LEFSETZ LETTER: Lunch With Rapino and Fogel

Now THAT was fascinating.

I started right in hassling Arthur about his comments re the U2 ticket debacle.

I figured he'd be laughing. Saying how you had to spin things for the press. That he was covering for McGuinness.

But that's not the way he took it at all.

And then it took a turn for the worse.

I started saying negative stuff about U2. How they had NO IDEA what the landscape was. How they thought they were still operating in the late eighties, when it was one homogenous landscape. When they were the biggest band in the world.

Arthur countered that they STILL WERE the biggest band in the world.

I had to cop to this. But I made the point that that doesn't mean what it used to. Used to be the biggest band in the world was ubiquitous. Played on all formats. Hell, U2 can't get arrested on Top Forty radio.

But Arthur said all the hoopla, the old acts HAD TO DO THIS, since radio wouldn't play them. How else could they get the message OUT?

I shot back did it make any DIFFERENCE?? Wouldn't U2 have sold out all the dates WITHOUT THE HOOPLA?

He had to agree with that.

God, this wasn't working out the way I wanted it to. I was sinking deeper in quicksand. I could see the expression on his face. Who IS this pisher??

And I guess I wondered the same in return. This is just a guy who works for Clear Channel, right?

I found out I was wrong.

Rock is a religion. You study it the same way Madge studies the Kabbalah. You read the bible, all the scrolls of the torah, visit the shrines, you can't get ENOUGH! Because you BELIEVE!

That's what's wrong with the music business today. The mainstream music business. There's no RELIGION!

Why in the hell should a kid read "Rolling Stone"? The people in the business don't. And, if it weren't for the SoundScan charts, they wouldn't read "Billboard" either. It's not WHERE IT'S AT! It's just a front for an endless string of worthless conventions. Remember how THRILLED you were when you discovered "Billboard"? All that insider information in ONE PLACE? Now it's bullshit stories written by people thinking about where they're going to find their next job. Why would a kid be INTERESTED? There's a lot more vital stuff ALL OVER THE NET!

And to those kids, religion is video games. Hate to tell you, the video games are what music USED TO BE! Exciting, outlaw, ADDICTIVE!

But our generation doesn't care about video games. We still care about the music. We want to know EVERYTHING about the music. Oh, not TODAY'S music, but the golden era. When it still MEANT SOMETHING! To not only us, but EVERYBODY!

At this point, when I was thinking how in the hell I was going to RESCUE myself, Michael Rapino appeared.

I knew him. It was easier going. He fills the spaces. I could lay back a bit and reflect. Try and get my bearings.

Clear Channel has been screwed up from the beginning.

But I found out that Rapino and Fogel KNOW THIS!

The touring business used to be DIFFERENT! A bunch of fiefdoms controlled by Frank Barsalona. Everybody told to just be happy with their piece. That there was enough for EVERYBODY!

How in the HELL do you end up with a company if you consolidate all these players into ONE ENTITY?

It would be like trying to roll up dope dealers. Hell, do you expect the rest of the cowboys to listen to the newly appointed dealer HEAD? Never going to happen. Dope is a renegade business. And anybody who tries to garner control is bumped off.

The system was inherently broken. You needed someone to ride herd on these disparate elements.

That's Michael Rapino.

There's unity now at Clear Channel. They've got a SYSTEM!

You've got one of three options. This is NOT a Chinese restaurant where you can construct innumerable combinations. No, agents can't make a million different deals, you've got to buy one from the MENU!

If you're the Dave Matthews Band, a blue chip act that's already done 400,000 tickets at Clear Channel, you basically write your own ticket.

If you're not quite in this category, there's a guarantee. And a chance to make money on the back end. HONEST ACCOUNTING!

And for the wild cards. The acts that THINK they're in category number one, but don't have the track record. For THEM a special deal will be cut. For acts like Coldplay. BUT, you've got to give Clear Channel ninety percent of the dates. Which are all cross-collateralized.

