LYWve nation Marketing Analysis: Live Nation J. Johari Palacio Introduction to Marketing the Arts AEMM/Music Business Marketing Project Summer 2010 ‘doh Patio ‘Markotng Anayss~ Lie NationL{ve nation} Mission Statement: 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 is the largest pro- ducer of live concerts in the world, annually producing over 22,000 concerts for 1,500 art- ists in 87 countries. LYve nation 4 doar Patacio Markotng Anais Lie Nation 2L{ve nation} Stated Corporate Goals: Our strategy is to connect the artist to the fan. We believe that this focus will enable us to increase shareholder value by developing new ancillary revenue streams around the live music event and the artist themselves. We will continue to focus on our live music assets. We plan to expand our business through building a stronger connection with the fan through the live event and our ticketing platform. We will seek to connect cor- porate sponsors with this fan through the live music experience. Improve the Profitability of Our Existing Core Business. We continue to focus on improving the profitability of our existing core live music operations by imple- menting strategies to increase ancillary sales per fan at all events and at all ven- ues we operate in, as well as striving to be the low-cost operator. Extend Relationships with Artists and Sponsors. Our goal is to develop deeper relationships with touring artists centered on the live music event. We are able to expand our relationship with the artist through longer-term and broader relation- ships by providing more services and partnering with the artist to grow their music properties. We believe that we can expand the business lines related to the live music event, such as the sale of tour merchandise and live concert DVDs as well as providing other products and services to fans and artists both before and after the concert, including the development of artist fan clubs and websites. We also believe that we have an opportunity to expand our relationship with corporate sponsors by providing strategic programs that deliver more value to the sponsor through our unique relationship to the music fan and to the artist and by utilizing our distribution network of venues and our extensive online presence. 4 doar Patio Markotng Anais Lie Nation 2L{ve nation} Stated Corporate Goals (cont.): * Develop Ticketing and Online Services. Our goal is to have a direct relationship with the music fan through our ticketing platform and to be the leading online live music destination website through www.livenation.com. Our website offers com- prehensive information about live concerts, including shows that are not Live Na- tion promoted events, and access to tickets and artist merchandise. We seek to continue to drive the growth of our website by expanding our online offering to increase traffic and generating incremental revenue from additional ticket sales, merchandise sales, online advertising and other goods and services. * Increase Our Global Live Music Platform. We plan to expand our promoter presence to include the top music markets and population centers around the world. We currently operate in 20 global markets. Our focus internationally is on increasing our promoter presence. We intend to expand our North American plat- form in key larger markets through ownership or operation of key venues and by growing our festival presence. * Divest Non-Core Assets. We are focused on building our live music business and ancillary services in major music markets around the world. As a result, we expect, where it is economically justifiable, to continue to divest non-live music related assets and/or underperforming live music assets and use the net pro- ceeds to re-invest in our core live music business, repay outstanding indebted- ness or for general corporate purposes. 4 doar Patio Markotng Anais Lie NationL{ve nation} Strategic Business Units: Live Nation operates in three reportable business segments: North American Music, International Music and Ticketing (previously known as Global Digital). * North American Music. Our North American Music business principally involves the promotion of live music events in our owned and/or operated venues and in rented third-party venues primarily in the United States and Canada, as well as providing various services to artists. During 2008, our North American Music busi- ness generated approximately $2.7 billion, or 64%, of our total revenue. We pro- moted over 10,000 North American live music events in 2008, including artists such as Madonna, The Police, Rascal Flatts, Coldplay, Jonas Brothers and the Trans-Siberian Orchestra. * International Music. Our International Music business principally involves the promotion of live music events in our owned and/or operated venues and in rented third-party venues and the production of music festivals outside of North America. For 2008, our International Music business generated approximately $1.4 billion, or 33%, of our total revenue. We promoted or produced over 4,000 live music events internationally in 2008, including artists such as Madonna, Vasco Rossi and Bruce Springsteen as well as several large festivals in Europe, such as Rock Werchter in Belgium, Lowlands Festival in Holland, and Reading Festival and Leeds Festival, both in the United Kingdom. 