Jay Marciano on streaming, Coachella, macro-economics – and why ‘everybody’s a genius in a bull market’

Jay Marciano doesn’t do many interviews.

In typical instances, there’s no need: Up till March 2020, AEG Presents – which Marciano heads up as CEO & Chairman – was a steadily rising international firm in a steadily rising international phase of the music biz.

Since then, in fact, we’ve been removed from typical instances. Consequently, MBW has a heck of so much to ask Marciano about, together with: (i) Stay music’s sturdy comeback post-Covid; (ii) The influence of streaming on the following technology of dwell expertise; (iii) Whether or not the concert events enterprise can be recession-proof; (iv) The long run influence of inflation on the enterprise; and (v) AEG’s rising funding in worldwide enlargement.

Fortunately, Marciano, one of many trendy music trade’s most modest and straight-talking – to not point out profitable – Chief Executives granted us an viewers to just do that.

The world’s largest non-public dwell music promoter – and second solely to Stay Nation general – AEG Presents is the proprietor of big festivals like Coachella (attendance: 125,000 per day, over two weekends), the New Orleans Jazz & Heritage Competition, and the UK’s British Summer season Time (BST), which this yr hosted the likes of Adele, Elton John, Pearl Jam, and the Rolling Stones.

Along with its competition enterprise, AEG can be the proprietor of a number of international venues together with the Crypto.com enviornment in Los Angeles, The O2 Enviornment in London, and the Mercedes-Benz Enviornment in Berlin, amongst many others. And as a live performance promoter, proper now, the agency is working excursions for superstars starting from BLACKPINK to Bryan Adams, Elton John, Luke Combs, and Stromae.

The topline indicators for the dwell trade in 2022 are good: AEG rival Stay Nation (a publicly-traded firm) lately acknowledged that 44 million tickets have been offered to its reveals in Q3 2022, greater than some other quarter in its historical past. Over within the UK, the 2023 Glastonbury Competition – but to call a single headliner – lately offered out in lower than an hour.

Talking of fine indicators for the enterprise, it’s value mentioning that AEG is selling that Taylor Swift tour (although not dealing with its much-discussed ticketing gross sales, which undergo Ticketmaster).

The dimensions of AEG and Swift’s success there – and the sign that provides us about dwell music demand even throughout a tumultuous financial interval – shouldn’t be underestimated.

Swift offered 2.4 million tickets; in keeping with Ticketmaster, the amount of visitors to her on-sale recommended sufficient demand for Swift to play 900 stadium reveals – the equal of “a stadium present each single night time for the following 2.5 years.” (The under interview with Jay Marciano befell earlier than Taylor Swift’s much-discussed dates have been introduced – and earlier than these much-discussed tickets went on sale).

In contrast to publicly-traded Stay Nation, AEG Presents (a part of Philip Anschutz’s AEG group) doesn’t publicly publish its financials. But when we briefly bounce again to pre-Covid instances, its scale turns into clear: In accordance with Pollstar knowledge, AEG Presents’ worldwide reveals grossed $1.4 billion from ticket gross sales in 2019. The agency’s reveals offered 14.8 million tickets that yr, up by greater than 3 million on its tally within the prior 12 months.

So how will AEG – and the broader live performance enterprise – fare when 2022 shakes out? Jay Marciano had a solution for that – and many extra – after we sat down collectively…

The dwell trade in 2022 is an advanced image: Some tasks, together with your sold-out Coachella and British Summer season Time reveals, appear to be doing exceedingly effectively. Different reveals are being canceled by artists for varied causes that will or might not be a canopy for gentle demand. What’s happening?

Anybody that tells you they know what’s happening might be utilizing the advantage of their expertise within the final 24 hours. Ask them that query in seven days, they may reply in a different way!

Our expertise tells us it’s arduous to disregard client sentiment, interval. And client sentiment proper now is sort of a yo-yo.

I’ve all the time felt that live performance ticket gross sales are very a lot the canary within the coal mine: We all know, most likely earlier than many individuals, how customers are feeling. Once we’re promoting rather well, it means customers really feel actually good about going out. When folks start to drag again, possibly it’s as a result of they’re feeling rather less safe about their very own monetary scenario.

“It’s not a shock to me that solely the actually sizzling artists and reveals are assured to promote.”

Occasions that went on sale in that preliminary interval post-Covid had all the advantages of the euphoria of opening up the market. All the things was promoting: You and I might promote a live performance out!

