To recap the biggest industry news of 2007, one must first pick a philosophy. What do you believe in?
Money? The top concerts acts saw more than a 15 percent downturn but the overall infrastructure remains sound.
Innovation? Live Nation’s think tank of concert veterans and fresh faces is developing a truly new model for the public equity markets to digest, from "360" deals with Madonna to retiring amphitheatres. Meanwhile, Prince was at the forefront of an increasing trend – residencies.
It was Prince who decided Las Vegas was not the only town worthy of extended artist runs, selling out a record-breaking 21 nights at The O2 arena in London. Bon Jovi followed suit with a mammoth run to open the new Prudential Center. Are we at the dawn of the era of the "stationary" tour? Not likely but it’s becoming increasingly common.
Tradition? Those who cherish heritage saw big changes with the retirement of the Monterey Peninsula Artists and Little Big Man Booking names as Sam Gores created his new Paradigm.
Maybe steady business growth is exciting to you. AEG Live has methodically increased its positioning in the real estate market, investing in new arenas like the Sprint Center and "The Rock," building new rooms of its own like the Nokia Theatre L.A. Live and The O2 arena, and expanding into third-party facility management. AEG has also been quietly opening up offices around the country, many of them staffed with former Live Nation employees.
That’s not to slight the industry behemoth. For all of the ups and mostly downs of Live Nation’s stock in 2007, most major financial analysts still predict the company will make a profit in 2008.
The company has already integrated merchandising into its vertical business model by acquiring Signatures Network, Trunk Ltd., UltraStar and MusicToday. It continues to expand the Fillmore brand, build new House of Blues clubs and increase its presence in the mid-size venue market.
The only question as the year came to a close was if any of the advancements on improving the bottom line would come at a human cost. As it is with all winter holidays, rumors were flying that Live Nation’s payroll would be streamlined in January.
Ozzy Osbourne became the Martin Luther of the concert world last year, spray-painting his manifesto on a banner at a CIC press conference for Ozzfest: "FREE." For whatever reason – be it Ozzy’s desire to give something back to the fans or Sharon’s disgust at rising guarantees for support acts – the Osbournes, Live Nation and agent Marsha Vlasic, plus sponsors like Jagermeister, figured out a way to tour a festival with a zero ticket price.
Then there was, OMG, Hannah Montana. In a world filled with Van Halen, Spice Girls and Police reunions, it took a 15-year-old with a wig made of tinsel to remind the concert business what a real phenomenon was. Judging by the number of old friends who came out of the woodwork looking for help with tickets, many grizzled industry execs told Pollstar that the demand for this tour was the biggest they have ever seen.
Four professional moves stand out. One is the move of former Live Nation music prexy Charlie Walker to Texas, where he joined some old friends and opened promotion company C3 with Charles Attal and Charlie Jones. Another move was Bruce Eskowitz, who, after helping to launch the free Ozzfest tour, left Live Nation to tour dead bodies at Premier Exhibitions. A third big move was made by Kelly Clarkson, who left The Firm and what seemed to be a bulletproof management team. And for our fourth move? How about Lou Pearlman dancing his way into iron-barred public housing?
Outside of Live Earth (and Live Nation’s praiseworthy efforts in organizing some of its locations), there were three live performances that 2007 will be remembered for. One, Britney Spears’ career collapse at the MTV Music Awards. Another was Led Zeppelin at the O2, which sparked a worldwide clamor for a reunion tour. The third notable live performance was the Phil Spector trial.
Ultimately, Pollstar would like to submit a major trend of 2007, one that touches on all of the above.
Last year was about ticketing. Who has the technology to sell tickets? Who can resell tickets? Can artists legislate away the secondary market? In hopes of controlling the almighty ducat, companies were folded together and sometimes unzipped again. Meanwhile, only five states still have scalping laws.
Ah yes, the secondary ticketing market. At last year’s CIC, StubHub CEO Jeff Fluhr – fresh off of a $310 million sale of his company to eBay – saw firsthand how passionate the industry is about who controls ticket profits. Everyone who has a suit, a phone and an artist on speed dial wants in.
Which brings us to a small article Pollstar ran in March, where Princeton University Professor Alan Krueger documented his research on the secondary ticketing market. He found only 10 percent of tickets purchased by concertgoers were made in the secondary market. It is a relatively small amount, but it recognizes that the 10 percent includes the choice seats.
Ticketing in 2007 also meant a business matrix that involved Barry Diller, Front Line Management and Ticketmaster. When Diller’s IAC invested in Front Line, it brought Irving Azoff’s and Howard Kaufman’s company partly under the same roof as TM. Meanwhile, Azoff and company are quietly building a management colossus whose real industry impact is yet to be felt. Diller, for his part, has started to unzip TM from IAC, opening the possibility that it may end up with a new owner, too. Changes, changes, changes. Such is the way of the suits.
Meanwhile, Ticketmaster quietly bought up a major competitor, Paciolan. To the venues that used Paciolan systems to sidestep TM, this was the biggest story of their year.
Finally, 2007 was about the biggest entertainment divorce since Sonny & Cher.
In about 12 months, the industry will find out who gets custody of the dog – Live Nation or Ticketmaster. Ticketmaster said it was done kissing the cloth of Live Nation – a company that provided up to 15 percent of TM’s bottom line. Live Nation will go it alone, creating a new ticketing system with partner CTS Eventim.
That suits Live Nation just fine. It wants control of its customer database and is confident it has the ability to create an in-house alternative to Ticketmaster. Meanwhile, Ticketmaster says it will do just fine, too. There are plenty of other income sources out there.
According to behind-the-scenes chatter, Ticketmaster, which has spent decades death-proofing its system against mammoth crashes, is content to sit back and observe Live Nation’s first major ticket onsale with CTS Eventim.
Any way you look at it, 2007 was interesting. There’s absolutely no reason not to expect 2008 will be filled with even more head-scratching surprises.