The Growing Impact of Big-Name Music Monopolies
Editor's note: AlterNet is renewing its commitment to covering the arts and culture. As we progressives seek to tell the story of America and the change we want to make, and as we look to present progressive ideas to the wider population of Americans, it is through the arts that we are likely to make the broadest impact. Get our weekly Culture newsletterby signing up today.
The specter of hyper-conservative, long-despised Clear Channel still looms large over the media industry, with its fraught history and insatiable appetite. Though it was more visible in the news during the 1990s and early 2000s, the behemoth corporation remains the largest radio station owner in the United States; still controls a majority share of the billboards on the nation's highways; and owns a grip of news networks, radio stations and transmission towers -- that is, access to the internet -- across the country. Clear Channel has gobbled up radio companies for years to own a majority of FM, AM and several stations on Sirius satellite radio. It’s also the syndication company for inflammatory right-wingers like Rush Limbaugh, and renowned for its free-speech-squashing robo-channels. It was, and is, a sort of proto-monopoly for the internet age, a corporation with a conservative agenda that figured out how to gobble up platforms and rake in obscene amounts of dough (in 2008, the last year it reported separate quarterly earnings before merging with a Clear Channel parent company, it made $1.6 billion... in the first quarter). And with its stake in radio, clearly it was going to branch out into further music ventures, In 2005, when Clear Channel spliced its business into three in order to drum up its value, it created Live Nation its events promotion leg... setting the stage for one of the biggest chokeholds on venues, ticketing, recording, promotion and sponsorship this country has ever seen. And as other large music corporations seek to save their crumbling empires as the pro-business, anti-regulation GOP Congress ushers itself in, Clear Channel may have foreshadowed a nefarious future.
The curtain's already closed on the first act of this media melodrama. Last January, the Justice Department approved a Godzilla of a music merger––the union of Live Nation, a large-scale events promotion corporation, with Ticketmaster, the behemoth ticketing company reviled for its egregious “service fees.” For a year, consumer groups and Congress alike had rallied the DOJ to stop the merger, saying it would inevitably incur steep fees upon music fans and unfairly bar competition from smaller companies and promoters. The ever-awesome Bruce Springsteen got in on the act, too, saying, “The one thing that would make the current ticket situation even worse for the fan than it is now would be Ticketmaster and Live Nation coming up with a single system, thereby returning us to a near monopoly situation in music ticketing...."
And yet, the Justice Department paved the way for Live Nation Entertainment’s controlling interest in both high-demand tickets and large-scale venues, creating, in the words of the L.A. Times, “a goliath with hands in every pocket of the music business.” In other words -- a $5 billion company with a 90 percent market share. And it set a precedent. As the music industry continues to flail, smaller, independent labels and companies are relying on creative wits, but larger corporations are reacting with staid, Gordon Gecko-era hunter instincts. Law of the land––big animals move slow. As major stakeholders bleed income and are seemingly unable to adapt to the Internet era, will more monopolistic moves become standard?
In the wake of the major merger, Live Nation had a rough year when it came to filling seats, in part a result of the economic downturn and a slowdown on big tours from high-grossing acts. Despite that, their copious equities and assets strengthened their grip on the way consumers experience live music––not only was America’s biggest online ticketing presence in their coffers, they’d shrewdly gathered controlling interests in similar ventures across the globe.
In the clinical language of America Banking News, “Live Nation owns, operates, and has booking rights for, and has an equity interest in 142 venues, including House of Blues music venues and locations, such as The Fillmore in San Francisco, the Hollywood Palladium, the Heineken Music Hall in Amsterdam and the O2 Dublin. The Company operates in three business segments: North American Music, International Music and Ticketing. On February 10, 2009, Live Nation acquired Ticketmaster Entertainment LLC (Ticketmaster). In February 2009, the Company acquired a 51% interest in Brand New Live B.V. (Brand New Live), event and magazine assets in the Netherlands for the Pleasure PAAS Party and in March 2009, it acquired a 77.5% interest in Tecjet Limited (Tecjet). In December 2009, Live Nation sold 20% interest in Marek Lieberberg Konzertagentur (MLK).”
That's a lot of swagger in an industry that, in the scheme of things, doesn’t yield that many huge-draw acts, globally. Clearly, the company’s bottom line is padded with assets. Not mentioned is the fact that, for over a year, Live Nation has essentially been acting as a record label, signing all-encompassing deals with artists as huge as Madonna, Shakira and U2. And Jay-Z, arguably the biggest rapper of all time, signed a 2008 contract with Live Nation for over $150 million, licensing his records and tours for 10 years, plus receiving financing for his own label. The New York Times said the deal “reflects the anarchy sweeping the music business.”
Now Live Nation is working on its own true record label to compete with the big four music labels, Sony, Universal, Warner and EMI. And ironically, another monopoly hangs in the balance; with EMI teetering on the edge of bankruptcy, the big four may now become big three, if Warner Music is allowed to circumvent antitrust laws and acquire the company. This will translate to higher prices, fewer choices and more lobbyists in DC gunning for control of the Internet.
Last week, as a Goldman Sachs analyst predicted a big 2011 for Live Nation with the impending tours of mondo moneymakers like U2 and Lady Gaga, the company laid off potentially hundreds of employees. It’s the second time it’s done so this year since joining forces with Ticketmaster––a reaction to 2010 losses amounting to 12 percent below its 2009 bottom line. Tellingly, Goldman Sachs attributed the downward slide to the fact that two-thirds of the touring industry gained its income from acts averaging over 45 years old, as attendance by 12- to 24-year-olds declined. The age gap is a direct link between ticket prices and earning power (not to mention the fact that there are, unfortunately, a finite amount of Justin Biebers to lure in the teen and tween set).
Meanwhile, a much smaller case filed in Denver, Colorado, shows that potential anti-trust issues aren't just relegated to corporate giants. Last week, a Denver-based music promoter, Regas Christou, filed suit against rival club owner Brad Roulier for alleged anti-competitive behavior. The suit states that Roulier used Beatport, the high-profile electronic music site he co-founded, as a bargaining chip when booking A-level DJs for his nightclub, Beta. According to the Denver Post, the lawsuit also claims that the defendants sent “the message to DJs that if they want full access and promotional support from Beatport, their only Denver performances will be at Beta” and “have resulted ‘in higher prices and fewer offerings for consumers.’"
Beatport is extremely important in the electronic music community––think of it as iTunes tailormade for DJs––and a shining example of successful innovation in a changing music industry, so the allegation is shocking. Roulier’s lawyer told the Post that the lawsuit came as a surprise, noting, "I think that Mr. Christou is really mistaking Beta's popularity among the artists and the public as being unfair competition. That's what this suit may well be about." Comments on various dance music sites within the Denver music community allege that Christou is not so saintly -- the owner of several dance clubs himself, it was he who had a monopoly on the club scene until Beta came along -- and there does seem to be a consensus among fans and DJs that Beta, like Beatport, is simply well-run and popular. But regardless of its outcome, the suit illustrates the importance of ethics and transparency for businesses that have several interests in the same industry.
There is a silver lining to all of this. An increasing number of artists are making allegiances with independent labels or releasing their music themselves, and booking their tours with smaller companies and promoters across the country. What was once considered “punk” or DIY behavior is now just a standard necessity for mid-level and smaller acts who hope to at least break even on their live shows.And as the behemoths continue to power up and gobble venues and acts, more and more music lovers are digging deeper for smaller musicians––enabled, beautifully, by the Internet that is forcing the monopolistic music industry to crumble. Smaller is, after all, stealthier.