Live Nation Entertainment's Business Strategy

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11th Jun 2020 Business Assignment Reference this

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Abstract

Composed of four major divisions; Ticketmaster, Live Nation Concerts, Artist Nation and, Live Nation Media & Sponsorship. Live Nation Entertainment is the world’s leading ECommerce and Live entertainment company. They are accomplishing a well thought out approach to consolidate the unique content elements of their foremost concert company. Now holding command on the world’s online ticketing market, Live nation has skyrocketed past its competitors in all areas, including event promotions and national concerts. Even with this achievement, there is still an opening for the publicly traded company to expand and progress. This analysis will reveal how Live Nation has become the best in their business, what they are doing to keep that status, and the factors affecting them, along with their other business strategies and its internal environment.

About Live Nation Entertainment

The world’s leading live entertainment company Live Nation Entertainment (LNE) ‘produces more concerts, sells more tickets, and connects more brands to music than anyone else in the world.’ Producing over 29,500 events in 40 countries in the past year, Live Nation Entertainment, Inc. is a company dedicated to its core value of maximizing the live concert experience. From its first start as SFX in 1997 to the completion of Live Nation Entertainment in 2010 after buying Ticketmaster and a portion of Roc Nation, the goal of becoming consumers number choice has always been in mind. When CEO Michael Rapino came into office and the company went on to the NYSE, the company’s whole demeanor had changed, deciding that his main goal was to downsize and specialized. From cutting jobs, scaling back offices, and even selling the North American theatrical business to prove a point. At the beginning of 2010, Ticketmaster was acquired with other businesses as well as partnerships with major companies such as Groupon NFL and Hilton. The concert business has been completely transformed due to the Live Nation artist to fan vertically integrated platform. By using their four divisions, each with its individual strategy and ways that are aligned with the corporate vision to create and perfect concert/live entertainment industry.

Mission, Vision and Values

Live Nation’s mission is “To maximize the live concert experience. Our core business is producing, marketing, and selling live concerts for artists via our global concert pipe”(Live Nation, 2018) . “Artist powered. Fan Driven. We are Live Nation”. Live Nation’s purpose is to maximize the live concert experience. Our center company is producing, marketing, and selling live performances for artists through our global concert channel.  With a company of this magnitude, they use their position to help them get what they want and create a better image of themselves. The companies split between Sponsorships Ticketing and concerts have created model ideas that align with the corporate vision to continually enhance their core concert/live events business. By creating six beliefs to live by on their website, they give consumers and those interested a look into the company in a more creative way by saying they live for; Artist, decentralization, ideas, entrepreneurship, focus, talent and, taking care of their own. Each belief comes with its Summary of how LNE accomplishes these on a day to day basis.  However, it does not stop there. Live Nation has set Zero Waste goals and even hires a sustainability staff at their venues that the most detrimental. Back in 2011, Live Nation formed a Green Sponsorship alliance with its man packing, shipping, and logistics sponsor UPS. With this alliance, they are trying to reduce waste and use more efficient products and services on all live nation tours and venues. With the promise of end sale of single-use plastics at all owned and operated venues and events by 2021, Aim for our offices, venues, and events to be zero waste to landfill and achieve a 50% (or higher) material recovery rate by 2030. (Sloan, 2018) They even go as far as paying workers if they also choose to be involved in helping. “Every employee receives five paid days off to engage in charitable functions and volunteering for causes important to them.” In a pamphlet made by their marketing time, they explain the demographics of those using their companies and how they feel about not only the company but the world and what they felt needs to be done. This pamphlet shows their commitment to their consumers and what makes them the number one in their market.

Organizational Culture, Structure and Corporate Strategy.

