complex in that proposal is that Glenn’s completion of a two-minute pop song would be worth more than my incompletion after listening to six and a half minutes of a seven-minute song. Curb the concern, though, because I did go on to show that genre is not necessarily a driver of completion; neither is song length. That’s a reassurance.
Universal Music Group (UMG) got a boost from physical sales in the second quarter, but the conversation during Wednesday’s earnings call was mostly focused on streaming. Subscriptions, which accounted for more than half of total recorded music revenue, were a key factor in the company’s 8.7% revenue growth in the quarter. Even so, UMG’s streaming business is not firing on all cylinders. Ad-supported streaming continues to show weakness and UMG revealed that Facebook no longer licenses its premium videos.
CEO Lucian Grainge said the industry has entered “the next phase” of the streaming and subscription business, one characterized by collaboration with streaming companies to produce new products and allow artificial intelligence to allow artists to sing their music in different languages. “The amount of work, win-win dialogue [and] creative discussions that are going on between us is really extremely exciting,” he said.
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Here’s what else you should know about UMG’s most recent quarterly earnings and what was said on the call.
Streaming is growing — unevenly
Although UMG’s recorded music subscription revenue improved 6.5%, not all subscription platforms are performing equally well. CFO Boyd Muir cited a “slowdown in subscriber growth at certain platforms” while noting that Spotify, YouTube “and many regional and local platforms” continue to show healthy growth. Generally, UMG is optimistic about the overall marketplace’s ability to find new subscribers. Michael Nash, executive vp of digital strategy, said UMG’s consumer research has identified 180 million consumers from the top 19 territories “that will form the next wave of subscription adoption,” even taking into account price increases.
“Other” streaming revenue dropped 3.9% in the quarter, which Muir attributed to a decline in ad-supported streaming and some platform-specific issues (see Facebook below). UMG warned of weak ad-supported streaming last quarter, and Muir said UMG needs to see “broad-based improvement across multiple partners and geographies over a longer timeframe before we’re ready to adopt a less cautious view.”
Meta is no longer licensing UMG premium videos for Facebook
Another reason for a slowdown in non-subscription streaming revenue was Facebook’s departure from music videos. “Meta had previously offered previous music videos on Facebook,” Muir explained. “This product offering was less popular with Facebook’s user base than other music products, and as a result, Meta is no longer licensing premium music videos from us. As of May of this year, Meta is now focusing instead on other areas involving music content, and we are working together to expand these areas as part of a multifaceted renewal.” Showing premium videos is not the only aspect of Meta’s licensing agreements with labels, however. As Billboard has previously reported, Meta reached a licensing deal with UMG in 2017 that allowed UMG’s repertoire in user-uploaded videos on Facebook, Instagram and Messenger. And a deal reached in 2020 allowed users to add songs from UMG’s catalog to videos on Facebook’s gaming platform.
The noncontroversial Spotify bundle controversy
After Spotify began offering both music and audiobooks, the company asserted it can pay a discounted “bundle” royalty rate to publishers and songwriters for premium streams. When asked about the audiobook bundle controversy on Tuesday, Spotify CEO Daniel Ek described it as a not-unusual disagreement between counterparts. “That’s the nature of all supplier and distributor relationships,” he said during the company’s earnings call. UMG had a similarly unsensational response when asked about the bundle controversy. Rather than feeling cheated out of royalties, Muir said UMG “[is] confident our revenue participation reflects the value our artists and our music is bringing to their platform.”
UMG invested 519 million euros ($562 million) in the first half of 2024
Three transactions accounted for 450 million euros ($487 million) of investments in the first half of the year: a majority stake in Nigerian label Maven Global; an investment in Complex; and a $240 million investment in Chord Music Partners, a joint venture of KKR and Dundee Partners that owns over 60,000 copyrights. UMG spent 96 million euros ($104 million) on catalog acquisitions in the half-year, including 75 million euros ($81 million) that had been sitting in an escrow account.
Equity analysts aren’t convinced the U.S. Department of Justice will accomplish its larger goal of separating Live Nation’s concert promotion and ticketing businesses, thereby undoing the controversial merger it allowed in 2010. But if Live Nation and Ticketmaster were to become separate companies, analysts estimate the combined companies would be worth from $85 to $96 per share, based on a handful of reports Billboard has seen.
Live Nation shares were trading around $101 to $102 the day before the lawsuit was announced on May 23. But shares have since traded in the $93 to $94 range, putting the current price at the upper end of analysts’ “sum of the parts” (SOTP) valuations. In the wake of the lawsuit, some analysts have lowered their price targets for Live Nation, and S&P Global downgraded its rating on Live Nation’s debt.
