CIC 2008 in Review
Reported by Tess Taylor
What do Beyonce, Korn and Kanye West have in common? They all have thriving fan clubs, which they use to engage their fans and develop their artistic careers.
Here are some highlights.
Is This The End Or Just The Beginning?
Harvey Goldsmith Keynote Speech
When someone tosses down the gauntlet instead of tiptoeing around problems, it’s good to hear. Harvey Goldsmith did just that in his hard-hitting keynote, which outlined the concert industry’s top challenges today, stuck it to the offenders, and offered suggestions.
One of the world’s best known rock promoters, Goldsmith has been instrumental in developing the live touring industry in Europe and produces huge events. Career highlights include promoting London’s 1985 Live Aid concert, the Live 8 show in Hyde Park, the Led Zeppelin reunion show and acts such as The Who, Van Morrison, Madonna, Eric Clapton, Pink Floyd, Luciano Pavarotti and others. He has worked with some of the biggest performers and shows in live music.
Taking a cue from U2 manager Paul McGuinness, whose MIDEM speech criticizing the record industry for its failures and Silicon Valley for its arrogance made headlines a week earlier, Goldsmith scolded his own industry for its greed and failure to come together.
“We [the concert industry] threw an opportunity away because of our inability to talk to one another,” he said.
The problems are not new and some are getting worse. Fewer people are attending concerts, the secondary ticket market threatens legitimate promoters worldwide, top-drawing super groups are retiring with no new talent coming up through the ranks to replace them and ticket prices are going up.
Millions of tickets sold:
Against this backdrop, Goldsmith offered some sobering figures, including U.S. ticket sales (in millions):
Industry Sales 2004 2005 2006 2007
Millions of Tix Sold 72.2 67.4 63.3 63.5
Est. Average Ticket Price $38.78 $45.99 $56.88 $61.45
Source: 2007 Year End Business Analysis (Pollstar)
From the figures below, we see that projected growth of the global ticket business is slowing.
Global Ticket Sales (in millions):
2006 2007 2008 2009 2010
Gross Sales $8,200 $9,000 $9,800 $10,600 $11,400
Growth 9.8% 8.9% 8.2% 7.5%
Secondary Ticket Market: A False Market?
The secondary ticket market was a hot topic of discussion last year and has grown more contentious. Promoters are angered that scalpers have consumed the concert business, flooding it with bootlegs, counterfeit tickets and even phantom shows. Stubhub (an eBay company) profits enormously from secondary sales and defends itself as offering a legitimate service that fills a need. But as more customers experience problems or fall victim to dishonest schemes, the pressure mounts.
Says Goldsmith, fans are getting ripped off on the secondary ticket market, which by some estimates is 30% of all ticket sales with at least 1000 secondary ticketing agencies in the U.S. alone though this figure is difficult to verify.
Viagogo estimates that the European market for secondary ticketing is $9 billion and that by 2010 the global secondary ticket market could exceed $25 billion.
TixDaq estimates 2006 secondary ticket sales in the UK of £100M ($195M) in 2006 and £250M ($487M) in 2007. The company reports that the top twelve artists had gross secondary sales as follows:
Artist Gross Secondary Sales
Take That £16,059,000
Reading Festival £5,295,486
V Festival £4,405,671
The Police £2,645,472
T in the Park £2,198,516
George Michael £1,849,499
Leeds Festival £1,661,482
Dolly Parton £1,178,115
eBay: The Most Arrogant Internet Company I Ever Met
Especially incensed about eBay, Goldsmith called the online auction site “probably the most arrogant Internet company I’ve ever met.” He described a recent meeting of eBay executives, the British Secretary of State, the UK Department of Culture, Music & Sports officials and himself. In the meeting, eBay turned a deaf ear to complaints about bootlegs and counterfeits destroying the concert business, simply invoking its “buyer beware” policy.
“So what chance have we got?” he asked.
When I approached Goldsmith to confirm this quote, he told me more. He says eBay is the biggest scalper in the business, allows this practice to happen and does nothing to stop it or remedy cheated customers despite increasing complaints of rip-offs and non-existent shows. In other cases, front seats are promised and paid for, and customers receive back-of-venue seats. eBay does nothing.
According to him, court cases are afoot in Australia to sue eBay for some of these practices.
“The secondary market doesn’t know or care about the difference between what’s real and what’s not,” he says. “eBay is out of order everywhere, and they do not live above the law.”
Goldsmith accepts some of the blame for the emergence of the secondary ticket market. “We enabled this false market to come into being,” he says, “and now brokers run teams of 20 to 30 students to grab full allocations of tickets for shows in demand.”
To show how bad the situation is, he shared an anecdote about a friend “who thought he could get better tickets from scalpers for MY shows than I could give him.”