In April of 2019, Live Nation Entertainment was listed as one of People’s Top 50 “Companies that care.” As the global leader in live entertainment, Live Nation strives to set new standards for the music and entertainment industries and was proud to represent as the only company honored from either industry. (Live Nation, 2019) By utilizing People and Team Orientation and following afterward with innovation and risk-taking, LNE captures many indispensable components of Organizational Culture. Called “Taking Care of Our Own,” LNE created six programs that aim to help employees live more balanced and fulfilled lives with holistic support themes. “Our people are the heart and soul of our company, and my top priority is making sure Live Nation is a great place for them to work,” said Michael Rapino, Live Nation Entertainment, CEO.(PRNEWS, 2019) They go above and beyond for their workers by giving more than the standard healthcare and 4O1k. With things like student loan repayment, gender reassignment surgery and, IVF coverage, they genuinely make those working for them feel at their peak to perform the same. When it comes to the actual structure of their business, they take a unique approach by using a matrix.  By combining multiple organizational forms that create multiple channels for reporting and relationships, they conceive the best for their vertically integrated concert and promotions business. This matrix system allows top tier leadership to split and carve business units by their own needs and priorities. By having this matrix system, they have formulated the optimal way for them to work together and individually to stay on top of all long- and short-term goals between segments. Live Nation’s corporate strategy to develop the corporation vertically and extend worldwide through consolidations and acquisitions demands a substantial stake in crucial help with verified outcomes and unparalleled abilities in specific fields. Fortunately, unlike some of their immediate rivals, Live Nation is a publicly traded company, which allows them the capability to give stock as an incentive to draw those people.

External Environment Scan

Being at the top of their Industries has many perks, as well as many factors that can stop them. While having many exclusive partnerships with artists and venues, it can be tough to keep up with their demands since artists have the upper hand in the bargaining aspect. In this day and age, with social media and television, it is easy for an artist to make a name for themselves. The cost to secure a performer directly depends on their social status. This can mean good and bad news for LNE. While the price of an artist may be less, it can also affect the number of seats they sell, which affects overall revenue. An artist like Ruel can be booked for 2000 plus Rider requirements, and he will only be likely to sell around 800 tickets. Iconic Stars such as Harry Styles will cost over 1 million for a single hour performance, not including rider requirements that they need to put on their elaborate show. That elaborate show made roughly $1,302,904 in revenue just only on the sold-out Sunrise, Florida June 7th, 2018 date. (Aswad, 2018) With numbers like these artists and their managers can begin to try and make more by doing exclusive shows or even doing bigger venues like doing stadium only tours. This put live Nation at a point to negotiate with those venues for those things. If they are not able to reach an agreement with these venues or artists, there is a possibility that they might switch over to competitors like Eventbrite and Ticket Alternative. Why all these competitors do not hold the same level of the platform as Live Nation, they are starting to make a name for themselves. Now with YouTube and Eventbrite’s partnership in which fans can directly purchase Concert tickets through the musicians’ channels, leading to Eventbright, it gives them leverage.(Alexander, 2018) Live Nation must work harder to keep relationships with artists and venues. As for their biggest rival, AEG holds just 4.8% of the market in comparison to the 16.2% held by Live Nation.(Insights, 2019) Both companies are using  360 record deals in which gives the company authority and a portion of all of the artist’s earnings, including record sales, touring, and merchandise endorsement deal in exchange for monetary support and business connections. This gives both companies a fierce competition and now that AEG has their own ticketing website axs.com they can genuinely keep up with Live Nation(Sisario,2011). With AEG and Eventbrite as direct competitors in the ticket sales aspect, indirect competitors may hinder as well.  The entertainment facet of business would have Disney as a rival. International Creative Management would be the talent agency and sponsorship opponent. These companies have a particular central focus they stick to while Live Nation Entertainment balances all three.  Macro-Economical factors also play a significant role in Live Nation Entertainment. The rising risk factor of gun violence has affected how Live Nation and its consumers look at safety. In 2017 there were two major concert attacks, the Ariana grande manchester concert ending in 59 wounded and 22 deaths and the las vegas concert massacre killing 58 and wounding over 850 (Corcoran & Choi, 2019). These events have caused event-goers to be more cautious, even caused some to stop going 100%. Live Nation has begun outlining new security measures to ensure fans’ safety at future shows. Live Nation issued a statement to venues and attendees that noted that “Due to enhanced security procedures, no bags or backpacks will be permitted into the venue except for small personal bags or purses (12″ x 12″x 6″ max) or clear 1 gallon bags.(Newcomb, 2019)” They have also stepped up their bag and security checks and have made a long list of things that are no longer permitted in personal baggage and have created cut off times to ensure all doors and areas safe and secure once a concert has begun.

