All you want to know about the current state of the music business is contained in a lengthy document entitled Exhibit 21.1. Over nine pages, Exhibit 21.1 lists the companies and entities that live music giant Live Nation counts as subsidiaries.
It was prepared as part of the company’s recent returns for 2015 and it makes for interesting reading. Many of the subsidiaries’ names are familiar to ticket buyers worldwide, such as Ticketmaster and Get Me In.
Others will ring a bell with Irish gig-goers, such as Electric Picnic promoters Festival Republic and Amphitheatre Ireland, the company that manages the venue now known as 3Arena.
As a whole, the list is further evidence of the immense power Live Nation has in the music business. Forget about fingers in pies – it now owns, runs and promotes the bulk of the pie industry.
It's not just live music either. During the week, Tim Ingham, in Music Business Worldwide, highlighted one of the growing aspects of Live Nation's operations - that of artist management. Between 2013 and 2015, the number of managers and acts under the Live Nation umbrella increased from 60 to 100 and 240 to 350 respectively. That's serious clout in the sector.
Such expansion makes perfect sense from Live Nation’s point of view in terms of economies of scale and the bottom line. By having an interest in so many different parts of the music game, Live Nation is better placed to take in cash at every turn.
Bossman Michael Rapino can point to revenues of $7.2 billion (€6.62 billion) for last year that show that this approach works. It helps that so far he has kept away from money-pit plays such as record labels or streaming services.
That said, high internal operating costs mean the company isn’t in the black: it clocked up an operating loss of $78.3 million (€72 million) for the year in question. Trimming those costs as well as growing revenues is required to get it out of the red.
More to come Live Nation is certainly not slowing down – it added major South African promoters Big Concerts to its list the other week and there is still more to come, with talk of increased revenues from clubs, advertising and secondary ticketing. "Fans globally drive demand, artists are motivated to tour, and technology drives conversion," is Live Nation-speak for "we're sucking diesel".
Live Nation may now be a too-big-to-fail entity, a corporation that’s so essential to the music business infrastructure that it has become virtually irreplaceable. Yet we all remember quite clearly what happened in the financial sector with interconnected institutions which were also deemed too large to flop.
As long as Live Nation keeps expanding and revenues keep growing, there will be few issues for the company as it runs everything from venues, festivals and ticket sales to acts, managers and promoters. The trick for Live Nation, though, is to stay ahead of any downturn in the sector.
