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Steve Sayer recently celebrated his 10th anniversary at The O2, the AEG Europe-owned and operated London arena that consistently ranks among the world’s top-grossing concert venues. In 2023, the 21,000-capacity building grossed $220 million from 188 shows, placing it second only to Madison Square Garden (MSG), which grossed $223 million, on Billboard’s Top Venues chart (15,001-plus capacity). In terms of total attendance, The O2 is a global leader, welcoming a record 2.4 million people through its doors last year (600,000 more than MSG), according to figures reported to Billboard Boxscore, justifying its claim to the title of “world’s most popular music venue.”
This year looks to be just as busy, with The O2 recently hosting sellout shows by Bring Me the Horizon, Take That, Depeche Mode and The 1975 as well as the three-day Country 2 Country (C2C) festival and 2024 Brit Awards. Upcoming bookings include J Balvin, Doja Cat, Justin Timberlake, Janet Jackson, four shows by Liam Gallagher and six shows by The Killers.
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“We’re grossing huge sums for the artists, selling an incredible number of tickets and we continue to invest and innovate to make sure the fans are having an amazing time,” says Sayer, who joined The O2 in 2014 as commercial director before being promoted to VP/GM of the arena four years later.
In addition to overseeing the day-to-day management of the venue, which first opened in 2007, Sayer is responsible for operations at the wider O2 complex, which also contains a second 2,800-capacity venue, a 210,000 square-foot designer shopping outlet, a 19-screen cinema and more than 30 bars and restaurants. “We’re certainly not resting on our laurels,” says Sayer. “We want to continue to be the front runner.”
Here, Sayer discusses dynamic ticketing, the rapidly-increasing costs of putting on shows, his opposition to a proposed Sphere venue in London and more.
Steve Sayer
Courtesy Photo
This year marks your 10th anniversary at The O2. What have been some of the biggest highlights and challenges in that time?
There have been so many highlights and quite a few challenges. It sounds cliched now, but a global pandemic and the shutting down of the live industry for 18 months was an incredible challenge for everybody. We’ve got nearly 200 [staff] that I’m responsible for and I guess what I’m most proud of is leading the team through that period, minimizing a very small number of redundancies and probably coming out stronger at the other end than we’ve ever been.
How has the pandemic changed the live and arena business?
Ticket-buying behavior has definitely changed in terms of late buying. There’s also been a definite shift in the number of shows that are getting booked within weeks and months of the show playing out. Pre-pandemic we would have really good visibility 12 to 18 months [ahead] in terms of what’s in the diary. We still have that to a large degree, but 20% of our shows are now short lead and that’s been a real shift.
What do you regard as some of the biggest issues facing the live music business?
One of them is sustainability. We’re acutely aware of our responsibilities and we collaborate with all our stakeholders right across the industry and we’re pushing hard on that. It would be remiss of me not to mention general cost inflation, which is impacting every part of the live ecosystem. Our energy costs are significantly higher than they were four years ago, and they are only going one way. Wage inflation has gone through the roof: double-digit growth in the last couple of years. The cost of putting on shows and running venues is significantly higher than it has ever been and that is a challenge to try and manage and mitigate that. Another challenge is the [health of] the broader live music ecosystem. While The O2 is having incredible success, we know the U.K. grassroots sector is having a tougher time. We’re cognizant of the importance of a vibrant live ecosystem that fuels sustained success for all of us.
Last month, a Parliamentary committee called for a new voluntary tax to be added to arena and stadium tickets sold in the United Kingdom to support struggling grassroots music venues. Is that something The O2 supports?
It’s something we’ve been talking within the industry about. One thing that we have got to understand as far as a levy [is concerned] is just what is legally permissible when you start thinking about competition rules and unilaterally adding levies to the price of a ticket. But it is certainly something that we’re actively exploring and it’s something that we’re talking about within our own business.
Unlike in the United States, the U.K. live music market has so far been generally resistant to the introduction of dynamic ticketing, whereby prices are set according to demand. Can you see that changing?
My sense is that you are going to see more dynamic pricing in the U.K. It will be an interesting challenge. It’s well understood in Europe that in travel and hotels, you pay a different price based on demand. We haven’t had that in the [U.K.] entertainment or the live sector or even really in sport, but obviously, it is commonplace in the U.S. and North America. My sense is that on certain shows and certain artists, it will start to come in. It’s just a question of over what time period and to what extent. Are we talking about a relatively small number of ringfenced tickets? Or are we talking about the entire manifest? That’s the big question.
