Dreskin opened the debate with the moment when “all the industry consolidation began: SFX part one. Was that a good thing?” he put it bluntly.
Perloff answered: “In the five years following the consolidation ticket prices basically doubled to the consumer. I’m not sure there were any positives coming out of that deal.”
Smid didn’t think that consolidation was solely responsible for the price increase.
He thought that “if you look at some of the deals on the artist side or the touring side there may be some industry positives around it.”
To him the main difference between the consolidations happening at SFX one and two was the maturity of the businesses that were bought up. Gersh pointed out that consolidation happens in every business every day. He emphasized that it was always the people in charge who decided how a consolidated business would perform.
He illustrated this with an example from the recorded music side of the business: “The day that it changed didn’t have anything to do with streaming or Napster. It had to with when Alain Levy, who was running Polygram, bought Island Records, A&M Records and Motown. He proceeded to take three amazing independent companies run by three incredible entrepreneurs, and fired them all. That’s just bad management and bad people.”
According to Gersh, the reason why a merger like the one between The Windish Agency and Paradigm worked so well was because it involved likeminded people working in one direction. Dreskin stated that “what sometimes got lost in the consolidation question is, what the circumstances were at the time.”
The sale of Bill Graham Presents to SFX in 1997 is exemplary for this. Graham had died a few years earlier. “Suddenly these companies – Ron Delsener, Dave Lucas – were selling to this guy we never heard of,” Perloff, who ran BGP back then, remembered. The reason he decided to sell, was “a feeling that a tsunami might overtake us.”
“Is this a consolidation war?” Dreskin wanted to know from Gersh, given that “Live Nation bought C3, Insomniac and Bonnaroo. AEG [bought] Hangout, Firefly, Madison House Presents and others.”
“No, that’s a big stretch,” was the reply. “We compete hard against each other, but we’re very different companies. We don’t have the same agenda, we have the same interests.” Questioned about the doom-and-gloom scenario of there only being two promoters in the future, Windish said: “We’re definitely dealing with more than only two promoters every day. I don’t think it would be good if it were so.”
“There’s no way it’s going to develop into a business of a few large players and nothing else. There is no example in business that tells us any different,” Gersh said. “Young, aggressive people are always going to come in.” According to Gersh, consolidation always opened up opportunities for independent companies.
Windish agreed: “My head is spinning with the opportunities out there.” The agent was more worried about ticket fees, which, according to him, was also a result of consolidation.
Dreskin, who just sold his company to Pandora, concluded the discussion by saying: “Coming into this I was thinking, consolidation sounded like a dirty word. But you guys made some really good points, which is that if you take great businesses and you put them together with a shared mission, and you let them continue to thrive it doesn’t need to be a bad word.”