March 7, 2006 - click on photos/graphs to
Michael Rapino, Live Nation
to listen to an Mp3 of the Keynote Address
very proud and excited to be in Las Vegas, addressing a room filled
with many of the people I have long admired as the pioneers and
visionaries of the business. I would especially like to acknowledge
and thank some of the original founders and builders of the Live
business. Namely Don Law, Larry Magid, Brian Murphy, Ron Delsener
and Jack Boyle.
I believe this type of gathering is important to our industry -
especially at a time when the key leaders come together to exchange
ideas and take a collective temperature on the health of our business.
For me, there is one issue that rises above all the rest. It is
a major concern deserving of our immediate attention - and our most
serious thinking. I am talking about the growing divide between
the people who run our business - that's the people in this room
- and the people who pay our bills ... the music fan.
I consider myself the quintessential music fan. I grew up in a small
town in Canada - Thunder Bay, the home of Paul Schaffer and the
inspiration behind Neil Young's song "Helpless." Anyone
who's ever driven along the north shore of Lake Superior would understand
why I say there's not much to do in Thunder Bay except play hockey
and listen to music. After I realized I wasn't going to follow Wayne
Gretzky into pro hockey, my recreational interests narrowed to one.
I was nuts about music. I was obsessed.
I vividly remember to this day the time I saved up enough money
for the 16-hour bus ride to the big city of Toronto, where at 15
years of age I saw my first live concert. It was Robert Plant and
the beginning of a life-long love affair with the live music experience.
I was hooked.
As powerfully etched as those early memories of music devotion remain
in my mind, they have little relevance in helping me understand
the music fan of today. I don't believe our biggest challenge is
the ticket price debate, or the guarantee or even who won which
tour. The real problem is - do we know our fans and how to service
them in 2006?
I promoted my first concert when I was 20 years of age. It was the
Jeff Healey Band and they played in the Thunder Bay Coliseum. That
was also the day I left the free paying fan base and became part
of the system. Since that time, I've become steadily removed from
the reality of who that fan really is, and what that fan truly feels.
When I joined the system, my life became all about the deal, the
guarantee, tickets, laminates, backstage catering, and guest lists
that didn't include the average fan. The industry, and its trappings,
place us in an unreal world that only serves to further distance
us from the fan. That's the reality.
It takes effort and deliberate choice to stay connected ... to maintain
a bridge to the fan ... to communicate in a meaningful way ... and,
ultimately, to deliver to our fans the product that they want. That's
my new passion.
We have to fight to stay in concert with the fan. We have to truly
feel for the fan.
my early days in the business I idolized - as did everyone else
who worked in the business in Canada - Michael Cohl, Arthur Fogel
and Donald Tarlton. They were the evangelists. They were to Canada
what Bill Graham was to the U.S. system. I was fortunate to meet
and work for Michael as he went from being the King of the Canadian
music scene to reinventing the world touring model. His words of
wisdom have remained with me. He said: "If you want to be a
promoter you can either keep working with the same model, or you
can try to invent a new one." When I got the Live Nation CEO
job, my first question was, "How can I change this model?"
I have strived to be an innovator all my working life. Now, innovation
is the mission of Live Nation.
At Live Nation our priority is to direct our resources towards research
that helps us understand the fan better than anyone else. Here is
what we have learned.
Live fan concert consumer spending is miniscule (1%) when compared
to total entertainment spending.
80 percent of consumer spending on music product is on recorded
music content. Within the overall music category, money spent on
recorded music dwarfs concert ticket spending by a ratio of 4 to
Music fan preferences for recorded music continue to shift to the
digital realm and are driving growth in overall music sales.
demonstrate the enormous growth in digital music consumption and
purchase as more & more fans download digital music. In fact,
total consumer spending for online entertainment content will grow
by 260% over the next five years and reach a market size of $9 billion
- up from the current $2.4 billion that is being spent online.