AEG strongly opposed proposals by MSG to build a Sphere concert arena in East London, not far from where The O2 is based. Madison Square Garden Entertainment (MSGE), which is owned by James Dolan, withdrew those plans in January following opposition from London Mayor Sadiq Khan. Was that a big win for The O2?
The thing with the Sphere that we’ve always been quite open about is — it’s not about competition. Competition is healthy. We are constantly looking at what other venues, festivals and other industries are doing and what we can learn. There was a lot of local opposition to the Sphere [in London]. Local residents didn’t want the light pollution. Las Vegas is a very different city and a completely different environment to East London. All along we said, “We don’t oppose competition in the live music industry.” But that was the wrong scheme in the wrong location in our view and that was what the [London] Mayor also concluded.
Are there lessons to be learned from the high-profile teething problems at the Oak View Group-owned Co-op Live Arena in Manchester, the U.K.’s biggest concert venue, which finally opened last month after a series of costly delays and cancellations? And what impact do you think the arrival of a major new U.K. arena will have on the wider business?
Building and opening any venue of scale presents various challenges and only underpins the importance of meticulous planning, thorough preparation and engagement with key stakeholders throughout the process, right up to opening day. There’s lots that we can always learn from new venues but we’re not resting on our laurels. We’re going to continue to invest in The O2. This year we’re upgrading our Wi-Fi. We’re starting a two-year program to renovate all our backstage. We’re continuing to look at what we can do on the sustainability front, so back-of-house we’re operating as efficiently as we can be. It’s a good time to be in the industry because while there are challenges, undoubtedly the market forecasts are strong.
Live music experts are anticipating the antitrust lawsuit brought by the U.S. Department of Justice against Live Nation to take years to resolve, given the wide scope of the claims against the concert giant and the various stakeholders in the live music ecosystem.
“It is going to take a couple of years, at least,” Lee Hepner, senior counsel of anti-monopoly group the American Economic Liberties Project, said at the NIVA 2024 conference in New Orleans on Tuesday (June 4). The conference is put on by the National Independent Venue Association, which formed in 2020 to secure federal funding from the government during the pandemic. The upside, for Hepner and other speakers on the panel called Ticket Tyranny: The Unseen Grip of Market Dominance, is the “massive potential in restructuring the industry.”
Ant Taylor, founder and CEO of ticketing competitor Lyte, agreed on Tuesday saying, “Given how big the scope [of the DOJ lawsuit] is, it is going to be challenging to see it through… What excites me about this moment is the opportunity we have as an ecosystem to look — not just at Live Nation — but to look at the way we do business together and the conditions in which Live Nation has thrived.”
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Specifically, Taylor added, “What’s the business model of ticketing and why, for 40 years, has there been so little innovation around it?”
Ticketmaster has been a dominate force in the ticketing business for decades — its 2010 merger with Live Nation only strengthened its position in the U.S. market. The DOJ lawsuit claims that Live Nation-Ticketmaster has “unlawfully maintained monopolies in several concert promotions and primary ticketing markets and engaged in other exclusionary conduct affecting live concert venues, including arenas and amphitheaters.” A major concern for the DOJ and the group of 30 states that jointly filed the suit on May 23 is Live Nation’s “flywheel model,” which the DOJ describes as a “self-reinforcing business model that captures fees and revenue from concert fans and sponsorship, uses that revenue to lock up artists to exclusive promotion deals, and then uses its powerful cache of live content to sign venues into long term exclusive ticketing deals, thereby starting the cycle all over again.”
Unlike the consent decree that Live Nation has been under since the merger, which was designed to prevent the company from abusing its position, Kevin Erickson, director of Washington D.C.-based nonprofit organization Future of Music Coalition, told the audience that he believes the DOJ lawsuit is focusing on the correct parties impacted by the alleged monopoly: the artists, venues and fans.
“Even with the best intentions, a consent decree is inadequate to address the potential for harm,” Erickson said. “It shifts the enforcement burden onto the people who have the least amount of power. It forces artists and artist representatives and venue folks to monitor for violations of antitrust law.”
Hepner explained that Future of Music Coalition has been collecting such complaints against Live Nation for years and encouraged those in the room to reach out on how to connect with the DOJ with additional complaints as the lawsuit works its way through the justice system.
