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 Live Nation Exits Car Racing to Double Down on Music - blog.wired.com 10.09.08 
Tasmanian_Devil
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Live Nation Exits Car Racing to Double Down on Music

By Eliot Van Buskirk EmailSeptember 10, 2008 | 8:30:49 AMCategories: Deals, Digital Music News, Events, Shows

Picture_9 Former concert promoter and multiple venue owner Live Nation has expanded its scope within the music scene by signing high profile acts such as Jay-Z, Madonna and Nickelback to so-called 360 deals which include merchandising, distribution, licensing and touring. In order to "hone (its) focus on (the) music business" and pay off some debt, the company announced on Tuesday evening that it sold its motor sports division for $200 million to Feld Entertainment, a producer of circuses, ice events and musicals.

Live Nation called the motor sports division "its largest non-core asset" before the sale. Live Nation has now sold $465 million-worth of its business, including its theater division, sports agency, a San Francisco office building and music venues it called "non-core" to date, to increase its focus on music.

The company's contract with Ticketmaster expires at the end of 2008, which will hopefully bring some more competition into the online ticketing market. In other words, Live Nation has plenty of ways to spend this money on its music division before January 1 -- and beyond.

We plan to meet with Live Nation executives next week; expect more details on their plans soon.

http://blog.wired.com/music/2008/09/live-nation-exi.html

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 Live Nation on Music Track to Increasingly Vertical Business - 14.09.08 seekingalpha.com 
Tasmanian_Devil
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Live Nation on Music Track to Increasingly Vertical Business
by: Seth Gilbert posted on: September 14, 2008 | about stocks: LYV / TKTM

Since being spun off from Clear Channel (CCU) in 2005, Live Nation’s (LYV) management has oriented the company toward a path of broad, vertical integration. Instead of being just an event promoter, they’ve aimed to transform from a narrowly focused promotion business to a comprehensive music services company. Non-essential (and non-music) assets have been divested. Ticketing and fan membership services have been acquired. People and assets have been shifted. This week, two more steps were taken toward the fulfillment of those goals.

Ticketing Business Bolstered with SMG
In August 2007, Live Nation cut off contract renewal talks with long time partner, Ticketmaster (TKTM). Rather than relying on a third party agent and sharing revenue that could otherwise complement their promotions, the company decided they’d take up the ticket sales opportunity themselves. (Live Nation Ticketing is slated for launch in early 2009.)

Thursday, the ticket inventory for the as-yet-unlaunched service was significantly bolstered. Live Nation signed a five-year deal to supply tickets for SMG managed venues.

[The move is also a significant strike against Ticketmaster. Live Nation is Ticketmaster’s top partner, reportedly responsible for anywhere from 14% to 18% of Ticketmaster’s annual revenue today. SMG is Ticketmaster’s second best contributor. With Live Nation leaving Ticketmaster to form its own ticket business and then signing SMG, they will have taken the top two venue partners out of Ticketmaster’s inventory.]

Based solely on sales for venues under its own contracts, Live Nation tickets had been projected to handle about 10m tickets in 2009 once the service goes live (Live Nation tickets can’t launch until their prior Ticketmaster contract expires). The exclusive business from SMG will begin to contribute in late 2009. It is expected to contribute more than 5 million ticket sales annually by 2011. Over the life of the five-year deal, an estimated 25m tickets are expected to be sold.

"This alliance increases our expected total ticket inventory by 25 percent over the next seven years, and that’s before we even flip the switch on Live Nation Ticketing," Live Nation Ticketing CEO Nathan Hubbard said in a statement.

SMG operates more than two hundred venues including major arenas and stadiums like Chicago’s Soldier’s Field, Houston’s Reliant Stadium, The Louisiana Superdome and the LA Forum. SMG Stadiums represent more than 422K stadium seats and more than “1.5million managed seats.” According to company press materials [PDF]: “SMG-managed facilities grossed more than $1 billion in 2006, hosting 10,000 events and attracting more than 50 million patrons.”

SMG is owned by private equity firm American Capital Strategies.

Divestiture of Motor Sports
Live Nation’s stated focus is music. Anything outside that has been targeted for cuts. Including its former theater business, TV services, real estate, and its sports agency, hundreds of millions of assets defined as “non-core” have been sold off.

Wednesday, in a continuation of that process, the company announced (release) the sale of Live Nation Motor Sports to Feld Entertainment.

Feld Entertainment, which also operates the Ringling Brothers Barnum & Bailey Circus and Disney on Ice, will pay $175m up front. Another $30m in earn-out potential is also part of that deal.

Live Nation Motor Sports, which promoted a number of different auto events, accounted for about 4% of Live Nation’s total revenue last year.

