In an Aug. 7 earnings call, the company acknowledged a flat season despite a big uptick in festival and shed attendance numbers, and expects the trend to continue through the year.

Concert revenue fell 0.6 percent to $1.08 billion in the quarter despite a 6 percent rise in global attendance figures. However, merch sales saw a big dropoff, giving the Artist Nation segment a 7.8 percent drop in revenue.

Net income for the period ended June 30 slipped to $7.69 million, or 4 cents per share, from the $13.3 million, or 7 cents per, of one year ago. Analysts polled by Thomson Reuters projected revenue of $1.55 billion on earnings of 4 cents per share, according to the Wall Street Journal.

Live Nation Entertainment CEO Michael Rapino told investors in an earnings call that despite the flat earnings, he is encouraged by an increase in concert attendance – noting that North American sales are up 7 percent in the quarter and 4 percent year-to-date.

But what’s driving attendance – festivals and amphitheatre shows targeting younger audiences – may also be a drag on revenues. Rapino acknowledged during the call that merchandise sales are down because younger audiences simply don’t spend as much on beer, popcorn and T-shirts as their older brothers and sisters – or parents – do.

Rapino touted the sharp increases in amphitheatre and festival attendance in North America as well as globally, where big outdoors events are more typical. And Live Nation’s recent burst of investment in electronic dance music promoters and events helped boost those numbers.

Festival ticket sales in general are expected to more than double last year’s figures by year end and Rapino added that EDM attendance in particular has tripled in the second quarter to 160,000.

But at the same time, net ancillary revenues dropped 3 percent compared with 2011. According to LNE chief financial officer Kathy Willard, the company is “attracting younger audiences, which typically have lower spends per head.” She added that Live Nation expects a similar drop in net revenue in the second half of 2012.

Live Nation Chairman Irving Azoff, in his opening remarks, also noted the flat season but said there is reason to be optimistic as artists including Eagles and Fleetwood Mac prepare to embark on new tours into 2013.

During the Q&A session, Rapino remarked on things that can’t be extrapolated from a balance sheet. Questions like paperless ticketing vs. mobile (he thinks mobile is the future), streaming content to sponsors vs. cable broadcasting (responding to a question about competing with AEG and MSG Entertainment in the cable frontier) and the efficacy of dynamic pricing (with fewer than 100 clients still on board, and Rapino keeping mum on competitive details, the jury remains out on that).

But overall, Rapino insists LYV’s second quarter was just ducky.

“We are very pleased with the performance of the company in the second quarter, led by a robust concert season,” Rapino said. “Overall, we remain confident in our ability to deliver growth in our core business while we continue to invest in the technology platform, unlocking future growth opportunities with our 200 million transaction base and maintaining our strong leadership position in the marketplace.”