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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.
A year after the deadly disaster at Travis Scott‘s Astroworld festival on Nov. 5, 2021, event organizers and victims are still locked in sprawling litigation over the tragedy, with hundreds of millions in potential damages on the line and no quick end in sight.
Beginning just hours after the incident, more than 4,900 alleged victims have filed legal claims against Live Nation, Travis Scott and other festival organizers over the disaster at Astroworld, in which a crowd crush during Scott’s headlining performance left 10 dead and hundreds physically injured.
The cases claim the organizers were legally negligent in how they planned and conducted the event, including not providing enough security and having insufficient emergency protocols in place. One case, filed by the family of a boy who died that night, claimed Live Nation and Scott had “egregiously failed in their duty to protect the health, safety, and lives of those in attendance.”
Combined, the cases are seeking billions in damages over the disaster. Even if a final settlement comes no where close to that total — and it likely won’t — the huge potential penalties resulting such “mass tort” cases should serve a stark reminder for those planning future music festivals.
“In business situations there’s always a pressure to cut costs, but you can’t cut costs in a way that ends up costing people lives and limbs,” says Mark Geistfeld, a professor at New York University School of Law and an expert in such litigation. “The point of mass torts is that you need something out there to temper the profit motive.”
“These cases can be a real wake up call,” Geistfeld says. “Are we actually spending enough on security and things like that to make sure these kinds things don’t happen?”
The lawsuits over Astroworld were all filed individually by the different victims, but they’ve been consolidated before a single Texas state judge as a “multidistrict litigation” — a standard procedure aimed at avoiding the inefficiency of individually litigating many cases that share key similarities.
Such a move not only helps streamline the proceedings, but also could make it easier to reach a broad settlement with all victims, like the $800 million deal that ended similar litigation over a 2017 mass shooting at a Las Vegas concert festival.
“Settlements are the way these cases almost always end,” says Jay Tidmarsh, a professor at Notre Dame Law School and an expert in complex civil litigation. “They make sense because of the risks of loss on both sides as well as the cost of litigation.”
A year into the case over Astroworld, sources close to the litigation tell Billboard that the parties are currently in the midst of what is known as discovery — the laborious process during lawsuits in which each side hands over mountains of evidence to their opponents, like internal emails about how the event was planned. Requests for such info have been exchanged, and disputes over what should be disclosed will be hammered out by the judge in the months ahead.
The parties are also gearing up to start depositions, in which attorneys for each side will take testimony from the various figures in the case, potentially including victims themselves, witnesses to the disaster, people involved in planning and many others. Each side is also lining up their own “expert witnesses” — specialists and professionals who will offer dueling analysis on what went down at Astroworld.
That work could still take well over another year, given the sweeping scope of a case involving more than a dozen defendants and thousands of plaintiffs. But when discovery and depositions eventually wrap up, the case will likely head in one of two ways.
One is a quick settlement. Based on what gets disclosed during discovery, it could become apparent to attorneys for the organizers that they’re facing a very strong case. Or plaintiffs might get worried that their ultimate damages award might be limited, even after years of costly litigation.
“One way these cases go is what’s called global peace — a large settlement that will cover all of these claims,” Geistfeld says. “If the amount is right, it might just be better for both sides to take that route rather than go to case by case litigation.”
If the parties can’t reach such a deal, they’ll keep litigating. But they won’t just take all 4,900 cases to trial. Instead, the litigation will likely proceed toward what are known as “bellwethers” – a handful of trials over individual victims that aim to serve as a representative sample of the broader case.
In the bellwethers, the two sides will grapple over the core question in all the cases — whether the conduct of Live Nation, Scott or any of the other planners caused the injuries suffered by various concertgoers. As reported by Billboard last year, that question will turn on whether the planners could have seen such a disaster coming, and whether they then took the proper steps to avoid it.
No matter how those early cases play out, experts say the case is still likely to eventually end in a settlement. But the outcome of the bellwethers will play a huge role in decided how that deal is ultimately structured.
“What [bellwether trials] do is set a baseline for negotiation,” Tidmarsh says. “Say the plaintiffs lose almost all of the early cases, then the settlement value goes way down. Say they win millions, then the value goes way up.”
Trailblazing Black women in entertainment will be celebrated with an annual ceremony, the Give Her FlowHERS Awards Gala, Billboard can exclusively reveal.
An initiative of Femme It Forward, the Give Her FlowHERS Awards is set for next Friday, Nov. 11 at the Beverly Hilton Los Angeles, with funds raised on the night supporting Femme It Forward’s mentorship program, Next Gem Femme.
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Femme It Forward, the female-led music and entertainment platform, launches the event to fete trailblazing Black women in entertainment who “empower, uplift, and inspire change.”
