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Sen. Amy Klobuchar (D-Minn.) is following up last week’s open letter to Live Nation over “dramatic service failures” during the Taylor Swift presale with a hearing on competition across the ticketing industry. The senator and her across-the-aisle counterpart on the Senate Judiciary Subcommittee on Competition Policy, Antitrust and Consumer Rights, Sen. Mike Lee (R-Utah), jointly announced the hearing, with a date and witness list forthcoming.
“Last week, the competition problem in ticketing markets was made painfully obvious when Ticketmaster’s website failed hundreds of thousands of fans hoping to purchase concert tickets,” said Klobuchar, without mentioning Swift. “The high fees, site disruptions and cancellations that customers experienced shows how Ticketmaster’s dominant market position means the company does not face any pressure to continually innovate and improve.”
Klobuchar said the hearing will examine the effects of consolidation across ticketing — namely that a lack of competition suppresses the need to improve services and maintain fair pricing.
Lee added that consumers “deserve the benefit of competition in every market, from grocery chains to concert venues. I look forward to exercising our Subcommittee’s oversight authority to ensure that anticompetitive mergers and exclusionary conduct are not crippling an entertainment industry already struggling to recover from pandemic lockdowns.”
Aside from a possible grilling by U.S. senators, Live Nation and Ticketmaster are said to be under investigation by the Justice Department as to whether the company maintains an illegal monopoly over the live event ticketing ecosystem. The probe, according to The New York Times, predates this current debacle involving Swift’s tour presale.
Ticketmaster has apologized for the debacle, which started Nov. 15 when millions of Swift fans overwhelmed a presale for her Eras Tour — causing site crashes and hours-long waits, with many fans left empty-handed and — possibly newly engaged in politics. Ticketmaster went on to cancel the general sale as well.
“I apologize to all our fans. We are working hard on this,” Liberty Media CEO and Live Nation chairman Greg Maffei said in an appearance on CNBC last Thursday. “Building capacity for peak demand is something we attempt to do, but this exceeded every expectation.”
Swift’s tour is actually being promoted by Live Nation competitor AEG, which has told Billboard it “didn’t have a choice” in terms of ticketing sales and distribution because of Ticketmaster’s “exclusive deals with the vast majority of venues on the Eras tour.”
Ticketmaster and Live Nation have long been dogged by accusations that they exert an unfair dominance over the market for live concerts, particularly since they merged in 2010 to create their current structure. The combined entity has operated for its entire existence under a so-called consent decree imposed by the DOJ when it approved the merger. Under the decree, Live Nation is prohibited from retaliating against venues that refuse to use Ticketmaster. Those restrictions were set to expire in 2020 but were extended by five years in 2019 after the DOJ accused Live Nation of repeatedly violating the decree.
Ticketmaster has issued a formal apology to Taylor Swift and her fans following the chaotic ticket sales process for her 2023 Eras Tour.
The ticketing giant took to social media on Friday night (Nov. 18) to share a brief apology message, along with a link to a lengthier explanation on its website about why legions of Swifties weren’t able to buy tickets.
“We want to apologize to Taylor and all of her fans — especially those who had a terrible experience trying to purchase tickets,” Ticketmaster tweeted. “We feel we owe it to everyone to share some information to help explain what happened.”
We want to apologize to Taylor and all of her fans – especially those who had a terrible experience trying to purchase tickets. We feel we owe it to everyone to share some information to help explain what happened: https://t.co/1Gn4kRIvq8— Ticketmaster (@Ticketmaster) November 19, 2022
The debacle stems from Swift’s presale earlier this week for her 52-date Eras Tour, which initially crashed shortly after launch as 14 million fans and billions of bots flooded the site, causing service disruptions.
In its Friday statement, which repeated much of what was written (and later deleted) in a previous blog post, Ticketmaster noted that more than 3.5 million fans pre-registered for Swift’s Verified Fan program.
“Never before has a Verified Fan onsale sparked so much attention — or traffic,” the company wrote. “This disrupted the predictability and reliability that is the hallmark of our Verified Fan platform.”
Fans bought up more than 90% of the ticketing inventory on Tuesday and Wednesday, according to Ticketmaster, breaking the record on Tuesday for the most tickets ever sold in a single day by a touring artist at 2 million.
Ticketmaster added on Friday, “We’re working to shore up our tech for the new bar that has been set by demand for the Taylor Swift | The Eras Tour. Once we get through that, if there are any next steps, updates will be shared accordingly.”
