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Op-Ed: AEG/Ticketmaster/Live Nation – Bob Lefsetz

Isn't Jimmy Iovine the most powerful person in the music business? Or is
that Clive Davis… They've both got scorched earth publicity campaigns.
Clive says he's the godfather, every hit record has to pass through him.
Without his imprimatur, you're irrelevant. Jimmy? He's your buddy. You
want to be on Jimmy's team, right? Hang at his house, take those loving
phone calls. He's a winner.

But let's kick it up a level. To Edgar Bronfman, Jr. and Lyor Cohen. Doug
Morris and Zach Horowitz. How did they let the music business slip through
their fingers? Didn't they have their eye on the ball? Which ball?

The labels have a problem. It's hard to charge for music. Oh, that's just
the tip of the iceberg. It's hard to break an act, the reach is ever
smaller and sales results can be one-tenth of what they used to be.
Furthermore, what's to prevent newbies from entering the business and
gobbling up market share? The majors' control of distribution used to
protect them, but with brick and mortar fading, they're fucked, the playing
field has been leveled. Meanwhile, they're kicking and screaming like
contestants on "American Idol", all emotion and very little substance.

Will people pay for music in the future? I believe so. But, the major
labels have devalued music, made it free, by clinging to an old business
model. And now the revenue is coming from elsewhere. In other words, WHO

But the labels now say they're in this business. With their 360 deals. But
what do they deliver for these newly-acquired rights? I'm scratching my
head. Looks like a land-grab to me. And to so many attorneys. But if you
want to play live, you need a ticketing company, a promoter, someone to
guarantee the date financially. All roads lead straight through Live
Nation, AEG Live and their much-smaller competitors. Furthermore, the big
companies have further advantages, known as ASSETS! They own/control the
buildings! All of this flows to the advantage of the act. Costs are lower.
Losses can be spread over many controlled gigs. Assuming the agent and
manager can continue to beat up the promoter, getting a high guarantee. All
the money is in live, and the labels are in RECORDS! How fucking stupid is

It's a war between the Canadians and the Americans. That's the battle
between Live Nation and AEG. The Canadians, despite their low-key demeanor,
believe they're just that much smarter than the Americans. But Michael
Rapino is a young 'un, how much has he seen? Well, Cohl's seen plenty. But
he must be pretty fucking frightened if he's suddenly accepted the
chairmanship of Live Nation. He wants to protect his investment. SO HE CAN
SELL IT! Which he's done multiple times before!

Cohl and cohorts are not full-service promoters. They skim from the top.
But AEG skims from the top too. And has got better assets. While Live
Nation is rebranding shitholes "Fillmore", AEG is investing capital in
Nokias and the O2. Which deliver a halo to the entire enterprise. People
hate Clear Channel/Live Nation. But they don't hate AEG, certainly not the
same way. AEG is peopled by all those buyers they've dealt with FOR YEARS!
The underlying loyalty is to AEG, not the rotating cast of characters at
Live Nation. Certainly Irving Azoff's loyalty is to AEG.

Not that Irving will say that. And truth be told, Irving's on nobody's team
but his own. He's manipulating all the players, they're all tearing their
hair out, because suddenly, Irving controls TOO MANY ACTS! And it's a
business of talent. He who controls the talent truly wins.

Rapino tried to make more equitable deals, he wanted the acts to share in
the upside. Only problem was Howard Kaufman, Irving's partner, didn't want
to do this. So he froze Rapino's company out. Confronted with the prospect
of his decaying amphitheatres going empty, without Jimmy Buffett, Chicago
and ultimately Def Leppard, et al, Rapino caved. Rapino has to give
Kaufman, and his partner Azoff, what they want.

Over at AEG… Irving built it and then gave Randy Phillips the keys to the
kingdom. If you don't think that's worth something, then you haven't
watched enough Mafia movies. And Jay Marciano, who oversees Madison Square
Garden and Fuse…he used to run Irving's Universal Concerts. They're

So, you can be sure, the loser in this proposed conglomeration is Live
Nation. Saddled with debt, owning too many bad buildings, peopled by the
"B" team in too many instances.

As for Phil Anschutz? Financially it makes sense for him. But how he
escaped the Qwest fiasco intact eludes me. Then again, innocent until
proven guilty.

Barry Diller? The supposed smartest man in the entertainment business? He
might have pulled one over on Edgar Bronfman, Jr., but he's being tortured
by John Malone. He's about to lose part of his empire. Diller may have
engineered a huge payout for himself, but he's another Clive or Jimmy, a
tireless self-promoter whose accomplishments don't quite square with the

Cablevision? Shit, Jim Dolan plays in a BAND! Managed by Irving
Azoff…isn't that fascinating. He gets further into the business and now
can leverage his Fuse channel, which many people don't even know exists.
Yeah, hype acts and then rake in the dough at the gig. While Doug Morris is
trying to squeeze MySpace, Dolan, et al, have figured out a way to profit
from hype/exhibition, which they OWN! Doug and Jimmy start FarmClub and
Pressplay, AEG, Cablevision and Ticketmaster create a behemoth!

Ticketmaster? They had to do buy in. To fuck with Live Nation if nothing
else. Looks like TM has entered the future. Purchasing a ticket reseller
and now making this deal, assuring future revenue.

As for the agents, managers and acts… The fewer places you have to sell
your talent, the worse it is. That's why the XM/Sirius merger should not go
through. But it will. As will this combination.

As for the public… Will this consolidation result in lower prices? No.
The public will get very few advantages.

It takes a ton of bread to erect a building. And continue to run it. A kid
may be able to steal an MP3, but he's never going to steal Madison Square

Let's see how this shakes out. Will this new consortium figure out a way to
break acts? As the major labels decline, who will control this process?
It's harder than ever to BREAK on the road, since the economics suck. Will
acts continue to break via recorded music and then fall into the hands of
AEG? Can a new concert promotion company be founded to compete? Only with
a fuck of a lot of money. And didn't that Wall Street analyst say the
business was a river of nickels?

This is a watershed moment. You just lost another person to sell your
talent to. Irving Azoff gains power in the music business that David Geffen
never even dreamed of. And those people making music on their computers?
It's all going to have to flow through the concert promoter, assuming the
act is successful. And successful today is predicated on playing live. So,
that begs the question, HOW DID THE MAJOR LABELS GET LEFT OUT?