If the DOJ’s lawsuit is successful and Live Nation is forced to divest Ticketmaster, the panelists expressed hope that without the promoter’s financial backing, competition in ticketing will flourish, allow for innovation and end exclusive ticketing contracts often used by Ticketmaster and other major ticketers.
Panelist Gary Witt, president and CEO of Pabst Theater Group, stressed the importance of eliminating Ticketmaster’s dominance due to growing customer dissatisfaction. “It is not about your experience when the customer comes through the door. It is not about the artist’s experience when they come backstage. It’s about the initial experience of buying a ticket,” Witt said to the audience.
The primary ticketing market has become “a closed market and allows for zero innovation,” Witt said, adding, “We have an industry to save here.”
SM Entertainment has issued a statement strongly denying rumors that NCT members Johnny and Haechan, as well as Heechul of Super Junior, are involved in a sex scandal that has gained increased scrutiny and attention both inside and outside Korea.
Earlier this week, allegations arose from different social media users detailing the alleged sexual affairs of Johnny, 29, and Haechan, 23, both members of SM Entertainment boy band NCT, with three women during a recent visit to Tokyo in March.
As NME notes, the claims stemmed from a Japanese nightlife gossip account on Twitter regarding three women said to be working in Tokyo’s nightlife industry as bar hostesses. Purported evidence of their time with the K-pop idols came via photos of three women holding hotel cards where the stars stayed, room interiors that point to five people drinking alcohol and smoking cigarettes together and one blurry photo that allegedly shows Johnny and Haechan entering the hotel with three women despite the fact that none of their faces can be readily identified. Captions and comments from the women describing their alleged experiences, as well as alleged text message conversations about meeting the K-pop stars, were also put forth as so-called evidence by the gossip account.
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Johnny and Haechan have not shared anything about the alleged encounters, but NCT 127 (the nine-member boy band that both singers are also a part of under the NCT brand) did fly into Japan on March 8, 2024 to perform a March 9 concert at the Tokyo Dome.
The claims soon went viral among K-pop fans and by Tuesday (June 4), SM Entertainment’s stock price had fallen from that day’s peak of 90,300 Korean won ($65.94) to 82,300 Korean won ($60.10) — though by press time, the stock had since rebounded to 85,500 Korean won ($62.44). The story even made it onto the evening news for KBS, the Korean national broadcaster, during a report about SM’s stock price drop.
Heechul of Super Junior, a more senior boy band under SM that’s been active for nearly 20 years, was also brought into the rumor mill after private photos of the singer with one of the women involved in the controversy made their way online. According to several blogs monitoring the situation, Heechul, 40, spoke about the news on the fan-messaging app Dear U denying that he drank or had meals with any of the junior SM Entertainment performers outside of work and that he is speaking with the label to clear any misunderstanding.
On Wednesday (June 5), South Korea’s Yonhap News Agency shared a statement from SM Entertainment denying any unsavory behavior from their artists. In the statement, SM labeled the rumors as “entirely false” and said they “constitute criminal acts that severely damage the artists’ reputations,” per Yonhap. The company added, “We have already gathered sufficient evidence regarding numerous posts related to these matters…we will not overlook such criminal acts and will take legal action against those involved without leniency or settlement, regardless of their nationality.”
SM Entertainment and representatives for NCT and Super Junior did not immediately respond to Billboard‘s requests for comment.
Travis Scott is asking a federal judge to end a lawsuit accusing him of using unlicensed samples on songs from Utopia and Astroworld, arguing that nobody can claim a copyright on the words “alright, alright, alright.”
The case was filed in February by Dion Norman and Derrick Ordogne, who claim that Scott and Sony Music illegally borrowed a portion of their song “Bitches Reply” — an oft-sampled 1992 track that’s previously been used by Lil Wayne, Cardi B, Kid Cudi and others.
But in a motion to dismiss the case filed Monday (June 3), lawyers for Scott and Sony argue that the allegations were centered on the “untenable” claim to ownership over basic words — “alright, alright, alright” — that everyone should be free to use.
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“The only alleged copyright infringement here is the alleged copying of the word ‘alright’,” the star’s attorneys write. “But the single word ‘alright’ and the short phrase ‘alright, alright, alright’ lack even the minimal creativity required for copyright protection both because these lyrics are too short and because they are commonplace, or stock, expressions.”