SWOT Analysis

Strengths

  • Partnerships
Weaknesses

  • Ticketmaster Interface
Opportunities

  • Venue Ownership
Threats

  • Artist Retention

Strengths

Live Nation had sold over 530 million tickets last year, and with each sale came information and data about those buying tickets to help other major brands. We do not believe in traditional sponsorships. We believe in strategic partnerships that solve real problems for our clients and forge meaningful, long-term relationships with their consumers. We give brands a role in music culture and establish an authentic language to communicate with fans through impactful creative work.(LNEB,2019) “If you looked at the business ten years ago, brands were interested in simple things [like] entertaining. They were doing a lot of sports sponsorships,” Russell Wallach, president of media and sponsorship at Live Nation, said. “In the last four or five years, brands have realized that the absolute best place to reach Gen Z and millennial consumers is at live events.(Ktjrichards, 2018).”  According to research from Live Nation’s “Love for Live” study, 99 percent of Gen Z and Millenials said live music is essential to them, while 62 percent said they absolutely could not live without it. By creating partnerships and sponsorships, it brings big brands to the people without having to take away from experience. Like in may of 2019 Gildan announces the launch of a multi-year partnership with Live Nation, featuring it’s American Apparel® brand, as the official printwear partner across 16 Live Nation® music venues and six music festivals (Gildan Activewear, Inc, 2019). While you might not see it as a partnership, it gives Live Nation a discount when it comes to merchandising  and helps Gildan secure more people buying their products. Live Nation Experiential creates unforgettable live music moments that help our partners stand apart from the rest. Servicing our B2C and B2B clients, we create over 150+ global brand experiences every year, including festival activations, custom concerts, and hospitality events and even creating a platform for a new artist to get their start with their One to Watch break out the artist of the month

Weaknesses

While Live Nation Entertainments’ acquisition of Ticketmaster was a win, it was also a loss. The interface of Ticket Master has several flaws that cause consumers and box office managers not want to use interface. The idea of creating a verified fan presale was just that an idea one it came down to the execution of it; it has caused nothing but more stress and heartache for individual fans. The Verified Fan presale was a system in which fans signed up ahead of time for a code to but tickets ahead of time. Only for scalpers and bots to be able to do the same and take the majority. This recently happened with the fan presale for Billie Eilish to the point she had commented on the issue. “You guys broke TicketMaster lmaoooo, but we fixed it. If you got a presale code but weren’t able to use it this morning, check your texts and get them tickets. For everyone else, tickets go on sale tomorrow. Love you.” (Cirisano, 2019). Her laughing message did not stop many fans from being outraged over this issue. It then became even worse when a sold-out show changed venues, and instead of honoring the floor seats bought by fans, they were given nosebleeds since the event was at a bigger arena. Issues like these anger fans and drive other second-hand ticket sellers to do better.

Opportunities

With ownership or equity in over thirty concert venues, Live Nation Entertainment still trails behind AEG. Philip Anschutz’s privately-held company controls numerous iconic venues, including Staples Center in Los Angeles, the O2 in London. “We’re seeing more and more opportunities… to have some equity ownership and control in some great assets,” Rapino said in Thursday’s earnings call. “We should capture not just the [entertainment] content, not just the food and beverage, but the equity value of the real estate holdings over time, too.(Mandell, 2019)”

Threats

Artist Retention is a significant factor that must be considered a threat. An artist’s tour can be canceled at any moment for multiple reasons, and the same can be said about their popularity. At their peak, artists can sell-out tours in minutes, but once they are beginning, some decide it is not exactly what they want and pull out. This is causing a loss for everyone, but most fans and Live Nation. Cardi B canceled over 12 shows in order to recover from her plastic surgery and even walk off stage midway through a show she told the crowd, “I have some news for y’all.” I should have canceled today… I shouldn’t really be performing because moving too much is gonna (expletive) up my lipo.”(McDermott, 2019) Alternatively, in cases of an artist going through their issues like Metallica canceling its upcoming tour because of a member entering rehab. The rise of one-hit wonders has also caused issues with artist retention. If the artist can no longer create albums or eps, they will lack content for a tour, making it harder for Live Nation to market them.

Competitive Strategy

Differentiation strategy is when a company seeks to be different in its industry, accompanying some factors that are usually valued by buyers. This picks one or more properties that numerous consumers in the industry recognized as essential and uniquely places itself to meet those needs.  Live Nation has found success in this business by following a focused differentiation strategy. In their words, “Our core businesses surrounding the promotion of live events include ticketing, sponsorship and advertising, and artist management. We believe our focus on growing these businesses will increase shareholder value as we continue to build all our revenue streams and achieve economies of scale with our global platforms.”(LYV, 2013).”

References

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