How Live Nation Is Devouring the Live Music Industry | WSJ The Economics Of

Summary

The video explores the business model of Live Nation, the giant in the live events industry. It highlights how Live Nation has used its 'flywheel' strategy to dominate the concert and ticketing markets, controlling key aspects like ticket sales, artist management, venue operations, and sponsorships. While the company’s success is clear, questions arise around its monopolistic practices, with the U.S. government investigating potential antitrust violations. The video delves into the complex economics behind Live Nation’s rise, as well as the challenges faced by independent venues and promoters in an increasingly consolidated industry.

Takeaways

• 😀 Live Nation's revenue reached $23 billion in 2024, driven by a broad involvement in the live events industry, not just Ticketmaster.
• 😀 The 'flywheel' business model enables Live Nation to integrate various sectors of the live events industry, creating a self-sustaining ecosystem.
• 😀 The US Department of Justice is scrutinizing Live Nation's business model for potential monopolistic practices, especially its control over ticketing and venue bookings.
• 😀 The rise of Live Nation is linked to the shift in how artists generate income—now from touring and merchandise rather than album sales.
• 😀 Live Nation controls a vast portion of the live events sector, with stakes in venues, festivals, ticketing platforms, and artist management agencies.
• 😀 The merger between Live Nation and Ticketmaster in 2010 sparked immediate backlash, but has since allowed Live Nation to dominate the market.
• 😀 Through its investments in companies like Liquid Death and CVT Soft Serve, Live Nation enhances its concert profit margins by selling additional products and experiences.
• 😀 The company’s sponsorship and advertising strategies, such as Verizon’s branded mini stages, help drive revenue without much added cost.
• 😀 Live Nation’s dominance in ticketing and venue control allows it to offer substantial amounts to artists for exclusive tour bookings.
• 😀 Ticketmaster’s exclusive ticketing contracts with venues help create a cycle where Live Nation-promoted shows are more likely to come through those venues.
• 😀 While Live Nation claims to benefit artists, the dominance of its business model may limit independent options, creating concerns about market fairness.

Q & A

How has the cost of attending a concert changed over the past decade?

The average cost of attending a concert has nearly doubled in the last 10 years, making live music a more expensive experience for fans.

Why is the live music business difficult to make money from, despite rising costs?

The majority of people in the live music business are only earning a living, and with rising costs and competition, it's increasingly challenging for smaller players to turn a profit.

How does Live Nation make its money in the live events industry?

Live Nation makes money through a variety of business segments, including owning Ticketmaster, promoting concerts, ticketing, venue management, advertising, and investing in ancillary businesses like Liquid Death and CVT Soft Serve.

What is Live Nation's 'flywheel' business model, and how does it contribute to its success?

Live Nation’s flywheel business model involves integrating various aspects of the live events industry, like promoting concerts, ticketing, and sponsorships, so that profits from one segment can fuel growth in another. This creates a self-reinforcing cycle that propels the company’s overall success.

What is the main criticism against Live Nation's business practices?

Live Nation is accused of monopolizing the live events industry by controlling major aspects like ticketing, promotion, and venue management, leading to reduced competition and higher costs for fans and independent promoters.

How has the US government responded to Live Nation’s dominance in the industry?

The US Department of Justice has raised concerns about Live Nation’s monopolistic practices and filed an antitrust lawsuit against the company, highlighting its ability to use its control over multiple sectors to suppress competition.

What role does Ticketmaster play in Live Nation’s operations?

Ticketmaster is a central part of Live Nation’s business. As the dominant ticketing provider, it generates significant revenue, and its exclusive contracts with venues help Live Nation secure concerts for those venues.

How has Live Nation’s involvement in merchandise and other side businesses impacted its profitability?

Live Nation has increased its profit margins by investing in and promoting additional products and services, such as VIP ticket packages, parking, food, drink, and exclusive water brands like Liquid Death. These investments enhance the overall concert experience and generate more revenue.

What is the impact of Live Nation’s control over venues and festivals on smaller promoters and independent venues?

Smaller promoters and independent venues face difficulties due to Live Nation’s extensive control over venues, festivals, and artist management. Many fear that without partnering with Live Nation, they risk being driven out of business by the company’s larger resources and exclusive contracts.

How does Live Nation’s involvement in artist management affect the live music ecosystem?

Live Nation’s investment in artist management agencies, such as Artist Nation and Roc Nation, allows it to have greater control over artists’ touring decisions. This consolidation of power across multiple aspects of the live event business gives Live Nation a strong hold on the market.