Released in 1992 by DJ Jimi, “Bitches Reply” has reportedly been sampled or interpolated in dozens of songs, including tracks by Megan Thee Stallion, Drake and OutKast. Most of those samples have come from a staccato burst of the word “alright” shouted nine times at the beginning of the song.
Norman and Ordogne, who say they co-wrote DJ Jimi’s song and own the copyrights to it, claimed in their February lawsuit that Scott sampled from that portion of the track twice — first in his 2018 song “Stargazing” off the Astroworld album, and again in his 2023 “Til Further Notice” off Utopia.
But copyright law only protects “original” works, and that typically doesn’t include short phrases that are already widely used. In Monday’s response filing, Scott’s lawyers say that a repetition of a common word like “alright” in song lyrics was exactly that — too “trite” and “cliched” to meet copyright law’s basic requirements.
They cite numerous other songs that had featured the phrase before “Bitches Reply” was even released, including “Revolution” by The Beatles, Elton John’s “Saturday Night’s Alright” and Earth, Wind & Fire’s “Let’s Groove.” They also cite a 2003 ruling in which a federal judge ruled that T-Pain’s “Put It Down” didn’t infringe copyrights by using phrases like “I can’t get enough” and “raise your hands in the air.”
“The Copyright Act does not protect ‘stock’ expressions,” Scott’s lawyers write. “Because the allegedly infringed phrase “Alright, Alright, Alright” is too commonplace to be copyrightable, Plaintiffs’ copyright infringement claims should be dismissed.”
Monday’s motion also made various other attacks on Norman and Ordogne’s lawsuit, including that they failed to show that they own the proper copyright registrations and filed the claims over “Stargazing” past the statute of limitations.
An attorney for Norman and Ordogne did not immediately return a request for comment. Their lawyers can file a formal response to Scott’s motion in the coming weeks.
Discogs has acquired Wantlister from software developer Stoat Labs in a move towards enhancing its wantlist experience, the online physical music database and marketplace announced Wednesday (June 5). Wantlister is a Discogs-specific web app, with users connecting their two accounts in order to organize and manage their oft-unwieldy Discogs wantlists. Wantlister, which soft-launched last year, […]
Indie digital rights group Merlin is launching a new initiative today (June 5) called Merlin Connect, aimed at helping up-and-coming social and tech platforms license independent music. The new program, which will work on an application basis, is aimed at helping promising startups utilize music while also helping Merlin’s labels and distributors, and thus indie artists, get paid for their use.
For years, new digital startups have often adopted a policy of “asking for forgiveness not permission” — dating back to the old Facebook motto of “move fast and break things” — which often meant that music and other media would be used without licenses, and recompense, while an app or platform found its footing and users, due to the high expense of licensing media catalogs. That tended to result in contentious licensing negotiations when such apps or platforms became too big to ignore — and, on occasion, lawsuits if such companies continued to utilize music and media without agreeing to deals with rightsholders.
Merlin Connect is trying to smooth that process for both new startups and its members, offering flexible terms and licenses that also get rightsholders paid as a startup develops.
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“Our overarching goal is to discover new opportunities for music monetization,” Merlin CEO Jeremy Sirota told Billboard in an exclusive statement. “Many emerging technology platforms lack access to, or do not even realize, how quality music can help them build and retain new audiences, resonate with cultural movements and drive their growth. Our members are handpicking a curated catalog of music that is perfect for any platform’s evolution… By bringing independent music to new spaces, we’re delivering exclusive opportunities for our members, ensuring they are at the forefront of innovation.”
Merlin says the program will be aimed at creating fair value for music, as well as marketing opportunities and the development of relationships with the next generation of platforms early on in their existence. On the other side of that equation, it will allow the platforms to have access to a simplified process within which they can utilize fully-licensed independent music and explore collaborations with Merlin members, and find ways “to maximize the impact of music on their platform,” according to a press release.
“The industry has been in need of an easier way for new platforms to access high-quality music and, in turn, foster growth for quite some time,” Ninja Turn managing director North America Marie Clausen said in a statement. “I am excited to see the Merlin team taking such a visionary approach to exploring new business opportunities. It’s a crucial step to ensure that new commercial opportunities have the best chance to succeed and diversify and secure new income streams for Merlin’s members. From an independent point of view, this initiative is excellent news — especially given the current market challenges.”