As we began to maneuver into summer time 2022, we had to have a look at the availability facet: There have been too many reveals, and too many decisions. Mix that with a little bit little bit of that pullback on client sentiment, and it’s not a shock to me that solely the actually sizzling artists and reveals are assured to promote – anything nearer to the margins goes to search out issues harder.

How do you see these subsequent 12 months enjoying out for AEG’s live performance promotion enterprise?

It’s necessary for me to begin by laying out my long-term view of macro dynamics which are working very favorably for the dwell enterprise.

The accelerated adoption of worldwide music plus the advantages of streaming imply that audiences have extra entry to extra artists and genres of music at this time than ever. And that’s nice. It’s nice for our golf equipment and theater enterprise, it’s nice for our competition enterprise, and it creates all types of alternatives.

“It’s tough to disregard the financial indicators – and on this enterprise, you ignore these indicators at your peril.”

However within the close to time period, it’s tough to disregard the financial indicators – and on this enterprise, you ignore these indicators at your peril. There’s an previous saying that everybody’s a genius in a bull market. We got here out of the pandemic right into a bull market, and everybody seemed good. Now it takes a extremely sturdy operator to navigate what we’re most likely going to expertise over the following 12 months.

That’s why, given the place the economic system goes into 2023, I’m not judging our firm’s efficiency on amount. I need us to be a little bit bit extra selective.

What’s the most important profit that music streaming has delivered to dwell music?

It’s made music discovery borderless. Possibly for the primary time within the historical past of pop music, it doesn’t matter which language you’re singing in.

5 years in the past, the concept that BTS and Unhealthy Bunny have been going to be the 2 largest stadium reveals in North America would have been an absurd thought. However now, by way of discovery, followers are keen to tackle music from around the globe.

“Possibly for the primary time within the historical past of pop music, it doesn’t matter which language you’re singing in.”

Coachella, as a result of it’s all the time been essentially the most adventurous competition in terms of reserving and all the time needs to get there first, has all the time been on the forefront of giving a giant platform to the following wave of artists from across the globe. So at a competition of 125,000 folks, a minimum of 50,000 folks will go watch them and be open to one thing new.

That goes each methods, too: Justin Bieber offered out 5 stadiums in Japan, that will not have occurred 5 years in the past. And I believe we’ll see increasingly of that.

I’m glad you talked about the correlation between streaming and your ‘golf equipment and theater’ enterprise – i.e. smaller venues than arenas. The logic is that there at the moment are many extra artists reserving and filling these venues, and that correlates with what’s occurring on streaming platforms: the High 10 superstars are seeing their share of complete listening lower, however hundreds of artists beneath them are rising their audiences. Is {that a} pattern that has continued post-Covid?

Sure, and our golf equipment and theater enterprise may be very wholesome. A membership that did 100 reveals a yr in 2012 is now doing 180 reveals a yr. That’s a direct results of there being extra expertise obtainable. It’s an ideal byproduct of streaming.

Our golf equipment and theaters enterprise is a gradual, comparatively low-risk and reliable facet of what we do. It’s additionally useful for recognizing new expertise that we expect might take the following step and play on the B stage of considered one of our festivals…that type of factor.

“The quoted stat, years in the past, was that the common concert-goer goes to 1-point-something reveals a yr. In our expertise, on the golf equipment and theaters stage [today]… it’s extra like eight instances a yr.”

Apparently, golf equipment and theaters was once a break-even enterprise. Now it’s turn into worthwhile as a result of our venues have turn into higher and we’ve made investments to enhance each the artist and viewers expertise.

What’s additionally new is the frequency with which followers are going to reveals: The quoted stat, years in the past, was that the common concert-goer goes to 1-point-something reveals a yr. In our expertise, on the golf equipment and theaters stage [today], the place the viewers is primarily 22 to 32-year-olds, it’s extra like eight instances a yr.

Is it inevitable that ticket costs should go up within the present inflationary surroundings, particularly at these smaller reveals?

A younger artist that’s on the street at this time is seeing all of their prices going up – their tour bus, employees, sound engineer, lighting engineer, accommodations… and in consequence some artists can’t even afford to go on tour.

That in itself would essentially dictate that ticket costs must go up. What was once a $20 ticket might be going to be a $25 ticket, as a result of everybody’s prices have elevated.

