Live Nation Has an Edge on Competition and Tailwinds From Young Consumers Seeking Experiences

Senior Equity Analyst

Matthew Dolgin

Revenue segments as reported by the company.

Concerts

Ticketing

Sponsorship & Advertising

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Live Nation is highly focused on live entertainment at venues ranging from intimate clubs to large stadiums. The firm controls over 338 concert venues that hosted over 50,000 events and 145 million fans in 2023. Ticketmaster, the firm’s ticketing platform, sold over 620 million tickets for over 10,000 clients in 2023. The firm has now exceeded prepandemic revenue levels in each of its three segment (concerts, ticketing, and sponsorship), and we project continuing growth over the next five years.

We expect the firm will continue to use concerts as the “flywheel” that drives the higher margin ticketing and sponsorship and advertising segments, along with onsite spending by fans. Live Nation should benefit from the ongoing trend of younger consumers preferring experiences over material goods, particularly with respect to spending on concerts and music festivals over purchasing music. We also project that artists will remain dependent on tours and associated revenue streams to replace the lost revenue from the decline in digital downloads and the shift toward streaming music. While the concerts segment has historically generated operating losses, it was close to breakeven in 2023, and we expect it to move into profitability in 2024. 

Ticketmaster will look to maintain its position via continued investment in its technology and leveraging its unique relationship with the concerts segment. We expect the service will remain focused on monetizing the secondary market and recapturing some of those profits for artists. We also believe that dynamic pricing will likely become more widespread, particularly for higher profile artists and tours. Ticketmaster remains vulnerable to potential regulatory actions, and recent public relations missteps like the Taylor Swift ticketing debacle increase that risk. 

With younger consumers watching less ad-supported video and using ad blockers online, Live Nation should be able to leverage its large captive audience to grow its advertising and sponsorship revenue. We expect the concert segment should be able to buck the secular trend of new advertising dollars flowing onto digital platforms at the expense of analog ones.

Business Strategy & Outlook

We assign Live Nation a narrow moat rating based on intangible assets. The firm is one of the largest live entertainment firms in the world. Live Nation controls or has signficant influence over 373 concert venues that hosted over 50,000 events and 145 million fans in 2023. The firm also owns Ticketmaster, which sold over 620 million tickets for over 10,000 clients in 2023. This large live entertainment footprint helped Live Nation become one of the largest advertising and sponsorship platforms targeted at music fans.

The live music marketplace relies on multiple parties working together to stage a concert or show. Artists and their team of manager/agents (including booking agents) typically sign a deal with a concert promoter who fronts the money for the tour. The promotor pays the artist based on a formula that can include upfront guarantees, a percentage of overall ticket sales or profit, and/or reimbursement of production expenses. The promoter generally assumes the most risk among the participants. 

Promoters contract with venues to rent the space for the dates and times of the events. Venues can receive either a fixed fee or percentage of ticket sales as part of the rental agreement. The venues also generate revenue from other services they provide including concessions, merchandize, and parking. This revenue may be either kept by the venue or split with artists and/or promoters. At the venue and during the event, there are numerous opportunities for advertising and sponsorship that can be sold by the venue or the promoters and/or artists.

Venues generally contract with a ticketing service for all events; a promoter or artist could also sign a deal with a ticking platform for a tour. The ticketing service collects a fee per ticket sold or a percentage of the total ticket service charges. While the venue generally uses the technology of the ticketing service to sell tickets onsite, the service does not receive any revenue from these sales. 

In the past, each of these entities would have been separate parties. Due to the 2010 merger of Live Nation and Ticketmaster, Live Nation Entertainment can promote tours where the firm has acted as the talent agent, booking agent, promoter, venue operator, ticket services provider, and advertiser and sponsorship seller. We believe this ability to fulfill multiple roles helps the company gain access to more venues and tours, especially larger, more complex, and/or multination ones.

While we don’t view the concerts segment as having a moat, we agree with management’s view of the segment as the flywheel that drives the higher-margin ticketing and sponsorship and advertising segments, along with onsite spending by fans. The concert business capitalizes on the trends within both the music industry and younger consumers. For artists, sales of albums and singles, either physical or digital, have collapsed over the last decade as younger consumers have turned toward streaming platforms like YouTube and Spotify to consume music. As a result, touring for major artists has shifted from a method to sell more albums to a major source of revenue. Artists are increasingly spending more time on tour even without an album to support, providing promoters with greater supply of concerts. At the same time, younger consumers are increasingly valuing experiences over material goods and are allocating their disposable income accordingly. 

