Live Nation To Acquire HOB & The Industry Responds

LOS ANGELES (CelebrityAccess MediaWire) — Live Nation has entered into a definitive merger agreement to acquire HOB Entertainment, Inc. for an aggregate purchase price of $350 million in cash, subject to certain adjustments. The closing of the transaction is expected by the end of 2006, and will be subject to customary closing conditions.

HOB operates 10 venues under the House of Blues brand in cities such as Las Vegas, Los Angeles, Chicago and Orlando, and eight amphitheaters in cities including Atlanta, Toronto, San Diego and Dallas. The acquisition will allow Live Nation to expand its presence in the growing mid-size venue business and fill in geographic gaps in its existing amphitheater network.

“We have great respect for the House of Blues employees and what they have accomplished and we look forward to welcoming them into the Live Nation family," Live Nation CEO Michael Rapino said in a statement.

“This represents a compelling opportunity to grow our brand and accelerate the expansion of our club business, both in the United States and abroad,” said House of Blues CEO Greg Trojan. “Together, we will be able to take live music to a new level, delivering more music on more dates in more local venues.”

Live Nation anticipates the transaction to be accretive to earnings and free cash flow per share within the first year. The company expects to file full financial information upon closing of the transaction later this year.

Speculation regarding a sale of HOB has been discussed for several years, but many in the industry still felt somewhat surprised at swiftness of the announcement.

Immediately following the acquisition news, business continued as usual at both companies, with expectations high that Live Nation will hold on to the majority of the personnel and club-level buyers employed by House of Blues. Other divisions at HOB may not prove as resilient when doubled up with Live Nation’s national talent buying offices.

HOB grew into its current status as one of the nation’s major promoters after purchasing Universal Concerts from the Seagram Co. in 1999 in a $190 million deal. The company was seeking an acquisition-led growth strategy similar to that of Robert Sillerman’s SFX rollup around the same time. SFX was soon after acquired by Clear Channel, who spun off the entertainment division as Live Nation at the end of 2005. –by CelebrityAccess Staff Writers


THE INDUSTRY RESPONDS

Buck Williams, Progressive Global Agency:

I really don't think I will change the way we do business unless I am forced to. This acquisition could be positive from a back office point of view but I can't see how it will possibly be positive to the artists touring. The two companies are so much alike already we may not notice the change for a while. It will really depend on whether or not more local offices will be eliminated. Promoting has been in a pretty generic mode for a while and i don't see it changing with moves like this.


David T. Viecelli, The Billions Corporation:

I don't think this acquisition will have any significant effect on the way we do business. Given that we do not sell that many shows to House of Blues now, it's possible that we will actually have more events going into House of Blues properties now than previously.

If that is the case, however, it will just be a matter of having more venue options through the Live Nation buyers with whom we enjoy good relationships rather than any specific change in strategy. In some markets, we do a lot of business with Live Nation buyers. In others, we do virtually none. It really is more a matter of personal relationships and maximized opportunities for our clients than an allegiance to Live Nation or anyone else.

I suppose that the touring business may become slightly easier from a lazy man's perspective but I would certainly have to decry the continuing consolidation of the industry. As an advocate of the clients we represent, I wouldn't hesitate to say that there is nothing positive in the reduction of options and the concentration of power and opportunity in the hands of a few. It's as true in this industry as it is in any other.


Jack Utsick, Jack Utsick Presents:

While I can understand why HOB would sell (at such a favorable price) to Live Nation, and want to be part of that great company, I believe that competition in the live music business is at a point where only the most innovative thinkers….who are far ahead of the "normal pack"….will survive; those who are not only smart enough to envision and spot new trends and possibilities, but to act on them as well.

Good luck to both HOB and Live Nation; quite frankly, we and many others I am certain, wish it would have been us.


Steve Tarkanish, S.T.A.R.S. Productions:

First, I can’t help but personalize. When House of Blues opened in Cambridge, MA and Mike Grozier was the General Manager, we provided House of Blues with some of their initial shows. As House of Blues grew and expanded, S.T.A.R.S. Productions became a founding member of their Foundation Rooms and we’ve shared great times together. However, getting on to the business aspect, this move was inevitable. Independents will continue on a downward spiral while powers at hand get stronger and compete rather than cooperate. S.T.A.R.S. Productions has been around for decades and, as the saying goes, if you got a game and they figure it out, you ain’t got a game. House of Blues’ game has been figured out and Live Nation bought it. S.T.A.R.S. Productions will continue its dealings with the change the way we always have, “Jersey Style.” Best wishes to all. Just hang on to Stan Levinstone.