A Ticket Is A Currency For A Unique Experience
A ticket is a currency for a unique experience says Goldsmith, “it is not a commodity to be tarted up and resold.”
Bootlegs, Counterfeits and Phantoms, oh my!
As if bootlegs and counterfeit tickets weren’t bad enough, some “organized gangs and bedroom marketers” sell tickets for shows that don’t even exist. One company is selling tickets to non-existent Led Zeppelin shows at Wembley Stadium and Manchester Stadium for June 2008. Ticket prices start at £250. The cost is real, and you’ll know it when you get your credit card bill at the end of the month.
And in something ripe for a George Carlin stand-up sketch, a new category of tickets has been invented: “pre-on-sale” which may be described as tickets going on sale before they go on sale (presumably to a select group of customers).
Retiring Super Groups
Replacing retiring artists who have a clear understanding of what fans want is a persistent problem. The Rolling Stones and Barbra Streisand ticket prices topped $1,000 last year. When they retire, who will fill arenas and command such prices? Goldsmith spoke of a need to balance the top and bottom of the market, but it is unclear how this should occur.
The real challenge is that with more indie bands than there are molecules in the universe (over 1.2 million rock acts and 1.7 million R&B acts on MySpace alone), how will we filter and find new artists? And who will do this?
Governments have yet to take an interest in regulating the secondary ticket market, said Goldsmith, the way they have done with piracy. The French government, for example, has shown a willingness to disconnect persistent violators and music pirates from ISPs.
Attempts in the U.S. and Europe to outlaw the resale of tickets have failed. Hopefully the concerned parties will work out their differences without government intervention. One thing is clear: both primary ticket sellers and re-sellers must provide better customer service.
Promoters can make the concert going experience more agreeable by offering good seats at fair prices, limiting surcharges (or at least including them all in one price to avoid unpleasant surprises), and working with venues to keep all prices reasonable (parking, concessions, merchandise). When concert-goers feel gouged (as many do), this doesn’t engender repeat business.
For their part, ticket re-sellers like Stubhub and eBay must be more vigilant about dishonest schemes and bad actors who exploit customers. Their buyer beware policy is insufficient. Bad actors must be shut down and prosecuted. None of this hiding behind caveat emptor business.
Solutions & Marketing Opportunities
Some solutions Goldsmith cited include training new promoters, saying “no!” to artists who get too greedy, and taking advantage of distribution opportunities, branding and 360 deals to help grow new artists.
As one example of distribution, mobile companies are more interested in music from new artists than from established artists. Ticketing is an attractive area to these companies. In fact, making the mobile phone into a “ticket” could help combat bootlegs because SIM cards in phones are the only unique personal system now in place.
Brands seeking relationships with artists can also offer a variety of opportunities to enlarge marketing efforts. Here again Goldsmith warned not to get greedy. Why is it, he asked, that artists always ask for $1 million just to open the door when a brand approaches?
The 360 model, a deal wherein the label shares in all revenue streams instead of limiting its participation to record sales, is nothing new says Goldsmith, who’s been doing such deals since 1984. Whereas “record companies are as greedy as artists when they can be, they can and should do 360 deals, but [they should] treat artists as partners and hire expertise.” As long as a record company pulls its weight, provides expertise and partners with an artist, such an arrangement can be positive. The deals go bad when the label wants a hand in all the revenues but doesn’t provide the service, expertise or muscle to justify it.
NOTE: NARIP is planning several programs to explore 360 deals in detail, what to ask for and what to avoid. Watch this space for dates and times here on NARIP.com.
“We have to decide what we’re in business for. Nothing thrills me more than a great show, and beaming buzzing fans. But we’re alienating them now, the same way record companies have been doing, and treating them like serfs. We must protect fans and stop milking the market.”
These closing words of Goldsmith’s reflected the best parts of his speech: he certainly doled out the criticism in spadefuls, lambasting concert industry professionals to clean up their act and offer a better service. But he also offered solutions and pointed out opportunities.
Survival Of The Fittest
Record executives are not the only ones looking for new ideas and angles to revive their portion of the music business. Concert promoters are also trying to devise ways to keep their cash registers ringing, meet the competition and avoid extinction.
Survival of the fittest indeed.
The panel of independent promoters included:
Steve Litman, President, Steve Litman Presents in St. Louis where he exclusively promotes the Fabulous Fox Theater
Charles Attal C3’s lineup includes Austin City Limits, Big State, Lollapalooza and about 800 other shows.
Mike Elko, Elko Concerts. Since 1986, Mike Elko and his company have brought concerts and live entertainment to venues throughout the Pittsburgh and Lake Erie areas.
