Providence makes strategic investment in Wasserman
Private equity firm Providence has expanded its music portfolio with a strategic investment in agency giant Wasserman.
Providence’s investment will be used to provide capital to pursue growth initiatives and “fully redeem” RedBird and Madrone Capital Partners, who both exit as investors, while Wasserman chairman and CEO Casey Wasserman will retain a controlling ownership stake. Financial terms were not disclosed.
US sports representation firm Wasserman launched booking agency Wasserman Music in 2021 following the completion of the company’s acquisition of Paradigm’s North American live music business and went on to acquire Paradigm UK’s live music business earlier this year.
Providence, meanwhile, already backs UK-based live entertainment group Superstruct Entertainment, Ambassador Theatre Group and Tait (Towers), and also bought into Sweetwater, the leading US retailer of musical instruments and audio equipment, in 2021.
“There is no better partner to help us accelerate and scale this purpose-driven model than Providence”
“I am incredibly proud of the business, and more importantly the team we have built over the past 20 years,” says Casey Wasserman.
“Our prioritisation of client service and values has resulted in tangible business success and cultural rewards, and there is no better partner to help us accelerate and scale this purpose-driven model than Providence. Their long relationship with our executive management group plus their extensive experience and established investment approach across the sports, media and entertainment sectors, and a shared commitment to culture will help accelerate the next phase of Wasserman’s expansion.”
“Casey and his team have built a global leader and influential force in sports and music talent representation and marketing”
Founded in 2002, Wasserman operates across six continents, 23 countries and more than 40 cities worldwide. Its other recent moves include a significant investment in post-career services for clients through the acquisition of The Montag Group; a strategic focus on marketing to Gen Z consumers through the acquisition of Riddle & Bloom; and a continued expansion into global sports with the launch of Wasserman Rugby.
“Casey and his team have built a global leader and influential force in sports and music talent representation and marketing, and they have balanced their rapid expansion with maintaining a client-first approach and culture that cultivates dedicated, motivated and talented executives and agents,” adds Providence MD Scott Marimow. “Wasserman is a natural fit with our firm, and we look forward to partnering with Casey and the entire Wasserman team to help fuel the company’s next phase of growth and success.”
In July, “purpose-driven global investment organisation” EQT became the latest private equity firm to enter the international touring business by becoming a strategic investor in UTA. Other such companies with live music interests include Silverlake, Yucaipa and Waterland.
Get more stories like this in your inbox by signing up for IQ Index, IQ’s free email digest of essential live music industry news.
EQT latest private equity firm to enter touring biz
EQT has become the latest private equity firm to enter the international touring business, following in the footsteps of companies like Silverlake, Yucaipa, Providence and Waterland.
The ‘purpose-driven global investment organisation’ today (19 July) announced that the EQT X fund has agreed to become a strategic investor in UTA.
Under the transaction, the UTA partnership and leadership continue to hold the controlling interest in the company, with EQT becoming the largest outside shareholder.
Investcorp, a global alternative investment firm that invested in UTA in 2018, will sell its full minority stake to EQT, and EQT will also purchase a portion of existing stakes from continuing shareholders including PSP Investments.
According to a release, EQT’s financial resources, expertise in capital markets, in-house digital team and global footprint will help fuel UTA’s next phase of investments in talent, innovation and international expansion.
Jeremy Zimmer, CEO of UTA, says: “EQT is the perfect partner for UTA’s next phase of growth. They have deep international capabilities, a strong balance sheet, and most importantly they truly appreciate and respect the culture that we have built at UTA.
“David Kramer and I led this process, and we made sure to listen to our instincts about who we felt would really help us drive growth while protecting our culture. We believe that we found the right partner to maintain that balance.”
“EQT is the perfect partner for UTA’s next phase of growth”
Kasper Knokgaard, EQT partner and global head of the services sector team, adds: “EQT invests in industry-leading platforms that are well situated for strong and sustained growth across economic cycles, are aligned with our values, and where we know we can create significant value –UTA checks all the boxes.
“We are excited to partner with Jeremy Zimmer and the entire team to accelerate UTA’s growth trajectory and enable more opportunities across entertainment and media.”
Dave Tayeh, head of private equity – North America at Investcorp, comments: “Our investment in UTA was highly successful and we are proud to have partnered with the UTA team as they achieved exceptional growth over the past four years. The company has strengthened its position as a market leader and we wish the team and EQT continued success.”