Any good merger creates value greater than the sum of the parts. Live Nation’s business model is a “flywheel” in which one segment (such as concerts) generates value for other segments (ticketing or sponsorship and advertisements). To the company, the flywheel is the result of hard-won competitive advantages built over the past 14 years. To the DOJ, the flywheel represents Live Nation’s ability to use its dominant market position to its advantage in anti-competitive ways.
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Breaking up Live Nation would eliminate the synergies that create value for the combined company. What is currently one stock would become two stocks of two separate companies with different management teams. Live Nation shareholders would likely get ownership in the new, standalone Ticketmaster. Analysts have calculated the value of Live Nation and Ticketmaster using a SOTP approach that combines the value of the business segments as if they were standalone companies.
But analysts have serious doubts the DOJ will succeed in breaking up the company. “Federal Judges…are generally pro-business and we doubt — at least based on [the DOJ’s 128-page] summary — the case is strong enough to either break up Live Nation or for the DOJ to win the lawsuit,” wrote Huber Research analyst Doug Arthur in a Thursday (June 6) note to investors. Similarly, J.P. Morgan sees “a real possibility that [Live Nation] comes out of this a winner” and fends off the DOJ’s ultimate goal of breaking up the company, analysts wrote in a May 29 note to investors.
“The government’s burden is going to be pretty high,” Bill Morrison, partner at Haynes & Boone, tells Billboard. “It’s long been the case in antitrust jurisprudence that it’s not illegal to have a monopoly. What’s illegal is to use that monopoly power in an anti-competitive way. And so that would be the burden that the DOJ would have to prove, which is to show that Live Nation abused its monopoly power and it acted unreasonably to restrain trade to maintain its monopoly.”
There could be outcomes other than a forced divestiture, however. Wolfe Research analysts note the “DOJ does not lose if it reached for the stars and landed on the moon,” they wrote in a May 23 note. “From that perspective, it is entirely possible the DOJ wants to get Live Nation/Ticketmaster to agree to remedies, such as eliminating exclusive ticketing deals, and is using the threat of a breakup to achieve those goals.”
The very existence of the DOJ’s lawsuit has changed how investors will approach Live Nation. The health of the concert business and Live Nation’s strengths will be overshadowed by the pall cast by the DOJ. Northcoast Research downgraded Live Nation from “buy” to “neutral” because analysts believe the stock price will be based on legal news and the political environment rather than fundamentals and business performance. J.P. Morgan also noted a “sentiment overhang” related to the DOJ’s lawsuit and lowered its price target to $116 from $126, although it kept its recommendation at “overweight.”
One variable that has largely gone unmentioned is the possible change in the administration at the White House. President Biden has taken an aggressive stance on protecting competition — the DOJ sank proposed mergers by Spirit-JetBlue and Penguin Random House-Simon & Schuster — reducing the fees consumers face everywhere from airlines to concert tickets, and criminally prosecuting companies over no-poaching rules and wage-fixing. A second Trump administration would bring an entirely new slate of appointments to head influential antitrust positions. “It depends on who is in those key [regulatory] spots, and then what the priorities are of those offices and the philosophy,” Morrison says. “We’ve seen big pivots in the past.”
Live Nation did not immediately respond to a request for comment on this story.
On Friday (May 31), AEG chairman/CEO Jay Marciano became the first major live music executive to voice support for the Department of Justice’s effort to break up Live Nation and Ticketmaster, foreshadowing the role AEG will likely play as a key witness in the DOJ’s antitrust case against Ticketmaster.
“AEG has long maintained that Ticketmaster has a monopoly in the U.S. ticketing marketplace and uses that monopoly power to subsidize Live Nation’s content businesses,” Marciano wrote in a memo to staff May 30. Beyond its longstanding criticism that Live Nation uses its scale to overpay for talent, AEG doubled down on its attacks on Ticketmaster’s use of exclusive ticketing contracts, with Marciano telling staff that AEG and its attorneys “strongly believe that DOJ’s lawsuit will succeed and ultimately bring sweeping changes” to the live music industry.
The government interviewed dozens of Live Nation’s competitors during its two-year anti-trust investigation, including AEG — executives at AEG have met with DOJ investigators on at least three separate occasions, including a 2023 meeting to discuss the crash of the ticket presale for Taylor Swift’s The Eras Tour, which AEG promoted through its joint venture with Louis Messina.
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That puts Marciano and AEG in a rare position to galvanize public opinion and build support for his call to staff and the larger music community to help “us lay the groundwork now for the future of the industry.”
But AEG’s claims aren’t as compelling as Marciano thinks, according to Live Nation executive vp of corporate and regulatory affairs Dan Wall, who responded to Marciano’s May 30 letter with a statement alleging AEG is trying to use Live Nation’s antitrust case “to advance their own interests.”
