Jay Marciano on streaming, Coachella, macro-economics – and why ‘everyone’s a genius in a bull market’

Jay Marciano doesn’t do many interviews.

In typical times, there’s little need: Up until March 2020, AEG Presents – which Marciano heads up as CEO & Chairman – was a steadily growing global company in a steadily growing global segment of the music biz.

Since then, of course, we’ve been far from typical times. As a result, MBW has a heck of a lot to ask Marciano about, including: (i) Live music’s strong comeback post-Covid; (ii) The impact of streaming on the next generation of live talent; (iii) Whether the concerts business will be recession-proof; (iv) The future impact of inflation on the business; and (v) AEG’s increasing investment in international expansion.

Happily, Marciano, one of the modern music industry’s most modest and straight-talking – not to mention successful – Chief Executives granted us an audience to do just that.

The world’s largest private live music promoter – and second only to Live Nation overall – AEG Presents is the owner of huge festivals like Coachella (attendance: 125,000 per day, over two weekends), the New Orleans Jazz & Heritage Festival, and the UK’s British Summer Time (BST), which this year hosted the likes of Adele, Elton John, Pearl Jam, and the Rolling Stones.

In addition to its festival business, AEG is also the owner of multiple global venues including the Crypto.com arena in Los Angeles, The O2 Arena in London, and the Mercedes-Benz Arena in Berlin, amongst many others. And as a concert promoter, right now, the firm is working tours for superstars ranging from BLACKPINK to Bryan Adams, Elton John, Luke Combs, and Stromae.

The topline signs for the live industry in 2022 are good: AEG rival Live Nation (a publicly-traded company) recently stated that 44 million tickets were sold to its shows in Q3 2022, more than any other quarter in its history. Over in the UK, the 2023 Glastonbury Festival – yet to name a single headliner – recently sold out in less than an hour.

Speaking of good signs for the business, it’s worth mentioning that AEG is promoting that Taylor Swift tour (though not handling its much-discussed ticketing sales, which go through Ticketmaster).

The scale of AEG and Swift’s success there – and the signal that gives us about live music demand even during a tumultuous economic period – shouldn’t be underestimated.

Swift sold 2.4 million tickets; according to Ticketmaster, the volume of traffic to her on-sale suggested enough demand for Swift to play 900 stadium shows – the equivalent of “a stadium show every single night for the next 2.5 years.” (The below interview with Jay Marciano took place before Taylor Swift’s much-discussed dates were announced – and before those much-discussed tickets went on sale).

Unlike publicly-traded Live Nation, AEG Presents (part of Philip Anschutz’s AEG group) doesn’t publicly publish its financials. But if we briefly bounce back to pre-Covid times, its scale becomes clear: According to Pollstar data, AEG Presents’ worldwide shows grossed $1.4 billion from ticket sales in 2019. The firm’s shows sold 14.8 million tickets that year, up by more than 3 million on its tally in the prior 12 months.

So how will AEG – and the wider concert business – fare when 2022 shakes out? Jay Marciano had an answer for that – and plenty more – when we sat down together…

The live industry in 2022 is a complicated picture: Some projects, including your sold-out Coachella and British Summer Time shows, seem to be doing exceedingly well. Other shows are being canceled by artists for various reasons that may or may not be a cover for soft demand. What’s going on?

Anyone that tells you they know what’s going on is probably using the benefit of their experience in the last 24 hours. Ask them that question in seven days, they might answer differently!

Our experience tells us it’s hard to ignore consumer sentiment, period. And consumer sentiment right now is like a yo-yo.

I’ve always felt that concert ticket sales are very much the canary in the coal mine: We know, probably before many people, how consumers are feeling. When we’re selling really well, it means consumers feel really good about going out. When people begin to pull back, maybe it’s because they’re feeling a little less secure about their own financial situation.

“It’s not a surprise to me that only the really hot artists and shows are guaranteed to sell.”

Events that went on sale in that initial period post-Covid had all the benefits of the euphoria of opening up the market. Everything was selling: You and I could sell a concert out!