Martin Longchamps, MD at head of origination and execution at PSP Investments, says: “Since our original investment in 2018, PSP Investments and Investcorp have been working closely with Jeremy Zimmer and his management team to continue to strengthen UTA’s exceptional market position.
“During this time, UTA has proven its abilities to perform, innovate and diversify as a leading entertainment company. We are excited to continue this journey with UTA and to welcome EQT. Together, we will be a driving force in supporting UTA’s long-term growth.”
EQT has €77 billion in assets under management across 36 active funds. EQT funds have portfolio companies in Europe, Asia-Pacific and the Americas with total sales of approximately €29 billion and more than 280,000 employees.
Get more stories like this in your inbox by signing up for IQ Index, IQ’s free email digest of essential live music industry news.
Patron Technology sold to PE firm Vector Capital
San Francisco-based private-equity firm Vector Capital has acquired Patron Technology, the company behind Greencopper, Marcato and several other familiar event technology products.
Vector, which specialises in investing in established technology businesses, says all Patron staff remain in place and will continue to operate the company on a day-to-day basis. Terms of the deal were not disclosed, but Vector manages nearly US$4 billion worth of investments.
“With Patron Technology, we saw an opportunity to back the leading platform and a seasoned management team as they successfully navigate unprecedented, Covid-induced market disruption in the live events industry,” comments Rob Amen, managing director of Vector Capital.
“Vector excels at investing during volatile times, and our thesis is that only the best products and most talented executives will survive this dislocation and emerge as market leaders. We are confident that our growth investment will enable Patron Technology to not only outlast this global pandemic but become stronger on the other side of it.”
Patron Technology, formerly known as PatronManager, has spent the past few years buying up various event technology companies, including app developers, ticket sellers and event management platforms. Its portfolio includes festival app company Greencopper, event management software developer Marcato, RFID provider Token and ticketing software firms ShowClix, Ticketleap, Ticketbooth and GrowTix.
“Vector excels at investing during volatile times”
The company was formerly majority owned by Providence Equity Partners (whose other live industry investments include Superstruct Entertainment, Tait Towers and Ambassador Theatre Group).
Marc Jenkins, CEO of Patron Technology, says: “This is an exciting and important day in our company’s history. It kicks off a fresh, new partnership alongside the thoughtful investment team at Vector. We are eager to work with them to propel the business through the age of social distancing and beyond.
“I’m extremely proud to be part of such an amazing team, past and present, that works tirelessly to serve our world-class clients.”
“With a great set of products, a strong balance sheet and an unparallelled management team, Patron Technology is well positioned to grow over the coming years,” adds Vector Capital vice-president Tom Smith.
“We look forward to partnering with Marc and his team as they continue to grow from this new position of strength and renewed investment.”
Get more stories like this in your inbox by signing up for IQ Index, IQ’s free email digest of essential live music industry news.
PE firm Yucaipa invests in APA
Less than a month after buying into UK metal agency K2, the Yucaipa Companies, the private-equity group controlled by billionaire investor Ron Burkle, has made a strategic investment in Los Angeles-based APA.
APA, the former Agency for the Performing Arts, is headquartered in Hollywood and has offices in New York, Nashville, Atlanta, Toronto and London. Its roster includes Blondie, House of Pain, Fetty Wap, Nickelback, Azealia Banks, Rodriguez, Lil Xan, Gang of Four, King Crimson, Nick Carter, Doves and 50 Cent.
Yucaipa, meanwhile, has stakes in Paradigm’s European business (including X-ray Touring), Spanish festival Primavera Sound and US promoter Danny Wimmer Presents, and owns Artist Group International.
“Ron Burkle and Yucaipa share our philosophy for disciplined growth”
According to Variety, which first reported on the deal, Burkle’s investment in APA is a non-equity arrangement that sees Yucaipa take on APA debt in exchange for cash. Variety’s sources say the cash influx will allow APA to recruit agents and clients at a time when its corporate agency rivals are furloughing and laying off staff.
“With so much uncertainty in the entertainment industry, we’re very pleased to be collaborating with a person and a company so in sync with our vision for the future of our business,” says APA CEO Jim Gosnell. “Ron Burkle and Yucaipa share our philosophy for disciplined growth, and are 100% behind our strategy to expand upon our core business across all media platforms.”