“AEG supports this case — indeed, begged DOJ to file it — because it doesn’t want to pay artists market rates or convince venues to adopt its second-rate ticketing system exclusively,” Wall said in a statement provided to Billboard after Marciano’s statement was released.
AEG declined to comment for this story.
The battle between Live Nation and AEG dates back to the federal government’s 2010 approval of Live Nation’s merger with Ticketmaster, which the government approved by imposing a number of conditions on Ticketmaster designed to increase competition. As part of those conditions, referred to as the consent decree, the DOJ required Ticketmaster to license its source code and technology to AEG to create a competing ticketing service. The government did not address some of Ticketmaster’s more controversial tactics at the time, like the use of exclusive contracts to lock venues into long-term deals, which lies at the heart of this current conflict.
AEG only licensed Ticketmaster’s technology for a year, and in 2011 announced it was instead building a new ticketing platform called AXS with the help of Montreal firm Outbox ticketing. It took two years to switch all of AEG’s venues globally to AXS Tickets, and then AEG struggled to sign on new clients, even after merging with Veritix in 2015, and in 2019 ended up losing a major client — Altitude Sports and Entertainment — to a startup called Rival launched by former Ticketmaster CEO Nathan Hubbard.
AXS’ struggles were due in part to its ownership structure following the 2015 merger with Veritix, which divided ownership among AEG, private-equity firm TPG and Cleveland Cavaliers owner Dan Gilbert, who previously owned Veritix. In 2019, AXS’ partners began exploring a sale of the company and looked at buying Rival or being bought by Rival, deals AEG blocked thanks to AXS’ ownership rules that required unanimous consent for all material decisions. AEG also blocked a merger between AXS and CTS Eventim, a powerful European ticketing provider that was looking for an entry point in the U.S. market to compete with Ticketmaster.
Gilbert and TPG eventually agreed to sell their stakes in AXS to AEG in 2019, which by then had started to explore a new business model for the ticketer, built around non-exclusive ticketing contracts. Instead of competing with Ticketmaster to sign venues to AXS, AEG would instead focus on expanding its use of AXS ticketing for AEG-promoted tours. Both Live Nation and AEG prefer to use their own ticketing platforms for the concerts they promote because it allows the promoters to directly control the customer data.
Hoping to encourage Ticketmaster to allow AEG to use AXS whenever it brought tours to buildings ticketed by Ticketmaster, AEG offered to allow Live Nation to use Ticketmaster at the venues AEG controls, including the Crypto.com Arena in Los Angeles.
AEG would extract a similar concession from Live Nation in 2021 that would earn a mention in the DOJ’s lawsuit against Ticketmaster. On June 15 of that year, leading venue operations company ASM Global, in which AEG owned a minority stake, announced it had renewed its agreement with Ticketmaster to provide ticketing services for a majority of the 300 venues ASM manages.
The government flagged the agreement as suspicious because AEG at the time owned 30% of ASM and had “advocated for AXS to serve as the exclusive primary ticketer for the ASM Global venues,” the complaint reads. “But ASM Global’s majority shareholder, Onex, worried that Live Nation would retaliate by withholding shows from ASM Global venues if ASM Global entirely switched away from using Ticketmaster.”
A source close to the deal called the DOJ’s version of the story an “oversimplification,” noting that AEG and Onex didn’t have the right to require ASM Global clients to use one ticketing system over the other and that the majority of clients opted to stay with Live Nation. ASM did, however, convince Live Nation to grant a rare exception to its venue contracts, allowing ASM venues contracted to Ticketmaster to switch to AXS tickets for any tours AEG brought to the buildings.
In exchange, Ticketmaster paid a large advance for the multiyear contract and issued a press release, quoting ASM Global president/CEO Ron Bension saying, “Aligning with industry leaders like Ticketmaster is a critical component in providing millions of people with the most seamless and secure live experiences.”
Happy to have secured the largest carve-out in Ticketmaster’s exclusivity contract to date, AXS decided to push for more exceptions. In 2022, AEG began routing Swift’s The Eras Tour alongside its partner, Messina Touring Group. The majority of the venues on the tour were Ticketmaster-exclusive facilities, though ASM managed five of the stadiums, representing 12 shows on the 52-date trek. But two of those dates — a pair of concerts at State Farm Stadium in Glendale, Ariz. — would be ticketed by SeatGeek under its exclusive deal with the Arizona Cardinals. Making matters worse, two of ASM’s management clients decided to partner with Ticketmaster for the sale.
Down to just five shows at two stadiums, AEG dropped the matter, but not before reporting the issue to the DOJ, encouraging them to look at Live Nation and Ticketmaster’s use of exclusive contracts as anti-competitive.