Brian Swanson, Monterey Peninsula Artists/Paradigm:

I don't expect it to have a huge impact on my day to day dealings. The way I do business is primarily based on individual relationships. I assess who the best individual or team is in each market for each artist and who has the history. I don't really concern myself with whom their employer is unless it is of concern to the artists I represent. Sometimes the best promoter works for some behemoth while other times that individual is fiercely independent. This is still a business where a person's individual strengths and weaknesses can make a huge difference in the success of a show.

Furthermore and in answer to your question concerning my views on the "increased homogenization of venues and promoter", I don't think the industry is that much more homogenized than it was twenty years ago. There are new independents popping up every day. Some do great work while others don't, just like the big corporate giants.


Brad Parsons, Arena Network:

I doubt it will change our end (arenas) much. House of Blues was not really much of a factor in all but a few of our venues. That said, any major shift like this is certain to have some effect. What that will be is the big question. It certainly makes Live Nation a stronger company.


Tony Conway, Buddy Lee Attractions:

Have been expecting this to happen for about a year. We do not think anything major will change with the merger, it will just limit some options for agents and managers when searching for outdoor amptheater tours, instead of 2 you now have one. In some cases it will make it easy for agents to do business in the venues that Live Nation will contract now. We also feel that this will not have any overall effect on the day to day business we have done with both organizations. Really as far as our company goes we have had no problems with either during the years of consolidation both have undergone. I would hope that Live Nation keeps a lot of the HOB Staff in place because they have some very experienced and strong people working for them at this time, and along with the best of the best that live nation has it will be a powerful combination.


Jim Fleming, Fleming & Associates:

As the owner of an agency which has developed new talent for the past 25 plus years, I'm concerned about Live Nation's acquisition of HoB. Nonetheless, my concern certainly isn't going to shake up the industry or halt the approval of the acquisition.

A few years ago when SFX was emerging as a powerhouse in the industry I expressed concern that the "baby artists" were going to fall off the radar. I also expressed concern that the independent promoters would lose incentive for developing followings for these new artists as if, and when, these artists became popular in the specific markets, SFX would come in and offer them more than the indies could ever begin to pay them. And this after the independent promoters had spent their time, and money, to deveolp those artists. Hard to say if that has occurred but I think it is rather evident that Live Nation has pretty much locked up several markets (and venues) and I just can't see how that can be healthy for anyone.

This type consolidation of any business never ends up boding well for the consumer and, in this case, I imagine it won't bode well for most touring artists. Will this encourage more independent promoters, or discourage them from even taking a stab at it? Only time will answer that question. If the model with the major records companies is any indication then we may see a number of new indie promoters emerge, and flourish. That could be a good bi-product of this kind of consolidation.

If you're in this business long enough (I've been in the business for close to 30 years) you never want to find yourself becoming a dinosaur, either in thought or action. I'm all for trying new things but this particular new thing concerns me. All in all, I've come to realize that anyone in this business who says they know "how it works" is just blowing hot air. It's always a surprise and I woke up this morning to a new one.


Bruce Houghton, Skyline Music:

We enjoy working with many wonderful people from both companies, but less competition is seldom good from an agent's or artist's perspective. It will also be interesting to see how two rather different corporate cultures join together and what opportunities this provides for both traditional and emerging independent promoters.


Tag Evers, True Endeavors:

Efficiency gains allowed by such mergers come at a high price. The consumer always loses when markets are subject to monopoly power. Fortunately, artists and their fans come in all shapes and sizes and historically have rebelled against the big and often bland world of corporate control.

Many artists (and their agents and managers) prefer working with indie promoters. My sense is the idea of working for the Man will remain less than satisfying for those who vivify culture by plumbing the depths of human experience in a song.