In other APA news, the agency’s head of talent, Jim Osborne (pictured), has been named president, taking over the role from Gosnell.
Get more stories like this in your inbox by signing up for IQ Index, IQ’s free email digest of essential live music industry news.
Buying and selling for beginners: Mayland CEO talks industry M&A
Investments and takeovers are the core business of Matthias Just, CEO of Mayland AG. Before becoming a lawyer Just completed an apprenticeship as a banker, and his CV includes positions in the UK and US at companies including Deloitte and Touche Corporate Finance.
Since the end of 2005, he has been a member of the board of Mayland AG, a Dusseldorf-based company specialising in mergers and acquisitions – including the likes of the takeover of Parookaville by Superstruct, whose portfolio also includes Flow Festival, Sonar, Sziget and Wacken Open Air, and is backed by Providence Equity Partners, which manages more than $45 billion worth of investments.
IQ spoke to Just (pictured) about why the live music industry is increasingly attractive to institutional investors – as well as how external investment companies can offer a compelling alternative to the major multinational concert businesses…
IQ: What is the external perception of the live music industry in the financial sector?
Matthias Just: The live music industry is growing and a stabilisation of turnover and profitability figures can be seen across most companies. Besides this, there are always new festivals that draw attention to themselves through innovative concepts and designs and are able to assert themselves in the market. In general, demand is still very high, despite increasingly high ticket prices.
In recent years, we have noticed that consumers in the leisure and entertainment sector have seldom been price-sensitive and are prepared to pay higher ticket prices in order to spend a weekend at their favourite festival. This willingness to pay is what distinguishes this industry and makes it interesting for strategic investors, as well as financial investors and corporate holdings.
On the other hand, what is the current situation of the financial market in terms of potential investors and investments?
It was inevitable that Brexit, the [US-China] trade dispute and the signs of an imminent recession would not leave investors unscathed. Therefore, we can perceive a slight increase in uncertainty across the market as a whole, which will – should the signs of an economic downturn become clearer in the coming months – lead to a reallocation of investors’ investment focus.
In this sense, this means that companies in a sector that is independent of economic cycles – such as the events market – will be given preference over cyclical investments, which generally tend to be negatively affected in times of recession.
“This willingness to pay is what distinguishes this industry and makes it interesting for strategic investors”
What role does Mayland play in the M&A process?
We see ourselves both as consultants and coordinators. Within an M&A transaction, on which we act both on the buyer and seller side, we coordinate all necessary services in order to achieve a successful conclusion of the transaction. In addition to classic sell- or buy-side M&A advice, our range of services also include succession planning, financial advice, company valuation and strategic business development.
There are many in the concert industry who worry about the involvement of external investment companies. Are they right to be concerned?
These reservations about external investment stem from the public debates about the financial sector due to the financial crisis in 2008. Also, various companies have been forced to cut jobs after an investment company had joined them – and even today, some entrepreneurs still face a loss of control when taking an investment on – but this process is anything but inevitable.
While anyone who sells shares in a company loses some control, the manner in which this transfer of control takes place is an important factor that a seller can influence significantly before the transaction is completed – a crucial point at which we come into game and, together with the current owner and management of a company, determine how this transfer should be structured from the seller’s point of view.
There are many understandable motives for dealing with the topic of participation [from the investment sector] from the entrepreneur’s point of view. However, those who are not familiar with participation systems and legal framework conditions should take on professional support, even in the case of a first initial meeting with a potential buyer.
“Companies in a sector that is independent of economic cycles – such as the events market – will be given preference over cyclical investments”
In one sense, AEG, CTS Eventim and Live Nation are investors, too. Aren’t these companies the better investors than those who have little or no industry knowledge?
In terms of strategic fit, these players in the industry are certainly good candidates – concert companies or festivals can benefit from the networks of these companies and partially improve their operative business. On the other hand, these investors usually require a majority stake (usually more than 50% – ie a qualified majority with which they can enforce all strategic decisions), which means that the seller can lose control of his or her festival, at least in the legal sense.
For smaller companies that are looking for a strategic partner, but do not want to give up control over their business, other strategic investors or financial investors may be the better alternative.
Providence Equity, as a financier of Superstruct, is a prominent player in concert takeovers. Do you expect other big players from the private-equity sector to increasingly be interested in the live music industry in the future?