Earlier in the day, Swift spoke out against Ticketmaster for her fans’ problematic experience in purchasing tickets to her tour.
“I’m not going to make excuses for anyone because we asked them, multiple times, if they could handle this kind of demand and we were assured they could,” the superstar wrote on her Instagram Story. “It’s truly amazing that 2.4 million people got tickets, but it really pisses me off that lot of them feel like they went through several bear attacks to get them.”
Sen. Amy Klobuchar sent an open letter on Thursday to Live Nation CEO Michael Rapino detailing her “concerns about the state of competition in the ticketing industry and its harmful impact on consumers.” The problem, wrote Klobuchar, is a lack of competition “that typically push[es] companies to innovate and improve their services. That can result in dramatic service failures, where consumers are the ones that pay the price.”
On Friday, a New York Times report surfaced that the U.S. Department of Justice is investigating whether Ticketmaster parent company Live Nation has abused its huge market share in the live music industry.
Maybe Live Nation chairman Greg Maffei’s statement that Taylor Swift and promoter AEG “chose” to work with Ticketmaster for her calamitous onsale earlier this week should have come with an asterisk.
On Thursday (Nov. 17), Maffei attempted to correct criticisms about Ticketmaster and its owner Live Nation operating as a monopoly by pointing out that Swift’s 2023 Eras Tour “is not actually a Live Nation promoted concert” but rather “promoted by one of our largest competitors.”
Maffei — who is also the president of Live Nation’s largest shareholder Liberty Media — continued: “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. Even our competitors want to come on our platform.”
The thing is, AEG says it’s essentially forced to work with Ticketmaster because of the stranglehold it has over the touring business. “Ticketmaster’s exclusive deals with the vast majority of venues on the Eras tour required us to ticket through their system,” an AEG spokesperson told Billboard in a statement. “We didn’t have a choice.”
The debacle centers around Swift’s presale Tuesday for her Eras Tour, which initially crashed shortly after launch as 14 million fans and billions of bots flooded the site, causing service disruptions. The ticket crash caught the attention of Capitol Hill. Rep. Alexandria Ocasio-Cortez and Sen. Amy Klobuchar, both of whom criticized the outage at Ticketmaster and doubled down on claims that the Live Nation-owned ticketing service was a monopoly. The Justice Department is now reportedly investigating Live Nation, though the investigation reportedly pre-dated the Swift debacle.
AEG and Live Nation have a complicated relationship built around intense competition and steady cooperation going back decades. While AEG’s facility group relies on Live Nation for programming, AEG Presents, the company’s concert promotion wing, competes directly against Live Nation’s global touring team and has its own preferred ticketing system, AXS.
While AEG Presents prefers to use AXS, their partner in the Eras Tour, Louis Messina (Messina Touring Group is a 50-50 joint venture between AEG and Messina), is basically agnostic when it comes to ticketing systems — he will work with any ticketing company, based on where the show takes place. In North America, that means working with Ticketmaster, which is especially dominant in the NFL as it provides tickets to 27 of the NFL’s 32 teams. By choosing to stage her show in NFL stadiums – really, in choosing to tour stadiums in the U.S. — Swift and her partners at AEG and Messina Touring Group are effectively forced to use Ticketmaster due to its supremacy in North America.
In that sense, Maffei’s argument that AEG chose to work with Ticketmaster is misleading, but it would also be inaccurate to describe Swift or AEG’s relationship with Ticketmaster as one built upon coercion. Historically, it’s been more mutually beneficial.
AEG’s venue management company ASM Global — formed following the merger of AEG Facilities and SMG in 2019 to become the biggest such company in the country — expanded its partnership with Live Nation in 2021, allowing the use of Ticketmaster for any of the shows the promoter brings to ASM’s 300 clients. In this arrangement, both sides win, since AEG relies on Live Nation to bring content to its buildings and grants the company incentives to entice shows to their facilities.
Swift has worked very closely with Ticketmaster over the years — for her Reputation stadium tour, the COVID-19-canceled Lovers Fest and now the Eras Tour, building an entire fan verification and Taylor Swift-branded ticketing platform together. While Swift might have preferred to have had more options to sell tickets to her fans, she did partner with the company in a way that few artists have in the past.
Perhaps Ticketmaster and Swift will mend their relationship once they start counting how much money they made together. Or maybe, they’re never, ever, ever, ever getting back together.
