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THE LEFSETZ LETTER: Fixing Live Nation

The acts have to play to empty seats.

So Barbra Streisand decides to go back on tour. Makes a deal with Michael Cohl. You know the drill, he advances a ton of money and you perform. Only one problem, Barbra couldn't sell the tickets. Prices were too high, she'd already done her farewell tour. But do you think Michael Cohl's gonna lose all that MONEY! Of course not. So he asks Barbra for a reduction. America's Movie Star Diva? OF COURSE NOT! So then Cohl whips out his ultimate trump card. No problem, I'll just let you play to an empty house.

Well, not truly empty, Barbra sold some tickets. But half-empty? Two-thirds empty?

Barbra Streisand caved. She made less money, but her reputation remained intact.

Bob Lefsetz, Santa Monica-based industry legend, is the author of the e-mail newsletter, "The Lefsetz Letter". Famous for being beholden to no one, and speaking the truth, Lefsetz addresses the issues that are at the core of the music business: downloading, copy protection, pricing and the music itself.

His intense brilliance captivates readers from Steven Tyler to Rick Nielsen to Bryan Adams to Quincy Jones to music business honchos like Michael Rapino, Randy Phillips, Don Ienner, Cliff Burnstein, Irving Azoff and Tom Freston.

Never boring, always entertaining, Mr. Lefsetz's insights are fueled by his stint as an entertainment business attorney, majordomo of Sanctuary Music's American division and consultancies to major labels.

Bob has been a weekly contributor to CelebrityAccess and Encore since 2001, and we plan many more years of partnership with him. While we here at CelebrityAccess and Encore do not necessarily agree with all of Bob's opinions, we are proud to help share them with you.

Live Nation's got to stop giving away the tickets, stop doing discount deals and let the acts play to half-filled houses. Believe me, then the managers and agents will cave.

But Live Nation won't do this. Because they want the parking and concession revenue. And it's a public company. Hell, are you scratching your head wondering why no fee shows were only available in June? Live Nation had to get that money NOW, for its quarterly earnings report!

In order for Live Nation to survive, it has to exact some pain. The acts have to play for lower guarantees. You can say they can go elsewhere, but really? Sure, GaGa doesn't need Live Nation's advance, she can get it from somewhere else. But Styx? The Doobie Brothers? All those acts playing Live Nation sheds?

And it's not only the seventies and eighties has-beens. So many of the modern acts don't earn their guarantees. But all of them like the fact that Live Nation will buy the entire tour, guarantee a ton of money. What if Live Nation says NO!

Do you really think JAM and IMP are gonna pay those heinous guarantees? And AEG is about creaming the top off the business. And how much money is AEG making anyway, does Phil Anschutz want to take MORE risk?

It might hurt its stock in the short run, but Live Nation has to exact pain in the marketplace in order to not only cure its ultimate stock price/business, but the touring industry. Overpayment must stop.

A hell of a lot of other stuff must stop too. Check out this sales receipt:
The ticket was $20 and the ultimate price was $49.75, after fees. That's INSANE! And you wonder why they hate Ticketmaster. But the fees are about kickbacks, promoter profit, and the acts won't go to all-in ticketing, they want to put the blame on the ticketing giant. In other words, fighting amongst the inside players is hurting everybody.

The model's got to change. Guarantees have to come down, you've got to earn your keep.

And if Live Nation is not willing to take this tack, its concert promotion business could implode, without lower guarantees, the model does not work. So either Live Nation fixes it, or Live Nation goes away.