That’s quite possible. However, Providence Equity’s Superstruct vehicle and its managers [including CEO James Barton, ex-Creamfields/Live Nation] are industry experts who know the festival business very well and usually have experience as festival organisers themselves.
This expertise is particularly important in an industry such as live entertainment, because the structures are special and personal aspects play a meaningful role.
However, in addition to Providence, there are many other investment companies with a strong interest in the festival industry.
Get more stories like this in your inbox by signing up for IQ Index, IQ’s free email digest of essential live music industry news.
PE firm Crestview buys a third of ICM Partners
ICM Partners has sold a 33% stake in its business to New York-based investment firm Crestview Partners, becoming the latest major booking agency to take on private-equity investment.
The US$150 million investment from Crestview – whose other holdings include cable TV company Wow! and American Idol/So You Think You Can Dance producer Industrial Media – will “help accelerate domestic and international expansion strategy”, according to an ICM statement.
In partnering with Crestview, ICM joins CAA, WME and, most recently, UTA, in securing investment from private-equity and/or venture-capital funds. CAA is majority owned by TPG Capital, while WME is backed by Silver Lake Partners, Softbank and others. UTA recently sold minority stakes to Investcorp and PSP Investments.
“We are philosophically aligned and excited to take full advantage of the growth opportunities ahead”
“We have always dedicated ourselves first and foremost to our clients and are proud to be a singularly focused representation company,” says ICM managing director Chris Silbermann.
“As our team strategised about growing the agency to be the best it could for our clients, we believed Crestview, with its strong track record of backing media companies, was the ideal partner for us. We are philosophically aligned and excited to take full advantage of the growth opportunities ahead.”
ICM’s music roster includes the likes of Anderson Paak, Migos, Khalid (pictured), Ari Lennox, Boyz II Men, Teyana Taylor, J. Cole and Phantom Planet.
Get more stories like this in your inbox by signing up for IQ Index, IQ’s free email digest of essential live music industry news.
TEG confirms Silver Lake acquisition
Confirming rumours that surfaced last week, private-equity firm Silver Lake Partners announced this morning (4 October) Australian time it has acquired Asia-Pacific live entertainment giant TEG.
Silicon Valley-based Silver Lake, which also holds stakes in Madison Square Garden Company, Oak View Group and WME/UFC parent company Endeavor, acquires TEG from Affinity Equity Partners, another investment firm, which bought TEG in 2015.
Financial terms of the transaction were not disclosed, though reports in the Australian financial press value the deal at around A$1 billion (US$675 million).
Sydney-based TEG’s live entertainment platform combines ticketing and event promotion, venue management, data analytics and marketing services. The company organises over 100 events annually through TEG Live and TEG Dainty, which have promoted shows including Hugh Jackman, Guns N’ Roses, Eminem, Katy Perry, Cirque du Soleil, Jerry Seinfeld and the Australian debut of Intel Extreme Masters esports.
The company is the parent of one of Australia’s “big two” ticket sellers, Ticketek, which sells 30m tickets annually, and also made moves into the European market earlier this year, acquiring UK-based promoter the MJR Group.
“The team at Affinity have been great partners for us over the last four years and have helped us to continue to scale our business,” says TEG chief executive Geoff Jones, commenting on the buy-out. “We are confident that Silver Lake is the right partner for the next stage of the company’s growth.
“High-quality live sports and entertainment content is more sought after now than ever, and represents a massive global addressable market”
“Silver Lake brings us deep technology expertise as well as important global entertainment content and live events expertise and relationships which will help us to accelerate the growth of our platform globally.”
Adds Silver Lake managing director Stephen Evans: “High-quality live sports and entertainment content is more sought after now than ever and represents a massive global addressable market for the company. We believe TEG’s innovative and integrated ticketing, content, digital marketing and analytics platform is well positioned to continue to benefit from increasing consumer demand worldwide.
“We’re excited to partner with Geoff and the entire TEG team and invest further to leverage TEG’s platform and accelerate the company’s growth, both in Asia Pacific and globally.”
The transaction is expected to close later this year, subject to conditions including approval by the Australian Foreign Investment Review Board.
Read IQ’s recent exclusive interview with Jones (pictured), in which he discusses TEG’s plans for European growth, here.
‘Our main focus is the UK and Europe’: TEG boss talks MJR buy
Get more stories like this in your inbox by signing up for IQ Index, IQ’s free email digest of essential live music industry news.