The Ledger is a weekly newsletter about the economics of the music business sent to Billboard Pro subscribers. An abbreviated version of the newsletter is published online.
Is Ticketmaster a monopoly that treats customers unfairly? Problems with Taylor Swift’s record-breaking The Eras Tour onsale this week has created choruses of complaints around the ticketing giant that have now led to a reported Justice Department investigation.
On Thursday, Sen. Amy Klobuchar sent an open letter to Live Nation CEO Michael Rapino detailing her “concerns about the state of competition in the ticketing industry and its harmful impact on consumers.” The problem, wrote Klobuchar, is a lack of competition “that typically push[es] companies to innovate and improve their services. That can result in dramatic service failures, where consumers are the ones that pay the price.”
Breaking up Live Nation and Ticketmaster wouldn’t necessarily have prevented this problem. It’s likely that any ticketing platform would have struggled with such a high level of demand. StubHub crashed in 2018 after University of Georgia fans flooded the site to purchase tickets to see their team play in the NCAA football national championship game — and that was just one game.
Ticketmaster blamed the outage on a surge of unregistered fans and billions of bots. According to the company, over 3.5 million people pre-registered for Swift’s Verified Fan credentials, the largest registration in its history. Typically, only a fraction of registered fans show up to buy a ticket. This time, “a staggering number of bot attacks as well as fans who didn’t have invite codes” resulted in 3.5 billion total system requests — four times the previous record number.
One could argue Ticketmaster could have been better prepared for such a high level of demand. Perhaps the company should Swift-proof the platform in anticipation of a flood of speculators and unregistered fans — Swift said Friday (Nov. 18) that her team “asked them, multiple times, if they could handle this kind of demand and we were assured they could.” Overall, problems on the platform are relatively rare given Ticketmaster’s volume of business, but we talk about them because they happen with high-profile concerts that attract large numbers of customers. Those attract the most attention and complaints online, which in turn attracts politicians. Ticketmaster is one of the few non-partisan issues in America in 2022.
Some observers have conflated the issues surrounding Ticketmaster’s market power, though. Rep. David Cicilline, chairman of the House Judiciary Committee’s Antitrust, Commercial and Administrative Law Subcommittee, wrote about the Swift on-sale that “excessive wait times and fees are completely unacceptable … and are a symptom of a larger problem.” It’s fair for Cicilline to suggest that Ticketmaster does not invest enough in its platform to avoid the technical issues and wait times Swift fans recently experienced. That’s debatable, but it’s a defensible argument.
Fees are, however, an entirely different issue. Ticketmaster is a pioneer in the area of ticket fees but does not have a monopoly on the ability to charge them. More competition in ticketing would not prevent venues and promoters from adding to the face value of tickets. The ticket purchase is an opportunity for all parties involved to capitalize on fans’ demand for live music. As Bruce Springsteen’s controversial leap into dynamic pricing showed, leaving money on the table is an increasingly uncommon strategy in the modern music business.
Ticket prices occasionally get dragged into the argument, too. Politicians and consumers seem to want a form of price competition that doesn’t exist. Prices for an in-demand concert ticket won’t necessarily become more affordable if they’re sold at, say, StubHub rather than Ticketmaster. The laws of supply and demand say that prices for in-demand, scarce objects like a Swift concert ticket are going to be high no matter who’s selling them.
So, what tangible results might come from the calamitous The Eras Tour on-sale? Sen. Klobuchar’s letter points to customers’ desire for fair access to concert tickets. She asked Rapino, “Generally, what percentage of high-profile tour tickets are made available to the general public compared to those allocated to pre-sales, radio stations, VIPs, and other restricted opportunities?”
Klobuchar wants to know what percentage of tickets the average person has a realistic shot at getting without being the customer of a particular credit card, without buying high-priced VIP packages, without winning a radio station contest or without being a member of an artist’s fan club. In this case, Capital One is a sponsor of the Eras tour and offered a pre-sale to its customers.
But how do lawmakers regulate access? Do they establish rules that dictate what kind of marketing partnerships artists can and cannot establish? Would they tell American Express to stop giving such long-standing perks as pre-sale access and dedicated tickets to its credit card holders? If Congress really wanted to create a more level playing field for fans, they could do what the lawmakers in Victoria, Australia, did in 2021: pass a law that limits the resale value of a ticket to 110% of its face value. That could lower the number of resellers and bots clogging up Ticketmaster’s system for high-traffic on-sales like the Eras Tour. At the very least, price limits would bring a much-desired sense of fairness to the secondary market. Whether the U.S. Congress has the stomach to establish price controls on private companies remains to be seen.