Emerging platforms will be able to apply, after which their application will be reviewed and Merlin will “selectively engage with the most promising platforms,” the organization said. Merlin will prioritize a platform’s potential for innovation and evolution; its leadership and the resilience of its team; with the goal of a more sustainable and ethic industry.
“As one of the founders of Merlin, I’ve had the opportunity to support the incredible growth of our organization from its inception to now,” !K7 founder Horst Weidenmüller said in a statement. “Merlin has always been dedicated to empowering independence, ensuring that its members receive the access and opportunities they deserve. With the launch of Merlin Connect, we are taking a significant step forward in this mission.”
Added Hopeless Records founder Louis Posen, “Hopeless is a passionate and longtime supporter of Merlin and its mission to ensure the fair value of music for the independent music community. With Connect, Merlin can now expand the reach of members’ music into new areas where music fans interact with the music they love. We are excited to see Merlin Connect open new doors for our artists and bring their music to innovative platforms around the world.”
Singer-songwriter Benson Boone has signed with WME for global representation in all areas. Boone gained popularity with the release of his viral hit “Beautiful Things” in January. The track has been an international hit, reaching No. 1 on the Billboard Global 200 for seven weeks and leading the Billboard Global Excl. U.S. chart for eight […]
James Blake is “the freest [he’s] ever felt,” tells Billboard over a recent Zoom call.
After about twelve years spent signed to Polydor Records, the producer/singer is now independent and experimenting with new ways to release his music to “match the speed of the internet,” he says.
On the Sunday of Memorial Day weekend, Blake released “Thrown Around,” his first single since he left Polydor. “I know it was an anarchistic move… Sunday’s a terrible day to release music, but I thought it was fun to try now that I can,” he laughs.
Part of Blake’s new post-label experiment includes paying creative collaborators both upfront (where applicable) and in “points,” or a percentage of the master recording royalties, so that everyone is “incentivized to push the song and to win together,” he says. Points on the master are typically only allotted to producers of a record, but Blake is going further, offering points to non-producing songwriters and his creative director, Crowns & Owls.
To pull it all off, Blake turned to Indify, a music company that lives by the slogan “artists are founders” and could benefit from raising capital for their releases similar to the way start-ups do. Instead of traditional label deals, Indify is a “service marketplace” for artists to meet strategic angel investors on a song-by-song basis, says CEO/co-founder Shav Garg. Interested acts select from an online leaderboard of angels – including music businesses like Thrice Cooked Media, Golden Kids Group and ATG and musically inclined Silicon Valley execs like Alexis Ohanian – to build their set of partners based on success metrics and the investors’ bios.
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Artists using Indify cede a percentage of streaming royalties for a given song until investors recoup the up-front funding and aid they offer. (Indify takes a 15% cut of the investor’s share of profits after recoupment and no investor is allowed to keep 50% or more of the streaming royalties after recoupment).
Founded in 2015, Indify is seen as a tool to “add gas to the fire,” as Garg puts it, on viral moments from independent artists. The company has had success stories include up-starts like Armani White, Pink Sweat$ and Anees, but Blake is by far the biggest artist to use the platform yet. “We’ve proven thus far that Indify can help artists go from, 20 to 70, but one of our goals has been taking an artist from 70 to 100, like major labels do,” says Garg. “I can tell James is willing and ready to lead the way for the next generation of artists and to take the jump, trying something like this first.”
Blake and Garg first bonded at a U.S. Open tournament several years ago and reconnected through Blake’s management when Blake began talking openly about his newfound independence and desire to handle his career differently going forward. Before “Thrown Around” dropped, Blake’s indie experiment included a partnership with superfans app Vault.FM to provide fans with unreleased demos for a monthly subscription. Garg and Blake aligned on the idea that “at a label, your music is subsidizing a million departments,” Blake says. “It’s a huge moving ship to steer, and it’s a bloated business with crazy overheads. I don’t want to pay for the CEO’s mansion in the Cayman Islands.”
Blake also felt there was a “lack of transparency” about how money was being spent on his behalf while signed to a label and that he didn’t have “much choice” in picking his team within the building, even if those assigned to him “didn’t really seem to understand” his project.
After going back and forth about what single to release as his first drop with Indify, Blake made “Thrown Around” and felt instantly that it was the right introduction to this new phase of his career. It’s easy to see why. The song (released May 26) and its video depict Blake as an artist desperate to get his music to go viral by any means necessary. At the end of the video, Blake is bloodied and bruised by all the ways he has dangerously attempted to feed the algorithm, and he ultimately learns that none of it was enough to sustain his art.
