This week, walkiki and I decided to attend the Concert Industry Consortium 2006 (http://www.pollstaronline.com/cic2006/CIC2006schedule.htm). We got lots of great information and had a good time.
We each went to separate sessions where possible to maximize our information gain. We will be posting summaries of our sessions as we have time. We believe that this type of information should be shared where possible, so you are welcome to copy these summaries to any other board as long as you appropriately credit walk and I. I would also like to ask that you pm me to let me know you have copied the post, as I would like to know where it goes.
The full conference schedule is at the link above.
My first session summary is below:
State of the Business '06 (Arena Manager's Meeting)
Participants:
Kevin Ullestad, Assembly Hall (Moderator)
Rob Beckham, William Morris Agency
Andy Cirzan, JAM productions
Doug Clouse, Concerts West
Rick Franks, Live Nation
Brad Garrett, Police Productions
Mitch Rose, CAA
Brad Parsons, Arena Network
Brent Smith, William Morris Agency
Preliminary Comments
I arrived a few minutes late to this one, and it seemed like the conference had way underestimated the interest, since it was standing room only by the time I got there. As a result, I was off to the side and couldn't really see who was saying what which made it a little difficult to follow the dynamics of the conversation. Nonetheless, it was an interesting discussion, and I will try to give you a flavor of the topics discussed.
The Discussion
First the moderator asked the panel to give their perception of the overall state of the business. The different perspectives were as follows:
- One panel member spoke to the shrinking size of the industry. He indicated that while in the past, they might have 30 principal shows in a year, it is now down to half that, and where they used to have maybe 20 secondary shows, they are now down to 4-6.
- Another member commented that the primary thing that was working to detriment of the Arenas was the increasing prevalence of Casinos and Fairs that were taking business that might otherwise have gone to the arenas.
- Doug Clouse, from AEG/Concerts West actually felt that in 2005/2006 things were actually on an upswing. He felt that in the summer of 2004 the industry had gotten lazy and weren't thinking about what they were doing. He felt that 2004 served as a wake-up call, requiring the industry to pay more in-depth attention to every element of the show from booking to marketing, and that that was a good thing. He felt that the industry was as healthy as it had every been.
Next the panel was asked about protection clauses (Ed. note: I'm not 100% sure exactly what protection clauses are, but they seem to be clauses put in by the venues to prevent an agent (I think) from bringing a competing act that might canabilize the ticket sales of the act being booked into another venue across town within too close a time to the booking.)
This discussion seemed to specifically take place in the context of country acts. The comment was made that the norm in country was for acts to go out every year, or at least every 16-18 months), therefore there were always a healthy number of country shows on the road. At any given time, you would have a combination of major acts like Kenny Chesney who were pretty much guaranteed to sell out any show they did and what the panel called A-/B+ headliners (examples were Gretchen Wilson) who were really trying to get anything they could get (from a venue POV).
They said that the arena's had to decide if they wanted to 12 really great shows or 16 shows that included some marginal shows.
Actually getting to the topic of protection clauses, the following discussion ensued:
- Andy Cirzan, who is based out of Chicago, said that it was really market-dependent. He said in his market (Chicago) there were 10 Million people, so they could probably afford to have a competing act across town 3 weeks from their booked act. However, this would be a more serious concern in a secondary or tertiary market.
- Another panel member commented that while protection clauses where designed to protect the arenas, you had to be careful how stringently you implemented them, as, if you were too stringent about it, the show might just end up across town, and you had to decide if you were willing to lose the business.
- Another comment that was made was that the most important thing was for the agent to be upfront in their communications. That, if they knew they were booking another competing act across town, they should make that clear upfront as venue/promoter getting surprised was the worst thing that could happen.
- Basically there seemed to be fairly broad agreement that you couldn't define a broad standard, you needed to take things on a case-by-case basis and use common sense.
- There was some discussion about how competing acts could co-exist, but it had to be done carefully or they would canabilize each other's sales. This seemed to be a particular concern in country, as the perception was that it was the same people going to all the country shows (regardless of act), and they would only go to so many shows in a year.