A more likely outcome of the Eras Tour debacle is increased transparency. New York State legislators passed a law in June that improves transparency by requiring all-in pricing and prohibits revealing the ticket’s total cost — face value plus fees — after multiple clicks in a check-out process. The bill could have gone further: a requirement to disclose the percentage of tickets made available to pre-sales and VIPs was in an early form of the bill but not the final version.
But, again, are lawmakers willing to mandate such disclosures from private businesses? This would more likely be a voluntary disclosure done at the behest of the artist – Swift is exactly the kind of powerful artist who could persuade ticket sellers to reveal this information. Transparency wouldn’t immediately translate into greater access for the average fan, but it could fuel a larger conversation about how fans get access to concert tickets. That wouldn’t ease the pain of many Swift fans, but it would be a step forward.
In the wake of Ticketmaster’s disastrous sale of tickets to Taylor Swift’s upcoming tour, a report has surfaced that the U.S. Department of Justice is investigating whether parent company Live Nation has abused its huge market share in the live music industry.
According to a story Friday in the New York Times, the DOJ’s antitrust division had already been scrutinizing Live Nation for months before Tuesday’s botched rollout, which saw widespread service delays and website crashes as millions of fans tried – and many failed – to buy tickets for Swift’s 2023 Eras Tour.
The Times report said that antitrust investigators have been contacting music venues and others involved in the live music industry for months to ask about Live Nation’s practices, aiming to determine whether the company maintains an illegal monopoly over the sector. The story was sourced to “two people with knowledge of the matter”; a spokesperson for the DOJ did not immediately return a request for comment.
Though the DOJ probe reportedly predates the Swift debacle, it echoes criticism that has been leveled at Live Nation in the days since the messy Eras presale.
On Thursday, Sen. Amy Klobuchar (D-Minn.), the chair of the Senate subcommittee for antitrust issues, wrote an open letter to Live Nation, complaining that the company’s market power “insulates it from the competitive pressures that typically push companies to innovate and improve their services.” Klobuchar said the results were the kind of “dramatic service failures” that took place during Swift’s presale.
Rep. Alexandria Ocasio-Cortez (D-N.Y.), was even blunter, tweeting Tuesday: “Daily reminder that Ticketmaster is a monopoly, it’s merger with Live Nation should never have been approved, and they need to be reigned in. Break them up.”
As alluded to by Ocasio-Cortez, Ticketmaster and Live Nation have long been dogged by accusations that they exert an unfair dominance over the market for live concerts, particularly since they merged in 2010 to create their current structure.
The combined entity has operated for its entire existence under a so-called consent decree imposed by the DOJ when it approved the merger. Under the decree, Live Nation is prohibited from retaliating against venues that refuse to use Ticketmaster. Those restrictions were set to expire in 2020 but were extended by five years in 2019 after the DOJ accused Live Nation of repeatedly violating the decree.
Ticketmaster has already tried to offer explanations for what went wrong on Tuesday, publishing a since-deleted in-depth blog post that said that it had misjudged demand for presale tickets and was ill-prepared for the millions of fans that tried to log in.
“I apologize to all our fans. We are working hard on this,” Liberty Media CEO and Live Nation chairman Greg Maffei said in an appearance on CNBC on Thursday. “Building capacity for peak demand is something we attempt to do, but this exceeded every expectation.”
Whether or not that explanation satisfies federal antitrust investigators, it does not appear to have been enough for Swift. In a statement issued Friday in which the star said the calamitous presale “really pisses me off,” Swift did not call out Ticketmaster explicitly, but laid the blame on an unnamed “outside entity.”
“I’m not going to make excuses for anyone because we asked them, multiple times, if they could handle this kind of demand and we were assured they could,” Swift wrote.
John Malone’s Liberty Media Corp. said Thursday that its board of directors has authorized management to pursue a split-off of the Atlanta Braves and its associated real estate development project and the creation of a new Liberty Live Group tracking stock, which will house the company’s 31 percent stake in Live Nation Entertainment, among other things.