First-time Special Awards honorees include breakthrough hip-hop star Latto (“The Big Femme Energy Award”); songwriter and artist Jozzy (“The Pen It Forward Award”), R&B singer and songwriter Muni Long (“The Bloom Award”); Lashon Jones, mother of rapper Lil Baby (“Moms I’d Like to Follow” or M.I.L.F. Award); singer-songwriter Victoria Monet (“The Visionary Award”); and high-profile couple Ciara and Russell Wilson (“The Black Love Award”)
Also, organizers will today announce honorees who have made “an invaluable impact as mentors” as part of the Next Gem Femme program. The list of 22 mentors to be honored — as voted on by their mentees — includes Baroline Diaz (Interscope), Dimplez Ijeoma (Capitol Music Group), Madeline Nelson (Amazon Music), Nicole Wyskoarko (Interscope Geffen A&M), Valeisha Butterfield Jones (Google), Alex Maxwell (Live Nation) and Diana Dotel (MTW), among others.
Emerging artists will also get time in the spotlight on the night, from Baby Tate, Mapy The Violin Queen, Joyce Wrice and Alex Vaughn, while Jasmine Solano is booked to DJ at the afterparty.
The gala “is a realization of the work we do year-round with Femme It Forward to champion, empower, and celebrate the women who are pushing our culture forward every day,” comments Heather Lowery, president and CEO of Femme It Forward.
Lowery and her team “wanted to take it a step beyond a traditional awards show and create a special experience that truly represents everything our culture is about: family, love, sisterhood, entrepreneurial spirit, innovation and artistic brilliance,” she continues.
Initially launched under the Live Nation Urban banner, Femme It Forward is now a joint venture with parent Live Nation Entertainment. Its mission, to celebrate, educate, and empower the industry’s “most creative and accomplished female visionaries through multi-format, multi-market consumer experiences,” according to a statement.
Additional details for the inaugural gala will be announced ahead of showtime.
Visit GiveHerFlowHERS.com for more and buy tickets at femmeitforward.com/gala.
Fans waiting to buy tickets to Taylor Swift’s Eras tour next week should expect two things: high demand and high prices. After all, it’s been five years and four albums since Swift toured, with her newest album, Midnights, on track to be the best-selling record of the year — earning Swift the title of first artist to ever have 10 songs dominate the top 10 of the Hot 100 chart.
That popularity means that Swift can set high prices for her tickets — most seats will be priced between $200 to $400, with floor tickets going for as much as $800 a piece. Platinum tickets will cost even more with some selling for thousands of dollars per ticket.
If there’s any consolation for the impending sticker shock, though — which has caused outcry over recent Bruce Springsteen and Blink-182 tours as well — it’s that unlike with some of Swift’s past tours, most of that money will be going into her pocket, and not scalpers.
Much like with album marketing and record-breaking sales, as well as revolutionary stances around artists owning their masters and streaming royalties, Swift has had a profound effect on the concert ticket market over the years. Throughout much of her early career, Swift was a master of pricing and marketing and distributing concert tickets to her growing fan base, who eagerly bought up tickets to tours arounds hit albums like Fearless and Red. Unfortunately, scalpers were buying up tickets too. By 2015, with her tour supporting Swift’s crossover pop album 1989, average prices on the secondary market were going for two to three times face value.
In 2016, promoter Louis Messina — who has been working Swift since she was 17 — had been celebrating the mega-successful 1989 tour, which grossed a staggering $250 million worldwide, when a well-known entertainment executive and friend bragged that he had made more on the tour than Swift or Messina. The executive enjoyed a far more profitable haul from the tour thanks to his ownership in a ticket scalping business that was selling 1989 tickets at a four-to-five-times markup. Messina and Swift had priced the tickets so low, and fan demand was so high that anyone flipping tickets for the concert was bound to make a big return.
The nexus between ticket prices at the box office and what ticket flippers can sell them for on sites like StubHub was also a problem that Live Nation chief executive Michael Rapino wanted to solve. Working with then Ticketmaster president Jared Smith, newly hired head of music David Marcus and company product engineers, the team developed an aggressive pricing strategy to make more money for artists by pricing tickets closer to what they would sell for on the secondary markets.