After the fiasco, Live Nation chairman Greg Maffei appeared on CNBC to defend Ticketmaster and claim “AEG, who is the promoter for Taylor Swift, chose to use us because, in reality, we are the largest and most effective ticket seller in the world,” he said. “Even our competitors want to come on our platform.” AEG leadership was quick to respond. “Ticketmaster’s exclusive deals with the vast majority of venues on The Eras Tour required us to ticket through their system,” the leadership said in a statement, adding, “We didn’t have a choice.”
In the months following, AEG’s relationship with Live Nation only worsened. In January 2023, AEG announced it was backing a U.S. tour for chart-topping singer Zach Bryan who had just released a live album called All My Homies Hate Ticketmaster. The album title succinctly encapsulated decades of anti-Ticketmaster sentiment from music fans over Ticketmaster fees, pricing and indignities and AEG was eager to get in early. With AEG as his promoter, Bryan embarked on an expansive tour of non-Ticketmaster buildings, a gambit that hadn’t been attempted since Pearl Jam in the 1990s. AEG even deployed a sophisticated anti-scalping system to keep tickets out of the hands of scalpers.
Despite the tour’s success, Bryan had reached a surprising conclusion about the experience — some of his homies hated AXS tickets too.
“Everyone complained about AXS last year. Using all ticketing sites this year,” he said of his 2023 Quittin’ Time Tour, which was still being promoted by AEG but would no longer route around Ticketmaster buildings and would play all venues, regardless of which company was the ticketer.
“All my homies still do hate Ticketmaster, but hard to realize one guy can’t change the whole system,” Bryan wrote on X, formerly Twitter. “It is intentionally broken and I’ll continue to feel absolutely horrible about the cost of tickets.”
In his written response to Marciano’s letter, Wall, a former litigator for Live Nation who helped architect the 2010 consent decree, says AEG is now trying to use the legal system to compete against Ticketmaster instead of focusing on improving AXS.
Marciano contends that there are many things that the DOJ can do to level the playing field and ended his letter by encouraging his employees not to “get distracted by Live Nation spin” and instead to “prepare for a world with more competition, more innovation, artist and consumer choice, lower ticketing fees, and more music.”
After an ugly weekend of diss-track crossfire, the beef between Kendrick Lamar and Drake now features unproven accusations of spousal abuse, drug use and even pedophilia. Those claims might be “slander” to many people, but are they defamatory? We asked the legal experts.
The long-simmering dispute between the two hip hop heavyweights went thermonuclear on Friday, when Drake dropped a track claiming Lamar had abused his fiancée. Minutes later, Lamar fired back with accusations about addictions, hidden children and plastic surgery. The next day he dropped another song accusing Drake and others of pedophilia.
With the allegations getting wilder by the minute, spectators on social media began to wonder if either rapper – but particularly Kendrick – could be setting themselves up for more than just another scathing response: “Has anyone ever filed a defamation lawsuit over a diss track before?” joked Matt Ford, a legal reporter at the New Republic, on Saturday night.
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An actual lawsuit seems unlikely, for the simple reason that any rapper responding to a diss track with a team of lawyers would be committing reputational suicide. But let’s play it out: Could a rapper like Drake or Kendrick sue over the kind of scathing insults we saw this weekend?
While diss tracks filled with extremely specific invective (and we mean extremely) could certainly lead to a libel lawsuit in theory, legal experts tell Billboard that such a case would face not just legal challenges but also practical problems. First and foremost? That the accuser would open themselves up to painful discovery by opposing lawyers.
“Any plaintiff suing for defamation is putting their entire life and reputation on the line,” says Dori Hanswirth, a veteran litigator who heads the media law practice at the law firm Arnold & Porter. “If someone decided to sue over a statement that they preyed upon underage women, for example, then that person’s entire dating history would be fair game in the litigation.”
While the term “slander” gets thrown around on the internet a lot these days, actual legal defamation is pretty hard to prove in America, thanks to the First Amendment and its robust protections for free speech. Winning a case requires that an accuser show that a statement about them was factually false; mere statements of opinion don’t count, and neither do bombastic exaggerations.
“The public … has to believe that the speaker is being serious, and not just hurling insults in a diss fight,” Hanswirth says. “If the statements are not taken literally, then they are rhetorical hyperbole and not considered to be defamatory. The context of this song-by-song grudge match tends to support the idea that this is rhetorical, and a creative way to beef with a rival.”
Another legal roadblock is that both Drake and Kendrick are so-called public figures — a status that makes it very hard to win a defamation lawsuit. Under landmark U.S. Supreme Court precedents, a public figure must show that their alleged defamer acted with “actual malice,” meaning they knew their statement was false or they acted with reckless disregard for the truth.