Tracking stocks are designed to let investors track specific businesses that are part of a larger company. Liberty has used such tracking stocks in the past in the hopes of highlighting the performance and value of parts of its wide-ranging portfolio of assets.
“We plan to split off the Atlanta Braves into an asset-backed stock to better highlight its strong value. Additionally, post-split-off, we plan to recapitalize all of Liberty Media’s remaining common stock into three tracking stock groups,” said Greg Maffei, Liberty Media president and CEO. “These actions will provide greater investor choice and enable targeted investment and capital-raising through more focused currencies, while maintaining an optimal capital structure for Liberty Media and preserving optionality with respect to our subsidiary SiriusXM and our Live Nation stake.”
The split-off will be accomplished “through the redemption of Liberty Media’s existing Liberty Braves common stock in exchange for common stock of a newly formed company to be called Atlanta Braves Holdings Inc.,” the firm said. “Atlanta Braves Holdings would hold all of the businesses, assets and liabilities currently attributed to the Braves Group, including Braves Holdings LLC, which is the direct or indirect owner and operator of the Atlanta Braves Major League Baseball Club, certain assets and liabilities associated with the Atlanta Braves’ stadium and mixed-use development project, The Battery Atlanta, and corporate cash.” In connection with the Split-Off, Liberty Media would redeem each outstanding share of its Series A, Series B and Series C Liberty Braves common stock for one share of the corresponding series of common stock of Atlanta Braves Holdings. As a result of the Split-Off, Liberty Media and Atlanta Braves Holdings would be separate publicly traded companies. It is expected that the intergroup interests in the Braves Group held by Liberty Media’s existing Liberty SiriusXM Group and Formula One Group would be settled and extinguished in connection with the Split-Off in a manner to be determined.”
Following the completion of the split-off, Liberty Media wants to create a new tracking stock group, the Liberty Live Group. It would then have three tracking stocks: the Liberty SiriusXM Group, Formula One Group and the Liberty Live Group. The company said the third one would include “its interest in Live Nation Entertainment Inc., corporate cash, certain public and private assets currently attributed to the Formula One Group, Liberty Media’s 0.50 percent Live Nation exchangeable senior debentures due 2050, margin loan obligations incurred by its wholly owned special purpose subsidiary, which are secured by shares of common stock of Live Nation Entertainment Inc., together with other assets as may be determined from time to time by Liberty Media.”
Liberty Media said it expects to complete the split-off and the tracking stock reclassification in the first half of 2023.
This article was originally published by The Hollywood Reporter.
When Live Nation reported $1.8 billion in first-quarter revenue in May, CEO Michael Rapino told investors, “Artists are back on the road and fan demand has never been stronger.” But while the concert business has largely returned to financial health in 2022 after a wobbly recovery last year, a number of acts eager to get back on the road and tap back into their primary income stream have instead found prohibitive costs that would significantly eat into or eliminate profits. And that has left them frustrated, if not furious, that the bullish picture painted by promoters and venues has eluded them.
A confluence of devastating economic factors — gas prices, artists flooding venues to make up revenue lost in the pandemic, airport chaos, supply chain shortages for tour buses, drivers, crew and equipment — has throttled even the heartiest of touring acts, especially indie artists. “The smaller shows are getting annihilated,” says Brian Ross, manager of Thievery Corporation, Guerilla Toss and Forty Feet Tall. He estimates net tour profits dropped 10% to 15% in spring and summer due to higher expenses.
Since Rapino’s rosy report in the spring, numerous previously successful touring acts have canceled shows for a variety of reasons, from COVID-19 to mental health to expenses, including Justin Bieber, Shawn Mendes, Ringo Starr, Jimmy Buffett and Animal Collective. “It’s pretty bad out there,” says Tom Windish, the Wasserman agency head of A&R who represents Billie Eilish, Tove Lo, Viagra Boys and others. “A lot of bands are going out on tour thinking they’re going to make money, and they came home and lost money.” Before the pandemic, Windish adds, many artists made their take-home pay on the “last 20% of the revenue — and now that 20% goes away.”
“It’s an extraordinarily challenging time,” says Joady Harper, founder and CEO of Rocky Road Touring, agent for U.K. bands The Mission, The Chameleons and Theatre of Hate, which postponed their 32-date triple bill club and theater tour until fall 2023 due to exorbitant costs and difficulties procuring visas. “Everybody’s sitting at home, twiddling their thumbs and counting their pennies, because the income they thought they’d have for that period just isn’t there.”