Mark Dinerstein, Entourage Talent:

Let’s just say that I am not surprised one bit. Its a highly strategic move, but I think the most interesting aspect of the merger will be seeing which changes in talent buyers and personnel take place, if any. Both companies have excellent bookers, so I would hate to see one booker be in charge of multiple properties (between LN owned and HOB owned venues). In other words, I hope to see a continuation of the localized promoter setup. There is a quality control aspect that needs to be addressed. Running an HOB property is a job unto itself. Running a LN property is a job unto itself. If responsibilities are combined for one person, I would expect less quality.

Will it be business as usual? I guess time will tell.


Tom LaPenna, Lucky Man Productions:

I have always taken the attitude that the business will take care of itself in the long run. My company and it’s employees wake up each day and continue to nurture the relationships we have with agents and managers and work as hard as we can on the shows we have on sale.

My company’s success depends upon breaking new talent and (hopefully) growing with each new artist that develops from the clubs to the theatres to the arena level. We have had a good working relationship with HOB in the past and hope this continues. At the same time, we have mixed feelings working with Live Nation but maybe this will change with the merger of the 2 companies. I welcome working with any co-promoter given the right situation.

As we all know, consolidation has not been a good thing for our business and attendance has continued to decrease while ticket prices have increased. I would hope that the changes that have been recently implemented by the Live Nation management team will continue and the top end of our business recovers.


Jon Stoll, Fantasma Productions:

I believe it is not positive for the live touring industry. It is important to everyone in the touring industry that there are more than two options. If the few independents like myself that promote nationwide are not encouraged and kept vital then it will be very detrimental to the concert industry. It threatens the future of promoters, venues, agents, managers, artists, and all who make their livelihood off the live music industry. The few of us who remain independent are all trying to be creative on all levels of the promotion industry but it is increasingly difficult. All should encourage the independents to thrive, as it will only benefit the live music industry.


Johnny Buschardt, Road Work Entertainment LLC:

While I don’t think the merger took anyone by surprise, it’s certainly disheartening to independent promoters like me. I have no doubt that the artists will love it, but the fact remains that the less competition there is, the tougher it is for the talent buyers. I’ve never been a fan of monopolies and it will take much more effort for the independent promoter to survive.


Tom Munsey, Hoffman Talent Agency:

it is always negative when these companies get bigger, they pay less attention to the ticket buying public


Joe Fletcher, Joe Fletcher Presents:

Live Nation buying H.O.B.'s is like George Bush invading another country, it is disheartening but no surprise.

The monopoly that is Live Nation has grown bigger and that is not good for artists, managers, agents or indie promoters.

How will it affect smaller promoters? I believe that whenever one company has too much power in any field there are challenges and opportunities. The opportunity is for good indie promoters to act as boutique providers of great, unique service. If you look at other industries there are plenty of examples of how the market leader misses an opportunity and a smaller company takes advantage of that.

Apple & Google are two companies who found their niche in extremely difficult markets. With a PC on every desk five years ago and Microsoft having a huge advantage who would have predicted how well either Apple or Google could do in direct competition?

H.O.B., R.I.P.


Buddy Kirschner, Kirschner Concerts Presents:

I feel that Live Nation is a corporation, much like the car makers. Their focus is numbers and units, they have the resources to squeeze the independent promoter out of any market they set their sights upon. The relevance of providing a quality experience seems less and less important.

What it means to me, a small independent concert promoter in a rural region, is that I have to become more resourceful and creative in providing a better experience for the artists and the fans. I believe it is the job of the promoter to provide a vehicle, a means which allows the artists and the fans an intimate connection with one another and to enable spontaneity which is the heart and soul of the live event.

As long as we remain passionate about the music and providing the very best event we can, Live Nation will not pose a legitimate threat to our lives, well being and livelihood.


Nancy Cavazos, Concert Booking Consultants:

This in my opinion will make it harder for the small buyers, such as myself, to get the acts we want and need. Clear Channel became a monster that buys up everything in parcels and we the small buyer cannot get the dates..now we have LN who is well on the way to becoming the same. It leaves less and less opportunities for the small promoters, the small buyers…to provide to the clients what they want to have.


Andy Green, Reading Convention Center:

Continued consolidation in any industry eventually leads to poorer
customer service and choice. Competition is healthy, consolidation
leads to complacency.

It is just one more step in the wrong direction. But saying it won't
stop it.

Corporations have no body to hug; no conscience or soul to appeal to.

It affects us as the prices for the artists inflates way beyond their
ability to sell tickets in this market.


