THE PIVOT POINT: March 2020 will go down in industry history as the moment when the business pivoted from live-sector domination of artist revenue to being primarily dependent on the ownership of master-recording and song-publishing assets.
For most of the current millennium—and some time before that—the live side has represented the lion’s share of music-biz economics.
Live Nation, for its part, reported $9.43b in global concert revenue in 2019. Festivals, stadiums, arenas and sheds, increased ticket prices and aggressive concert promotion caused artist wealth to skyrocket. The reliability of this income dictated how careers were conducted, deals negotiated, assets allocated.
Now, with touring in suspended animation and no real end in sight for a pandemic that was recklessly brushed off by politicians and other influential folks who were desperate to keep the money flowing, the situation is radically different. Artists earning big streams become big brands and have income to match; those who aren’t—and that includes some very high-profile acts in pop, rock and country, and older artists in all genres—are now searching between the proverbial couch cushions for new sources of cash.
Thus the tables have turned, and the leverage pendulum has swung away from artists and managers and toward rights holders. Some of the former are not happy about the way the latter have pressed their advantage, and some are keeping score. For this and other reasons, we are seeing an unprecedented rise in deals for publishing catalogs.
Merck Mercuriadis’
Hipgnosis, with its highly aggressive approach to the acquisition of song “assets,” has utterly transformed the game —and the financial planning of songwriters. Merck, with international financiers at his elbow (and $2b raised), caused the price of such deals to go ballistic; catalog from
Chrissie Hynde and
the Pretenders,
Dave Stewart,
Journey,
Timbaland,
Barry Manilow,
Tricky Stewart,
Mark Ronson,
Jack Antonoff and plenty more is currently part of his collection. But there are now multiple players in the mix, having enticed investors who’ve heard tell of a copyright gold rush.
Larry Mestel’s
Primary Wave has also emerged as a top choice by attorneys, and word is he’s in the process of raising another $1b in his next financing round. Among the also-rans are
Round Hill,
Reservoir,
Downtown and occasional bidders like the teetering
Kobalt and
BMG. Among the top rollers on the financial side are
Shamrock,
Vine, MusiCapital,
Iconic and
Focus. The majors are now believed to be beginning to push back and get into these deals within their own rosters, retaining what they believe are sound investments going forward.
Several top biz attorneys confide that they have never seen this much action on the pub side, with deals valued at 20x earnings not unusual. At a time of economic downturn, investors see this as a sound way of diversifying portfolios with a predictable, sustainable income stream.
For artists bereft of the regular touring windfall—and songwriters whose biggest hits are behind them—the pressure is mounting. That pressure can be especially strong from managers and attorneys, who see the opportunity to commission a deal valued at 20x earnings. Why not get that deal hammered out while the getting is good and take some chips off the table? Another plus: The sale of publishing catalog is treated as a capital gain and taxed at a lower rate than ordinary income from publishing or master royalties.
STREAMING SALVATION: Meanwhile, as we assess the ongoing social and political shitshow of 2020 and the economic devastation wrought by the reckless sociopathic greedheads in charge, we would be remiss not to acknowledge how streaming has saved the bacon of the recorded-music biz. Imagine if the quarantine had happened two decades ago, when retail ruled the game? No store traffic, no CD production, no trucks—this side of things would be as paralyzed as the live sector. Instead, business is up year over year (+11.3% YTD) and streaming is, if anything, expanding its user base; it’s up 17.6% YTD. Let us count our blessings where we can. The explosion of this platform has caused the valuation of the majors—which were still wandering in the wilderness a half decade or so ago—to go through the roof, with
UMG now valued as high as $33 billion,
SME at $20b+ and
WMG at $16b. Is a point of worldwide marketshare worth $1b today?
THE NEW SINGLES MARKET: Quarantine conditions have had an interesting effect on the biz—they’ve made the aggressive players more aggressive, and the passive ones more passive. Thus a few of the top label execs have gone into overdrive, signing promising projects from the digital netherworld as soon as they ping the radar and working them doggedly at radio.
Yet one distinct consequence of the industry’s effective pivot is the lack of artist development. The pre-pandemic model was straightforward: Get a record on the air, get the act on the road and—if streaming took off—add money to fuel the fire. The small tour, the showcases, the radio shows, the clubs and ballrooms paved a path to greater fame, recognition and an indelible artist brand. Without the road (and with TV options limited), even some of the biggest phenoms on the streaming charts are having difficulty branding themselves as acts and developing fan bases. As a result, we are seeing a long procession of one-and-done contenders, who were signed for a single hit and might not have anything else in the chamber. In certain ways it resembles a rerun of the old singles business, when the acts behind the hits were so faceless you could put different lineups in multiple markets under the same name.
