[This article discusses the diminishing importance of the album and Azoff says that the tour is the most important thing. Album is an afterthought, now]
Billboard, January 25, 2003
BODY:
2002 was a record year for touring, with upward of $2 billion in tickets sold worldwide. And, increasingly, it appears that labels are casting a jealous eye toward the concert business as more than just a promotional tool for records.
"The touring industry is in better shape than the record companies these days," says Don Law, co-CEO of Clear Channel Entertainment (CCE), the world's largest promoter. "I would venture to say that touring is a more stable revenue stream for artists than royalties right now."
Veteran artists and their managers are well aware of touring's elevated stature-even in a world where live performances were already an important force. "I've always considered touring the biggest priority," says Irving Azoff, manager of such acts as Eagles and Christina Aguilera. "If you don't have a fan base from touring, you won't have to worry about how many records you sell."
A newer player on the national scene, Chad Kroeger of Nickelback, says his band has always placed the emphasis on touring. "Hardly any bands recoup [on albums], but every band knows how to make money on the road. More and more, it's turning out that these little discs are like greeting cards or previews of what your show is going to be like live."
As Goo Goo Dolls' Robby Takac puts it, touring is the new barometer for success. "You used to be able to base it on whether you were selling records, but the world's changed," he says. "Now it's based on the shows, and they're bigger and better than ever. We're getting our biggest numbers ever. Good cowboys hang on until the end."
Matchbox Twenty's Rob Thomas agrees. "It can't be about record sales anymore. We want to get to that point where you don't have to have a radio hit to sustain you. I don't think we're there yet, but we're a lot closer."
Touring offers a better profit margin and return on sweat equity for acts than recording and is an area where artists can still exert total creative control. In simple terms, an artist can expect to leave town with 50%-65% of ticket sales, which can be four times the artist's cut of gross CD sales.
"Artists are simply not making a fair amount of money on the traditional record deal," says John Scher, former promoter and current artist manager. "With touring, most artists are making a really fair amount of money, and everyone involved in the process is making a reasonably fair return on their investment and sweat equity."
The road is filled with artists who have continued to sell out concerts without the benefit of current radio hits, such as Jimmy Buffett and Billy Joel (and 2002's top-grosser, Paul McCartney). And those coming after them say they have learned those lessons well.
"From day one for us, we targeted touring," Kix Brooks of country duo Brooks & Dunn says. "We nurtured touring, because we knew that would sustain us after that point in every artist's career when radio falls off [and] record sales dwindle."
"We never trusted our ability to continue to sell records and have songs on the radio," partner Ronnie Dunn adds. "We're really shocked and amazed that we've been able to continue to do that, but our long-term plan was to do like Buffett and a lot of artists have done, where you can still go sing and play and do what you love to do if you bring them a great show every year."
The 2002 Billboard list of top tours bears out that touring often sustains careers when record sales are moot: Half of the top 25 touring acts did not enjoy hit albums for the year and in some cases did not have any current product at all. "The top touring artists to a large degree are way past their prime of selling records," Scher notes. "The industry has spawned this sort of second touring business of acts who aren't selling a lot of records [but are] doing profitable business for everybody."
SHOuld labels get a cut?
With touring revenue becoming more attractive, record labels appear increasingly interested in getting in on the action. In October 2002, EMI negotiated a deal with Robbie Williams that, in exchange for a healthy advance, includes a share of publishing, merchandising, and touring revenue (Billboard, Oct. 19, 2002). Additionally, BMG chairman/CEO Rolf Schmidt-Holtz has said that BMG will pursue similar deals with appropriate artists. Representatives for BMG and EMI declined to be interviewed for this story.
Such developments raise a big red flag for artist managers. "For many years-from the inception of our business, really-record companies have looked at touring as simply a way to sell records," says Tony Dimitriades, manager for such acts as Tom Petty and Fleetwood Mac. "Now that their business model is faltering, I'm hearing more and more from them, 'Well, you guys have the touring, and we don't have that.' I don't think that's for any reason other than they're trying to find more revenue. The record companies have no justification, in my view, to believe they are entitled to any piece of the touring pie."
Other managers share Dimitriades' dim view of the labels' motivation. "These deals are almost like arbitrage; it's like a banking deal. The labels are saying, 'We're going to use your money to mitigate risk and give you some return,' " says Jim Guerinot, whose clients include No Doubt, Beck, and Social Distortion. "The premise is that the labels should get touring money because [they say], 'We spend all the money getting the branding.' But by everyone's estimate, 90% of these acts fail. If you fail 90% of the time, how much is you and how much is the artist? If [labels] were successful with the artists 100% of the time, that may be different."
Buck Williams, booking agent for such acts as R.E.M. and co-manager of Widespread Panic, flatly states that labels "deserve zero" from touring. "Their mission has nothing to do with touring. They're in the business of selling records, and they believe that's the only career an artist has: selling records."
Scher says the industry is transitioning toward more partnerships in all phases of an artist's career. "It's a matter of throwing the old model out the window," he says. "I think we'll see both new and veteran artists entering into new arrangements where they are in a partnership with the record company and management." He says that "everybody involved in risk and decision-making" would be rewarded from such income streams as record sales, publishing, touring, and merchandising.
There are certain multifaceted companies that are already involved in tour earnings. "As a production company, we always have been a part of touring and merchandising, and as a management company we're always part of it," says teen-pop guru Lou Pearlman, who wears manager, label head, and tour director hats via his Orlando, Fla.-based Transcontinental companies. But, he adds, "on the record-label side, a straight record deal has never taken in touring and merchandising, because we've been told it would be a conflict of interest."
Some are taking a wait-and-see attitude as the new landscape develops. "To say we'd never consider it would be silly," Phish manager John Paluska says. "But I have a very hard time imagining us doing that. We control our publishing, merchandising, and touring in-house, and I know we all like it that way. I don't think in general that artists are going to be very receptive to that. It's important to have checks and balances."
Even so, record companies will always benefit, if indirectly, from tours. "This has always been a symbiotic relationship," CCE VP of touring Brad Wavra says. "Our job as promoters is to bring the same music to the masses, and if we do our job well, presumably you'll see album sales fall out of that in each market."
MAKING UP SHORTFALLS
Despite the decline in album sales in the overall market, managers do not expect a proportionate increase in touring activity.
"Phish is going to tour as much as they're going to tour," Paluska says. "It's never a conversation that we'd better tour more because people aren't selling as many albums."
Guerinot concurs. "I would never say, 'We sold half as many records; let's do twice as much touring.' "
Besides, because an artist is grossing more does not mean they are putting more dollars in their pockets. Azoff says, "Costs are so much higher, and facilities, promoters, and Ticketmaster are all taking off the top."
Guerinot notes that a number of current recording artists have been able to increase concert attendance despite a decline in their album sales. For example, he notes that No Doubt's 1996 album, Tragic Kingdom, sold 17 million copies worldwide. At that time, the Interscope act sold out two Los Angeles-area arena dates. Its current album, Rock Steady, has sold a fraction of Tragic Kingdom's numbers-2.4 million copies in the U.S., according to Nielsen SoundScan-yet on its latest tour, No Doubt sold out four Los Angeles-area arena dates. "And," Guerinot says, "I think people have the sense that No Doubt are bigger than they've ever been."
Once that touring base is established-as Paluska notes, with careful cultivation and respect for the fans-an act can go on forever. "It is a good feeling to know that for the Phish guys, nobody can ever take our live show away from us," Paluska says. "Their popularity will go through ups and downs, but [touring is] something that they can always fall back on. Musicians who can't do that face tough times."
|