Op-Ed: Sillerman – By Bob Lefsetz

You've got to sell to somebody. Just ask Zappos. Or Groupon!

Zappos sold to Amazon, otherwise the online retail giant would have gone into competition with the sassy shoe sales site. As for Groupon… It should have sold to Google. It made the mistake of believing couponing was forever.

Is electronic music forever?

Yes.

But at this level of attention and attendance?

Unclear.

What EDM (and I know insiders hate that term) has going for it is it's not like what came before. And it's dedicated twenty years to becoming what it is. Arguably, even longer. You may not have been paying attention, but soon after those Kraftwerk and Donna Summer records came out a scene was born, which has grown into a behemoth in Europe and is now burgeoning in America. It's paid its dues. And the promoters tend to be of the people, paying attention to the people. It's not corporate. It's about the experience. Attendees feel they own the scene. Which is completely unlike going to the shed or arena to see a corporate show.

So far, EDM has not even penetrated arenas. Its fans like outdoor sites. Or tents. Culture, venue, is all important to them.

So wouldn't the promoters want to stay independent?

Just ask John Scher. The fiercely independent promoter would probably still defend his decision not to make a deal with Sillerman fifteen years ago, but that was a mistake. He could have taken the money, chafed under management and gone independent again, all the richer.

So the indie EDM promoters have to sell out.

First and foremost, because they don't have enough money. You can't compete with deep pockets. And once Sillerman or someone else collects competitors it gets ever harder to book talent and put on an event. Yes, talent goes where the dollar is. Not only the offer, but the guarantee you get paid. Loyalty gets lip service, but ultimately you go with the dough.

So who do you make a deal with?

You could go with Live Nation. But that would be problematic. First and foremost there are two majordomos, Azoff and Rapino, and they oftentimes don't see eye to eye. One can ask who's in charge…

Or, you could go with AEG. Which runs a haimish, family-style organization, but it's built on rock, on pop, EDM is something new.

That's the fascinating story here. That Live Nation and AEG missed it. Like Microsoft missing tablets and Facebook missing mobile. You can be the biggest behemoth on the block, and if you're not looking towards tomorrow, you're ultimately doomed.

Furthermore, Sillerman is willing to overpay. Live Nation is a public company that has never made a profit and has debt on its balance sheet. AEG is ultimately a real estate play. Phil Anschutz doesn't want to overpay for bragging rights.

But Sillerman does.

Yes, Bob Sillerman doesn't mind paying too much. Because unlike his competitors, he's not in the concert business. He's in the money business. The goal is to build an asset and sell it. It's just that simple. How do you roll up something so shiny on the surface that those not in the know will overpay you for it.

That's what Sillerman did with Clear Channel. He sold the original SFX to the radio giant. Ultimately, there was a huge write-down and a spin-off. And as stated above, Live Nation is still not profitable.

So who do you go with if you're an independent? The guy who'll overpay you who will let you do it your way, because there's no infrastructure, no central management to get in your way?

Expect this to change. As it did at the original SFX. But for now, you make a deal with Bob, you get a huge check, and it's the same as it ever was. Furthermore, the more promoters he rolls up, the greater his and your leverage. As for the long term… That's about acts, not promoters, if you don't know you're fungible, get out of the promotion business immediately.

And is all this good for the music, good for the public?

Looking at SFX/Clear Channel/Live Nation, one would have to say no. Someone has to pay that bill, someone has to justify giving all those promoters millions, and it's the public. And with more competition in the field, the price of acts goes up, they play promoters off each other, and shows become even more expensive to produce, and attend.

So for those of you who were against the Live Nation/Ticketmaster merger… It seems not to have eliminated competition one bit. There are more ticketing companies than ever and Live Nation is not the only promoter in the game, there appears to be no barrier to entry other than a deep pocket.

As for Live Nation itself… Maybe Azoff ultimately signs all the deejays to Frontline. Irving may not be first, but his charisma and financial skills often put him in the catbird seat. But where does that leave Azoff vis a vis Rapino? And if Live Nation were private, would it overspend to keep Sillerman out of the market, playing for a very long term that Wall Street doesn't respect or understand?

The times they are 'a changing.

And the reason they are is because of the music.

All of the old players missed it. Oh, established promoters will protest they own this and that, but if there weren't successful independents, which they could have purchased for a song way back when, they wouldn't be in this pickle.

It's very exciting. For business.

On a musical level?

Not so much.

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