One thing I’ve been occupied with: The dwell music enterprise has lengthy treasured so-called ‘heritage’ artists who can promote out stadiums on the power of their catalog, whereas the report trade has arguably been extra obsessive about the ‘new’. In a world the place these established artists are promoting their catalogs for lots of of hundreds of thousands of {dollars}, that appears to have modified a bit.

I’d agree with that. Historically, there wasn’t a variety of glory on the label facet of the enterprise in engaged on an artist who had already launched their 5 largest albums.

Once you work at a label, that ‘genius of discovery’ is a part of [your] purpose for being there: ‘I signed this artist, I found this artist, I made this artist.’ And naturally the people who find themselves profitable at doing which are rewarded essentially the most.

“Historically, there wasn’t a variety of glory on the label facet of the enterprise in engaged on an artist who had already launched their 5 largest albums.”

There’s a little bit little bit of that within the live performance enterprise, however much less so.

After I sit there at a present after doing this for all these years, can I make a reasonably fast determination about how far a [young] artist goes to go of their profession? Not all the time. However I could make a reasonably knowledgeable guess, simply based mostly on having seen hundreds and hundreds of reveals. I can sense fairly rapidly if an artist is connecting with the viewers.

What’s the distinction within the causes for an organization like AEG to again new expertise vs. the explanations the labels may again expertise? We’ve all seen hyped artists with over a billion streams who can’t promote tickets at this level.

We expertise artists the place the followers are. This isn’t a knock on the labels, however we now have entry to completely different knowledge factors [than they do], and our knowledge is a little more energetic. We all the time ask ourselves: are followers in love with the tune, or are they in love with the artist? You’ll be able to have an ideal tune that individuals love, however that doesn’t essentially imply they’re keen to exit and spend 100 kilos or 100 {dollars} to see the artist carry out dwell.

The longevity of a dwell fan base is what we’re excited about. That’s what helps so many artists proceed to pay their payments lengthy after a label’s frontline advertising of their music wanes.

“The longevity of a dwell fan base… helps so many artists proceed to pay their payments lengthy after a label’s frontline advertising of their music wanes.”

The report enterprise and the concert events enterprise are undoubtedly nearer than they as soon as have been – you solely must see the variety of report trade folks who come to Coachella and British Summer season Time to know that! However there nonetheless appears to be a distance between the 2 components of the enterprise.

We each want one another for the ecosystem of this trade to perform at its greatest: we want sturdy labels, and we want sturdy promoters. Frankly, I want we have been a little bit nearer to the labels on the dwell facet of the enterprise. It could be to everybody’s profit.

Once we’re at Coachella, I discuss to a variety of label folks over the course of these two weekends. They usually all say, ‘Subsequent time, our advertising plan ought to be extra built-in with the Coachella efficiency.’ And I begin to suppose, “Properly, whenever you’re having these advertising conferences, you by no means name us and say: ‘Now we have one thing we’d love to do with this artist.’” I’ve by no means gotten that decision!

The music trade has seen a lot of corporations go public in these previous few years: Common Music Group, Warner Music Group, Consider, Hipgnosis and many others. AEG Presents appears completely satisfied staying privately owned. Why?

Our firm displays who our proprietor is. He’s an proprietor that expects our firm to be the gold customary. He’s affected person when he makes an funding. It’s important to be affected person and visionary to make a guess on one thing that wasn’t so apparent on the time – the O2 Enviornment is an ideal instance – that finally ends up wanting very apparent at this time.

Once we have been nosing the London space in search of an enviornment web site, we mentioned, ‘what about on the market on the Millennium Dome?’ Everyone laughed at us. All of them mentioned, ‘No person goes to East London. It’s a white elephant!’

“You’ll be able to solely take these bets when you will have an proprietor that’s centered – somebody who doesn’t have to make a greenback at this time, however as a substitute needs to create worth in the long run.”

It was the identical factor in Berlin. Everyone thought we have been loopy to construct the place we did. Identical factor in Los Angeles; we went downtown at a time when no one needed to go downtown.

My level is you may solely take these bets when you will have an proprietor that’s centered – somebody who doesn’t have to make a greenback at this time, however as a substitute needs to create worth in the long run. That’s who Phil Anschutz is.

What’s your view on the labels taking cash from dwell through ‘360’ offers with artists?

It’s had no influence on us as live performance promoters, as a result of that cash isn’t cash from our desk – it’s the artist’s. I believe over time knowledge has prevailed: the labels don’t have the power to execute the rights that they’ve acquired in a 360 deal. And lots of of them have form of moved on from it. The actually skilled attorneys which are negotiating report offers today are profitable in eliminating them.