For Harper, whose company represents more than 50 acts, 2022 began in a “high spot,” with artists excited to hit the road post-quarantine and fans buying plentiful tickets. Then Russia invaded Ukraine, gas prices and plane fares shot up, and many tours were “no longer financially viable.”
“All of that on top of the already-tapped mental, spiritual, physical and emotional resources of just having made it through the past few years,” Santigold posted on Facebook in September when she announced she was canceling her tour. “Some of us are finding ourselves simply unable to make it work,” she wrote, striking a chord with frustrated musicians.
With a larger number of acts booked into a pandemic-reduced number of venues, the concert business’ supply-and-demand mechanics have shifted as well. An act that drew 1,000 fans to a show might now wind up with 800 people, according to David T. Viecelli, Chicago agent for Pavement, Joanna Newsom, Bonnie “Prince” Billy and Wire. “There’s too much going on, and people aren’t going to four shows a week anymore,” he says.
Even for largely sold-out tours like Pavement, the no-show rate has spiked due to illness or fear of it, which means a drop in merchandise sales, he adds. “It kind of hits you from all sides.”
In order to stay on the road, artists are strategically cutting costs. Ann Henningsen, who manages singer-songwriter Chris Berardo, says he has been performing more frequently with his acoustic trio than his preferred six-man rock band. Ross says Guerilla Toss has cut down on hotels. Sam Luria, who manages New Zealand’s Broods, says the duo’s lighting director programs the technology remotely rather than traveling with the crew. “You’re getting a pretty similar outcome,” he says, “but saving a good amount of money.”
One solution is that bands who might have been poised for headlining tours are pairing with others — Bodysnatcher is opening for Hatebreed, for example. “Maybe you’re not going to sell the same level of merchandise you would, but eventually you will,” says Scott Givens, senior vp of rock and metal at MNRK, the label representing Bodysnatcher. “You don’t want anybody losing money.”
Givens is optimistic the touring economic storm will pass, hoping for a broader recovery in the world economy. “We’ll be fine,” he says. Jeff DeLia, manager of The Blind Boys of Alabama, A.J. Croce and others, acknowledges the financial pain but adds that his clients remain upbeat, telling him, “We know this isn’t going to last, and we’ve just got to fight through these things.”
Less than a year after the final coronavirus restrictions were dropped on concert capacity and attendance, the country’s largest two concert promoters are forecasting record sales in 2023 across a broad swath of building categories and genres. Although another promoter says he’s concerned the future is not nearly as bright for new acts.
Live Nation’s chair for global touring, Arthur Fogel, says his company has seen “absolutely no diminishment in sales” since the full-scale return of concerts and believes there is still significant growth opportunity for the company’s top-line touring acts to command record grosses.
Likewise, AEG Presents president for North America Rick Mueller says that ticket sales for shows already on sale in 2023 indicate record revenue and attendance at every capacity level in the concert space, “from [13,000-capacity] Forest Hills Stadium in Queens, N.Y., to the [500-capacity] Roxy in Los Angeles. We’re going to make a little more next year and work a lot harder for it,” he says, predicting that staffing and supply chain shortages will remain substantial challenges.
“I used to think oversaturation was the biggest threat to the industry, but I no longer believe that bears out,” Mueller adds. His counterpart at Live Nation, Fogel, agrees, noting that less than 1% of events promoted by Live Nation were canceled in 2022.
Neither executive believes economic headwinds from prolonged inflation will significantly diminish sales or lead to a short-term rollback on prices for big-ticket tours, like Bruce Springsteen’s 2023 Live Nation run. “The level of spending around the show hasn’t changed,” says Fogel.
He also says that the top 20 stadium and arena tours “at any given time” are now more diverse than ever, representing multiple genres across multiple demographics. For example, Bad Bunny’s El Último Tour del Mundo tour is the highest-grossing Latin outing in Billboard Boxscore history.
Independent promoter Jim Cressman, founder and owner of Canada’s Invictus Entertainment, says that Live Nation and AEG’s bullish outlook for 2023 is good news for the concert business but worries there’s not enough entry points for new fans or new bands.
“The added expenses that artists have because of inflation and rising energy costs make the economics very difficult for developing acts,” he says, echoing the complaints of indie managers. Cressman recommends that these artists connect early with sponsors to underwrite their tours. “Before the pandemic, sponsors provided a nice income bump,” he says. “Now, they’re critical to covering your costs.”