“James signed up online and used Indify just like anyone else does,” says Garg. Blake ultimately opted to pair with a combination of Good Boy Records and Stellar Trigger Marketing to build out his team for “Thrown Around” after finding them on the Indify leaderboard. Good Boy co-founder John Zamora says that “before the song came out, we already recouped the deal we did with James. We secured a pretty big synch, though I can’t say more than that.” Good Boy specialized in film/TV (or “synch”) licensing opportunities for Blake, but the company also connected with him over a shared interest in providing better compensation for songwriters.
In the last few years, songwriters’ dwindling payments in the streaming economy have made headlines, and a few indie labels have stepped in with a proposed solution to offer “points” for the songwriters who, unlike producers, typically don’t make money on the master recording side. As Billboard reported in December, this new cohort of companies includes Good Boy, The Other Songs, Facet Records and Nvak Collective. Some producers, like Good Boy co-founder Elie Rizk and Tre Jean Marie, have also been giving away some of their points to their songwriter collaborators. Now, with “Thrown Around,” Blake is joining the movement.
Stellar Trigger was brought into Blake’s Indify deal to aid with digital marketing. “Things have changed since I started,” Blake says. “Back then, it was quite easy to be mysterious. I mean, you have a whole generation of producers wearing masks. I think it’s pretty difficult to maintain that now and still get your music out there. It’s not the way it works anymore.”
Though Blake stopped short of wearing a mask, his early career characterized him as a mysterious musical genius with a “sad” disposition – an image he’s railed against in recent years. In a recent Instagram Reel, Blake wrote that he was “practicing looking sad for those who want me to be sad so that I make sad music forever,” in a cheeky dig at his fans.
“This is the most connected I’ve ever felt with the way my music is being pushed,” Blake tells Billboard. To brainstorm, he’s been in constant communication with Stellar Trigger co-founder Ryan Peterson to build the multimedia storytelling of “Thrown Around.” “We wanted it to be meaningful. There’s a lot of narrative here, with James leaving the major label and coming to independence,” says Peterson. “I’m constantly texting ideas back and forth with him.”
The story told in the “Thrown Around” music video was teased out, piece by piece, in meta social media posts about how artists have to make social media posts. Whether or not the song ever hits the Billboard Hot 100 is unclear, but Blake maintains that “Thrown Around” is still “more successful than any previous single campaign” of his career.
More importantly, it serves as proof that digital storytelling, lean budgets, equity incentives and the freedom to pick partners on a song-by-song basis can lead to creative and financial success in today’s market. Now, he’s in talks with his team about working together again for a follow-up single.
“I feel we’ve made something groundbreaking [with ‘Thrown Around’],” says Blake. “I’m excited for the future.”
Artists at country singer-songwriter Ashley McBryde’s level of popularity can sell $16,000 to $20,000 worth of T-shirts and hoodies when they play 1,500-capacity venues. Layne Weber, director of merchandising and fan engagement for McBryde’s management company, Q Prime, says some venues took a 20% to 25% cut of her merchandise sales during her spring tour — which is standard in the industry but, he says, exorbitant for services rendered at many clubs. “I went to a show the other night and the merch table was next to the bar,” Weber says. “The merch seller was having to compete with the bartender who’s trying to sell the drinks. That was a venue taking 20% of the sales.”
Weber’s complaints, which many artists and their representatives share, are at the center of a long-running live-industry debate over merch percentages. For decades, artists, venues and promoters have haggled behind the scenes over percentages as part of every show contract, but they contend the stakes are now much higher. “Ever since we’ve come back from COVID, the merch numbers have gone through the roof for all genres of music,” says Crom Tidwell, owner of Crom Tidwell Merchandising in Nashville. And with so much money at stake, artists want a larger percentage of their own profits.
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“Bands are getting ripped off,” says Barry Drinkwater, executive chairman of Global Merchandising Services, which handles merch for top metal acts such as Iron Maiden and Guns N’ Roses. He adds that the venue’s cut particularly hurts small acts, which tour on slimmer margins and often operate their own merch tables. “They need the money that gets them food, gets them to the next show,” he says. “Then the promoter wants to charge them 20% of the gross.”