As we started to move into summer 2022, we had to look at the supply side: There were too many shows, and too many choices. Combine that with a little bit of that pullback on consumer sentiment, and it’s not a surprise to me that only the really hot artists and shows are guaranteed to sell – anything else closer to the margins is going to find things more difficult.

How do you see these next 12 months playing out for AEG’s concert promotion business?

It’s important for me to start by laying out my long-term view of macro dynamics that are working very favorably for the live business.

The accelerated adoption of international music plus the benefits of streaming mean that audiences have more access to more artists and genres of music today than ever. And that’s great. It’s great for our clubs and theater business, it’s great for our festival business, and it creates all kinds of opportunities.

“It’s difficult to ignore the economic signs – and in this business, you ignore those signs at your peril.”

But in the near term, it’s difficult to ignore the economic signs – and in this business, you ignore those signs at your peril. There’s an old saying that everyone’s a genius in a bull market. We came out of the pandemic into a bull market, and everyone looked smart. Now it takes a really strong operator to navigate what we’re probably going to experience over the next 12 months.

That’s why, given where the economy is going into 2023, I’m not judging our company’s performance on quantity. I want us to be a little bit more selective.

What’s the biggest benefit that music streaming has brought to live music?

It’s made music discovery borderless. Maybe for the first time in the history of pop music, it doesn’t matter which language you’re singing in.

Five years ago, the idea that BTS and Bad Bunny were going to be the two biggest stadium shows in North America would have been an absurd thought. But now, through discovery, fans are willing to take on music from around the world.

“Maybe for the first time in the history of pop music, it doesn’t matter which language you’re singing in.”

Coachella, because it’s always been the most adventurous festival when it comes to booking and always wants to get there first, has always been at the forefront of giving a big platform to the next wave of artists from around the globe. So at a festival of 125,000 people, at least 50,000 people will go watch them and be open to something new.

That goes both ways, too: Justin Bieber sold out five stadiums in Japan, that would not have happened five years ago. And I think we’ll see more and more of that.

I’m glad you mentioned the correlation between streaming and your ‘clubs and theater’ business – i.e. smaller venues than arenas. The logic is that there are now many more artists booking and filling these venues, and that correlates with what’s happening on streaming platforms: the Top 10 superstars are seeing their share of total listening decrease, but thousands of artists underneath them are growing their audiences. Is that a trend that has continued post-Covid?

Yes, and our clubs and theater business is very healthy. A club that did 100 shows a year in 2012 is now doing 180 shows a year. That’s a direct result of there being more talent available. It’s a great byproduct of streaming.

Our clubs and theaters business is a steady, relatively low-risk and dependable side of what we do. It’s also beneficial for spotting new talent that we think could take the next step and play on the B stage of one of our festivals…that kind of thing.

“The quoted stat, years ago, was that the average concert-goer goes to 1-point-something shows a year. In our experience, at the clubs and theaters level [today]… it’s more like eight times a year.”

Interestingly, clubs and theaters used to be a break-even business. Now it’s become profitable because our venues have become better and we’ve made investments to improve both the artist and audience experience.

What’s also new is the frequency with which fans are going to shows: The quoted stat, years ago, was that the average concert-goer goes to 1-point-something shows a year. In our experience, at the clubs and theaters level [today], where the audience is primarily 22 to 32-year-olds, it’s more like eight times a year.

Is it inevitable that ticket prices will have to go up in the current inflationary environment, especially at those smaller shows?

A young artist that’s on the road today is seeing all of their costs going up – their tour bus, staff, sound engineer, lighting engineer, hotels… and as a result some artists can’t even afford to go on tour.

That in itself would necessarily dictate that ticket prices have to go up. What used to be a $20 ticket is probably going to be a $25 ticket, because everyone’s costs have increased.

Something I’ve been thinking about: The live music business has long treasured so-called ‘heritage’ artists who can sell out stadiums on the strength of their catalog, while the record industry has arguably been more obsessed with the ‘new’. In a world where those established artists are selling their catalogs for hundreds of millions of dollars, that seems to have changed a bit.

I’d agree with that. Traditionally, there wasn’t a lot of glory on the label side of the…