4 doar Patio Marking Anaysis~ Lie Nation .L{ve nation} Strategic Business Units (cont.): * Ticketing. Our Ticketing business principally involves the management of our in- ternal ticketing operations and online and wireless distribution activities, including the launch of Live Nation ticketing and the development of our website. Our Tick- eting business generated approximately $22 million, or 0.5%, of our total revenue in 2008. We expect this business to expand as a result of our launch in 2008 of a ticketing platform which allows us to sell tickets for 2009 events at our owned and/or operated venues BUY TICKETS AT LYVENATION.com ARTIST POWERED Y FAN DRIVEN ' \ i j * Other. Our United Kingdom theatrical venue operation business principally in- volves the operation and rental of our owned/and or operated venues for theatri- cal performances. For 2008, businesses included under “other” generated ap- proximately $88 million, or 2%, of our total revenue. 4 doar Patio Markotng Anais Lie Nation °L{ve nation} Recent Acquisitions || Secondary Business Unit: * Heineken Music Hall. In January 2008, we acquired the operating company that manages and holds the lease for the Heineken Music Hall in Amsterdam. * AMD. In January 2008, we acquired a 51% interest in Amsterdam Music Dome Exploitatie B.V., or AMD. AMD will be the exclusive lessee of a music venue that is planned to be developed, * DF Concerts. In April 2008, we acquired a 78.3% interest in DFC Holdings Lim- ited, or DF Concerts, through a joint venture with Gaiety Investments. We own 50.1% of the joint venture with Gaiety Investments. DF Concerts is a leading con- cert promotion company in Scotland and promotes what we believe to be the most successful music festival in Scotland, T in the Park + Mirage. In May 2008, we acquired a 65% interest in Mirage Promotions FZ-LLC, or Mirage, a leading promoter in Dubai and the surrounding region. Mirage was subsequently rebranded as Live Nation Middle East. * Fantasma. In May 2008, we acquired certain assets of Fantasma Productions Inc. of Florida, or Fantasma, a concert promotion company in Florida 4 doar Patio Markotng Anais Lie Nation 7L{ve nation} Recent Acquisitions || Secondary Business Units (cont.): + Luger and Moondog. In June 2008, we acquired the remaining 61% interest and 75% interest of Lugerinc. AB and Moondog Entertainment AB, or Luger and Moondog, respectively, that we did not already own. Luger and Moondog are music-related companies in Sweden. * Main Square Festival. In July 2008, we acquired a 51% interest in Moi.Je Prod SAS, the producer of the Main Square Festival in Arras, France. * De-Lux. In October 2008, we acquired De-Lux Merchandise Company Limited, or De-Lux, a merchandising company in the United Kingdom * Emerge. In October 2008, we acquired Emerge Media Ventures Ltd., or Emerge, a promotion company in Canada. 4 doar Patio Markotng Anais Lie Nation 8L{ve nation} Management Organization: Michael Rapino is our President and Chiet Executive Officer and has served in this ca- pacity since August 2005. He has also served on our board of directors since Decem- ber 2005. -Brian Capo is our Chiet Accounting Officer and has served in this capacity since De- cember 2007. is the Chief Executive Officer of our Global Touring division and Chairman of our Global Music group and has served in this capacity since 2005 ~Jason Garner is the Chief Executive Officer of our Global Music group and has served in this capacity since September 2008, Prior to that, Mr. Garner held various positions within our North American Music division including President and Chief Executive Offi- cer. -John Hopmans is the Executive Vice President of Mergers and Acquisitions and Stra- tegic Finance and has served in this capacity since April 2008. -Nathan Hubbard is the Chief Executive Officer of our Ticketing division and has served in this capacity since June 2008. From January 2008 to May 2008, Mr. Hubbard served as President of the Ticketing division. 4 doar Patio Marking Anaysis~ Lie Nation °L{ve nation} Management Organization (cont.): Thomas Johansson is the Chairman of our International Music division and has served in this capacity since September 2004. Previously, Mr. Johansson served as the Chief Executive Officer of our subsidiary EMA Telstar Group, a company he founded in April 1969 and which our predecessor acquired in 1999. ~Alan Ridgeway is the Chief Executive Officer of our International Music division and has served in this capacity since September 2007. From September 2005 to August 2007, Mr. Ridgeway was our Chief Financial Officer. Prior to that, Mr. Ridgeway served as President of our European Music division. Michael Rowles is our General Counsel and has served in this capacity since March 2006 and as our Secretary since May 2007. -Ben Weeden is the Chiet Operating Officer of our North American Music division and has served in this capacity since October 2008. -Kathy Willard is our Chief Financial Officer and has served in this capacity since Sep- tember 2007. From September 2005 to August 2007, Ms. Willard was our Chief Ac- counting Officer. 