- An example of this issue was given about a situation faced in Talahassee. They had two middle tier acts on sale who had not sold a huge number of tickets. A major act went on sale later that basically stopped all sales for the initial two acts. One of the panel members chimed in that Talahassee was a hit or miss market anyway, so that wasn't surprising, and that in a case like that, where there are 3 competing acts, the weakest of the three would die a miserable death (from a sales POV).
- Basically, the agreement was that everybody out there runs from the big acts - that a Kenny Chesney does take money out of the market and a Gretchen Wilson or even a Rascall Flatts will avoid him rather than playing near him just for the sake of doing a date.
The next question was about theater configurations (aka cut down arenas - though the arena owners hate that term).
- One of the venue representatives talked about how the curtaining system was a brilliant and bold move.
- The comment was that a lot of acts were playing in the 4-6K range, so more options were good.
- However, one of the promoters countered that you also need to consider the economics of the situation. He stated that if someone is playing to 4-6K people, casinos or theaters are a cheaper option as they have fewer overhead costs than the arenas.
- The other comment was that there was a lot of variation in how the smaller configurations looked from venue to venue. Some were nice, but some "looked like shit"
- The promoter's recommendation was to make sure there were not already 3-5K venues in your market as they would get the business over your cut down configuration due to their lower overhead costs and that smaller looks better to an artist if they can fill it.
- Andy Cirzan (from Chicago) commented that he hardly ever used the theater configuration because there was too much competition in the small theater market, but that the alternate configurations might have value in secondary & tertiary markets where there were not as many options.
- It was repeated that all the action was in the 4-6K range and that there are only 4-5 acts in a year that can actually fill an arena anymore. Therefore, the smaller configurations were necessary in order to compete.
There was a question about tour routing that I couldn't quite hear, but it was followed with a few comments:
- Right now things are so tight that it can come down to the last 10-15 days to determine if a promoter/venue is going to make a profit at a venue
- It was agreed that it was ultimately the agent's job to manage the artists' routing, not the promoter. That this was the only way it could be. One of the agents commented that that was the thing he thought about at night - that this was their fundamental responsibility - to make sure the artist had a favorable routing.
The next question was about venue in-house buying and self-promotion.
- One of the agents commented that there are cases where no one will go into a particular market for a particular artists, so in that case, it is nice to have other options available. If the promoters pass, they will use the venue instead.
- One of the promoters cautioned that the arenas needed to be very careful before doing in-house promotion, and need to be very responsible how they do it. That they need to remember that teamwork between the venues and promoters is very important, and they need to make sure they communicate with the promoters and not just go off and act on their own. That promoter felt that the in-house buying could co-exist with promoters as long as they venues were not acting irresponsibly.
- One of the arena owners pointed out that they needed every possible show because budgets were not being reached and revenue was down. He indicated that there was simply not a surplus of shows out there.
- One of the promoters warned that if a venue makes a favorable deal with an act because there is no promoter involved, they should not expect that to be a one time thing. He said that that will be the deal going forward.
- Another promoter warned that before venues got into the "minefield" of self-promotion they should think really hard since promoters are their major suppliers and they don't want to damage that relationship.
- At this point, Brad Parsons from Arena Network spoke up pretty strongly, saying that, going back to their earlier conversation, the promoters were showing no interest in their theater configurations, so they had no choice but to go in-house. He used an example of Bruce Springsteen, that he was going to do all theaters this tour, but they showed him their theater configuration, and wound up having 12 shows that they would not otherwise have had. He maintained that in-house buying was not about cutting better deals with the artists but a simple matter of needing to fill their venues and that they were forced to do it. He said that there were some acts that were not interesting to promoters but the venues could make those shows work because of the additional revenues they got from the ancilliaries (parking, food, etc).
The next questions was about ticket auctions. This caused a bit of a razz-battle between Andy Cirzan from JAM productions and Mitch Rose from CAA.
- Andy jumped in and said that he hated ticket auctions. He made it clear that he wasn't speaking for his company, but personally, and he did recognize that they were not going away. He felt that ticket auctions forces fans to compete on an unfair playing field, one that meant that if you cannot afford to play the game, you are not going to the show. And said that he hoped that artists would think the implications of this through before embracing it. He hoped that it remained the exception, not the norm. He felt that this would create a divide between the haves and the have nots and pointed out that, while sports tickets are expensive, you can watch the game on TV if you can't go to the game. If you can't afford a concert you just can't see it.