In practice, the “actual malice” rule has made it nearly impossible for prominent people to sue for libel. And that’s by design. Without strong protections, defamation lawsuits would allow government officials, business leaders and other powerful people to harass and silence anyone who criticizes them, stifling free speech about important public issues.
“The Supreme Court has held that this heightened standard always applies where the plaintiff is a public figure, and it is designed to promote robust expression and debate,” said Adam I. Rich, a music and First Amendment attorney at the law firm Davis Wright Tremaine.
So, what’s the verdict? No matter how ugly the insults between Drake and Kendrick, it seems like the beef between them is probably going to remain in the form of verse rather than legal briefs.
“As both a lawyer and a fan,” Rich says, “I hope Drake and Kendrick turn the heat down and play the next round out in the studio, not the courtroom.”
Accounting scandals may not get the public’s attention like a raid by Homeland Security, but questions about the quality of a publicly traded company’s books is a serious matter. This week, an internal report made public by Hipgnosis Songs Fund, the London-listed company that played a major role in turning music rights into a stable, attractive asset class, confirmed what some analysts and shareholders had long suspected.
At best, the 26-page report by Shot Tower Capital, the firm hired by the company’s board of directors in the wake of a shareholder revolt in October, details how the investment advisor, the Merck Mercuriadis-led Hipgnosis Song Management (HSM), made numerous missteps in accounting and financial projections of its vast music rights portfolio that includes music by Red Hot Chili Peppers, Shakira and Journey. At worst, the report suggests the investment advisor chose accounting standards that overstated revenue, inflated the portfolio’s valuation and — as the board previously stated — resulted in larger fees paid for managing the portfolio. In any case, information released Thursday presents an unflattering portrait of HSM and its internal operations.
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For its part, HSM considers some “aspects of the report…to be factually inaccurate and misleading,” the company said in a statement on Thursday (Mar. 28). HSM said it received the report the evening before its release and will respond to the board “in due course.”
To be clear, Shot Tower did not explicitly comment on the investment advisor’s intent in using certain accounting practices. The data-heavy report offers analysis, not speculation. But the report, part of the board of directors’ effort to regain shareholders’ trust, made clear that annual revenue was “materially” overstated and laid out numerous examples where the fund’s numbers didn’t reflect the reality behind its assets.
Take, for example, something called right to income (RTI), which are royalties that are paid to the buyer at the close of an acquisition. (If the acquisition’s effective date is prior to the closing date, royalties received by the seller after the effective date are credited to the buyer.) Normally, the amount of the RTI is deducted from the purchase price and is not included in annual revenue figures. However, Shot Tower found that some RTI revenue from Hipgnosis acquisitions was counted as annual revenues rather than an adjustment in the purchase price. As the board’s Mar. 18 update noted, including RTI revenue with annual revenue amounts to “double counting.” Misclassifying RTI “significantly” increased the fund’s income in 2021 and 2022, according to the report. In fiscal 2019 and fiscal 2020, zero and 5.3% of deals had RTI periods that extended for more than one year. In fiscal 2021 and 2022, those numbers jumped to 43.9% and 60.0%.
RTI also came into play with the proposed sale of a portion of the portfolio to Hipgnosis Songs Capital, a joint venture of HSM and investment firm Blackstone. The catalog was presented to shareholders as having a net purchase price of $424.7 million (including RTI revenue of $15.3 million). With pro-forma annual revenue (PFAR) of $24.1 million, HSM assigned a 17.6x multiple to the proposed sale. But Shot Tower believes the catalog’s multiple should have been 14.9x based on higher annual revenue of $28 million and believed the net sale price should have been $416.7 million. Shareholders voted against the proposed sale in October.
In fiscal 2022, the investment advisor changed how it accounted for accrued revenues. The fund is required to make estimates on revenue earned in the period, rather than recognize revenue when the royalties are collected. A new approach, called “usage accruals,” calculated accruals “based on expected usage” rather than when revenues “are paid to, and processed by, collection societies, publishers and administrators.” Shot Tower noted the adoption of usage accruals occurred “at a time when RTI revenue was declining and the Fund could no longer raise capital for continued acquisitions.” In other words, a lack of fresh funding halted acquisitions and reduced the amount of RTI revenue added to annual revenue. Without the change, Shot Tower believes the fund “would have breached its lender covenants” and fiscal 2022 revenue would have been $36 million lower.
Accrued revenue also caused problems with PFAR, a non-IFRS metric meant to show investors organic growth excluding accruals and RTI. But Shot Tower found PFAR did indeed include accrual estimates of income expected to be included in the period, which “presents a picture of organic growth that is higher than growth suggested by the statement data,” according to the report. As such, Shot Tower warned investors not to rely on PFAR as a metric.