4 doar Patio Marking Anaysis~ Lie Nation 0L{ve nation} The Live Nation customer is a music fan ranging in all ages. Although the majority of Customer Profile our market are concert attendees who have the ability to purchase their own tickets; a large part of our customer demographic are those who do not have the means of buy- ing their own tickets (under the age of 16 primarily). Although this customer may not be Purchasing the tickets directly, their parents are purchasing the tickets for shows that appeals to the younger demographic. * Strengths The Live Nation customer has an expansive age demographic. We also capitalize on customers who interested in the live entertainment experience to take their interest in an artist to the next level. We also are currently involved with the booking and ticketing of 159 venues worldwide as per our 2009 Annual Investor Report. * Weakness Although Live Nation works with and/or owns over 189 venues worldwide, we still do not have much of a presence in the smaller, less profitable cities and venues. * Opportunities Within our customer demographic, we have the opportunity to attract customers who may go to smaller venues, and see smaller acts to promote the Live Nation name/ brand among the public. + Threats ‘Smaller markets are being capitalized upon by smaller ticket providers and promoters. Most smaller venues have already been picked up by promoters who offer competitive rates. 4 doar Patio Markotng Anais Lie Nation "L{ve nation} Behavioral Buying Habits Strengths + As stated in our customer profile, we have a wide ranging demographic who are con- sistently interested in the live entertainment experience. Even with the current state of the economy, Live Nation has been steadily rising in the stock market. This proves that the current economic conditions have not stopped consumers from spending on live entertainment. Weaknesses * The concert season may go year round, but the average consumer is more likely to attend a concert during the height of the concert season beginning in early spring and going until mid fall. Opportunities * Have more promotion and discounts during the off-season for concerts that we book in the high season. Threats * Consumers are less likely to attend live entertainment events when there is a lack of shows that they have interest in. 4 doar Patio Markotng Anais Lie Nation 2L{ve nation} Product Mix Strengths * Offers a wide variety of promotional services for live entertainment experiences such as: Concerts, Festivals, Theatrical Performances, Musicals. Weakness * Live Nation does not offer many other services besides for ticketing and promotion, entertainment options that Live Nation does not currently offer. Opportunities * Live Nation can enter into new areas in the live entertainment industry such as offer- ing exclusive live recordings or merchandise at shows. Threats « We have competitors that offer the same and or similar types of product mix at com- petitive prices, OOOs 6 PRODUCTS from your favorite Artists T-Shirts, Posters. m Hats, MP3s, Vinyl, & more 4 doar Patio Markotng Anais Lie Nation 8L{ve nation} Pricing Strengths + Live Nation can offer reasonable pricing for “A-List” acts in the live entertainment in- dustry, Weakness + Live Nation's competitors offer promises such as reasonable service/convenience charges which Live Nation does not match. Opportunities « Live Nation can offer lower (or waive) service/convenience charges for smaller shows and/or for early ticket purchase. Threats + Competitors such as Brown Paper Tickets offer the ticketing “Bill of Rights” which makes Live Nation look like the “bad guy” in the live entertainment industry. Due to our pricing, we have been looked at as a monopoly. 4 doar Patio Markotng Anais Lie Nation 1“L{ve nation} Management || Employee Structure Strengths * Live Nation has a staff of an estimated 4,700 members world-wide. We have enjoyed good employee relations as well as good relations with their unions. Weakness * As a result of the expiration of a collective bargaining agreement, Live Nations busi- ness operations at a venue may be interrupted resulting in a detriment to our busi- ness ventures. Opportunities * Continue good relations with our employees and their unions to avoid problems in the future. Threats * As stated above, as a result of the expiration of a collective bargaining effort between Live Nation and an employees respective union, there may be unexpected expenses as well as competing business ventures * Competitors compete with Live Nation for important employees whom have ties with important venues and artists 4 doar Patio Markotng Anais Lie Nation 16L{ve nation} Promotion Strengths + We have a very large distribution scale with access to 159 venues world-wide. « The scope and effectiveness of our expertise of marketing and sponsorship pro- grams « The Artist Service Division of Live Nation provides our artists with services such as merchandise sales, fan sites, music distribution. * Our broad range of national and local sponsorships. Including such companies as CitiBank, Coca-Cola and Blackberry. Weakness «The lack of brand recognition in obscure markets. Opportunities * Continue to enhance sponsorships and fan-to-artist relations to enhance the live en- tertainment experience Threats * Other companies have promotions in markets that Live Nation has little or no influ- ence at all in. 4 doar Patio Markotng Anais Lie Nation 6L{ve nation} Competition Strengths + Live Nation is the largest and most profitable retail outlet for live entertainment. We are involved in all aspects of of the music business. Weakness * Despite Live Nation’s large span of control, there are many profitable sectors that the company cannot capitalize on due to the size of the company. Opportunities * Live Nation is able to use its resources and contacts to further expand, and possibly buyout competition. Threats + Competition may be willing to offer lower prices in order to attract current Live Nation customer, 4 doar Patio Markotng Anais Lie Nation 1”L{ve nation} Economics Strengths * Live Nation is the most profitable entity in the live event/entertainment business. Weakness + Live Nation primary business is susceptible to changes in the economy. When the economy is down and unemployment is high, resources for spending on entertain- ment are scarce and business can suffer from it. Opportunities * The potential to purchase more venues and create relationships with new artists can improve the fiscal stability in the future when the economy tus around * The ability to buy struggling businesses. Threats * Extended slumping of the economy can cause permanent closures of some extended profitable ventures. 