After piloting the program with Jay-Z in early 2018, Ticketmaster began implementing its new pricing strategy for Swift’s Reputation Tour later that year. Compared to the 1989 tour, the Reputation Tour average ticket price was only about 10% more, but the best seats in the venue were priced significantly higher than in past years, thanks to new Ticketmaster tools that allowed it to optimize a venue’s seat map on a seat-by-seat basis. Ticketmaster also created a fan identification tool for Swift called SwiftTix, which had fans register in advance for an opportunity to buy tickets during the show’s presale, with their place in line partially boosted by purchasing fan merch and posting about the Reputation tour online. Today, the pricing strategy Swift used has become a staple of how most major tours are priced to capture more profit for artists, while advance registration has become a staple of most high-demand shows. For the Eras tour, for example, fans who register in advance get first crack at tickets while those held onto tickets for Swift’s canceled 2020 Lover Fest shows received even higher priority access for the Nov. 16 onsale.
Swift initially faced massive backlash over higher-than-expected ticket prices for the Reputation Tour, as well as criticism that SwiftTix was a money grab at the expense of fans. She was excoriated in the press, bashed on Twitter and targeted by ticket brokers for allegedly ruining her career. Not long after tickets went on sale, Gary Adler, executive director of the North American Ticket Brokers association penned a piece called “Why Taylor Swift’s Reputation Tour Is a Total Disaster” saying Swift’s sales scheme was the “best example of how not to sell tickets to a large tour.”
Adler could not have been more wrong. By avoiding the urge to price tickets so that they would immediately sell out, Swift’s long game, higher priced approach brought in $345.7 million, making it one of the highest grossing tours of all time.
When Swift’s tickets go on sale next week, millions of fans will be waiting for a confirmation email to notify them when it is their turn to buy tickets and fans will collectively spend hundreds of millions of dollars buying up seats. Based on the size of the tour, the popularity of Swift and the five years since Reputation, some fans will not be able to get the seats they want or will not pay the asking price, either because they can’t afford it or because they do not think it’s worth the money.
Again, angry fans will go on Twitter to complain about soaring prices, rage at Ticketmaster and lament about how things used to be, when tickets cost less — and, as they’re likely to forget, when scalpers bought them up in a frenzy. And they can thank their favorite “Anti-Hero,” Swift, for helping to develop a ticketing model that shifted more money into the pockets of artists, instead of scalpers — raising upfront prices for fans in the process. Whether that’s a solution or a new problem altogether, those who do buy tickets are likely to be applauding next year anyway when she sings, “It’s me, hi, I’m the problem, it’s me.”
Live Nation set records for concert revenue and ticket sales in the third quarter of 2022 as the touring industry continued its recovery from the COVID-19 pandemic. Third-quarter revenues were $6.2 billion, 66.8% greater than the same period in 2019, while adjusted operating income increased 45% to $621 million, the company announced Thursday (Nov. 3).
“Fans around the world continue prioritizing their spend on live events, particularly concerts,” said president and CEO Michael Rapino in a statement. “Despite varying economic headwinds including inflation, we have not seen any pullback in demand, as on-sales, on-site spending, advertising and all other operating metrics continue showing strong year-on-year growth.”
The concerts division tallied its highest-ever quarterly attendance with 44 million fans at 11,000 events that generated $5 billion of revenue and $281 million of adjusted operating income (AOI), up 67% and 44%, respectively, from the same period in 2019. Demand was strong across all types of venues and markets. Stadium attendance tripled to almost 9 million as many top artists, including Bad Bunny (the highest grossing Latin tour in Boxscore history), Red Hot Chili Peppers and The Weeknd, took advantage of strong fan demand by performing the larger venues.
Ticketmaster also had a record-breaking quarter by delivering its highest fee-bearing gross transacted value of $7.3 Billion, a 62% increase from the same period in 2019. Ticketing revenue was $343 million, up 96.7% year-over-year and 36.8% greater than the same period in 2019. Ticketing’s AOI of $163.2 million was 5% lower year-over-year but 28.2% above the third quarter of 2019.
Ticketmaster has made headlines because some artists — namely Bruce Springsteen and Blink-182 — opted for dynamic pricing that charged more for the best seats. The practice may frustrate some fans, but Live Nation expects to transfer over $550 million to artists through higher primary ticket prices — value that might otherwise have been captured on the secondary ticketing market.
Sponsorship and advertising revenue was up 59.4% to $343 million on the strength of Live Nation’s festivals and Ticketmaster platform integration. The high-margin segment’s AOI of $226.2 million was 103.4% better year-over-year and 69.8% higher than the same period in 2019. Confirmed sponsorship revenue for 2023 is up 30% over the same period a year ago.
Through September, ancillary fan spending at U.S. amphitheaters was up 30%. “The consistent theme is that fans are eager to enhance their experience, as we continue elevating our hospitality operations and provide more premium options,” said Rapino.