I perceive the place that considering began from the labels’ perspective, particularly given the monetary straits the labels have been in at the moment: ‘We’re spending all this cash and all this time to construct an artist’s model.’ After which they checked out what was occurring on the dwell facet considering, we’re not taking part – how will we get extra of that?

“Streaming is a high-margin enterprise to the labels, and we’re a giant gross, low-margin trade, as a result of – appropriately – the artists are making 90% of the income.”

However that was earlier than the massive streaming checks began to roll in. And the cash coming in from streaming is so huge that the cash that they’re going to make off of promoting a T-shirt seems de minimis.

The massive distinction between the 2 companies: streaming is a high-margin enterprise to the labels, and we’re a giant gross, low-margin trade, as a result of – appropriately – the artists are making 90% of the income. So after I hear labels complaining that they’re solely getting 70% of the income from the streaming corporations… effectively, you may guess what I take into consideration that!

There’s been a variety of debate round secondary ticketing and ‘DYNAMIC TICKETING’ this yr – with ‘dynamically priced’ tickets for some concert events, based mostly on demand, spiraling as much as a number of lots of of {dollars}, and extra. What’s your view?

The US market accepted secondary ticketing way more readily than different locations, just like the UK and Europe. That’s as a result of it was initially pushed by sports activities: Season ticketholders couldn’t make it to each dwelling sport within the NBA or NFL every season, in order that they wanted a market. Generally these tickets offered for underneath face worth, typically they offered for face worth, and typically they offered for greater than face worth.

Then, by the point the music enterprise woke as much as the truth that there was a sturdy secondary marketplace for its tickets, it was too late. Artists have been afraid of being known as out, or for seeming “off-brand”, for charging what their tickets have been actually value in an open market. So that they’d put a third-row ticket on sale for $100 that will then promote for $500 on the secondary market.

“we’ve obtained to maneuver that cash away from the secondaries and again onto the desk…”

We as live performance promoters didn’t love the secondary market, and our artists’ didn’t need to be concerned. So we stayed away from it. As an alternative, lots of of hundreds of thousands of {dollars} have been invested by the banking trade to create a secondary [music ticketing] market. All of that cash spent within the secondary market didn’t make it to any of the rightsholders; together with the promoter and the venue, however most significantly, the artist.

Now artists [increasingly] perceive that they have been letting all these third-parties revenue off their reveals, in order that they’re working with the ticketing corporations and promoters to unlock a live performance’s gross with ‘dynamic pricing’. The actual fact is, we simply moved that 30%-plus improve in a field workplace you’ll see on a secondary ticketing web site again into the arms of the ‘rightsholders’.

Sure, we will argue about who amongst these ‘rightsholders’ will get what. However we’ve obtained to maneuver that cash away from the secondaries and again onto the desk to allow us to try this.

What’s the route of journey for AEG Presents over the following few years – what are your priorities for enlargement?

The largest phase of development can be worldwide. You’re going to see us turn into extra aggressive in Asia and South America, and probably just a few extra places of work can be opening in Europe as effectively.

I’d level to our relationship with Frontier Touring in Australia as a current instance of that. In 2019 we introduced a JV by which we acquired 50% of the corporate. Then, following the unlucky passing of Michael [Gudinski, founder of Frontier and Australian music business icon who died in 2021], we bought one other 30%, with Matt Gudinski proudly owning the rest.

We consider in Matt, we consider in all the staff that got here collectively to run the enterprise after Michael’s passing, and we consider in each the historical past and the way forward for Frontier.

“International enlargement and ticketing – you’ll see some actual proof of that [from AEG] over the following 12 to 24 months.”

We’ve additionally actually made our personal international touring offers a precedence. Our International Touring staff is spearheading that and I anticipate we could have extra artists partnering with us by way of that sector of the corporate.

The opposite space of focus is ticketing our personal reveals. Traditionally, we’ve made the guess on an artist, performed all of the advertising for the reveals, agreed on a contract with a venue… after which turned our ticketing – our level of contact with the patron – over to a 3rd occasion. We’re acutely conscious that the entire relationship with the patron orbits across the sale of the ticket, and we’re going to make that relationship much more of a precedence.

So, international enlargement and ticketing – you’ll see some actual proof of that over the following 12 to 24 months. Greater than something, after the previous two years, I’m simply excited to be speaking about the way forward for the enterprise once more.Music Enterprise Worldwide