AEG Live, the nation’s second-largest concert promotions company, has reportedly begun preliminary talks with record labels for backing to help the company’s expansion to better compete with industry leader Live Nation Entertainment.
When Live Nation was allowed to merge with Ticketmaster, one of the conditions imposed by the U.S. Department of Justice was the requirement that Ticketmaster license its ticketing software to AEG, which was a move designed to bolster competition in the ticketing industry. Prior to the merger, Ticketmaster and Live Nation controlled well over 70 percent of the ticketing business in the U.S., and AEG was one of its larger clients.
Now, it appears that AEG may be taking some preliminary steps toward exploring an expansion into ticketing and other music-related businesses. According to a report that first appeared in Billboard, AEG has held some preliminary discussions with several record labels about teaming up to take on Live Nation.
Beginning in 2007, Live Nation began signing several superstar acts to “360-degree deals” that included recording, touring and merchandising components. In most cases, the deals were in excess of $100 million for the artist over several years, and they helped to put the company in a financial hole, which led to the ouster of music mogul Michael Cohl and contributed to the decision to merge with Ticketmaster.
Yet, despite their hefty price tags, the 360-degree deals were envied by many in the industry because they locked up several revenue streams for the company, and since touring has taken on such prominence over the last several years, controlling the ticketing has become very important.
“We’ve been approached by every one of the majors, who are trying to rejigger their business model to include more rights and revenue streams from the artists they’re in business with, the so-called ‘360 deals,'” Randy Phillips, CEO of AEG Live, told Billboard. “Obviously, one of the places (for the labels) to go would be us, because we’re not competing with them in the same way that Live Nation does.”
The federal conditions placed on the merger do not require AEG to use Ticketmaster’s software, but if the company decides not to use it, Ticketmaster is required to provide the ticketing company AEG’s ticketing information. Another stipulation of the merger agreement was that Ticketmaster had to divest its Paciolan primary ticketing business to Comcast-Spectacor, which owns and operates a rival ticketing company called New Era Tickets.
Steve Martin, president of North American operations for the Agency Group, told Billboard that the Live Nation/Ticketmaster merger, which included artist management under Ticketmaster’s Front Line Management division, has opened up the field for discussions between record labels and promoters.
“We’re going to see more and more conversations going on between labels and other aspects of the live touring business, be it promoters, agencies or management companies, to consolidate — hopefully with a better vision — new ways of marketing and thinking about how we disseminate information and break long-term artists, not just short-term artists,” Martin said.