Matt Hickey opened High Road Touring in Austin and brings his career perspective as an agent, manager and talent buyer to the table.
Bill Rogers of BRE Presents is a longtime promoter providing a full array of services including booking, producing and promoting concerts in the Northeast.
Bill Silva has had an amazing run with Bill Silva Presents, producing more than 10,000 events worldwide since 1979 including Simon & Garfunkel, The Police, Madonna, Nirvana, Eric Clapton and Bob Dylan.
Andy Somers, Senior VP, The Agency Group. Somers started out managing punk bands, and has been with several top agencies before arriving at his present position.
How To Compete in a Crowded Marketplace?
Andy Somers, who is optimistic about great music scenes around the country, hit on the challenge for music professionals everywhere: there are “more opportunities than ever for crap to be marketed well.” Fortunately, there is more good music, too.
Has Live Nation changed the concert business for better or worse?
They’ve ruined it, according to Pacific Arts Entertainment’s Steve Litman, responding to an audience question. “When money supercedes music, it affects everything. Guarantees have gone up, ticket prices have gone up, it’s a math game [now]. We’re not engineering repeat business. Instead of one to two shows per month, kids today go to one show a year. Good experiences beget more experiences. The movie business doesn’t treat tickets the way we do,” he said.
Entertainment Has Been Undervalued
Here again, panelists bemoaned skyrocketing ticket prices. Only Bill Silva noted that entertainment has been undervalued historically and ticket prices are simply catching up.
“We tend to lose our customers around age 22 to 25 and then pick them up about 10 to 12 years later around age 35,” he said. “About 10 to 15 years ago, people began going to fewer shows before the ticket price run-up. [Prices are] up 75% in the last 10 years, but entertainment was an under-priced value. That’s what has changed.”
Artist Fan Club: Boon Or Boondoggle?
Who needs a fan club? Any artist serious about his music career must engage with fans, according to the experts. In fact, NOT doing so can be detrimental to an artist’s career.
Panelists during this discussion included:
Mark Weiss, panel moderator and Founder of Artist Arena. His company creates new income and promotional opportunities for artists. Services include fan club development, management and marketing, fan club ticketing and VIP package sales
Charlie Brusco, President & CEO of Alliance Artists. Brusco founded the company in 1991 after accomplishing everything from discovering and managing The Outlaws to promoting the 1986 Amnesty International Concert.
Harlan Frey, VP of Touring & Artist Development at Roadrunner Records. Last year’s winner of Pollstar’s Artist Development Executive of the Year, Frey has contributed to the careers of Nickelback, Slipknot, The Dresden Dolls, Dragonforce and others.
Chris Guggenheim, CEO of All Access Today. The company offers artists a no-cost online service platform, creating new revenue streams for the artist and providing perks to fans through pre-sale tickets and fan club memberships.
Moss Jacobs, VP of Nederlander Concerts and talent buyer for the Santa Barbara Bowl. Jacobs also books and promotes other key venues for Nederlander in the Bay Area, Central Coast, Los Angeles and San Diego.
Steve Kirsner, Director of Booking and Event Manager, HP Pavilion. A 30-plus year industry veteran, Kirsner has also worked with Mannheim Steamroller at American Gramaphone Records.
David Marcus, Senior VP of Music, Ticketmaster. Marcus is responsible for developing and deploying unique platforms and partnerships to help the company’s concert clients sell more tickets and connect artists with their fans.
Mark Montgomery, echo music. Client roster includes Keith Urban, Kanye West, Korn and Dolly Parton.
Fan clubs are a growth area and have moved beyond the stigma of Marsha Brady-Davy Jones blandness. Today, record companies write big checks for fan club rights and the recognition of value is evident in the many acquisitions and consolidations happening.
Industry leader Live Nation now owns (or has a majority share in) three fan clubs including Ultra Star, Signatures and Musictoday, part of the company’s broader strategy to position itself as a middleman between fans and artists.
The best fan clubs engage, offer access and goodies beyond mere tickets. Tips shared during this session to build a better club and induce participation include making birthday calls to fans, organizing softball games during the Warped Tour and involving non-frontmen.
Above all, panelists emphasized that for a fan club to be successful, the artist must engage his fans. Poll the fans, ask what they want, then deliver.
Activate fan club membership with a USB wristband at a show, says Guggenheim, which arouses a curiosity that helps get fans to act when they get home after a show.
Exclusivity is key, says Weiss. Artists and their keepers must work hard to create and promote value beyond a MySpace page or mailing list. Free lists, he says, are wide open to porn and other unregulated activity and not so compelling. Engaging the diehard fans and giving them their own space can promote value and attract other fans.