Mark Sonder, Mark Sonder Productions:

[The acquisition] will make things one more step more difficult…in buying acts, in pricing of acts, etc., as LN will have a virtual monopoly on the live performance industry. They can promise more to the acts they are looking for, and for the RA's calling on them, they can work out sweetheart deals.

Looks like it will be CCE all over again, until the heads of this company leave and take some accounts with them. And we make full circle!


Carlos Flores, Premiere Entertainment:

It will be great for the entertainers, but it will destroy small promoters like me!


Dave Kirby, The Kirby Organization:

Although I have personal concerns for those talent buyers that may end up being victims of the inevitable attrition these types of acquistions create, I don’t think it is a bad situation for the business. On the top end, Live Nation had to either build competative sheds in the markets where HOB had venues or continue to partner the shows in those cities (which always puts LN on the losing side of the split), route around those venues or buy them. In terms of the bottom end, Live Nation desperately needed a strong national club base in order to develop young talent and establish relationships early in the artist’s careers. Because they didn’t have the real estate, they have been renting in many markets and unless you have the food and beverage, you can’t make enough money on the few winners to pay for the many losers, let alone make a "profit”. The only potential downside is if LN abuses power and the new administation there has not done so since being put in place, over 2 years ago. If you think this move will create a monopoly, have a close look at the growth of AEG lately…there will always be another game in town.


Mike Tomas, Tomas Concerts:

I believe it will have a negative impact on the industry. Agents do not want to give shows to smaller promoters because Live Nation buys the tours. Because they are buying a tour, they get a better rate and prevent anyone else from doing them. When I try to book an act, the price is sky high and I am charged a backend expense by the agent. What the agents do is quote higher prices to smaller promoters with the idea that if they are stupid enough to pay the money, they can have the show. This allows them to justify to the big promoters why they gave a show to someone smaller. The agents are frankly scared to give shows to anyone else because of the fear of upsetting Live Nation. To add to the problem of doing shows, Live Nation owns venues in almost every city and when outside promoters want to use the facility, they charge way more than they should. I know this because I have only been doing this for 3 years. I have only done a handful of shows because the negotiations usually fall apart due to the agents over pricing the act, or the venue over charging for the facility. Once again I call attention to the fact that Live Nation sets the bar on pricing. They get premier pricing and the best markets to host the show because they buy the tour. The result is that their will only be maybe 3 to 5 promoters that have a credit line set up to secure millions of dollars of shows, whereas everyone else is trying to survive. The sad part about it that it is all perfectly legal, but they are getting away with it because nobody can prove that they are employing tactics that prevent others from working in this business. I do commend Live Nation for what they have been able to accomplish. They do their job very effectively. If I were an agent why would I want to work with several promoters when I can just work with one. Those are my thoughts. Thank you for your time.


Craig Downtown, DowntownSound Productions:

I'll tell you how it affects me……Don't care….HOB is fine, with the exception of ONE individual that works for them. Large scale monopoly's are not where it's at. I'm DIY. NOT CORPORATE. Us "small" guys hate the entire situation.


Jim Baker, Consolidated Entertainment Group, Inc.:

It is and has been my opinion that any move towards monopolization is not good for any industry and the concert business is no exception. The SFX/CCE/Live Nation business model has been seriously flawed from the beginning. Any rational consolidation plan should include reducing costs with mass buying power. The exact opposite has happened in this instance. The now Live Nation and all it's previous identities drove the cost of talent dramatically upward and disproportionate to the actual market value of the talent. This was done to stifle competition and to get control of the "Software" for use in it's "Hardware" This in turn exponentially increased all consumer costs including tickets, concessions, parking etc. As we all now know it didn't work. Even though Mr. Rapino has been vocal about enhancing the customer experience with cheaper lawn seats the reality is any price is better than none sold.

This ever growing Gorilla hasn't resulted in lower talent costs. Elvis has left the building as far as that's concerned. It has and will affect the independent promoters negatively but it has also spawned opportunies for those that can adapt. We are having the best year in a long time but I won't elaborate. Who knows what segment of the business King Kong will be looking at next.


Paul Lohr, New Frontier Touring:

Thoughts:

1. Consolidation makes for a less competitive market
2. I have to modify my Address data base everytime SFX / Clear Channel / Live Nation changes.


