It’s been a brutal summer for the concert industry, with tours being cancelled, select shows being yanked, and attendance down across the board. Following an investor disclosure last Thursday, Live Nation shares dropped nearly 12% on Friday, and fell 21% in the past week. Among the downbeat news given to investors on Thursday was that ticket sales for Live Nation’s top 100 tours dropped almost 10% in the first half of the year. There’s a lot of information in the presentation they gave investors, which can be viewed here, and we’re not sure how we feel about it.
For one, page 17 of the report states that “more bands are on the road faster now.” Under their “old model,” it took 2-5 years for a band to sell out an arena, with milestones like “write song,” “get label,” and making two albums. Under their “new model,” it should now take three months, there are now three: “post video/song online,” “sign promoter deal,” and “sell out arena.” Wait, WHAT? Who’s selling out arenas three months after they post something online? Lady Gaga isn’t, and neither is Justin Bieber. I guess that means that the Double Rainbow guy is coming to an arena near you soon. It’s also interesting that according to their study, only 15% of concertgoers find out about shows via radio and print advertising. 53% find out via e-mail and online, while almost 30% find out from friends and family.
The report also takes a look at the math behind a typical concert ticket. Using the average face value of $55.65, talent fees range between $34 and $47 dollars, and according to Live Nation’s math, the promoter makes between $3 and a loss of $10 per show.
Don’t feel bad for Live Nation though. It’s obvious that people aren’t buying as many concert tickets any more. The cost has gone way up, and anyone that’s been to a Live Nation show in the past few months has seen that it’s been much easier to buy cheap tickets as the shows get closer. It’s one of the few industries where the die hard fans that buy tickets first get hurt. And as demonstrated on page 62 of the report, $10 lawn seats, discounted 4-packs of tickets, and no service fees drove up attendance. Hey Live Nation, maybe you should drop service fees altogether, ya greedy bastards. It’s obvious from your stock price and the investor report that the model you have now isn’t working.