A Chat With Peter Schwenkow On 40 Years Of DEAG: ‘Artists Have The Right To Be Greedy’

Deutsche Entertainment AG founder/CEO Peter Schwenkow spoke to Pollstar about his company’s 40th anniversary, his early beginnings, the state of the music business in general and more.

Peter Schwenkow
Till Brönner
– Peter Schwenkow
“Happy 40th anniversary DEAG”

Peter Schwenkow learned from the best. Before launching his own company in 1978, he had worked with three of Germany’s live entertainment pioneers: Karsten Jahnke, Fritz Rau and Horst Lippmann.

At Jahnke in Hamburg, he drove artists to concert venues around Germany in his own car, an old Mercedes 180 Diesel with a bench seat in front and a huge trunk. It only had around 60 horsepower, which meant that journeys were slowed down significantly when making his way through the mountainous parts of the country. This gave him plenty of time to have conversations with his passengers during trips.

These conversations and the characters he had them with made him want to work in the live-events business for good.

“It was an exciting time. It was the mid-1970s, and we were still at the very beginning of this industry,” Schwenkow remembers. “It worked according to the supply-and-demand model, if a concert didn’t sell well it simply did not take place, and people where sent home. If an artists drank too much Southern Comfort, or a guitarists took too many drugs, they weren’t able to perform.”

Schwenkow moved to Berlin in 1975, where he worked as tour manager for Lippmann and Rau. It’s where he got to know a fellow tour manager by the name of Jochen Zanke, who used to look after Santana, Frank Zappa, Nana Mouskouri and others in Germany. It was Zanke whom Schwenkow called the day he decided to start his own company.

By that time, he was working for Berlin’s then-biggest concert promoter, Wolfgang Jänicke. The decision to go self-employed was made in defiance, once he realized his boss was exploiting him. It made Schwenkow want to prove to the world that he had what it took to become a successful concert promoter. And Zanke was all game.

Together, they founded a company by the name of Concert Concept in 1978, a name they kept until 1995, when it was embedded into the Deutsche Entertainment AG holding. The company’s 40-year history can be roughly divided into four decades, the first of which was spent establishing its position as local promoter in the Berlin area, with the second decade dedicated to promoting shows internationally.

The 10 following years were marked by the internationalization and professionalization of the worldwide concert industry. DEAG went public in 1998, off the back of its first Rolling Stones

Peter Schwenkow
– Peter Schwenkow
In deep conversation with Fritz Rau

DEAG had bought the tour in spite of four other, bigger promoters voicing their interest as well. Fritz Rau told Germany’s Spiegel at the time, he had heard that Schwenkow had paid 42 million Deutschmarks ($26 in today’s exchange rate) for the tour, which he thought insane. Others in the business, including Giddings, give Schwenkow credit for pulling it off.

During the past 10 years, DEAG has been working on positioning itself more broadly, besides the classical concert business, where the company is still very active – be it Ed Sheeran through Kilimanjaro in the UK or Iron Maiden , Toto and Asif Avidan. Schwenkow says, “DEAG will finish this year with far more than €200m in revenues, and I estimate that around one third is going to be generated by non-concert business.”

In 40 years of doing business, one is bound to make mistakes. DEAG made a few attempts in the music market in the 2000s, which failed. And it seems to have capitulated in the war against Live Nation for the German-speaking festival market, after struggling to get its rock festival triple-launched in 2015 – Rockavaria, Rock in Vienna and Rock im Revier – off the ground. The latter was scrapped in 2016, Rockavaria took a break last year, but returns in 2018. No dates for the Rock in Vienna 2018 have been set, and it seems unlikely any will.

That shouldn’t take away from the company’s achievements. Peter Schwenkow has an eye for events that sell tickets.

 “We’re developing new entertainment formats with a lot of joy and excitement. We’re dealing in exhibitions, such as ‘The Art of the Brick,’ a Lego exhibition, and developed Christmas lights trails, such as Christmas at Kew with Raymond Gubbay, Christmas in Edinburgh or Christmas Garden Berlin. We welcomed more than 750,000 visitors to these events in 2017, with a format that didn’t even exist five years ago,” he said.