Michael Schweiger, Central Entertainment Group:

I am sure all the independent venues and promoters will be rubbing their hands with anticipation as this will make the independent venues now more competitive for the indie bands.

As it was when Clear Channel sucked up the promoters and were then forced to divest several years later, the same will happen here, the American public is too savvy to be forced feed their music from one source.

Creative managers and Agents will thrive.


Tom Bunch, Tab Management:

Below are my responses, but first I will tell you a little about myself and business. My name is Tom Bunch. I got my start at age 14 working at a record store and then after high school I started promoting concerts. I owned and operated TAB Concerts in Houston Texas 1983-1995 (tabmanagement.com has much info about myself and business). During this time period I owned, booked and operated clubs, theaters and ballrooms in Texas and Louisiana, as well as promoted/produced concerts in concert halls and arenas. I promoted events ranging from 250-35,000 people. I started out promoting punk rock concerts with bands like The Dead Kennedy's and Black Flag, then started working extensively with Janes Addiction, Red Hot Chili Peppers, Nirvana, Pearl Jam, Soundgarden, Ministry, Stone Temple Pilots and many others. Most of these bands played my clubs for $5 tickets and I worked with them all the way up to the big leagues. It was an exciting time to be a concert promoter/venue owner. I started managing bands in 1989, with the Butthole Surfers and The Toadies (which I did until 1999), both great Texas rock bands, and I have gold and platinum records from both. I also managed a few successful music producers. Since 2000, my business has consisted mostly of producing corporate events and music/entertainment business consulting. It has turned into a nice business, but I am doing this instead of traditional rock music business as the traditional rock music business is all but extinct. The merging and conglomerating of the entertainment business has killed the business. It started with the merging and conglomerating of radio, then concert promoters and now record labels. Conglomeration has squeezed the fun, excitement and profitability out of a once great business. In radio there used to be a GM, Program Director, Music
director and promotions director at each station, and as a promoter or manager you could call and work each. Now there is 1 person who programs 35+ stations and the GM or any local radio executive have no say in programming, so it literally went from 1000+ people to pitch music to nationally to break a band to a mere handful, and the ones that are left don’t care about music, they only care about doing as little work as possible to get as much money as possible. It is very similar in Concerts and record labels. All the music lovers are gone from the business, and the new executives are underpaid and have no experience except this new model that doesn't find, develop, nurture, market and promote new acts with the hopes of making tomorrows stars. No one in the major record, radio or concert business is finding, developing, nurturing, marketing and promoting new bands and all these companies are going to be in more trouble than they are now in just a few years because there are no new stars in the works. The people who are now calling the shots at the major companies don’t care about music and have forgot the fact that there is art involved and the connection between the artist and the fans/audience is sacred and needs to be considered and cared for in every decision. They have been consistently increasing the price while decreasing the quality of music and the music experience and they are now dealing with the fallout, which is just beginning. It will continue to get much worse before it gets any better and it will only get better if people start caring and working again. Now to answer your questions:

[The merger of Live Nation and House of Blues] will not directly effect me as I don’t go to concerts any more unless it is something I am working on or if a friend is in a band or working with an act and in that case I will go and be on the guest list. The exceptions are I am going to see Ray Davies, I saw The
Rolling Stones last year and I will go see a few acts (like Dr. John) that I love, but for the most part I don’t participate in any way with the people who claim to be concert promoters.

It will not affect [business opportunities] much as I have structured my business as to not be directly connected to or effect by anything that the major companies are doing. I had to to survive.

[The effect on the entire industry:] The costs of tickets for well know acts will rise and less people will go to any act that doesn’t have a string of hits. The problems that we are facing are directly due to the merging and conglomerating of the concert business and they are trying to fix the problems with merging and conglomerating more, which is the root cause of the problems. You can never fix a problem by doing more of the actions that caused the problem. The problem can only be fixed by having creative people who care about art and the audience produce and promote events in a unique, exciting and interesting way, and this cant be accomplished in a company the size of Live Nation.

My business has been structured so the decisions of the majors don’t directly effect me one way or the other. Most of the great music people are no longer in the music business, and that is sad. There is no place for them.