Live Nation has expressed sympathy for this point of view. Last fall, trumpeting an endorsement from Willie Nelson, the world’s biggest concert promoter unveiled its On the Road Again program, which eliminates merch-selling fees for artists at its clubs and provides a per diem of $1,500 in gas and travel cash for artists, among other benefits. Earlier this year, Live Nation president/CEO Michael Rapino told Billboard that the program had “already helped support 3,000 developing artists,” and a statement that Live Nation issued on May 22 said, “We’re incredibly proud of how On the Road Again is supporting thousands of artists and their crews, with 100% merch profits, $1,500 cash nightly for gas and travel costs and more. Developing artists are the future of live music, and we’re proud to keep this program rolling strong.”
Complaints over merch fees are not limited to clubs, however. At arenas, stadiums and other large venues, in-house concessions staff take over merch sales, and the 20% to 25% cut goes largely to these services. And at least one venue takes an even bigger chunk. Drinkwater says New York’s Madison Square Garden (MSG) charges artists 30% of their merch sales, plus credit card fees. He also notes that percentages can be higher in the United Kingdom. (A representative for the Garden declined to comment.)
Whether artists are handling their own merch tables or relying on in-house staffers, managers say they’re often unsatisfied with the services they get, given the cost.
“I don’t feel they’re worth 25% of the revenue,” says Rick Sales, who manages Slayer, Ghost, Mastodon and others. “It’s not good value for the money spent.”
Venue reps counter that long before fans step into their buildings, they negotiate deals with artists, including merch percentages. Not surprisingly, those with leverage receive favorable terms. “Every live performance is a negotiation,” a concert-business source says. “The band doesn’t like the merch percentage, find somewhere else to play.” Venue consultant Brock Jones, the former GM of Nashville’s Bridgestone Arena, adds: “At the end of the day, venues have got to make money, too — electricity isn’t free, all that space isn’t free. Venues have to recoup those expenses. An 80/20 merch deal is absolutely fair when the venue is selling.”
Tidwell agrees that it’s a different story at arenas, which often are required to staff union employees at fixed salaries. “You’ve got to have a crew to facilitate the sales,” he says. “Somebody has to pay for the help.” But he also contends that artists complaining about high venue percentages in small venues have a point: “What are you doing for your 20%? You’re just providing a lobby and a table.”
Some small venues, still reeling from the pandemic, have expressed concern that Live Nation’s On the Road Again program might pressure them into following suit and giving up a crucial revenue source. “Temporary measures may appear to help artists in the short run but actually can squeeze out independent venues, which provide the lifeblood of many artists on thin margins,” the National Independent Venue Association said in a statement in September.
Arenas and stadiums are where the big merch money is. On her The Eras Tour last year, Taylor Swift made a reported $200 million on T-shirts and other goods sold at shows. In its 2023 financial report, Live Nation claimed “double-digit growth” in merch and concessions at the arenas it owns or operates, such as the Moody Center in Austin. Notably, the On the Road Again program does not apply to large venues. Drinkwater says the standard 20% to 25% cut applies and, like MSG, sometimes venues pass on credit card fees (usually 5%) to the artist. “We try with our artists to beat this down,” he says. “Sometimes we get a reduction if we can do big sales.”
This July, roughly six years after the debut of Hipgnosis Songs Fund (HSF) on the London Stock Exchange, the relatively short-lived experiment of publicly traded catalog funds — also known as investment trusts — will likely end. Global investment giant Blackstone is expected to win over at least three-quarters of HSF’s shareholders with its $1.58 billion offer to buy the 65,000-song catalog.
The only other listed fund, Round Hill Music Royalty Fund, was taken private in November when Concord acquired it for $468 million. But though their runs were short, these funds transformed how the investment world sees music. Hipgnosis founder Merck Mercuriadis led the charge to convince institutional investors of the stable, noncyclical nature of song rights, and they poured billions into the asset class, bid up the prices of song catalogs to unprecedented heights and fueled a frenzy for acquisitions, which meant creators got more money than ever for selling the rights to their work.
Investments in music royalties keep thriving in the private market — where the Hipgnosis and Round Hill funds continue to do business — but the money is now flowing to asset-backed securities, the same financial vehicle used to create “Bowie bonds” in the 1990s. In the past two years, Concord, Kobalt, HarbourView Equity Partners, Chord Music Partners and others have raised $3.3 billion using securitizations, and music intellectual property investors say money of that magnitude will help keep catalog prices and multiples near record-high levels.