Silver Lake eyes up potential TEG buy
US private-equity firm Silver Lake Partners is in talks to buy Australian live entertainment powerhouse TEG, according to a report by the Australian Financial Review.
Reports suggest that the California-based buyout specialist is in “late-stage talks” with TEG’s owner Affinity Equity and senior management team, led by CEO Geoff Jones, in a deal expected to surpass AUS$1 billion (US$675 million).
Silver Lake has over $43 billion in combined assets across a portfolio of tech-related businesses such as Alibaba, AMC, Dell Technologie and Tesla. The firm also has stakes in various live entertainment-related enterprises, including in WME parent company Endeavor, the Madison Square Garden Company, UFC and Oak View Group (OVG).
The firm is the not the first potential buyer to register interest in TEG over the past few years. In 2016, CTS Eventim and Chinese conglomerates Fosun and Wanda Group made up a trio of potential buyers in the running to acquire TEG.
Silver Lake has stakes in various live entertainment-related enterprises
TEG, the parent company of one of Australia’s “big two” ticketing companies, Ticketek, made moves into the European market earlier this year, acquiring UK-based promoter the MJR Group.
The company also owns self-service ticketing platform Eventopia, promotion business TEG Live, concert promoter TEG Dainty – formerly Dainty Group –, data firm TEG Analytics and the AEG-Ogden-operated the Qudos Bank Arena (21,000-cap.) in Sydney.
TEG launched a new live family entertainment division, TEG Experiences, earlier this month.
IQ has contacted TEG for comment.
Get more stories like this in your inbox by signing up for IQ Index, IQ’s free email digest of essential live music industry news.
TodayTix receives $73m investment
TodayTix, a ticketing platform for theatre shows, has announced a US$73 million equity investment led by growth-oriented private equity firm Great Hill Partners.
The investment will be used for internal modifications and closing out secondary purchases of original investors, but predominantly for outward-facing growth and “utilising the company’s proprietary data-driven audience feedback to offer new shows, arts and cultural experiences”.
The company will also “double down” on expanding its technologies in discovery and personalisation for both consumers and partners.
“By understanding the ways next-generation audiences purchase and experience shows, we can forever change the way people discover art in their cities,” says TodayTix chief executive and co-founder Fenty.
“Our audiences, married with a community of visionary content creators, establish an unprecedented ecosystem of engagement between the two sides of live entertainment. While ticket sales are the bedrock of our relationships, these are only the beginning of our content and discovery ambitions.”
Founded in New York in 2013 by former Broadway producers Brian Fenty and Merritt Baer, TodayTix is now active in 15 markets around the world. The company has sold more than four million tickets to date, and claims to account for 8% of all Broadway tickets sold per year and 4% of London’s West End.
The company works with 1,300 venue and producer partners, and to date has run lottery and last-minute discount ticket promotions for more than 900 productions.
In October 2018, TodayTix launched its event production division TodayTix Presents, producing events across its active markets. Its first production, in September 2018, was a sold-out concert with Broadway performers Darren Criss, Matthew Morrison, and Ariana DeBose, featuring the music of Madonna, Katy Perry, and the Beatles.
“By understanding the ways next-generation audiences purchase and experience shows, we can forever change the way people discover art in their cities”
“From our humble beginnings in 2013, to our current global business on three continents serving millions of culture lovers, TodayTix has changed arts and entertainment ticket buying for the next generation,” says the ticketing company’s co-founder and president Baer.
“This investment from Great Hill Partners will allow us to take our ambitions to the next level; we couldn’t be more excited about the road ahead,” adds Baer.
“TodayTix is rapidly changing the way millennials and other consumers connect with live cultural experiences,” comments Michael Kumin, a managing partner at Great Hill Partners.
“We look forward to working with Brian, Merritt and their talented management team to expand the Company’s product and service offerings and accelerate its push into new geographies.”
Boston-based Great Hill Partners focuses on mid-market growth businesses. The firm recently led the buyout of Gizmodo Media Group from Univision and has invested in companies including Ziff Davis, IGN, Momondo Group, Wayfair and The RealReal.
Methuselah Advisors guided the Great Hill Partners’ investment.
Get more stories like this in your inbox by signing up for IQ Index, IQ’s free email digest of essential live music industry news.