The touring industry is going to shrink to a mere handful or companies. Michael Cohl and AEG are going to be doing 90% of the tours, but they will all be with old, tried and true acts. They will not waste their time and money on up and coming acts (oh yes, every year or so they take on 1 unknown to prove to everyone they care, but then a year or 2 goes by without anything new and in the heyday of rock 1967-1997, there were hundreds of bands touring and earning a living and making it so tens of thousands of people could earn a good living from rock and pop music).

As long as they keep trying to fix the problem with the same actions that caused the problems [the industry] will continue to get worse. It may take the total collapse of the concert business to change the business dynamic.

A concert Promoter is someone who can get 2000 people to an event that should only have 800 people there, or 250 people to an event that should only have 50 people, or 10,000 people to an event that should only have 3000, but choosing the right venue, the right poster artist, flyer distributors, the right ticket price, the right cross promotions and put a personal touch to each event. What Live Nation is is a real estate owner who sells naming rights and corporate boxes and makes money off parking, beer, food and soda. The are not promoters. The advertise acts that are playing at their real estate. If you know the act and like them and are willing to drive the distance and pay the price you will go, but you will not take a chance on an unknown, as the drive is too great and the cost too which. There are no promoters left. I am not bitter, as my business is good and my life better than ever. Venues and business hire me to consult and structure business models and I negotiate sponsorship deals and set up ticketing, corporate boxes, etc for any venue that is competing with live nation or any business that wants these type structures, so I am playing the game on some level, but you can’t compete as an independent promoter with companies that have the ability to lose hundreds of millions of dollars. Live Nation/Clear Channel has never been profitable, and I don’t think it will be profitable. HOB was never profitable and companies like JAM in Chicago have almost went out of business trying to compete. I am in the music business and I must make money and earn a living or I wont be in the music business. The companies are now run by people or corporations that made there money elsewhere and want to be in the music business because they think it is cool and sexy. They are willing to lose large amounts of money to be in the business and it is impossible to compete with that, and as a matter of fact most of these companies have lost so much money in the last few years that they are out of money and trying to figure out what to do, but they still cant see that they created the problem and that they are trying to fix the problem by the same actions that created the problems.


Paul Thornton, Bravo Entertainment:

In general the business of buying tours in their whole has had a negative impact on the industry. It creates a situation where then the promoter of the tour has to market the event in many markets they do not have experience in, don’t know the right people there to get the proper media attention, and don’t brand the band the correct way for that market. Each market has its own nuances, especially secondary and tertiary markets, as all those are so very different. Plus the price paid per date on these tours means that the price points don’t work in secondary markets, ticket prices get too high for that specific market and the show tanks, but at the same time it sucks out revenues from the market and can hurt other shows. It also creates the situation where the promoter owns the tour, and thus there is not the competition between promoters and venues for that date, and the tour promoter now strong arms the venues they don’t own into their terms – and the venues have had their profit centers taken away – that is why you see these huge up charges going to the customer on ticket facility fees, parking fees, food and beer prices, overload of signage and advertising – everything the venue can do to salvage some income streams. It has created a vicious circle in the industry and put a bad flavor in the customers mouths which has turned away many people the last few years.

I have always thought of the venue and the local promoter as the true storefront for the artist goods to sell. The promoter and venue really know how to brand that artist in their market, to sell them to the public so that the artist is positioned not to just sell that one show, but to come back and grow in the market. An artist and manager needs to work with venues and local promoters to help keep them strong, to help brand their artist the right way for many years. If the venue and promoter keep getting weakened by losing all their revenue streams then ultimately they will weaken, and have in many, many markets, and lose good people – good marketing people, good production people, good buyers, etc. – and that is not good for the artist in the long run. Today too many people in this industry are looking so short term on how to pull every dollar out of that one show or that one tour, that they don’t realize they are killing the long term success of the industry, and growth potential in building strong fans, strong venues, strong promoters – which are all needed to brand the artist correctly for long term success.

I think that this new acquisition also means more tours dates going to all their amphitheaters and less and less arena dates, so I would think that companies like SMG and Global need to make some bold decisions now as they are potentially going to lose more and more business due to this.

