Congressional Hearing Highlights Need for Change in Ailing Music Biz
Michael Rapino, CEO of Live Nation and Irving Azoff, CEO of Ticketmaster Ent. told members of Congress Tuesday that the merger of their two companies could help revive the struggling music industry and provide a host of benefits to artists and consumers.
The two music industry leaders discussed the challenges facing their industry at a hearing on the merger and future of the concert business convened by the Senate Judiciary Committee’s Subcommittee on Antitrust Competition Policy and Consumer Rights.
“Clinging to old ways and fighting change is not the answer. Together with artists, local promoters and venues, and my new partner Irving, we want to offer some solutions. I’m not claiming we have all the answers, but we can be on the leading edge of change in our industry,” Rapino said.
Azoff, who has spent his 43-year career working with artists, also spoke of the need to find new ways to support artists.
“The message I want to leave you with today is that the music business is in far worse shape that most people realize. We cannot keep doing things that no longer work. This merger will allow the live music industry to avoid repeating the mistakes of the record business,” Azoff said.
Rapino and Azoff said the competition that exists today in every aspect of their business will thrive undiminished after the merger. They pledged to work with the Department of Justice during the agency’s review of the merger.
“Our business model rises or falls on our ability to serve the artists. If others can do it better, the artists will go elsewhere. We welcome competition. Every service we offer today faces aggressive competition and that competition will continue — and likely increase — long after this merger is complete,” Rapino said.
Rapino and Azoff said the combined company, which will be called Live Nation Entertainment, will create an artist-driven company that provides a full-service connection between artists and fans. They said the new company will continue to work with independent venues, promoters and other industry stakeholders.
“It is designed to address the obvious inefficiencies in the supply chain — the large volume of unsold tickets to events, higher costs, surcharges and the explosion of the resale market,” Azoff said.
Rapino said the music industry has been struggling for an alternative to the business model that relied on record labels to support the artist and drive sales. While Azoff offered the perspective of a long-time artist manager, Rapino spoke of his efforts to bring change to Live Nation. Live Nation has achieved steady growth under Rapino’s leadership, despite the music industry’s problems.
“Unlike so many other businesses, we are not here today to seek a bailout or a tax credit or any other favor. Instead, we’ve come with our own self-funded renewal plan. All we ask is the freedom to innovate in an American industry that is in deep trouble,” Rapino said.
The desire to combine the two company stems from several factors:
The live entertainment business model is broken and the industry needs to evolve.
* There are too many parties between the artist and the fan, all working at cross-purposes, and creating enormous inefficiencies and additional costs.
* The escalating reseller market is creating a crisis in the industry. Resellers, especially the scalpers/illegal resellers, have no skin in the game and are sapping the system.
* The primary market is not working well for artists or fans.
Fans and artists are demanding change.
* Fans are seeking more choice, clear pricing and more technological innovations to improve the ticketing experience.
* Artists want to have a stronger, more direct and secure connection to their fans.
* Everyone wants to fill more seats.
Together, Live Nation and Ticketmaster can begin to make the investments needed to fix what doesn’t work today. Merging will:
* Reduce costs associated with today’s inefficiencies;
* Relieve pressure on ticket pricing in the primary and secondary markets;
* Give artists and fans new services and products
* Spur innovation and competition from all quarters; and
* Increase concert attendance and improve the entire experience, from ticketing to the actual performance.
Combined, the companies will be better positioned to confront a challenging economy and shifting marketplace.
* Competition is robust at every level of our traditional distribution (legal and illegal resellers, primary market players, self-ticketing venues as well as new fronts such as iTunes, Amazon and eBay).
* Technology continues to spur innovations in all aspects of the business.
* Merging will also allow us to strengthen our ability to serve all fans
* including those who don’t have computers or credit cards — by investing further in our phone and retail outlet presence. This also will help preserve existing brick and mortar jobs, too, which contribute to local economies.