Whoa, you say. We don't WANT to give them ninety percent of the dates.

Well, that's fine. If you want to do an arena show, they'll make a deal for you for one-offs. Because there the numbers are clear. There's no overhead, no hidden costs.

The point is, is Clear Channel the evil empire? Are THEY the problem?

I'd argue they're EVIDENCE of the problem in the radio business.

But in the concert business, although being a behemoth, haven't THEY been the ones laying out all this money to the acts? Taking the hit when shows fail?

Oh, they're no princes. God, the numbers are so confusing, who could TRUST THEM? The overhead, the facility fee.

But that's what Rapino's trying to eviscerate. The fog. These are the numbers. If we think a deal is right, let's go forward. Otherwise…

Yup, business got out of hand. The agents were twirling the promoters over their heads like dead cats.

Then again, the agents will blame the managers.

Who say they're only doing what the acts want them to.

There's no INVESTMENT in the business anymore. It's an every man for himself landscape. Get all the money up front, get it now, because WHO THE HELL KNOWS ABOUT TOMORROW???

Believe me, the managers and agents can see the landscape. They may appear comfortable, but in reality they're just one step away from selling real estate, like the old promotion men. You see we're coming to the end of the road. All anybody wants to see are the aging BOOMER ACTS! And this audience is nearing RETIREMENT!

So therefore, you've got a FIRE SALE!

But at inflated prices.

Kind of messed up if you think about it.

Hey, I've been a manager for thirty years. I represent a heritage act. I want to retire. Let me rip you off ONE MORE TIME, PLEASE?

Stunningly, the audience let them do this. But no more. They've seen the game. They're DONE! Just look at Fleetwood Mac for instruction. And that's a HIT ACT!

Mmm…

Rap can't fill a building. Not one large enough to end up with a few zeros on everybody's paycheck.

The Simpson sisters aren't making promoters rich.

But, somehow the promoter is the PROBLEM?

Looks like the promoter is going to have to become the new label. The PROMOTER is going to have to build the acts. Because the label's not in that business anymore. And radio's a joke.

The major labels are becoming marginalized. They're just gonna shrink the overhead until they market just a few wannabe superstars and sell their catalog. All those employees? They're selling REAL ESTATE!

Management will be a non-living. Hell, it already is. All the medium/failed managers of the late eighties and early nineties went to work for the label. Don't forget, Will Botwin used to be a medium level manager. Never mind Danny Goldberg. Irving will survive. There's room for a king. Everybody else??

But the promoter is different. He controls the BUILDINGS! In Clear Channel's case, they OWN a lot of buildings.

You can't go to a concert on the Net. You've got to go to a physical space. And, only a few companies control those spaces. And they're gonna survive. There's no exit strategy other than selling to a competitor. Just ask HOB.

So, it's incumbent on the PROMOTER to right the business.

But for doing this, the promoter gets SHIT!

Oh, the promoter was crooked in the past, but those days are through. Hell, the agents beat them up so bad that every gig was essentially a flat fee payday. Otherwise, the promoter would steal.

Now sanity has to come back. Are you going to let Michael Rapino inject some sanity? Because, if you don't, he's going to have to be insane just like you. But, all I can tell you is, even if you're both insane, the numbers are going to come down, because there aren't enough people who want to GO to these overpriced shows by has-beens.

Oh, don't worry, music will survive. But there will be NEW entrepreneurs, developing the new game outside the system. WITHOUT the usual labels and managers. But they'll end up going to Clear Channel and AEG. Because they HAVE to. Because those companies CONTROL THE VENUES!

And without a steady stream of talent, Clear Channel will have to support these entrepreneurs. With more club shows. More theatre shows. So EVENTUALLY, profitable shed, arena and stadium acts can be developed.

Stadium acts.