For Bravo – how will this effect us – we are taking this news as an opportunity for our company. I believe that agents are the most skeptical of this news as their roles are the ones that LN seems to be bypassing more and more when buying whole tours. Thus agents want an independent company like ours to grow and become stronger so there are competitive alternatives for their artists – and also more importantly so there are alternatives that enable better marketing and positioning in the marketplace for their artists to have a career. Many agents see the importance of this imaging in a market – a show in our markets will have an artist on the front page covers of all the papers, big ads that we are running every week – whereas a tour promoted show by LN will have a small ad in the back of the paper and they are paying 5x the price we are. PD’s give us more than 10x more promotions than they will ever get in these markets because of the relationships established and the volume of shows we do versus their few touring stops. The importance of what the local promoter brings to the artist branding means volumes, and more agents are seeing the value in that for their artists. So I believe this brings more opportunity for agents to try and break away from selling whole tours. I have to shake my head when I see our company promoting a club show that has bigger print ads, and more radio promotions, than a LN arena tour date in the market. I also see it as an opportunity for our company to hire away some really good people that just wont work for LN. The growth opportunity there is great for us, and with our recent merger this year with Knitting Factory and the investment group behind our two companies we are poised for the expansion of not just the concert club chain but the whole live entertainment business – our goal is to create a company that can work with bands from A to Z. Finding new artists in the Knitting Factory clubs, taking them to the next level with the Big Easy Concert House clubs we will be rolling out nationwide, and then moving them up to theaters, arenas and so on. This way they are working with a promoter who truly cares every step of the way how that band gets positioned and branded in a marketplace for greater success the next time through the market.

….

As stated above, I just don’t see positive effects from the last five years in buying whole tours. It has not been good on the industry, and I don’t believe it has been good for the artists in positioning themselves for long term success.

To me it is like the scalper theory – LN (and others) believed there was demand there to sell the better seats at much higher ticket prices. And I agree there is the demand there, but there is a huge price to the industry that goes along with it. People have used ticket scalpers in the past, and yes there is a market there, but people have also hated the huge upcharge they pay thru scalpers, and they have nothing but negative feelings towards scalpers for the most part. Now that the scalper markup has just been moved to the ticket prices upfront, we have moved the fans animosity for the huge prices over to our industry makeup. We have taken on as artists, venues and promoters all that negativity that used to be viewed towards scalpers. Couple that with higher ticket fees, higher beer prices, higher parking charges, and the attitude towards our industry right now is in the dumper with the fans. And we wonder why there is such an industry image crisis right now?? All things and decisions like these need to be weighed over the long term and not the short term, and not based on keeping ones stock price in check with short term gains. And with whole tours when you are paying a fee for each date across the board, it will work in primary markets, but makes no sense at those ticket prices in secondary markets – and it is a horrible branding for the band in those markets – in fact many acts just can’t come back to many of those markets when they come in way over priced for the market and tank based on the price resistance of the market, and poor advertising. And what everyone forgets is that the secondary markets of today have the highest growth rates – more and more people are moving in to these secondary markets and leaving the primaries – so why do you want to kill artists for their future in the growing markets? Economics has always taught us to pinpoint where the growth markets are and cater to them, and focus there for tomorrows success as your primary markets are stagnate.

One goal of ours now is to really show agents the importance of the positioning of their artists in these markets. I don’t expect to see the model of buying whole tours change overnight, but eventually I think it will be too apparent that it is not the best model for our industry. You will probably see adaptations to it, whereas agents and managers might start to cut their tours into two models, and LN might buy the primary stop dates where they have the people in place to market a band better, but then the agent will go back to working with local and regional promoters for the secondary market dates, so those markets get the correct attention to detail and the band is positioned correctly there for future growth. I think this would be a good start to getting things back on track, tours where LN might buy 20 primary dates and the other 20 dates for secondary’s are sold to local and regional promoters who really know the marketplace and those dates are negotiated by date. Otherwise the alternative reality is going to be that the secondary markets have been destroyed all together and become non-existent stops in the model anyways. And when that happens the artists and labels are going to start wondering why they aren’t selling any music in those growing markets.

I can say that LN has some good people that I have enjoyed interacting with over the years. HOB has some really good people and I have a lot of friends there. However, the LN philosophy is one that I could never buy into, it is skewed in the way that to achieve their goal the industry as a whole suffers – and when that happens the long term success of that industry is not possible. And if the industry is not prosperous then companies operating within the industry can not prosper, until it changes… Our company is working towards that change that can bring the industry back to its former glory.