Looking ahead, the busy touring season will continue into 2023 and consumer demand appears to be holding strong despite widespread fears of an upcoming recession and tightening budgets due to persistent inflation. “Ticket sales for shows in 2023 are pacing even stronger than they were heading into 2022, up double-digits year-over-year, excluding sales from rescheduled shows,” said Rapino. Through the third quarter, Ticketmaster sold over 115 million, up 37% from the same period in 2019.
Live Nation’s share price rose 4.6% to $79.90 in after-hours trading on Thursday following the earnings release.
Financial metrics
Total revenue: $6.2 billion, up 63.TK% from 2019
Adjusted operating income: $621 million, up 45% from 2019
Concert revenue: $5.29 billion, up 66.8% from 2019
Ticketing revenue: $531.6 million, up 36.8% from 2019
Sponsorship and advertising: $343 million, up 59.4% from 2019
Fan metrics
North America concerts; 8,261, up 14% from 2019
International concerts: 2,958, up 57.4% from 2019
North American fans: 29.1 million, up 27.7% from 2019
International fans: 15.2 million, up 71.9% from 2019
Fee-bearing tickets: 73.4 million, up 32.7% from 2019
Calls to break up Live Nation Entertainment are getting louder.
The American Economic Liberties Project, a nonprofit advocating for more aggressive antitrust enforcement, urged the Department of Justice on Wednesday to unwind the merger between Ticketmaster and Live Nation for allegedly price gouging customers in addition to strong-arming artists and venues into accepting unfavorable conditions. In a letter to the DOJ obtained by The Hollywood Reporter, the group claims that the live-events behemoth continues to violate the conditions of a 2010 settlement greenlighting the deal.
“Ticketmaster’s market power over live events is ripping off sports and music fans and undermining the vibrancy and independence of the music industry,” said Sarah Miller, executive director of the American Economic Liberties Project. “With new leadership at the DOJ committed to enforcing the antitrust laws, our new campaign helps connect the voices of fans, artists and others in the music business who are sick and tired of being at the mercy of Ticketmaster’s monopoly with enforcers who have the power to unwind it.”
Ticketmaster and Live Nation merged in 2009, two years after the live-events organizer announced plans to build its own ticketing service. Prior to the deal, Live Nation was Ticketmaster’s largest customer.
The merger was met with pushback. Bruce Springsteen, upset at Ticketmaster for steering concertgoers toward its own secondary ticketing platform, wrote in a 2009 letter to his fans that “the one thing that would make the current ticket situation even worse for the fan than it is now would be Ticketmaster and Live Nation coming up with a single system, thereby returning us to a near monopoly situation in music ticketing.” (Springsteen’s current tour lists dates with Ticketmaster listings.)
At the time, David Balto, an antitrust attorney at the Center for American Progress Action Fund, testified to the Senate that the combined company “will cut off the air supply for any future rival to challenge its monopoly in the ticket distribution market,” and use its newfound reach to “diminish competition in independent concert promotion.”
Antitrust regulators approved the deal with certain conditions. They required Ticketmaster to sell its ticketing service subsidiary, Paciolan, to Comcast and to license its ticketing software to Live Nation’s rival, AEG. The new company was also not allowed to bundle or retaliate against venues for working with other ticketing services.
The American Economic Liberties Project argues that Live Nation is violating the consent decree. It points to conditioning the availability of the company’s performers to independent venues using Ticketmaster’s services.
“Live Nation essentially uses its concert promotion services to bully venues away from using the few competitors that Ticketmaster still has,” states an analysis from the group. “If a venue opts not to use those services, Live Nation retaliates by effectively boycotting the venue. Because Live Nation controls so much of the market for concert promotion, being able to book performers who contract with Live Nation can make or break a venue’s ability to survive.”
In 2019, the DOJ found that Live Nation had been violating the terms of the settlement by forcing venues to accept Ticketmaster’s ticketing services as a condition for hosting Live Nation performers and retaliating against those that refused. The agency, in turn, threatened to assess monetary penalties for additional violations and installed a monitor tasked with investigating further breaches of the consent decree, which was extended until 2025.
The organization also claims that Ticketmaster wouldn’t be able to charge hidden and excessive fees if it weren’t an illegal monopoly and that it facilitates price gouging by encouraging scalping. The company runs a secondary ticket market called Ticketmaster Resale, where they charge a second, more lucrative fee in addition to the fee assessed on its primary ticket market. By allowing scalpers to buy up the majority of tickets, Ticketmaster can essentially assess a second fee on consumers who missed out on the initial sale of concert tickets.
“Ticketmaster has an incentive to minimize the genuine sales by concertgoers on the primary market, by either restricting sales or allowing scalpers to buy, and then profiting from the price gouging in the secondary market, where consumers pay far more,” the analysis states. (The American Economic Liberties Project’s petition is here.)
This article was originally published on THR.com.