Live Nation Builds The List

The recent addition of U2 to Live Nation’s roster of megastar talent comes as little surprise to anyone, particularly since Live Nation acquired U2’s merchandise provider, Signatures, last November. This could be seen as a natural progression for the market-savvy band, who have tended to be very alert to income maximisation opportunities. But is Live Nation really showing us the next economic model for music marketing?
(from Digital Music)

It’s All In The Audience

The approach taken by Live Nation’s Michael Rapino is relatively unhindered by the historical bureaucracy of major label procedures; he knows that he won’t be making much money on selling recordings. Although CD sales are dwindling, there is still huge demand for concert tickets; and not just for the megastars either.

A lot of revenue is to be found in mid-size venues, a sector where there are lots of bands and lots of fans. Megastars may sometimes be loss leaders, but they are a necessary glamour front to an industry that lives on huge quantities of bread and butter while making a great show of eating one slice of accessorised cake.

Channeling Existing Demand Into Other Products

It’s not just concerts either; Live Nation’s margins are running at a slender 4.3%, which is why Rapino is keen to exploit other ways of tapping into the revenue stream of people attending his gigs. As any Internet marketer knows, the contact list is the key; so why not build lists from your existing customers? There is great potential for upselling here, and Rapino wants to exploit this potential to its fullest extent.

He has a team of dedicated data miners providing invaluable information on what his audience likes (or doesn’t like) about their gig experiences. Collecting information from exit surveys and email lists, he exploits angles that traditional promoters may not have even considered. For example, this interview with Rapino reveals that in Seattle, demand for Christina Aguilera tickets declined dramatically once the price went over $40. Such detailed local targeting can really help organisers maximise their revenue for each event. You can read more about Live Nation in this piece at CNN.