The Road Map
If vertical integration has been the destination, Live Nation’s path for getting there hasn’t always been crystal clear. Notably, this past summer, there were reports of some dissension in the upper ranks over how to best handle artist acquisitions. According to speculation, Chairman Michael Cohl, who also headed Live Nation Artists and is famed for managing concert tours like the Rolling Stones’, wanted to aggressively pursue more exclusive artist partnerships, so-called “360 deals.”

Under his guidance, the company had already spent millions signing multi-year, multi-service agreements with such major artists as Madonna , U2, Nickelback, Jay-Z and Shakira. He wanted to lock up more of the industry's top grossing stars.

CEO Michael Rapino reportedly took a different position. He wanted to slow down on the up-front and guaranteed spending to instead focus on building out the services around the artists already on board. According to one source quoted in the New York Post, he has even been interested in striking licensing deals to outsource some functions back to the traditional music labels.

As David Joyce of trading firm Miller Tabak & Co told the LA Times last June, “Cohl wanted to hurry up and get more of the artists locked up so they didn’t lose them to competitors,” But, he said, “The market is very nervous right now regarding those deals, and that’s why there was the disconnect.”

Ultimately, if there was a rift, Rapino won. Michael Cohl, the former founder of Concert Productions International, stepped down as Chairman and instead took on an advisory role.

Since, the company’s been moving full steam ahead. The acquisition of SMG as a partner, and the divestiture of the Motor Sports business, are cases in point.

Big on Vision
Live Nation’s ambitions are big. As noted in prior Metue coverage, in corporate marketing materials, Live Nation bills itself as “the future of the music business.”

Theirs is a vision defined by a single, top-to-bottom vertically integrated business: a place where fan club services, Internet content, recording contracts, publishing, touring, promotions, sponsorships and talent management all sit under the same roof, or at least, under their control.

CEO Michael Rapino has said before, “Live Nation will use its most important asset, the concert ticket, to build artist careers and customer relationships, forge sponsorship deals, create a fan and artist friendly secondary ticketing platform and provide a ticketing alternative for 3rd party venues.”

In today’s music industry climate, that’s a fairly unique proposition.

Unlike in years past when a band toured to promote album sales, in today’s music industry the equation is largely reversed. Nowadays, musicians (at least those with already established fan bases) make their money on the road.

Some data points: When Forbes summarized the Top Ten Earning Country Acts for last year in May, they found that “most of the musicians on [the Forbes] list earned the majority of their income from successful tours.” The same result was reached in Forbes' first review of the Top 20 Female Musicians, Forbes “Cash Queens List.” In that report, the magazine found the top twenty earned a combined $420m between June 2006 and June 2007. “The vast majority,” the accompanying article reads, “collected hefty paychecks from sell-out tours.”

A few more recent examples:

- In the first six months of 2008, the top ten grossing tours so far have generated $391.5m at an average ticket price of $97.92. The lowest average ticket price for one of those events was $62.88 for Kanye West. Jay-Z and Mary J Blige drew the largest with an average ticket price of $111.12. (source: Pollstar [PDF])

- At the top of 2008’s first half report, Bon Jovi had so far grossed $56.3m with an average ticket charge of $87.98 a seat. Bruce Springsteen and the E Street Band was second ($40.8m), Van Halen third ($36.8m). Kenny Chesney and Michael Buble rounded out the top five with $35.3m and $32.5m respectively.

- In 2007, the Police reunion tour earned the trio $133.2 million over 54 shows with an average ticket price of $119.99.

- Country star Kenny Chesney generated gross ticket revenue of $71.1m in 2007, the second highest tally. For two years in a row, he sold more than 1million tickets. (via Pollstar)

If successful in implementing their vision, Live Nation could become a formidable competitor for both ticket vendors and music labels.

http://seekingalpha.com/article/95346-live-nation-on-music-track-to-increasingly-vertical-business

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Leben heißt, den Stößen der Welt zu antworten und mehr als einmal am Tag dem untreu zu werden, was man sich vorgenommen hat (Alain)
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Tasmanian_Devil
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17:11 | Tuesday November 11, 2008

Live Nation is reportedly planning to sell MP3 content from three of the four majors on its new download store.

Technology magazine Wired claims that the company’s store will feature individual artist pages in a layout that is similar to MySpace Music, rather than the iTunes model of a central database.


And Digital Music News says that Live Nation has deals with Sony BMG, Universal and EMI to sell their music as MP3s.

The move would represent a further expansion from Live Nation’s roots in live music: it has recently signed deals incorporating live and recorded music with artists such as Madonna and Nickelback.

http://www.musicweek.com/story.asp?sectioncode=1&storycode=1036142&c=1

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