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Rapino: Live business going to boom post-Covid

The live music industry is gearing up for a huge 2022 as the concert market explodes post-Covid-19, Live Nation president and CEO Michael Rapino has said.

Speaking to writer Bob Lefsetz, Rapino said Live Nation’s stock – currently priced at US$80.72, above its pre-pandemic high of $75.54 – remains so valuable because financial analysts are expecting a live entertainment boom as the final coronavirus restrictions are lifted in the US and internationally.

“Wall Street’s buying the future, not the present,” Rapino explained. “So if you’re an investor looking at Live Nation, you’re probably saying, ‘Well, I think this live experience business in general is going to boom. We see that happening.’” Wall Street would have been particularly encouraged by the low rate of people returning their tickets for cash and Live Nation’s extensive programme of cost-cutting (estimated at $800 million as of this time last year), he continued: “If you’re an investor and you’ve already valued me at $75 going into the crisis, you’ll be sat there saying, ‘What do I think about the future? I think they’re going to be leaner than they were before they went in, so they’ll make a bit more money. I think there’s a boom happening. And [I think] this thing called live must be really, really valuable to customers, because there’s not even cashing it in in one of the greatest crises in history. So I want to bet on this category, and I want to bet on the market leader.”

Rapino was the guest on the latest episode of the Bob Lefsetz Podcast, where the wide-ranging conversation with Lefsetz also touched on topics including sponsorship, secondary ticketing, global touring, the festival market and the uniqueness of the live experience.

Comparing recorded to live music, Rapino said: “I think live is, is very, very unique. It’s the only unduplicatable asset that’s really survived this entertainment revolution. Everything else pretty much got duplicated and digitised. And that’s great, but those goosebumps you get when you watch the Eagles, [for example], you don’t get that on an iPad. So we have this very unique industry that is not duplicatable. And in a world where everything else has become duplicatable and commoditised, I think this category has a long life.”

He elaborated: “You know, when the when the crisis happened, there were people on Wall Street and elsewhere that were saying, ‘Oh my God, no one’s gonna ever gather again, we’re all going to be living in our houses forever, no one’s going to go to a movie theatre or concert.’ But I always remember it was the May long weekend [in 2020] and there was a CNN report from the Ozark lakes, where everyone was partying like crazy, and in the middle of this crisis with no vaccine. That moment showed that, no matter how dangerous it was, people still wanted to gather people, they wanted to get out.

“We have this very unique industry … in a world where everything else has become duplicatable and commoditised”

“And the market started to realise: Wow, this is really going be a pent-up demand situation when when we can gather. People are going to want to come back to shows, to go to Disneyland, do all the good things they do when when life’s normal.”

In addition to speaking about the market and live music’s recovery, Rapino returned to a favourite theme: The need to more effectively price shows in order to minimise the secondary market, something he discussed during his keynote at ILMC back in 2016.

“There’s still billions of dollars in secondary business out there, so we know we’re not pricing the house right,” he told Lefsetz, “so we have opportunity to at least get some of that front-of-the-house economics for the artist. [N]inety per cent of the shows I’m dealing with in life are not selling out, so I don’t ever have a problem selling the front part of the house. I do have a problem selling the back part. It’s about pricing, not awareness, so I’m always going to try and convince an artist to redistribute the pricing to see how low can we get the back end of the house – and probably subsidise the back of the house from the front of front of the house – so we can get that perfect sell-out.”

On festivals, Rapino discussed how the market has evolved to a place where niche formats have become more important, accelerated by the pandemic shutdown. “A little bit of a shake-up happened, and probably Covid did help – we’ve even shook out a few; I think we’ve shut down 12 that weren’t working that we didn’t love,” he explained. “And I think you’re seeing the bar getting higher to make a successful festival work.”

Now, he added, “I don’t think all of a sudden you can just launch a main line festival with three different genres of music over the weekend and expect 100,000 [people] anymore. I think they became like any industry: they went out wide, then the big ones survived and the niche ones started to create their own space. We see it happening now: a niche idea in a good location, against a certain genre of music or a certain theme. […] I like the super-served ideas where they’re hitting a certain target, or a certain location, and they’re less talent-reliant because they have more of a thematic soul to them. And those ones tend to work.”

Listen back to the full interview on the Bob Lefsetz Podcast.

 


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“Bring on the Roaring ’20s”: $97 target for LN stock

Financial research firm Wolfe Research has begun coverage of Live Nation, assigning the company’s stock an ‘outperform’ (ie strong buy) rating ahead of the resumption of live entertainment activity later this year.

In an announcement, titled ‘LYV: Bring on the Roaring 20s – Initiate with Outperform’, that the company is initiating coverage of Live Nation stocks (which trade on the New York Stock Exchange under the symbol LYV), Wolfe analyst John Janedis says the promoter is “poised for a multi-year cycle of strong growth as the reopening accelerates for a business that will have the tailwind of favourable supply/demand and a structurally stronger margin profile coming out of the pandemic”.

“LN will have the tailwind of favourable supply/demand and a structurally stronger margin profile coming out of the pandemic”

Channelling Marc Geiger in predicting a second “roaring twenties” for live entertainment, Janedis says he also sees Live Nation growing its already dominant market share post-Covid-19 “given its scale and vertical positioning within live entertainment”.

Wolfe has given Live Nation shares a price target of US$97 by the end of 2021. At press time, LYV stocks were worth $85.80; they reached an all-time high of $92.86 on 1 March.

Other analysts covering Live Nation stock include JP Morgan, William Blair, Morgan Stanley and Northcoast Research.

 


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Live Nation’s share price reaches all-time high

The share price of live entertainment behemoth Live Nation has scaled new heights this week, despite the fact the vast majority of live shows have not been able to take place for the past 10 months.

On Tuesday (19 January), Live Nation’s share price hit an all-time high of US$76.54 – which has more than doubled since its slump to $29.50 in March last year, amid the cancellations and postponements of live shows.

The record-high share price comes after the company acquired a majority stake in Veeps, a ticketed livestreaming platform developed by Good Charlotte’s Joel and Benji Madden.

Veeps is Live Nation’s first major acquisition since the pre-Covid-19 era and a strong indication that livestreamed concerts are here to stay.

Live Nation’s share price hit an all-time high of $76.54 after the live entertainment giant acquired a majority stake in Veeps

“Livestreaming is a great complement to our core business, and essentially gives any show an unlimited capacity,” said Live Nation CEO, Michael Rapino.

“Looking to the future, live streams will continue to unlock access for fans – whether they are tuning into a sold-out show in their hometown, or watching their favourite artist play in a city halfway around the world. The most critical element of live streaming is the artist on stage, and with Live Nation’s unmatched inventory feeding into Veeps, together we will help fans enjoy more live music than ever before.”

Live Nation’s stock has steadily climbed after its 52-week low in March 2020, with the company offering drive-in shows, live streams, and new content through its Live From Home virtual music hub throughout the pandemic.

In November last year, following early results from the world’s first effective coronavirus vaccine, Live Nation share price soared by 22%.

Prior to that, Live Nation-owned Ticketmaster unveiled SmartEvent, a new suite of technology will equip event organisers to meet the evolving needs of capacity, distancing and other logistics.

Live Nation’s share price stood at $74.59 yesterday (21 January).

 


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