The Ledger is a weekly newsletter about the economics of the music business sent to Billboard Pro subscribers. An abbreviated version of the newsletter is published online.
Most publicly traded companies have released earnings for the latest quarter (ended Sept. 30), and most of those results have shown encouraging signs for investors and the music industry alike. Earnings by Universal Music Group, Spotify, Live Nation, SiriusXM are in the books. Notable companies yet to announce include Warner Music Group (Nov. 22) and Tencent Music Entertainment (Nov. 15).
If there is one over-arching narrative, it’s that inflation and economic uncertainty haven’t ruined music’s post-pandemic recovery. Revenue growth is strong, aside from some softness related to a slowdown in advertising spending that impacts broadcast radio and ad-supported streaming. Consumer spending on everything from concerts to vinyl records is healthy – despite the around-the-clock warnings of an impending recession and the highest inflation rates in four decades eating into consumers’ wallets. When companies have raised prices for tickets and concessions at concerts, music fans, by and large, haven’t blinked. Even long-stagnant music subscription prices are on the rise, and nobody expects a consumer backlash.
Not that music companies’ stock prices reflect this optimism. Stocks in general have taken a beating in 2022. Music stocks have suffered, too, although stocks ended the week on a high note. The Billboard Global Music Index, a measure of 20 publicly traded music companies’ stocks, climbed 12.7% this week after markets rallied on Thursday and Friday on encouraging news about the slowing U.S. inflation rate.
Here are five quick takeaways from third-quarter earnings and the statements made by the companies’ management teams.
1. The subscription business model is insulating creators and rights holders from economic uncertainty. Music royalties are popular with investors in part because they are counter-cyclical, meaning their returns have little correlation with changes in the broader market. Put another way, when the economy sours, people are more likely to cut back on grocery spending or travel than cancel a Spotify subscription. Consumers might feel pinched in their pocketbooks, but Spotify and SiriusXM added 7 million and 187,000 subscribers, respectively, in the third quarter, and YouTube announced on Wednesday that it surpassed 80 million subscribers to YouTube Music and Premium, an increase of 30 million in about 14 months. Stock prices at companies more exposed to inflation pressures fared best on Thursday, as stocks surged on news that the annual change in the consumer price index in the U.S. fell to 7.7%. Shares of radio companies iHeartMedia and Audacy climbed 10.0% and 14.0%, respectively. Live entertainment companies also did well: MSG Entertainment was +5.6%, Live Nation was +5.1%, and ticketing companies Eventbrite and Vivid Seats were +8.3 and +9.2%, respectively.
2. Podcasts are a growing, stabilizing force. Spotify’s podcast business has rightly captured headlines as the company uses spoken-word content to build engagement, generate advertising revenue and improve on the gross margins of its core music business. The number of monthly users who consumed podcasts grew “in the substantial double-digits” year-over-year, the company said. But other companies’ podcast businesses get less attention despite their importance to their own futures. Radio companies – namely iHeartMedia, Cumulus Media and Audacy – have fast-growing podcast businesses. LiveOne, primarily a music streaming company, has a fast-growing podcast division, PodcastOne, that made $17.2 million of revenue in the last two quarters on the strength of such shows as The Adam Carolla Show, Cold Case Files and Uncut with Jay Cutler. The catch is that podcast growth has little direct impact on the music business outside of helping those platforms – digital and broadcast – that produce royalties for record labels and publishers. Music rights owners could better tap into this growing market if there were better systems for licensing music to podcast creators.
3. With share prices relatively low, companies are increasingly buying back shares to bolster shareholder value and help share prices. Among the companies currently engaged in stock repurchase programs are Spotify, MSG Entertainment, Cumulus Media, Audacy, SiriusXM, Townsquare Media and LiveOne. Spotify announced a $1 billion share buyback program in August 2021, and it spent $2 million and $24 million repurchasing shares in the second and third quarters, respectively. Cumulus Media has $21.1 million remaining in its $50 million share repurchase authorization announced in May. Last month, MSG Entertainment authorized $75 million for share buybacks on top of a $175 million, one-time dividend worth $7 per share paid on Oct. 31 to shareholders of record on Oct. 17. And LiveOne announced on Thursday that it will expand its share repurchase program, originally planned for 2 million shares (worth about $1.5 million at Friday’s closing price), by an additional $2 million. More buybacks could be on the way soon: Universal Music Group shareholders voted in May to give the company’s board the ability to repurchase up to 10% of the issued share capital.
