Live Nation is the largest live entertainment company in the world. Live Nation’s three main business segments are concerts, ticketing, and advertising. Live Nation also has an artist management company with 410 artists.
Live Nation promotes live music events in venues across the world.
For a live event, Live Nation as a promoter books the artist and venue. Live Nation markets the concert and sells the tickets.
Payment for live events: first, the artist receives an advance (guarantee) that they keep regardless of ticket sales. Out of gross ticket sales, the promoter retains all revenue up to their expenses (venue costs, marketing, staff). The remaining net profits typically get divided 85/15 to 90/10 with the artist keeping 85% or 90%. The advance is included in that share. The promoter keeps the 15% or 10% share of net profits, but also eats the losses if gross sales cannot cover expenses and artist’s guarantee. A promoter can cancel shows to reduce their losses. Table below illustrates an example of payment distribution:
Promoters can make rebate deals with venues, in which a venue pays the promoter an additional bonus for each ticket sold. For instance, if a promoter brings 10 shows to a venue a year, the promoter receives a $5/ticket rebate.
A promoter can purchase an artist’s entire tour and cross-collateralize the dates, which allows losses from one concert to be recouped from profits from other concerts.
Live Nation organizes festivals like Lollapalooza.
Live Nation owns Ticketmaster, which is a ticketing provider for venues. Ticketmaster sold 270 million tickets in 2022. Venues, particularly in the US and new venues in Europe, often make an exclusive partnership with a ticketing provider.
Ticket fees include: service fee which is split between the venue and Ticketmaster, with the venue usually receiving around 90% of that fee; facility fee which is kept by the venue and covers the cost of hosting a live event; credit card fee which pays for the cost of credit card processing.
Ticketmaster is in a constant battle against scalpers that buy tickets to later resell them on secondary marketplaces. Many artists want low ticket prices, but bots resell them later.
Increased revenue opportunities: Ticketmaster has a dynamic pricing algorithm that changes prices based on demand. Ticketmaster sells platinum and VIP tickets.
Sponsors advertise using Live Nation’s concert, festival, venue and ticketing assets.
Operating income largely comes from ticketing and sponsorship & advertising.
Live Nation's main competitor within the concerts segment is AEG (Anschutz Entertainment Group) which is a private company.
Within the ticketing segment, Live Nation primarily competes with secondary marketplaces like StubHub and SeatGeek, which rely on high-volume ticket scalping.
Vertical Integration: Live Nation has a controlling interest in 338 venues across 48 countries. Vertical integration with venues allows Live Nation to control artist choice with its concert business and sell tickets with Ticketmaster, thereby avoiding double marginalization. Vertical integration gives Live Nation the ability to vertically foreclose access to complementary goods which are venues, ticketing, and artists.
Ticketing Platform: Ticketmaster is a highly scalable platform that can handle many customers while preventing bots from purchasing tickets. Many customers go directly to Ticketmaster to buy their tickets, which makes it a marketplace with a network effect.
Global support: Live Nation is one of two businesses along with AEG that can deliver global tour support. Live Nation has offices in 44 countries.
Latest Annual Report - provides an overview of Live Nation’s business in items 1 and 7 and financials in item 8.
Michael Rapino - The Bob Lefsetz Podcast (2023) - Live Nation’s CEO discusses business basics, expansion, and vertical integration.
All You Need to Know About the Music Business - Part V provides an artist’s perspective on how to think about touring.