More issues arose in Shot Tower’s due diligence investigations into how individual catalogs were valued. The entire portfolio, which stood at $2.8 billion on Mar. 31, 2023, is instead worth $1.95 billion, according to the report — a difference of some $850 million. Given the transparency into the fund’s accounting practices, however, shareholders were unfazed by the demotion. On Thursday, Hipgnosis Song Fund’s share price jumped 8.3% to 69 pence, its highest closing price since Jan. 31 and 30.4% above its low point in 2024, 52.9 pence, set on Mar. 4. Whether the share price will improve further could depend on how shareholders view the board’s reaction to this report.
The RIAA’s release of 2023 revenue figures show U.S. record labels are increasingly reliant — possibly too much so — on paid subscriptions for both revenue and revenue growth. While consumers continue to pay for premium streaming services, ad-supported on-demand streaming is languishing and newer platforms like TikTok provide more promotion than they do royalties.
The top-line takeaway of the RIAA’s 2023 report is that the U.S. market grew 7.7% to $17.12 billion, an improvement from the 6.6% uptick seen in 2022. Without adjusting for inflation, 2023 revenue was about 17% above the CD-era peak of $14.6 billion set in 1999, marking the ninth straight year of revenue growth after the U.S. market bottomed out at $6.95 billion in 2014. After nearly a decade of gains, the record business is healthy and stable.
But look over the RIAA’s report and you’ll see the U.S. market is missing the dynamism it could — and wants to — have. The revenue mix doesn’t have the diversity of past years. It’s not for lack of effort: Record labels are partnering with AI startups, licensing music to social media platforms and looking for new ways to engage with big spending superfans. But emerging categories remain just that — emerging — while other categories don’t yet provide much of a revenue boost. On-demand streaming turned around the industry, made music into an appealing asset class for investors and allowed handfuls of companies to go public. But where does it go from here?
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Here are five takeaways from the report.
The U.S. market is more reliant on paid subscriptions than ever.
Revenue from paid subscriptions from premium music streaming services such as Spotify and Apple Music totaled $10.15 billion and accounted for 59.3% of total recorded music revenues in 2023, an increase from 57.8% in 2022 (and far higher than percentages seen during the preceding years: 57.2% in 2021, 57.4% in 2020, 53.4% in 2019 and 47.3% in 2018). But U.S. labels were even more reliant on subscriptions for revenue growth, with paid subscriptions accounting for 79.4% of that growth in 2023. Ad-supported streaming — services such as TikTok and Facebook — grew 21.5%, or $56.2 million, but accounted for only 4.6% of annual growth.
New subscribers are harder to find.
For all the growth attributable to subscription services over the last decade, it might not be enough for some markets. As Billboard noted on March 15, SNEP, France’s recorded music trade group, warned that revenue growth from subscriptions “is slowing down here while our market is far from having reached maturity.” Fortunately for the United States, subscription penetration has surpassed 50% of U.S. internet users, according to MusicWatch. But the 2023 RIAA figures suggest streaming services have already picked the low-hanging fruit and will need new products to attract new customers. With far fewer new subscribers in 2023 than in previous years, labels were fortunate that Spotify raised the price for its standard individual plan in 2023. After adding 7.6 million subscribers in 2022 and 8.5 million in 2021, the U.S. market added just 5.2 million in 2023. That’s a sharp drop from the 15.1 million new subscribers gained in 2020 when pandemic restrictions caused an uptick in both music and video on-demand streaming services. Price increases by Spotify in July and Amazon Music in both January 2023 and August helped average monthly revenue per user improve to $8.74, up from $8.35 in 2022.
Advertising has stumbled.
A few years after advertising revenue surged, ad-supported streaming’s strength is probably its potential to convert some free users into paying customers. Ad-supported, on-demand streaming revenue rose just 2.3% in 2023, an even worse showing than the 3.5% improvement in 2022. Things looked much better a couple of years ago after ad-supported, on-demand streaming revenue jumped 46.7% in 2021 following a slowdown in 2020 due to the COVID-19 pandemic. Ad-supported on-demand streaming actually did better in pandemic-stricken 2020, rising 32.2% even though the bottom fell out of the ad market when brands braced for a recession by curtailing their ad spending. It was a remarkable turn of fortune for the promise of ad-supported music; after Spotify’s ad-supported revenue jumped 81% in 2021, CEO Daniel Ek said the growing online ad market bode well for India, Indonesia and other developing markets where Spotify operates. Since then, however, subscriptions — especially in mature markets like the United States — have carried the load for Spotify and others.
Social media is growing fast but remains small.