Oh, you've got to know. It used to be a THRILL to go to the stadium show. You didn't bitch about the price. Hell, it wasn't even ABOUT the price, which was relatively CHEAP! It was about being there with TENS OF THOUSANDS OF YOUR BRETHREN ENJOYING THE ONLY THING THAT MATTERED!

Turns out, that's the world Arthur Fogel comes from.

Hell, who knew?

He started off as the road manager for Martha and the Muffins.

But he ended up working with Michael Cohl.

Michael had made a connection with Prince Rupert Loewenstein. The Stones' financial guy. Prince Rupert would sell the ENTIRE Steel Wheels tour to one promoter. If that promoter could make the numbers work.

That's why Cohl had hooked up with Labatt. To be able to DO tours like this. But how could they make it WORK??

They spent WEEKS crunching the numbers. They knew either this would MAKE the company, or BREAK IT!

Finally, a deal was hashed out.

It was shortly thereafter that Arthur ran into Bill Graham.

Bill started RANTING AND RAVING! How CPL was RUINING THE BUSINESS! Interesting if you think about it, since Bill Graham, despite his legend, was famous for ripping off acts. Hell, read Neil Young's account of the '74 CSNY reunion tour. They worked for months in sold out venues, but made no money. Bill Graham treated them like royalty, but really, they'd have rather had the DOUGH! But now Bill was yelling at Arthur. Who was a bit frightened.

But then Bill started to cry like a baby. It had dawned on him, his days were through. The whole Frank Barsalona/Premier Talent days were done. It was no longer drug-dealing, it was BIG BUSINESS, LEGITIMATE BUSINESS!

And that's the business Arthur Fogel is in.

So big, in fact, that he and his cohorts moved to Bermuda, for tax reasons. Hell, you don't move for tax benefits UNLESS you're making a BOATLOAD of money!

And after the Stones, there was Pink Floyd.

And then Sillerman bought the company and Arthur moved to L.A. to run touring for what eventually became Clear Channel.

And now that's all he does. The really big tours. Last year it was Sting, Madonna and David Bowie. Worldwide. And this year it's U2. Hell, he's worked with U2 since Pop Mart.

Well, that was a failure, wasn't it?

God did Arthur stare me down.

I had to clarify. Oh, you made MONEY, but it didn't sell out!

He admitted that.

And I was right. U2 had misplayed their hand. Which is why they play indoors in the U.S. now. They don't want to risk not going clean, and the hit their reputation would take.

But that's not what Arthur's concerned with. No, for him it's the talent and the money. He's at the nexus. He likes the action.

And I could castigate him for that.

But at this point I was too busy with my nose pressed to the window. Looking inside. Wanting to JOIN THE CIRCUS! Hell, at least let me SIT UP FRONT!

You can make a lot of money selling widgets. Investing.

But it's not like the rock and roll business.

EVEN THE MOVIE business is not like the rock and roll business. Those are all actors. Playing a role. Let me ask you, do you think Sting's playing a role? Bono? Hell, their role is being LARGER THAN LIFE!

Stunning if you think about it. A whole business fumbled the ball. Lost the formula. No longer has the ability to GROW these larger than life rock stars. Ones that people wanted to see YEAR AFTER YEAR AFTER YEAR!

Then again, most people in the business are no longer hungry. They just want more of what they had before. Which is MONEY!

Michael Rapino likes money too. But he's truly hungry. And not intimidating. And not removed. He wants to make it WORK! Sure, he's gonna look good if it all comes together, but that's just being a male, RIGHT??

We need more people like him in this business.

I don't know any agents like him. And I don't know any label employees.

There ARE a lot of acts and managers like him. We just don't know their names yet.

Hopefully the game will change enough that these acts can rise to the top. Maybe Arcade Fire won't be headlining stadiums, but it's a good bet some other act playing left field music that isn't whored out to a major label and television will. I have no doubt that Arthur Fogel will be there to promote. And I can't wait for the day when I'm dying to buy a ticket.

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