Michael Clemens
DEAG is focused on creating new event formats that sell tickets

And, according to Schwenkow, there are going to be new entertainment formats 10 years from now. 

“Maybe, when DEAG turns 50, we’ll only be earning around one-third of our revenues through concerts, another third via other live entertainment formats involving artists, and the last third in areas such as VR, e-sports and others. The types of events we’re selling tickets for aren’t determined by us, but by the market, which is the entirety of customers.”

Schwenkow doesn’t think tickets are too expensive, and he explains why in great detail: “It’s only about 5 percent of shows that end up being so hot on the secondary market that you can sell them overpriced, if at all. Maybe it’s just 3 percent. These are the spectacular cases. I can also give you examples where the promoter simply charged too much and therefore isn’t selling. People won’t go if they can’t afford to.”

“I’d like to take a bird’s-eye view on this topic and ask: how did we end up at this price point? I think there are three reasons for this. First, we’re constantly competing with our entertainment offering against other entertainment offerings. You can, of course, visit a concert for €80, but you can also go to the movies for €12, and receive a valet parking service for €15. At the cinema you’re likely to see a production that cost €50m. So if you’re going to a concert, you won’t be satisfied with a lamp to the right, another to the left, and five Marshall speakers on stage. The customer expects big, elaborate productions, and we deliver them, and they have a price. Just think about the big productions of U2 or the Rolling Stones. They cost millions. The customer expects this, we deliver, and that’s why the customers pay the price.”

“No artist or promoter invests millions in a production for egoistic reasons, if the artist and their audience are content with less.”
Joan Baez, who Schwenkow has been promoting for 37 years, is going on “Fare Thee Well Tour” this year. She prefers less production and acceptable ticket prices, and, because her audience agrees, “we can deliver acceptable entrance fees,” Schwenkow explains, adding: “I think the audience is wrong to assume promoters are arbitrarily setting prices high.”

“Secondly, a lot of people are making money off of concerts, and I’m not just talking about the artists, catering companies, stagehands and the tens and hundreds of thousands of people that are meanwhile working in this industry. The biggest earner is the state. The state makes the most money off of our industry, through VAT, non-resident tax, income tax, banner taxes in Austria, poster tax in England. Many concert halls are owned by the state, which is taking the rental income. It’s like driving up to the gas station, where 80 cents on each €1,30 for a liter of diesel fuel goes into the state’s pockets.”

“Then there’s GEMA or PRS or SUISA or whatever they’re called in different countries, all of which also take a significant cut. In the past 40 years, state and GEMA have been two of the biggest inflators of prices in our industry.”

“Thirdly, artists are greedy, and artists need to be greedy. Just like a football player, who can only hope he’ll be able to play professionally for 10, 15 or 20 years, an artist can never be sure how long their career is going to last. Therefore, it is their right to be greedy.”

“If you take all of these three factors into account – the artist’s greediness, the expectations of the audience and the state’s being a party to your earnings – then, I believe, we’ve been able to keep ticket prices pretty low over the past 40 years.”

Peter Schwenkow
– Peter Schwenkow
With The Rolling Stones

Schwenkow’s a fierce opponent of the secondary market,.

“We sometimes contemplate for days on end, whether we can charge three Euros more or three Euros less, what the audience is able and willing to pay. We then put a tour on sale with an average ticket price of €55, and are sold out in an hour, while, in parallel, tickets have already appeared on the secondary market at triple the price. This is vulture-like behavior; people are really using the worst sorts of methods to achieve exorbitant margins on the back of artists and promoters. Interestingly, based on everything that has been said over the past months, these businesses don’t even pay taxes on these profits in Europe, or are based in tax havens.”

DEAG’s own ticket agency, Myticket, does not offer a resale function in any of the markets it operates in, which are Germany, Austria and the UK to date. His most viable solution to the problem of reselling tickets for profits that don’t end up with the artists and promoters: dynamic pricing.
“If the artists worked with us on dynamic pricing, we would still be able to offer tickets at higher prices for those available to afford them, while the money would go to those carrying the risk and working out the prices: the artists and promoters.”