The Big Get Bigger

Live Nation swallows HOB and tightens its hold on local concerts.

Live Nation Clear Channel House of Blues
You may soon pay more to see your favorite bands, thanks to a mega-merger between Live Nation and House of Blues.
You may soon pay more to see your favorite bands, thanks to a mega-merger between Live Nation and House of Blues.
Live Nation may have split from parent Clear Channel, but it's clearly following the same strategy of consolidating markets.

Already the country's leading concert venues and promotions company -- grossing $1.3 billion last year -- Live Nation recently announced that it's buying out rival House of Blues. The acquisition brings to 171 the number of venues Live Nation owns, operates, or books, including 58 outdoor amphitheaters. Locally, House of Blues owns Blossom Music Center as well as the HOB club on Euclid.

While the amphitheaters acquired from HOB -- in places like Toronto, Atlanta, and San Diego -- help plug holes in Live Nation's portfolio, the real plum is the club network, according to Gary Bongiovanni, editor-in-chief of the concert-industry publication Pollstar. "There's a much healthier business out there on the smaller-club level," he says.

Cleveland is one of the few markets in which the two companies competed, so this area is likely to feel the ramifications of the deal more than others would. No one's sure yet how it will play out, but the possibilities are intriguing.

The competition between Live Nation and HOB has been fierce. The two organizations scrapped bitterly even for mid-level acts, which had several local consequences -- among them, the inflation of ticket prices at smaller clubs, which rely on booking up-and-coming acts.

Because Live Nation and HOB were trying to one-up each other, bands commanded higher guarantees, and many small-club owners passed along the added cost in higher ticket prices, says Cindy Barber, co-owner of the Beachland Ballroom and Tavern.

"So even though we have a depressed concert economy, we have inflated prices, because of the bidding wars that are going on here," Barber says.

Nationally, ticket prices have been steadily climbing since 1996, when Congress sent Clear Channel on a spending spree by passing the Telecommunications Act, which repealed limits on radio-station ownership.

Last month, Jeffrey Goldenberg of Cincinnati filed a class-action suit on behalf of concertgoers. The case alleges that Clear Channel and Live Nation engaged in anticompetitive practices that have driven up ticket prices for thousands of consumers.

The lawsuit cites a study by Princeton professors Marie Connolly and Alan B. Krueger, which found that ticket prices have risen by almost 9 percent annually from 1996 till 2003 -- almost four times the rate of inflation.

At the same time, attendance has been slipping. According to Pollstar, last year the top 100 concerts drew 3.5 percent smaller crowds. Yet the industry still made more money, as the average ticket climbed by more than $4.50, to $57.

Are higher prices driving down attendance, or are lower attendance and fewer stars forcing up prices?

"That's a real chicken-or-egg question," says Bongiovanni. "Certainly, ticket prices have been going up, and that can't help but have some impact on the volume of tickets sold."

Krueger suggests that the rise in ticket prices is a side effect of artists getting less from sales of recorded music. He and others also cite the fact that in the mid-'90s, scalpers were able to get several times face value for tickets, which led artists to start raising their fees.

Now that Live Nation has the lion's share of concert venues in Cleveland as well as nationally, it will have even greater leverage in setting ticket prices and band guarantees, says Mike Shea, publisher of the Cleveland-based magazine Alternative Press.

"The big question is: How will it utilize its size? To the benefit of the consumers, by holding the line on ticket prices? Or are they going to take it back to how it was prior to House of Blues' arrival?"

Also remaining to be seen is whether Live Nation will keep all its venues open. Schedules for both Tower City Amphitheater and the Plain Dealer Pavilion have been spotty. It might be more profitable to consolidate large shows into a single venue.

In addition, House of Blues established a strong reputation for the diversity of its bookings. The club was especially notable for bringing in an eclectic mix of bands, many of which hadn't been heard locally in decades, says Shea.

"I am all for competition; it causes you to stay on your toes," he adds. "It's been good for the city so far, because it's helped make the music scene so vibrant, and that trickles down to the smaller clubs. It trickled down to Akron, and suddenly clubs are opening there. That hasn't happened since the late '80s."

The X-factor is the role to be played by Michael and Jules Belkin, the brothers who have dominated the area's concert scene for going on 40 years ("The Most Powerful People in Cleveland Music," March 14, 2002). Even after Belkin Productions was absorbed by Clear Channel in 2001, the brothers retained strong local control.

"They've got ties to the community that go back a ways, so the Belkin culture was always slightly more progressive than a typical Clear Channel," says Mark Leddy, co-owner of the Beachland Ballroom.

But the increased size of Live Nation's holdings will also give it greater influence, and the company has already earned a reputation for its hardball tactics.

"People are afraid to stand up to them," Shea says. "Unfortunately, most of the papers in town won't write anything negative, because they need them for the ad dollars, and that's a problem."

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