- Mitch jumped in a said that he didn't want to call Andy naive, but that the Stones sold out $400 tickets which meant that was what the market was for their show.
- Andy continued saying that he thought the auctions sent a bad message to the fans - that shows did not belong to all the fans, but only for those who can pay, in the meantime, "please buy my record."
- Mitch pointed out that it was about supply and demand and pointed to the Stones example.
- Andy responded that the Stones don't care and haven't cared for years, but that he was talking about young, developing artists. He said his advice to a young artist would be to wait until they have 30 years in their career before cashing out.
- Mitch responded that ticket auctions were simply a way to get money back to the artists that was already going to the brokers anyway. He also said, that as album sales decreased, this helped supplement the loss of income from albums (Ed. Note: I'm not actually convinced that the artists every got much income from album sales). He claimed that auctions allowed the fans to set the price, so if they didn't think the tickets were worth the premium they wouldn't pay. He re-iterated that auctions were not going away.
- One of the other panel members piped in that artists need to be smart enough to know if they can auction tickets, that not all artists can do this.
One of the panel members talked about adding extra value to the ticket by "bundling" (e.g. bundling the ticket with a CD). That got a strong negative response from another panel member who asked - What if they already own the album. His contention was that bundling was just forcing fans to buy an album the already had for the sake of Soundscan. Someone else replied that, depending on the artist, it can work, and, after all, they make good Christmas presents (which got a chuckle from the room).
Getting back to auctions, one of the agents stated that agents don't make their decisions based on morality but on how to serve there client best. He went on to say that it was ultimately the artist's choice - that an artist could say no to auctions. He also said that when they work to hold the price down to $85 and see the tickets being resold at $250 on the open market, he has to wonder if they did the right thing. Again, he reiterated that the fans set the price.
- One of the panel members replied that what gets lost in this debate as that you are only talking about the best seats in the house, which are always going to command a premium. He used the example of Alabama who sold out front row seats at $1000 - when everyone thought they were crazy. He felt more attention should be payed to prices in the back of arenas and on lawns of sheds (and mentioned that Live Nation was already attempting to address the latter).
- Andy responded that once the door was open, you could never go back and indicated that there was an artist who was considering auctioning the whole house.
- One of the agents replied that it was all about the artist and what they wanted to do, and pointed out if the whole house got auctioned, people could decide that the worst seats in the house were only worth $10, and the artist would have to live with that.
The next question was about naming rights.
- This didn't get a lot of discussion except some comments that it can be confusing if names change every 2-3 years. However, this seemed to be seen as just part of business.
- One comment was made that you should show common sense, and try to pick a sponsor who is connected to the market.
The floor was then opened for questions:
- One of the venue owners got up and challenged the promoters that they were continually decreasing the fees paid to the venues and the venues were struggling to make there budget and asked "Where does it end. Do you want me to pay you to have you come to my venue." One of the promoters replied "That would be a yes" to chuckles from the group. Basically the venue owner said he was going to have to start saying no to deals. The promoter said that was certainly his right, and he might be able to get better deals that way, but that tours might also just start skipping over his city (he was from Canada) and going to other venues.
- One woman stood up and indicated that she had just taken over a theater in Chicago, but that it was primarily known for Urban acts, and wanted to know how she start booking other types of acts. The promoter from Chicago replied and basically gave the entire history of her venue (multiple owners, in and out of challenging money situations) and listed here competition (5 or six of them). He told her that she was doing well, getting a foothold in some other types of acts and that was the best she could expect for now.
My thoughts
Overall, I thought it was an interesting session. It seems clear that the arenas are really struggling with the increasing bookings by casinos coupled with the shrinking size of the audiences that acts can command. There seems to be a real controversy between venue owners and promoters about in-house buying as one solution to that problem (the promoters did not really seem happy about it). One thing that really struck me was how relationship-driven this business is. In both the discussion on protection clauses and in-house promotion it became very clear how important maintaining trust and good relationships are to this business. In many ways it is a very old-fashioned business model. I was also struck by the almost encyclopedic knowledge the promoters have of their territories, and even other territories. They literally seem to know every circumstance of every venue in their territory (and frequently a lot about venues in other territories as well).
It also seems like fans should prepare themselves that the ticket auction is here to stay.
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