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Despite the game-changing effect that the Hipgnosis and Round Hill funds had on the music business, they faced a number of stumbling blocks. For one, investors “misunderstood” the way that music copyright grants administrative control to the owner, Round Hill co-founder Josh Gruss says. This was borne out by the due diligence report HSF released in March, which indicated investors didn’t comprehend the rights HSF had acquired or the lack of control it had over much of its portfolio.
But interest rates may have been the death knell. When rates were low, HSF and Round Hill offered attractive returns for an acceptable level of risk, but when rates began rising, the funds’ dividends weren’t nearly as attractive. By the end of 2022, the Bank of England’s official bank rate rose to 3.5%, which put downward pressure on HSF’s share price because the risk-free rate wasn’t far from the fund’s dividend. Round Hill was similarly affected. “If you can put your money in the bank and earn 4.5%,” Gruss says, “Round Hill should not [pay investors] 4.5%.”
HSF had other problems, too, including sizable debt and the lasting pall cast by a Sept. 7, 2022, Financial Times article that described HSF’s stalled growth as interest rates rose and a subdued share price that left the fund unable to sell additional shares to fund catalog acquisitions. “If the [Financial Times] thinks it’s a problem, it’s likely going to be a problem,” says Philipp Saure of ContourMusik, a firm that specializes in private securitizations of music assets.
Had HSF been founded today, it may have put more focus on asset-backed securitizations. First deployed in the music business by David Bowie in 1997 to raise $55 million from his recorded music catalog, they allow companies that own music rights to sell debt, using music royalties as collateral.
The size of recent ABS deals dwarfs the money raised by Bowie bonds. In 2022, Concord brokered a $1.8 billion securitization, and Chord, a venture of KKR Credit Advisors and Dundee Partners, did one for $733 million. Hipgnosis Song Management, a different Hipgnosis company that advises HSF, also raised $222 million through an ABS that year. In 2024, HarbourView and Kobalt put together $500 million and $267 million ABS deals, respectively, and sources say that far more unpublicized securitizations have closed in recent years.
While both the ABS and investment trust models let investors buy into recorded music and publishing royalties, there are key differences between the two. ABS debt is purchased by institutional investors such as pension funds and insurance companies with time horizons that match the long durations of music assets. “They’re not as impatient [as retail investors],” Saure says, “so you don’t have this ‘trial in the court of public opinion’ element.”
Institutional investors’ need for a specific rate of return is an approach that works well with established music catalogs that consistently generate cash. Shares in Universal Music Group or Warner Music Group are “speculative” investments that could lose money or produce double-digit gains, says a bank source, who adds that “public investors are growth investors, not just cash flow investors” who seek a steady return. In contrast, ABS investors know exactly what to expect over a specific period.
ABS deals are complex and involve ongoing administration and generally high costs, but they can be worth the effort. “Each structure has its pros and cons, and each is better-suited to varying market conditions,” Reservoir Media CEO Golnar Khosrowshahi says. “Securitization today is attractive because it lowers [the] cost of capital in this interest rate environment.”
Concord CFO Kent Hoskins says he prefers the flexibility of securitizations over traditional debt: “We’ve very much liked the capital structure that allowed us to relatively easily draw new debt for new acquisitions.” An ABS creates a trust that manages a collection of assets that acts as collateral for investors. If Concord is within its covenants, such as a specific loan-to-value ratio — the size of a loan compared with the value of an asset purchased with the loan — he explains, the company can get more debt out of a catalog’s particular value. Term loans are more restrictive, he adds, and give the borrower a lower loan-to-value ratio. Concord did an ABS deal in 2022 with what Hoskins calls a “relatively low” loan-to-value ratio in the “low 40s” compared with ABS deals that he says have gone as high as 65%. That buffer allowed the music company to do another issuance in 2023 for $500 million, which funded its $468 million acquisition of the Round Hill Music Royalty Fund in November.
Music may be a recession-proof, stable commodity, but well-diversified ABS deals aren’t without their risks. One source points to artificial intelligence as a factor that could jeopardize stable cash flows if it causes a major economic shift like pirated music did in the early 2000s.
In general, though, institutional investors see music as a safe asset class over time. “There has been strong demand for every music ABS deal we have done,” the same source says. “As some of the retail money is walking away,” Saure adds, “institutions are becoming more confident.”