Charlie Brusco, manager of Styx, says that fans must join to get into the “Lounge” portion of Styx’ site and this has been successful for them. Offering unique benefits like these (access) or special edition songs and ways to connect to the band all help to build fan loyalty.
The downside to fan clubs is when they are poorly run or when they dictate ticket inventory to the promoter or resell tickets, according to Nederlander’s Moss Jacobs. Where quick transferal to brokers occurs, Jacobs says, it’s disheartening that these tickets aren’t actually going to fans. In fact, bigger ticket brokers appear to be members of many fan clubs for the express purpose of acquiring tickets to resell.
Pearl Jam has managed ticketing issues well, they are very strict but this can be labor intensive on the building side as it directs more people to will call which requires additional staff.
Ticketmaster’s David Marcus agrees that will call is a good strategy to use to avoid scalping.
He also suggests that admission to a concert venue be tied to the customer’s credit card and permit no transferability. Most importantly, bands should ensure they can honor commitments to their fan clubs.
During several Tom Petty concert dates last year, Marcus says there was so much broker activity that they cancelled 600 tickets and sent people to will call to sort out the mess.
Lots of bands would love to have a broker problem, says Weiss. On the other hand, a fan club that only offers tickets is “lame” according to Frey.
360 Deals… Again
Talk of 360 deals was ubiquitous and the topic brings out strong opinions in the concert business. Such deals typically seek participation in tour revenue (not to mention merchandise sales, personal appearance fees, music publishing, etc.), but with struggles enough of their own promoters are loathe to share any of their hard-won dollars with the record business.
And who can blame them?
Brusco voiced his distrust of record companies that have “failed at their own business” that now want to get into a part of the business they know nothing about. He recommends entering into such an arrangement only if the record company writes a large check and pulls its weight.
Record companies have “no business” entering into a 360 model unless they have an understanding of the touring world and specific people to assign to the job, says Frey. On the other had, he admits that it’s hard to break bands without partners.
Audience Question (from a promoter): The bigger the band gets, the less they want to do meet and greets. What do you do?
Frey recommended that promoters determine in advance what participation they can get from artists scheduled to perform. Also, the best time to get artists involved in the fan club is during down time after the recording and tour cycle.
Styx doesn’t do meet-and-greets says Brusco, but they gladly sign merch mostly for charity unless it appears on eBay the next day. Artists need to preserve their voices and shouldn’t be put in jeopardy, especially when meet-and-greets usually have poor security and too many intoxicated fans. Most fans just want a great show and hanging out with the band is not essential.
In some cases, fans even scare artists, said Weiss, so much so that bands are sometimes afraid to get off the tour bus. Fans can be brutal and have been known to say, “Why are you playing songs from the new record? It sucks!” not realizing how painful and personal this can be.
Fan clubs can also be a much-needed safety net between the artist and the psycho fan. Weiss said he’s dealt with fans who would kill bands.
One interesting trend is that lead singers are no longer necessarily the face of the fan club. Fans want to talk with the bass player and drummer, too. It’s possible to leverage the non-frontman part of the band, and no need to stop with musicians. In some cases cousins, uncles, cameramen and others from artist entourages have stepped in. Fueled By Raman’s Webmaster took over the band’s fan club, sending it “off the charts” in one example.
Favorite technologies among the panelists include zip code matching services and iLike. Montgomery advises when trying new things to “fail quickly” and move on. Talk of wireless technologies abounds and how fan clubs can leverage these, especially to reach the teen and urban markets, but no specifics were offered as to how to accomplish this. I get the sense they’re all trying to sort it out themselves.
If I had a dime for every time I heard the words “fan club,” “360 deals” or “artist development,” I could afford to park at the Westin Bonaventure Hotel more often ($46 for the afternoon). Clearly, concert industry professionals are looking at every possible angle to protect their business from encroachment and create new sources of revenue.
Fascinating, fun and lucrative, it’s no wonder everyone wants to get into this part of the industry because it IS exciting.
The energy at CIC this year was palpable, and the conference was excellent. These professionals – promoters, agents, venue operators – can play a vital role in creating and sustaining an artist’s career.
So it’s a good idea to meet them and hear what they have to say.
# # #
P.S. Despite rumors to the contrary, artist development is not dead. The Los Angeles Music Network’s “LAMN Jam” heads for the Big Apple next month. Launched three years ago in Los Angeles (where performances continue), LAMN Jams go beyond traditional showcases by featuring artists performing original songs, followed by instant professional critiques from a panel of industry experts. This year, artists will perform for $20,000 in prizes. Details at www.lamn.com.
We welcome your comments at info AT narip DOT com.
Sources for info:
Editor’s note: Thank you to Gary Bongiovanni, Shari Rice and the entire staff at Pollstar for another great and information-packed conference. Well done!