This model worked well in the indie sector, where small staffs could efficiently wrangle a handful of hot sides. But the majors have built their reputations on cultivating the creative and commercial potential of radar-pinging comers, and not having the live component puts a serious crimp in that process.
Hip-hop, the mightiest of all genres in the present marketplace, has transcended this problem by being a culture unto itself that enables growth via socials and cross-promotion—and has created some strong brands that look sustainable. Consider this week’s chart champ,
21 Savage, let alone such dominant acts as
Lil Baby,
DaBaby,
Kendrick Lamar,
Travis Scott,
Future and the late but ever-popular
Pop Smoke and
Juice WRLD.
THE LONG AND WINDING ROAD: The live sector was built by an eclectic group of giants,
Damon Runyonesque characters from all over who built the foundations of the behemoth that ruled the earth before the shutdown, and who ultimately paved the way for
Live Nation:
Don Law,
Ron Delsener,
Jack Boyle,
Brian Murphy,
Irv Zuckerman,
Bill Graham,
Larry Magid,
Jules Belkin and
Cecil Corbett.
Robert F.X. Sillerman bought
Michael Cohl’s concert promotion company,
The Next Adventure, in 1999, which revolutionized the business by giving
the Rolling Stones $67m for the 1989
Steel Wheels global tour, thus ensuring all of the promoters bought out by Sillerman of all Cohl’s huge artist tours. This changed the landscape of the concert promotion business forever and set the precedent for today. Sillerman’s roll-up of the above-mentioned top concert promoters, meanwhile, transformed a regional concert promotion business in North America—known as
SFX in the ’90s—into an asset that would be sold to
Clear Channel in 2000 for north of $4 billion.
Clear Channel spun off its entertainment division as Live Nation in 2005, with
Michael Rapino—who promoted concerts for
LaBatt’s beer in his native Canada before first working with Cohl—as boss. Under his command it has become the juggernaut we know today, fueled not only by its massive event promotion and stratospheric ticket sales but also by unprecedented deals with artists like
U2,
Madonna,
Metallica, Coldplay,
Rod Stewart,
Drake,
Maroon 5,
Jay-Z’s
Roc Nation and the rest of the
Artist Nation roster. In 2019, LN reported its ninth straight year of record growth; but for events out of anyone’s control, it would certainly be celebrating a 10th.
AEG, comprised of
Concerts West,
Goldenvoice,
The BoweryPresents,
Festival Productions,
Madison House Presents and
Zeromile, became a similarly behemoth presence on the music landscape, under the guidance of
Jay Marciano. Marciano was leading
Universal Concerts when it was absorbed by
House of Blues, and stayed with the company to run its booking operation; leveraged to the hilt by the purchase, HOB was run by a hedge fund—and the joy ran out of it for Marciano, who went to AEG as a consultant with the title of Chief Strategy Officer. He then left after two years to run the
Madison Square Garden/Radio City Music Hall operation, only to return when
Tim 
Leiweke hired him in 2011 to run the European operation. He became head of AEG Presents in 2013 and in the ensuing years has helped the company double its total venues. Between its high-profile venues such as
Staples Center and the
O2 arenas,
Mercedes Benz Arenas (Berlin and Shanghai),
Accor Arena, T-Mobile Arena and
L.A. Live and festivals such as
Hyde Park,
Coachella,
Stagecoach,
Electric Forest,
Rock en Seine,
New Orleans Jazz Fest,
Firefly,
Hangout Festival and
Camp Flog Gnaw, it’s the promoter of choice for
the Rolling Stones,
Elton John,
Taylor Swift, Ed Sheeran, Justin Bieber,
Celine Dion, Carrie Underwood,
Luke Combs and
Kenny Chesney, among others.
We would also be remiss if we didn’t mention that
Irving Azoff had a hand in the expansion of both Live Nation and AEG—and the live sector in general. The deal to merge his
Front Line Management and
Ticketmaster with Live Nation was transformative.
Live Nation and AEG did massive yearly ticket sales pre-shutdown—and many big artists were earning 90% of that revenue. But the tables have turned and the landscape is undergoing another metamorphosis, where—for now—the rights holders also hold all the cards.
