If he wanted to, Michael Rapino could afford to rest on his laurels.
Under his leadership as President, CEO and Director, Beverly Hills, Ca.-based Live Nation Entertainment recently enjoyed a banner year in 2016 - its sixth in a row: revenues were up 15% to $8.4B (U.S.); operating income increased by 48% to $195M; concert attendance registered a 12% increase to 71M people.
In fact, all four core divisions of Live Nation Entertainment - concerts, ticketing (they own Ticketmaster), sponsorship & advertising and Artist Nation, a management firm - experienced impressive growth during Rapino's 11th year at the helm.
With some justification, Live Nation lays claim to being the top music brand in the world, annually promoting 26K events in 40 countries, issuing over 480M tickets, partnering with 900 sponsors and managing the careers of more than 500 artists through 140-plus managers.
But during his keynote interview at Canadian Music Week last Thursday, one got the impression that the native of Thunder Bay, Ontario not only has no intention of quitting, but, in many ways, is just getting started.
He talked of his love and obsession with live music, triggered by a Jeff Healey Band concert he promoted at a Lakehead University bar. He subsequently became obsessed with Toronto-based concert promoter Michael Cohl and Concerts Production International - and began his post-university career as a sales rep with Labatt Breweries.
"I wanted to be Michael Cohl," he told interviewer George Stroumboulopoulos. "I wanted to be the guy that was involved in this thing called touring. I had a passion for the live business, and then my discipline kicked in after that to say, 'How am I going to end up running this?'"
Rapino credited his determination and work ethic for his success.
"I was a big believer that you had to kick doors open: new experiences, lateral moves, backward moves, don't worry about money, just keep getting better experiences," he admitted. "I was fairly determined."
He became a partner in Core Audience Entertainment, later purchased by Clear Channel, and helped found Live Nation in Los Angeles in 2005.
Now a public company, Live Nation has since benefitted from constant growth and expansion, with Rapino saying he has a very supportive board of directors behind him.
"I don't run it any different than Phil Anschutz runs AEG. Most owners want the same thing - they want it to do better next year than it did this year. We don't ever make short term decisions. You don't ever hear us talk about stock prices. We've been playing long ever since we went public 12 years ago. We have a $400M - $500M market cap, today worth $7B with 30,000 shows. But we've never made short decisions. There's been no 'we have to do this by some quarter.' We make long term decisions and those long term decisions are either sometimes investing in artists and contracts that are long term."
Here are a few points that Rapino touched on during his 60-minute interview...
On the secondary ticket market:
"We started this thing called Verified Fan (through TicketMaster). The problem with our business is that we're still trading the bar code. As long as we're trading on the bar code, we're still a business that can be hacked. The minute the bar code goes away and the digital ticket comes alive, you have a whole other thing. The content owns the ticket, whether it's the sports team or the artist, so they should be able to set the rules of the ticket, set the prices on the ticket and capture all of the dollars from the ticket."
(Note: The Verified Fan program was recently employed by Twenty One Pilots to help combat scalping for an upcoming series of five dates in June that will see the Grammy-winning duo play venues in their hometown of Columbus, Ohio ranging from the smallest (the 300-seat Basement Club) to the largest (the 18,809 Schottenstein Center.) Fans that bought a ticket had to show up to the venue with ID and show a unique code that allowed them access to the venue.
"I think we walked away and if the early data says anything it says that we definitely put obstacles in place that blunted the scalping community from getting their hands on more tickets," band manager Chris Woltman told Forbes last week. " I know that we can sit here and confidently say that we put the vast majority of tickets into our fans’ hands. And where we didn’t, the tickets that are on the secondary market is a significantly smaller percentage than any of our shows in the last year.")
Rapino says that Live Nation Entertainment will do whatever it can to help discourage the resale market.
"We're going to do what we can to either give them the technology, like we did for Twenty One Pilots, help them limit access so that fans can buy it at whatever price they want - we're going to give them better pricing tools to say, hey, you can charge $200 if you want, and get them thinking about charging better so it's a complete free market. I think content will win in the end."
On proposed government legislation to help curb ticket scalping:
"My instincts are always on free market," he said. "There's nothing more in the world that I'd love if tomorrow there was some universal law that said you can't sell tickets. Perfect. Then we'll just worry about what we do, keep it in the gross and go from there.
"I just think it's so unrealistic. You do a digital ticket, then they buy portable phones. You do gift cards; they buy gift cards. This is real dollars. So I don't think you can legislate $8B (the estimated value of the secondary ticket market). As long as the market is gigantic, then you will have sophisticated players trying to figure out how to monetize this. So I think that some of these are decent attempts, but I don't think overall, until you start pricing the product better, and/or have better technology to deliver the fan their ticket, that it will start to make a difference.