4. Strong growth in “rest of world” markets. Believe’s revenue in Asia Pacific and Africa grew 61.1% to 52.3 million euros ($53.2 million), about the same as its European revenues excluding France and Germany. Spotify’s “rest of world” markets improved their share of monthly active users to 26% in the third quarter, up from 21% in the prior-year period. Also, “rest of world” and Latin America each gained a percentage point in shares of Spotify subscribers while North America and Europe both lost a percentage point of subscriber share. As Billboard’s Elizabeth Dilts Marshall reported last week, investors are increasingly eyeing companies in the Middle East and North Africa as streaming transforms those regions.
5. Spinoffs are going to separate high-growth, high-potential businesses. MSG Entertainment plans to spin off its MSG Sphere venue currently under construction in Las Vegas along with its Tao Hospitality Group. The remaining MSG Entertainment will retain the live entertainment business – namely the portfolio of venues such as Madison Square Garden and Radio City Music Hall – and MSG Networks, a sports broadcast network. Ryman Hospitality will spin off its Opry Entertainment Group – possibly within four years, based on its agreement with two new investors, Atairos and NBCUniversal. LiveOne plans to file an S-1 document with the SEC by Dec. 15 for a spin-off of its podcast division, PodcastOne, which accounted for about 37% of the company’s total revenues in the six-month period ended Sept. 30. LiveOne’s management and board believe the company’s share price undervalues the sum of its parts and spinning off PodcastOne would maximize shareholder value and better position the division for M&A and talent acquisition.
Despite various economic headwinds, including inflation, we have not seen any pullback in demand,” Live Nation CEO Michael Rapino said during the company’s earnings call on Thursday (Nov. 3). In the third quarter, Live Nation posted record revenue for its concerts division of $5.3 billion as well as the company’s best-ever gross transaction value at its Ticketmaster division of $6.7 billion. Its high-margin sponsorship and advertising division also produced record adjusted operating income of $226 million, up 56% from the same period in 2019.
Looking ahead to 2023, Live Nation is “feeling very good about the attendance levels for next year,” said president and CFO Joe Berchtold. “Our tickets sold for the shows that we have on sale for next year are up consistently across all venue types relative to a year ago.” Excluding rescheduled events, Ticketmaster’s sales for 2023 concerts are up by double digits compared to advance ticket sales at the same point in 2021.
Demand depends on the supply of artist tours, and Live Nation executives believe next year’s tours will have a similar level of quality as this year’s headline tours, which included runs by Bad Bunny, Red Hot Chili Peppers and The Weeknd, among others. “If you were a stadium act, a large selling arena act, you probably debated whether you went out in ‘22 or you went out in ‘23,” said Rapino. “From clubs to stadiums to arenas, it looks like a similar year [in terms of] quality.” Next year, Live Nation will promote tours by Taylor Swift, Blink-182, Shania Twain, Dead & Company, Depeche Mode and the Eagles.
The warning signs for pending economic doom are everywhere. On Thursday, hedge fund giant Elliott warned of a “global societal collapse” and a further 50% decline in equity markets due to hyperinflation and an end to an “extraordinary” period of cheap money. The same day, the Bank of England warned that the U.K., facing high energy costs and rising interest rates, could suffer its longest-ever recession and a possible doubling of unemployment over the next two years.
The biggest banks have raised concerns, too. On Wednesday, Citi said the U.S. could fall into a recession in the second half of 2023. JPMorgan Chase & Co. CEO Jamie Dimon said earlier this month the global U.S. economies would hit a recession in mid-2023, although he added the U.S. economy was “actually still doing well” at present.
The U.S. economy is a grab bag of mixed signals that point to both resilience and stress. U.S. payrolls increased by 261,000 in October. Yet auto loan delinquencies are on the rise, according to TransUnion, and repeated interest rate hikes by the Federal Reserve means consumers with credit card balances will pay more in interest.
But Live Nation’s numbers show fans are spending money on concerts in record numbers. At Live Nation’s U.S. amphitheaters and global festivals, ancillary fan spending — which covers items such as food, beverage, merchandise and parking — in the third quarter increased almost 30% to $38 per fan from the same period in 2019. At U.S. and U.K. theaters, ancillary fan spending increased by over 20% relative to 2019.