By controlling concert venues and serving hundreds of millions fans, Live Nation offers a unique platform for advertisers looking to market toward younger consumers. Many of these consumers generally watch less live television than previous generations and are more likely to using ad-blocking software when using the internet. Thus, the more than 50,000 events that Live Nation held in 2023 were likely among the most effective methods of reaching many of these young consumers. We expect that Live Nation’s venues and concerts will remain one of the valuable platforms for reaching younger music fan as those fans continue to attend more live events. Some artists will sometimes already have their own sponsors. But Live Nation also has venue rights and owns over 100 festivals globally to which the firm controls the advertising and sponsorship rights. The firm can also help bring ad sponsors to artists that Live Nation already has a relationship with.

Despite the rise of competitors like AXS, StubHub, SeatGeek, and Eventbrite over the last 20 years, Ticketmaster remains the dominant player in the U.S. ticket marketplace, as 80 of the top 100 arenas by concert tickets sold use the firm’s technology. The firm’s dominant position allows it to continue to reinvest in the business, in technology development for both the platform and additional services. Live Nation’s larger size also allows Ticketmaster to be more aggressive in providing upfront advances and guarantees. Ticketmaster can bundle its services with Live Nation shows, providing venues with a set number of shows per year. 

These advantages have helped the firm not only maintain its dominant position but also win back business that was previously lost to AXS and other competitors. Ticketmaster was the first platform to rollout anti-scalping and anti-fraud services like Verified Fan and Ticketmaster Presence. These services help artists to retain more of the dollars spent on live music, making Ticketmaster a more attractive partner. While we expect some of the larger players to catch up to Ticketmaster in terms of these add-on services in some areas, we believe the firm can invest more in development than its peers.

Narrow

Economic Moat

Live Nation

Live Nation Entertainment, Inc. operates as an entertainment company. The firm engages in producing, marketing, and selling live concerts for artists via its global concert pipe. It operates through the following segments: Concerts, Sponsorship and Advertising, and Ticketing. The Concerts segment is involved in the promotion of live music events in owned or operated venues and in rented third-party venues. The Sponsorship and Advertising segment manages the development of strategic sponsorship programs in addition to the sale of international, national, and local sponsorships and placement of advertising such as signage, promotional programs, rich media offerings, including advertising associated with live streaming and music-related content, and ads across its distribution network of venues, events, and websites. The Ticketing segment is involved in the management of the global ticketing operations, including providing ticketing software and services to clients, and consumers with a marketplace, both online and mobile, for tickets and event information. The Ticketing segment also operates the firm's primary ticketing website, www.ticketmaster.com. The company was founded in 1996 and is headquartered in Beverly Hills, CA.

Earnings data Q2 2021

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Live Nation (LYV) reports strong 2022 performance and anticipates record 2023

Live Nation's 2022 performance showcased robust revenue growth, driven by strong demand for live events and successful initiatives in ticketing and sponsorship. While facing challenges related to reopening costs and regulatory discussions, the company remains optimistic about returning to normal business operations in 2023 and leveraging opportunities for further growth.

Live Nation reports record Q1 results, eyes global expansion

Live Nation's Q1 2023 showed strong performance with record revenue and AOI across all divisions.
The company faces challenges in scalability, international market transitions, and pricing uncertainties.
Opportunities lie in expanding venues, leveraging technology, and driving fan engagement for growth.
Overall, Live Nation remains optimistic about continued growth and industry capture in 2023 and beyond.

Live Nation reports strong Q2 performance with international growth opportunities

Live Nation's Q2 2023 Earnings Call showcased robust performance, strategic strengths in acquisitions and pricing initiatives, challenges in consumer spending concerns, and opportunities for growth through international expansion and sponsorship strategies.

Live Nation reports strong Q3 performance amidst growth opportunities

Live Nation's Q3 performance reflected strong global demand for concerts and robust ticket sales.
The company faces challenges related to the DOJ investigation, legislative impact, and sustaining revenue growth.
Opportunities lie in upcoming investor presentations, double-digit growth expectations, and expanding venue additions.
Overall, Live Nation remains confident in its business model and poised for future growth opportunities.

Live Nation reports robust Q4 earnings, eyes amphitheater expansion

Live Nation's Q4 earnings call highlighted strong financial performance, emphasizing revenue growth drivers and strategic initiatives for future expansion. Despite challenges in consumer pricing and regulatory scrutiny, the company remains focused on capitalizing on growth opportunities and maintaining profitability.

Live Nation reports strong Q1 performance amidst legal challenges

Live Nation's Q1 2024 earnings call highlighted strong performance in ticket sales and sponsorship growth, despite potential legal challenges and operational factors impacting margins. The company's strategic focus on niche festivals, venue partnerships, and hyper-local strategies presents opportunities for continued growth and international expansion.

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