Consumers of digital products, who our research tells us are also
music lovers and our greatest fans, will spend $135 billion on consumer
electronics by the year 2008. They also own on average 25 consumer
electronic devices, spend an average of $1,250 a year on electronics,
own on average three TV's, and are most likely to have high speed/broadband
truly understand the fan, we also need to consider the impact of
There are currently 200 million wireless users in the United States
alone. Some 50 million of these users are under the age of 25 and
they spent $20 billion just on their cell phones in 2005. SMS text
usage is increasing every day, and the ring tone business has gone
through a phenomenal growth spurt, surpassing the $500 million dollar
mark last year. In fact, when you consider how rapidly consumers
are embracing new applications in the mobile category, you can suddenly
see the emergence of a whole new world of opportunity and experiences
with the music fan, such as mobile ticketing solutions, supported
by currently available e-commerce practices.
Going back to the Live business, you will recall that consumer spending
on live concerts is relatively small, just 1 percent, when compared
to total Entertainment consumer spending. This only means that there
is a huge potential for growth. When compared to the Sports gate,
Theme Park admissions and Movie box office takes, Live Music concert
tickets gross only eight percent of the total spend. The picture
becomes even more dramatic when we look at Live concerts' share
of the number of fan purchases across these four areas. Live concert
purchases represent just two percent.
Here's an interesting perspective on the music fan based on concert
attendance. Surprisingly, of the total American population, 71 percent
did not attend a live concert last year. Almost three out of every
four Americans did not experience a live music concert in the past
year. That means only 29 percent of the population do attend live
concerts every year. And you can see from the chart, that we can
group these fans based on the number of shows they attended in the
past year. What we call our Occasional Goer, those who only attended
one concert in the last year, represent 23 percent of the population.
Our Concert Goer group, those attended two concerts in the past
year, represent just four percent of the population. And finally,
our heavy fans, those we have called our Concert Aficionados, who
attend three or more concerts a year, represent a meager two percent
of the total population.
put this into perspective, if we line up 100 random people against
the wall, we know that only 29 of them have gone to at least one
concert a year. The other 71 people never go to concerts. Why then
do we spend millions of dollars on TV, radio & outdoor mass
media trying to reach just these 29 fans. Our advertising dollars
are wasted on the 71 people who never come to concerts anyways.
Here's another way of looking at it. If we look at the same sample
of 100, only three of them are Concert Aficionados. And yet these
three represent 24 percent of our revenue. Imagine that, only three
people out of the 100 random people we lined up against that wall
represent a quarter of our business. In other words, if we concentrated
on talking to only these three people and convinced them - or gave
them some incentive - to come to twice as many shows in the year,
we could immediately increase our overall business by 24 percent.
further analysis of our fans shows that on average they attend 2.2
concerts a year. However the number of tickets they purchase per
order, or in other words the number of people going to each concert
with them, is on average 2.7. The insight here is that while older
concert-goers attend in pairs, fans in the younger demographic go
in groups of four, which, when you think of it, represents a tremendous
marketing opportunity. Think of how you could restructure venue
services to cater to groups of four rather than groups of two at
shows that attract the younger music fan.
When asked how they got their information on an upcoming show, 56
% of young fans, age 13-24 years, found out about it online.
Once again, this raises the question: Why do we continue to spend
so much of our advertising dollars on conventional mainstream media
such as television, radio, print and outdoor? Last year, Live Nation
spent only 1 percent of our $200 million dollar advertising budget
on online media, where we now know almost 50% of our young adult
fans find out concert information online.
The Internet now represents 54 percent of all concert tickets sold.
The growth in online ticket purchase is illustrated by how U2 tickets
were purchased in 2005, vs. Bruce Springsteen concerts in 2002.
I must thank Alan Krueger of Princeton University for this data.
You can see that internet purchases jumped from approximately 10
percent to 50 percent.