4 doar Patio Markotng Anais Lie Nation 6L{ve nation} Nature Strengths * Many venues are indoor and weather has no effect on show and turnout. * Warm weather regions have less weather-related event cancellation. * We experience higher revenue during the second and third quarters due to the sea- sonal nature of shows at our outdoor amphitheaters, which primarily occur May through September. Weakness * Outdoor events at certain times of the year are in jeopardy due to the weather. « Winter events can suffer due to low-turnout. Opportunities Lower prices in inclement weather. * Avoid booking major events in inclement weather Threats * Increased potential for disastrous event permanently closing a venue. 4 doar Patio Markotng Anais Lie Nation 0L{ve nation} Politics || Regulations Strengths «The recent merger of Live Nation and TicketMaster has been approved and we are free of lingering antitrust issues. Weakness Our live music venue operations are subject to federal, state and local laws, both do- mestically and internationally, governing matters such as construction, renovation and ‘operation of our venues, as well as: licensing and permitting; ‘human health, safety and sanitation requirements ‘working conditions, labor, minimum wage and hour, citizenship and employ- ment laws, ‘compliance with the ADA and the DDA; sales and other taxes and withholding of taxes; privacy requirements related to ticketing; ‘environmental protection laws Opportunities + Remain is good standing with governmental and regulatory agencies. Threats * We are subject to extensive governmental regulation, and our failure to comply with these regulations could adversely affect our business, results of operations and finan- cial condition. 4 doar Patio Markotng Anais Lie Nation 2L{ve nation Technology Strengths + Maintenance capital expenditures are associated with the renewal and improvement of existing venues and, to a lesser extent, capital expenditures related to information systems, web development and administrative offices. Weakness + Keeping abreast of technologies is costly. * Trial and error involved with technology implementation. Opportunities * Venue operations is a capital intensive business, requiring continual investment in our existing venues in order to address audience and artist expectations, technological industry advances and various federal, state and/ or local regulations. Threats * Continual failure of implemented systems may cause customer backlash and aban- donment of services. 4 doar Patio Markotng Anais Lie Nation PoL{ve nation Society ‘Strengths * We have cancellation insurance policies in place to cover a portion of our losses if a performer cancels a tour. *We are able to pull in some of the most influential and popular artist available. Weakness * Live Nation does not has the most favorable image with some in the live event enter- tainment business. Opportunities * Reaching out to smaller venues and artists may curtail “Evil Empire” image. Threats * Our live music business is highly sensitive to public tastes and dependent on our ability to secure popular artists and other live music events, and we may be unable to anticipate or respond to changes in consumer preferences, which may result in de- creased demand for our services. *Since we rely on unrelated parties to create and perform live music content, any un- willingness to tour or lack of availability of popular artists could limit our ability to gen- erate revenue, 4 doar Patio Markotng Anais Lie Nation 2L{ve nation Live Nation Competition: Our main competitors in the live music industry include Anschutz Entertainment Group, Jam Productions and Palace Sports & Entertainment, in addition to numerous smaller regional companies and various casinos in North America and Europe. Anschutz Enter- tainment Group operates under a number of different names including AEG Live, Con- certs West and The Messina Group. Some of our competitors in the live music industry have a stronger presencé certain markets, and have access to other sports and en- tertainment venues, as well as greater financial resources, which may enable them to gain a greater competitive advantage in relation to us. In markets where we own and/or operate a venue, we compete with other venues to serve artists likely to perform in that general region. Consequently, touring artists have significant alternatives to our venues in scheduling tours. Our main competitors in venue management include SMG and Anschutz Entertainment Group, in addition to numerous smaller regional companies and various casinos in North America and Europe. Some of our competitors in venue management have a greater number of venues in certain markets as well as greater financial resources in those markets. 