The highest growth rate of any category in 2023 came from “other ad-supported streaming,” which includes relative newcomers to licensing agreements such as TikTok. Other ad-supporting streaming jumped 21.5%, to $317.7 million, making the category about 75% as valuable as the fast-declining download and ringtone category (which was down 12.2% last year). The downside is that the category remains a small part of labels’ business:. Last year, other ad-supported streaming accounted for less than 5% of total revenue growth — about 6% as much as subscription services.
Physical sales were dependable, not explosive.
Both LPs and CDs had double-digit growth in 2023 — 10.3% for LPs and 11.3% for CDs — as physical formats benefitted from enthusiasm for vinyl collectibles and K-pop fans’ penchant for buying multiple CD variants of new releases. Total physical revenue increased by $181 million, or 10.5%, to $1.91 billion, and it has grown 66% since 2018. That more than compensated for the $60 million decline in legacy digital formats such as track and album downloads and ringtones. Still, vinyl and CD sales accounted for 14.8% of 2023’s revenue gains compared to subscriptions’ 79.4%.
In a New Year letter to staff in January, Warner Music Group CEO Robert Kyncl said the company needed to offer better services to the “middle class of artists,” an area being feverishly pursued by his major-label competitors, as well as a handful of independent distribution companies.
This week, WMG revealed it is interested in acquiring French company Believe, which owns a large label services business, digital distributor TuneCore, publishing administration service Sentric and a stable of record labels including Naïve, Nuclear Blast and Groove Attack. WMG said it is willing to pay “at least” 17 euros ($18.60) per share, a premium to the 15 euros ($16.41) per share offered by a consortium led by Believe CEO Denis Ladegaillerie and investment funds EQT and TCV. WMG’s bid values Believe at roughly 1.65 billion euros ($1.8 billion).
WMG’s interest in Believe doesn’t come as a surprise. The middle class of artists Kyncl referenced wants alternatives to traditional recording and publishing deals — and WMG needs the tools to give those artists what they want.
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While WMG can likely bring greater value to Believe’s assets as well, a Believe deal “solves a real stack problem for [WMG],” says Matt Pincus, founder and CEO of MUSIC, a venture with investment bank Liontree. A full “stack” — a tech term that refers to all the technologies and skills required for a project — would allow WMG to serve a more complete range of artists. Presently, WMG’s product offering is missing a distributor for self-published artists, says Pincus, that provides a level of artist services between a do-it-yourself distribution deal and a record label contract. That would augment WMG’s ADA, which distributes indie labels, and create a funnel to bring rising artists into WMG’s system.
Kyncl need only look at how his competitors are serving middle-class artists. Following the rise of iTunes, some independent distributors were eventually acquired by other major labels that wanted to distribute music on a greater scale. Sony Music has The Orchard, a digital distributor acquired in 2015, and AWAL, an artist-development company acquired from Kobalt in 2022. Universal Music Group acquired digital distributor Ingrooves in 2019 and folded it into its artist- and label-services division, Virgin Music Group in 2022. TuneCore, founded in 2006 to allow artists to access a new era of digital stores and services, was acquired by Believe in 2015.
The majors’ emphasis on label services is an acknowledgement that today’s marketplace is a mix of traditional artist deals, do-it-yourself independent artists and everything in-between — distribution deals, joint ventures, licensing deals, profit-sharing arrangements and releases from independent artists backed by a major’s label services provider. Budding superstars often want independence but need the majors’ global infrastructure and expertise. “What really makes a difference in this world is to do what [CEO] Brad [Navin] and the Orchard did with the Bad Bunny record [Un Verano Sin Ti],” says Pincus. “They really helped break that record worldwide.”
Believe would also provide WMG a publishing solution for those same independent artists. “When you consider that Believe also acquired Sentric publishing, this brings together master and publishing for many of these indie artists,” says Vickie Nauman of advisory firm CrossBorderWorks. “That also opens up opportunities for new synch licensing models that otherwise fragmented rights do not allow.”
Geography is another aspect of Believe’s business that could be attractive to WMG. Although the majority of Believe’s revenue comes from Europe, it has employees in more than 50 countries and has a presence in fast-growing markets such as Indian — where it invested in two record labels, Venus and Think Music — and Indonesia. Approximately 27% of Believe’s total revenue in the first nine months of 2023 came from Asia-Pacific and Africa, a 17.4% increase from the prior-year period.
Developing markets have great potential for a couple reasons, Kyncl explained Wednesday at the Morgan Stanley Technology, Media and Telecom 2024 conference. In the Middle East, for example, markets that have young populations, an underdeveloped subscription market and lack collection societies “will see quite a lot of value appreciation.” Developing markets are increasingly becoming music exporters, and Kyncl believes that provides WMG with an arbitrage opportunity. “Let’s say if you have Indonesian content that’s traveling to America,” he said. “It’s a smart place to put money because it’s [going] from a low ARPU country to high ARPU streams [in a developed market].”