The timing of a concert ticket purchase has also changed considerably.
Our research reveals that 43 percent of fans aged both 13-17 and
18-24 buy their tickets within a couple of weeks of the show. Once
again, fan behavior has major implications on the way we market
our product and the old model of focusing all our activity around
the on-sale date must adapt to the new market realities.
We've got a lot to do, and we must re-engineer our business to service
the new fan of today. The tables have turned. Power has shifted
to the consumer. There are new rules of engagement. To be current
and connected, we need to remain immersed in technology, grounded
in the streets and we must remain in constant contact with our customers.
In order to do that, we must be prepared to reorient the way we
think and the way we behave. We must stop "talking AMONGST
OURSELVES." We need to start "listening TO THE FAN."
Artists are doing their part. They are creating fantastic music
- more diverse and more accessible than ever before. The product
has never been better. Now - we need to do our job to help them
reach their fans and sell them the live experience.
live industry is uniquely positioned to enhance the fan experience.
We allow them to connect with their favorite artists in a way that
may be imitated - but can never be duplicated. We touch the fan
every night giving us this amazing opportunity to understand, to
observe and to service their needs ... we need to exceed their expectations.
The basic premise is simple: Give customers what they want and they
will help articulate your business model. Companies like Google,
Yahoo, Starbucks, and Best Buy know this to be true. This industry
was founded on the basic principle of building events for fans.
The pioneering promoters who understood the importance of catering
to the fan were known for the creative twist that they always brought
to the Live experience.
While the industry today seems to be drifting away from these fundamental
rules, there are still those exceptional people who continue to
abide by our original code of conduct. People like Leon Ramakers,
who heads up Mojo in Holland. When I arrived in Europe to run the
music division, Leon took me through the meticulous detail he went
through in planning services for the fan. Simple things like adequate
toilets, a sufficient supply of bottled water. To his further credit,
Leon built numerous festivals from the ground up and he invested
in a Mojo barrier to protect fans - a barrier which now is a worldwide
standard at festivals.
People like Don Law. When I returned to run the Entertainment Group
in the US, Don took me through one of his venues, the Tweeter Center.
While on the tour I noticed a greenhouse on the grounds and I asked
Don what that was for. It was with great pride that he told me about
how concerned he is with the appearance of the venue grounds and
in wanting to create a true fan oasis or getaway atmosphere. So
he built a greenhouse on site.
People like Paul Tollett, a competitor of ours at AEG. Paul built
an entire festival, the Coachella Festival, from the ground up,
in direct response to fan requests for an indie/alternative music
festival in the Los Angeles area.
And people like Marek Lieberberg in Germany. When one of Marek's
rock festivals looked like it was going to lose a lot of money,
Marek didn't cut any fan services like toilets, etc., in the interest
The Live business is truly blessed with the most creative and forward
thinking people in the world. These are the people who have inspired
me to "change the model." The new model is all about the
The fan is obsessed with the artist. So must we be obsessed with
We at Live Nation have a lot to do to take advantage of this new
fan-centric model starting today. We will build upon the fan department
we created inside our company this past fall. We will have our managers
spend 2 days a week serving our fans in our venues. We will expand
our existing Fan First Venue survey program to include more shows,
at more venues, in more markets. We will talk. And we will listen.
Nothing shall detract us from our obsession with the fan.
Live Nation will be a critical agent of change. Not by holding onto
the past, but by building upon it. By respecting the legends who
brought us to where we are, and then by moving ahead as we turn
ourselves into the company trusted by artists and fans - the greatest
live entertainment company in the world.
We are a worldwide community built upon the foundation of one simple,
but profound and powerful common bond... the love of music.
I began today with an anecdote from my youth. I'm sure many of you
in this room have similar experiences and feel the same nostalgic
warmth when you look back to what made you fans in the first place
and what ended up defining your careers.
Today, I urge you to find that 19 year old fan within and fight