Cashing in on live music: Meet the investors buying into the biz
The global live music industry has experienced a significant uptick in fortunes over the past decade. A switch in favour – from listening to recorded music at home, to physically attending the live event – has facilitated immense growth and profitability, driven by escalating ticket prices and the desirability to attend high-end live experiences.
This financial success has created a world of possibility for live music events, which are becoming more and more appealing to investors and fans alike. Thanks to consumer preference and industry adaptability, “the sector is growing more rapidly than the economy as a whole,” according to Lisa Boden, partner at Edition Capital, an investment company specialising in the entertainment and leisure industry.
“It is therefore an attractive space to invest into,” she adds.
Journalist and entertainment stock-market analyst Manfred Tari believes that while traditional industries are becoming saturated with investors, private-equity firms are speculating on different business sectors that have not previously been properly explored.
“The stock markets are not delivering the profit margins usually required by investors, so investors are looking into other industries to gain that 10% profit margin or more,” says Tari. “The live music industry is providing one of these different investment fields.”
Big money
Private-equity firms are pouring money into the live industry like never before, acquiring stakes in major talent- booking agencies, buying up popular festivals, and entering into partnerships with venue management companies.
“The live music sector is growing more rapidly than the economy as a whole”
“Whenever a deal takes place, it shows what kind of strategies are being used by investment companies,” explains Tari. “One particular deal that comes to mind is the merger between AEG facilities and SMG, backed by the huge private-equity company, Onex. This merger explains well what is going on in general – private-equity companies are looking for opportunities and just jumping in.”
The recently announced ASM Global merger could boast a portfolio of 310 arenas, stadia, convention centres and performing arts venues, if the deal is given the green light by monopoly watchdogs. The venue management colossus would span five continents and has been hailed by supporters as a “major step” for the live music industry.
Meanwhile, in the outdoor space, festivals are proving to be a highly lucrative aspect of the industry. Providence Equity Partners is the private-equity backer of Superstruct Entertainment, a festival owner and operator led by Creamfields founder James Barton. The company has acquired stakes in major European festivals, including Barcelona’s Sónar, Hungary’s Sziget, Norway’s Øya and Flow Festival in Finland.
Also tapping into the potential profitability of the festivals sector, Edition Capital serves as an example of one of the investment giants gambling on the continued popularity of the business. Investing in festival promoter Impresario Festivals was “one of the most prominent investments that we as a team made,” says Edition partner, Boden.
Through the Impresario Festivals investment, the company acquired a number of UK festival brands “with clearly unique audiences,” such as London’s Field Day, 80s-themed Rewind, and laidback surf festival, Boardmasters. “We sold that business in 2016, more than doubling the investors’ money,” Boden tells IQ.
Tari notes, “A main effect that we will see from these kinds of investments, like in the case of Superstruct and Waterland Private Equity, is that private-equity firms will now be looking to consolidate their place, investing in multiple similar companies and synchronising between them.”
“Private-equity firms will now be looking to consolidate their place, investing in multiple similar companies and synchronising between them”
In December 2018, Netherlands-based investment firm Waterland Private Equity acquired six leading Scandinavian promoters and agencies to create All Things Live, which it described as a “new independent market leader in Nordic live entertainment.” The company, comprising ICO Concerts and ICO Management; Friction and Atomic Soul Booking; Blixten & Co and Maloney Concerts, represents 140 Nordic artists and promotes almost 3,000 local and international events. All Things Live has a combined annual revenue of US$96 million, according to the company.
“Headliners coming to one event can now be supplied to many concerts across the private-equity firm’s portfolio. That is how these kinds of investments will change business structures,” observes Tari.
It’s all about the experience
Live shows and events have not always proved as financially fruitful. Indeed, recorded music dominated the industry as the chief generator of cash flow up until a decade ago, and according to collection society PRS for Music, the change in fortunes for live music in the UK occurred in 2008, with the United States following suit a few years later.
The origin of this movement of value from recorded content to live experience transcends the music business, extending to the wider entertainment industry and consumer habits in general. “People, particularly millennials and Generation Z, are spending increasing amounts of disposable income on doing things rather than owning things,” notes Boden.
This tendency to favour live experience over material possessions is commonly referred to as the experience economy, of which “the live entertainment sector is at the forefront,” says Boden.
That shift is proving enticing for large investment firms who can see that the live music industry is revelling in changing consumer preference, as leading festival and event promoters tap into the specific trends that accompany the era of the experience economy.
