Four years ago, Live Nation didn't even exist. Today, it's on the verge of assuming a position that bestrides the music business, by merging with Ticketmaster, the world's dominant ticketing and artist management company. Already Live Nation has an extraordinary track record, having persuaded some of the world'sbest-known music artists, such as Madonna, U2, Jay-Z and Shakira, to sign up to its "360 deals", which allow the company to make a singlepayment for the right to make money on everything from recorded music to concert ticket sales, merchandising and official websites.
Live Nation is also the world's biggest concert promoter, staging tens of thousands of events a year across the globe. In Britain, it runs some of the summer's leading festivals, including Download and Wireless, and some of the country's most famous theatre venues including the Lyceum in London and the Palace in Manchester.
Now Live Nation's chief executive, Michael Rapino, is in talks with Ticketmaster to create a new company that would dominate the world of music promotion and have even greater control over ticketpricing. Neither company is talking publicly, but reports suggest the deal could be done by next week.
News of the merger brought concerns yesterday in some other sectors of the music business. AlisonWenham, who is chairman of both the Association of Independent Music and the Association of Independent Festivals, said that such consolidation of large companies was not helpful in the creative industries.
"It's not serving the economy very well or the kids of this country very well. It's ultimately a big business agenda," she said. "As a merged company, they will be looking for exclusives and will use their power in a way that's detrimental to smaller operators."
The formation of Live NationTicketmaster would have a vastroster of globally recognised artists, following Ticketmaster's acquisition last year of Front Line Management, which handles the affairs of more than 200 acts, including The Eagles and Christina Aguilera.
As Ticketmaster has moved into artist management, so Live Nation has launched its own ticketing service, and in doing so broken from an arrangement with Ticketmaster, as the two companies have extended the scopes of their operations and become the most powerful players in live music. A merged company would be well placed to exploit fresh sponsorship opportunities, matching brands with specific artists and their music. It has been suggested mobile phone companies might wish to sponsor a concert tour while simultaneously offering subscribers exclusive music content from the artist.
The music industry was oncecontrolled by five record company giants, but the impact of the internet and the culture of illegal downloading have undermined the industry's traditional model. A complete re-evaluation of the relationship between music consumers, the artists and the companies that manage them has acknowledged the growing importance of revenue streams from ticket sales and merchandising in an era where many have come to regard recorded music as a free commodity.
Alan Edwards, chief executive of the Outside Organisation, which works for such artists as David Bowie, The Who and Amy Winehouse, said consumers appeared to think that live performance offered better value for money than a paid-for CD. "If you pay £40 for a Prince concert, you still know you are going to get a great night, whereas people buying a new album from an artist are taking more of a shot in the dark," he said. "People are also realising how special some of these established artists are. A hundred years from now, people will be listening to The Beatles, Led Zeppelin and Bowie; you can look at them in a similar way to the way people looked at Beethoven and Mozart."
Live Nation, which likes to describe itself as "the future of the music business", recognised the importance of live shows and that some artists were worth far more than the value of their CD sales, and began offering staggering up-front payments for its 360 deals. Madonna was lured from Warner Music, her record company for 25 years, with a $120m (£83m) deal that signs her up to Live Nation for 10 years. In April last year, the New York rapper Jay-Z negotiated a similar arrangement for a payment of $150m.
Yet the onward march of this young company has met with numerous pitfalls. In December, U2 cashed in on the Live Nation shares they were given as part of their 360 deal, pocketing a guaranteed $25m, even though the value of the shares had fallen to around $6m. In some cases, Live Nation artists have insisted on banking a hefty 90 per cent of their box office revenue, which has hampered the company in making a profit on its concerts, the core of the business. In 2007, the company had a loss of almost $12m on $4.2bn in revenue. Its stock price was this week down to $4.99, well off its $24.95 high in 2007, and it is still to turn a profit.
As for Ticketmaster, while it has attracted the ire of consumers because it adds substantial "service fees" to transactions, taking nothing of the advertised ticket price, it makes healthy profits. This is due to a near monopoly position in America, last year reporting a net income of $169m on revenues of $1.2bn. Its new chief executive, Irving Azoff, is said to be making strides to make the company more consumer-friendly. A merged company would be in a better position to offer "all-in" prices, where only the advertised fee is payable.
To Wenham, the proposed merger is something that should attract the attention of the competition authorities. She says the development mirrors the consolidation in the recorded music industry where two companies, Universal and Sony, now dominate the weekly album charts. Such intervention might not be necessary if the deal falls foul of American anti-trust authorities which would want to review the likely implications of such a powerful player in the live music sector.
Singing in harmony?
* Ticketmaster Entertainment was established in 1976 by a group of students in Arizona. It now operates in 20 markets which stretch as far as Brazil, China and New Zealand. It has more than 10,000 clients around the world and sold 141 million tickets worth more than $8bn (£5.5bn) in 2007.
* Live Nation was formed in 2005, spun out of Clear Channel Communications. It produces over 16,000 concerts for 1,500 artists in 57 countries a year. It sells about 45 million concert tickets a year.
* Ticketmaster bought acontrolling stake in Front Line Management Group last year. Front manages artists including Aerosmith, Guns N'Roses, and Christina Aguilera. The mostpopular tickets between July and September (its most recent data) were the New York Yankees, squeaky clean pop combo the Jonas Brothers and Madonna.
* Live Nation has a series of high-profile acts of its own beyond Madonna and Jay-Z. Nickelback, U2 and Shakira have also signed. Hot concert tickets include Bruce Springsteen, Motley Crue as well as Elton John and Billy Joel.