"Listen, scalping was outlawed in Ontario forever, and you've been able to buy a ticket through StubHub for the last 10 years to every game and every show. Sites are available in Buffalo to go buy Canadian events. Being illegal for the last 10 years meant nothing, so I don't think legislation can get you there."
He's also not crazy about Ticketmaster being in the ticket resellers market, but says it's a necessary evil.
"We, as a company Live Nation, our No. 1 goal is to make the gross as big as possible," said Rapino. "So I wish we didn't have to do TM Plus. I don't want to be in the secondary business at all. I wish we could take that - they say it's $8B - that's sports, but whatever the billions are, I wish we could put it all in the gross, the artist should get most of it and then us as a promoter, we get our slice. That's the best. So price it right, right? We're the only industry in the world that has a higher retail value the second it's sold. It's not normal. I get it. Now, I'm going to go to the reality. That artist - Bruce Springsteen - doesn't want to say, I'm charging $4200 for the front row. That's not aligned to my brand. That's not what I want to do. This isn't Bob down the street scalping: This is a real arms race industry now. You leave that much money, you've got the pros bots technology, and you're going to leave $8B on the table? Then we're going to mobilize.
"So now you have this whole industry - we have bots coming in from Eastern Asia, this whole globalized business now of secondary sellers, they're not the bad guys - they're just taking advantage of a market reality. That's alive and well, and any regulation won't work. So what you got to do eventually is we got to get prices up - not all the way - to at least do platinum seats and VIPs - price some of front of the house more realistic, charge less in the back."
What the artist requires from Live Nation Entertainment:
"At the core, we've got to be valuable to the artist. That's our only job at the end. To be good in the business today, I don't need to do shots with the artist.. What's relevant to that artist, is, can you get my job done? Are you on top of technology and media and reach trends that are out there? Are you living in your isolated music bubble or do you understand the global business as well as the technology? I'm spending more of my time making sure I get all of those business relationships cemented."
On the state of Live Nation Entertainment, which Rapino defines as a "B2B" brand:
"We have a huge business right now; we have a lot of great staff. It's very decentralized. What I love about what we do is the Insomniac guys or the Festival guys or the artist-management division have all these different businesses that we're partners in. We get very incredible access to skill sets of people other than your concert promotion lane. That whole world of understanding technology and APIs and CTOs and understanding the product feature functional set: that's an incredible experience of getting deep with all those young engineers and programmers. That's been a great exposure at hiring the best. The artist-management division gives you a whole view of what they really want from the promoter and the label and what promoters and staff and their digital team and you have to know Facebook and what you're going to get done in today's marketing business. So we've been fortunate to keep diversifying our businesses which get us the different pieces of the new ecosystem. From there, we learn."
On taking care of their own:
"I feel a moral responsibility that these 20,000 employees do well on this ride, too. Along the way in the last few years, if you want to look at what my mission is in Live Nation, you really want to get close that service/leadership style versus management. If there's any employee in this company that's got a real dire problem, we're going to take care of them. So we set this up four years ago, it's called Take Care of Your Own. I didn't know how powerful it was going to be. I got 400 e-mails after a Town Hall call. I responded to all of them. Some of them were moving: 'I'm a single Mom and I can't pay the rent by Tuesday and my husband's beating me and I need to get out of here. I need $5000.' We've done about 600 or 700 of those Take Care Of Your Own programs, and that's probably what I'm most proud about. Because, if there's anything, ultimately we're going to get done in Live Nation, other than what we're going to get done on a day-to-day basis, taking care of our artists, is that we're truly in the service business with these 20,000 employees are it. And if we can provide some level of support for those that aren't going to get it from another system."
On the future of concert promotion:
"There are more artists today than ever who say, I want to be a live performer. There's more supply than ever. You now have a global customer. That 19-year-old girl in Colombia knows the artist. She no longer has to wait for MTV or MuchMusic or anything else to discover them. You can't export an industry like music does. Rihanna is a global exportable business. Now all that's happened is that the world has opened up to her. We used to do 100 dates: That would be 60 in North America that was the money; 30 were in Europe and the remaining 10 would be throwaways. You sit down now and you're doing maybe 40 dates in North America, 30 or 40 in Western Europe - a full Latin America now that is on fire. You've got an Asian run that can make you money. I wouldn't say China is hot right now. But the zone is on fire. That's why we have offices there. When you can say to an artist, hey, you can do a stadium tour now and there are 14 dates in the Pacific Rim - maybe Asia, Australia, and upward - that never happened before. You can play that and Coldplay can do the same gross as Minneapolis and Detroit. So now that the world has opened up, our artists can go anywhere, because the consumer base has a much bigger appetite than the amount of Rihanna dates available. We're spoiled in Toronto - we think this is how the world is: The rest of the world didn't get 70 concerts a year. They didn't even have an arena. From a global standpoint, that 19-year-old girl in Colombia, who now gets to see a Lollapalooza date we do there or a festival or Neil Diamond or Metallica, that's where the trend is, a global trend."