“People, particularly millennials and Generation Z, are spending increasing amounts of disposable income on doing things rather than owning things”
“The live experience – festivals and events – brings in a lot of other trends, such as personalisation, relevance and the availability of additional content to augment the experience,” says David Fisher, investment director at Edge Investments, a venture-capital company that specialises in creative industries finance.
Fisher explains that the businesses with most growth potential are those that “think about the experience economy and live events in a different way,” making a particular effort to target customers and personalise services.
“We are seeing this trend towards personalisation in every industry,” says Fisher. “Being able to understand the customer – what they’ve bought before, which kind of content they enjoy – is vital for offering the right solution to each customer’s requirements.”
In February 2019, Edge completed a $4.6 million investment in Festicket, a ticketing platform that packages together festival tickets, travel, accommodation and add-ons. “An attractive element of Festicket is that they get to know their customers,” Fisher tells IQ. “They identify a target, personalise their services and bring that target to specific customers, hence the ease of their tailored packaging, with festival tickets, accommodation and travel all in one place.”
Festicket sent 70 million emails last year, according to Fisher, “ensuring the development of a personal relationship with consumers.”
An individualised service and fresh outlook is a must for Boden, too. According to the Edition partner, the most attractive element for a potential investor is “an ability to attract and retain a loyal audience.” She adds, “Ultimately, the event needs to have a unique niche – it can’t just be another middle-of-the-road festival or event.”
“These investments mean that tickets will get a bit more expensive for fans and the entire industry set-up is going to change”
Indeed, the burgeoning international festival scene and the increasing willingness of festivalgoers to travel abroad is allowing further expansion of the festival market and offering ever more lucrative opportunities to investors.
Edition recently invested in Mainstage Festivals, a company that blurs the lines between music festivals and travel, offering festivalgoers a holiday as well as a live music experience. Last year, Mainstage launched Kala, the first international music festival to take place in Albania, receiving critical and public acclaim.
A bright future?
As long as the experience economy continues to thrive, the trend of external investors injecting funds into the live music industry shows no signs of slowing down.
The creativity and inventiveness of industry professionals, as well as swift technological advances, are enhancing the quality of live experiences, prolonging their impact and keeping both consumers and investors hooked.
Boden expects to see “increasing numbers of active firms and active funds” taking an interest in the sector in the short term. If larger players become involved in the future – a prospect that she deems likely – investors will gain more exit routes and the public will receive a greater size and diversity of offerings, she says.
Fisher is similarly optimistic: “Bringing investment into an industry is a good thing, as it means businesses can then invest themselves, leading to employment, growth and profit,” he says. “In the UK, the creative industries make up 10% of the GDP. It is important to get investment into such a large sector of our economy.”
These investments are providing attractive cash flows for many major festivals, agencies and venues, facilitating further expansion of the booming international live music industry and proving beneficial for all involved.
“Recipients of funding in the live events arena need to be able to provide that return, otherwise the money will dry up and go elsewhere”
However, the influx of investment may serve to change the live music industry in some less favourable ways, especially for concert attendees and festivalgoers.
“Firstly, these investments mean that tickets will get a bit more expensive for fans,” warns Tari. “Secondly, the entire industry set-up is going to change.”
In the past, the music industry received funding from impresarios or standalone investors who would work with artists and audiences on a more local, personal level. Nowadays, these kinds of investors are making way for huge corporate companies, dealing on a global level.
As a result, “agents now almost have the role of a product manager, so direct relations between the artists and the agent are less meaningful and the industry is becoming more corporatised in general,” says Tari.
Artists benefit from this, to a certain extent, due to the significant financial and professional advantages corporatisation brings. However, “fans are mostly not aware of these kinds of developments, and most have no idea that they are paying higher ticket prices for the benefit of investors,” Tari believes.
Furthermore, the sector cannot rely upon private-equity cash flows to boost the industry indefinitely. “Any sensible financial investor is investing for one reason: to make a return,” explains Fisher. “Recipients of funding in the live events arena need to be able to provide that return, otherwise the money will dry up and go elsewhere,” he says.
Tari echoes the sentiment. “These kinds of investors are looking for live events companies that already have a significant number of artists and a certain financial capacity – they aren’t concerned by the talent involved – it’s all about the financial potential.”
Get more stories like this in your inbox by signing up for IQ Index, IQ’s free digest of essential live music industry news, via email or Messenger.