An acquisition is hardly a done deal, though. To date, WMG has only expressed an interest in Believe. WMG is playing catch-up, too: The consortium attempting to take Believe private has lined up blocks representing nearly 72% of share capital — enough to “prevent a competing bidder from acquiring control,” according to Believe’s ad-hoc committee — although WMG’s higher bid could change that. An acquisition would require regulatory approval, too, and there is likely to be pushback from music companies and trade associations such as the UK-based Association of Independent Music against further industry consolidation.
But, setting aside the potential roadblocks, WMG would be a good fit for Believe. Sony Music and UMG are both larger than WMG, already have Believe-like companies and would thus face more regulatory scrutiny. The 1.65 billion-euros ($1.8 billion) price tag is in what astronomers call the “Goldilocks zone” for habitable planets’ distance to their suns: It’s too expensive for many independent companies but affordable enough for WMG.
If 2023 was the year of Taylor Swift, 2024 could be the year of the superfan.
While Swift’s The Eras Tour proved that music fans are willing to spend large sums and travel far to see their favorite artist, for years promoters have improved their revenues by selling premium experiences to concerts and festivals. Whether it’s dynamically priced seats close to the stage, VIP access or a revamped cocktail offering, there are more options for fans willing to pay more to enjoy the sights, sounds and hospitality of live music. Expect an even greater emphasis on this in the new year.
The focus on superfans isn’t confined to live music. The CEOs of Universal Music Group and Warner Music Group both started the year by highlighting a desire to better serve superfans. In the recent past, that may have meant NFTs and newfangled web3 offerings. Today, superfans buy multiple copies of albums (both LP and CD) and merchandise, often directly from the artist’s web store. Streaming services could soon be getting into the game, too, by offering “superfan clubs,” Spotify CEO Daniel Ek suggested in a Jan. 24 open letter.
But live music has a unique ability to upcharge for premium experiences — and add to companies’ bottom lines in the process. Tickets for superstar acts have proven to have remarkably resistant to price increases. In 2023, the average price of a Taylor Swift concert ticket on Stubhub was nearly $1,100. Drake, Morgan Wallen and Beyonce prices averaged about $450, $390 and $324, respectively.
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Emphasis on superfans makes sense in an era of higher priced primary tickets that capture value that would otherwise go the secondary market. Artists are increasingly willing to charge more up front rather than lose money to re-sellers. Still, the typical secondary ticket is still almost twice the price of a primary ticket, Live Nation president and COO Joe Berchtold said during the company’s earnings call on Thursday. Currently, about 9% of Live Nation’s amphitheater business comes from premium offerings such as VIP boxes, added president and CEO Michael Rapino. He thinks that should be 30% to 35% instead. To get those numbers, Live Nation is upgrading the concert experience.
This year, Live Nation plans to spend $300 million of its $540 million of capital expenditures on revenue-generating projects. The top four projects — including Foro Sol in Mexico City and Northwell Health at Jones Beach on Long Island — will account for $150 million of the $300 million. The other half includes several projects in the tens of millions of dollars such as VIP clubs, viewing decks, rock boxes and new bar designs, said Berchtold. Those “tactical improvements,” as he called them, can produce a return on investment in the 40–50% range.
Putting more emphasis on revenue-generating enhancements will boost the bottom line in 2024. Following a stadium-heavy touring slate in 2023, Live Nation will put more tours in owned and operated amphitheaters and arenas that allow the company to capture fan spending on parking and hospitality. Stadium shows have higher average ticket prices, Rapino explained, but amphitheater and arena shows produce higher per-person spending. In other words, the venues are smaller but have better margins for the promoter. As a result, Live Nation expects higher adjusted operating income in the second and third quarters. “We’re going to have a fabulous year,” said Rapino.
Dynamic pricing — seats closer to the stage are priced far above seats further away — is just getting started outside of the United States and presents “a great growth opportunity” as it expands from Europe to South America and Australia, said Rapino. There’s room for growth in the United States, too, as dynamic pricing extends beyond the top artists and into amphitheaters and other concerts. “We still think that’s a multi-year opportunity to continue to grow our top line plus [our] bottom line,” he said.
The price-conscious fan isn’t forgotten as concerts increasingly cater to big spenders. Live Nation offers a lawn pass for amphitheaters called Lawnie Pass — the 2024 edition costs $239 each and offers lawn admission to multiple shows at select amphitheaters — and sold an unlimited pass for select clubs called Club Pass in 2022. And company executives have repeatedly stated that a benefit of dynamic pricing is that higher prices for in-demand seats allow for lower prices for seats further from the stage.
But from live music to music streaming, companies are searching for ways to beef up their margins. As such, expect the market to continue segmenting into higher-value and lower-value fans.