4 doar Patio Marking Anaysis~ Lie Nation 2L{ve nation} Live Nation Competition (cont. Our main competitors at the local market level for sponsorships consist of local sports teams, which often offer state of the art venues and strong local media packages. Ad- ditionally, Live Nation competitors locally can include festivals, theme parks and other local events. On the national level, our competitors include the major sports leagues that all sell sponsorships combined with significant national media packages. COWBOYS STADIUM 4 doar Patio Markotng Anais Lie NationL{ve nation} Live Nation Competition (cont.): In the online environment, we compete with other websites, online event sites and tick- eting companies to provide event information, sell tickets and provide other online services such as fan clubs and artist websites. Our main competitors for online event sites include Tickets.com, as well as secondary ticketing companies such as StubHub ence Tee a Teka we Bnav Ta oR 1008 STUNG Wetcometo StUBHUD! nore rons Su Setrvicnets” — RE EaMNaaa Page hifi Me Sect anes tn Canaan open ae sor ON [eee ee es Tee 4 doar Patio Marking Anaysis~ Lie Nation FoL{ve nation} New Product || Service Introduction: Product: Live Nation Promoter Client - Elite Service: A new package providing small venues and concert promoters who are not in the Live Nation family, access to Live Nation services such as promotions, ticketing, “A-List” artist booking and representation. Benefits: * Larger marketing sphere - allows select venues and established local promoters to attract and reach larger demographic and more diverse target market. * Live Nation’s assistance with booking “A-List” acts at smaller venues. Popular re- gional acts will fill out the rest of the bill. © The brand recognition of the Live Nation name - Live Nation is an influential com- pany with major financial resources, reputable name, contacts and venues world-wide. * Alow-priced, competitive introductory registration fee. Price: This service will be available to select small to mid-sized venues and regionally established promoters. Affordable introductory fee of $1,500, payable by either quar- terly payments of $376 or initial lump sum annual payment. 1-year minimum contract required, renewable upon approval of Live Nation executives/product coordinator. Service will be provided at an annual price of $2,500/25% of concessions/40% of mer- chandise (which can be provided by Live Nation's design staf). 4 doar Patio Markotng Anais Lie Nation 2L{ve nation} New Product || Service Introduction (cont.): Place: This service will first be available in the test market locations of New York, Chi- cago, and Los Angeles where the entertainment business is lucrative and Live Nation already has a stake in the music business. If the test market service works well, Live Nation will consider expansion to other cities with high music markets such as Austin, Nashville, Seattle and San Francisco. Promotion: * This service will be promoted to our prospective clients through the use of adver- tisements in trade publications such as CMY, Billboard and NME. * Influential blogs such as Hypem.com, NPR, Pitchfork and okayplayer.com will be used to reach the small market venues and promoters. We will also utilize Survey- Monkey to conduct the necessary market research via the aforementioned sites to poll the regional markets for acts they would pay to see at a smaller venue in their area. ‘We will also utilize a 3-month period of promotion by sending solicited information Packets out to select, reputable venues that are interested as well as; jeeting popularity/attendance criteria, music scene relevance, excellent sound system and security requirements. 4 doar Patio Markotng Anais Lie Nation ”L{ve nation} ‘The Live Nation Promoter Client-Elite is primarily a service to which Live Nation can ex- Evaluation: tend our reach into the smaller markets in which we may or may not have had previous presence and or stake in, This new product's purpose is not to gain much financial profit but rather to gain a social profit within the music industry. Up to this point, Live Nation has been looked at as a monopoly on the concert promotion/ticketing industry. After product introduction and implementation, we believe Live Nation will be able to promote an image of “goodwill” within the live entertainment industry. The evaluation of the program will be conducted by the number of venues and artists that sign on to our program Live Nation Promoter Client-Elite, in addition to surveys (utilizing outsour- ced SurveyMonkey analytics) involving consumer opinions of Live Nation products and services. We are not looking to immediately increase our market share with this pro- gram, but rather looking to promote future business endeavors in the long-run with more niche markets of venues and artists, 4 doar Patio Markotng Anais Lie Nation Eonation} New Product || Service Introduction (cont.): NEW MUSIC | REPORT METRIC GETS THEIR HAINES ON YOU. #3-Month Campaign via BUZZ Media @ $2,000 per month = $6,000 +3-Month Campaign via Billboard, NME, CMJ @ $3,000 per month = $9,000 simplementation of survey via SurveyMonkey.com = $15,000 Total cost for Promotion of Product Campaign = $30,000 4 dha Patacio Markoting Anais Lie Nation 0L{ve nation} NOTES Stohr Patio Marking Anaysis~ Lie Nation