Concert Tours Are Where the Real Money Is
Forget CD Sales the Real Money for Hot Acts Is in Concert Tours
— In 100-degree heat, the crowd starts to build in front of a Las Vegas nightclub two hours before the doors swing open. By 9:30 p.m., 1,500 sweaty people are packed inside, where it's almost as hellish as it is outdoors.
Onstage, though, Jay-Z barely breaks a sweat. The languid rapper, who has accessorized a military-style T-shirt with diamond-encrusted dog tags, gets his fans to do much of the work: They rhyme along with him during each song, finishing his verses when he holds out the microphone. One hour later the rapper walks offstage, working his way through the kitchen. His entourage of 20 retires to the green room to joke and pass around vodka. Jay-Z enters a separate suite and sits, alone, with two bodyguards parked out front.
Graced with the requisite rapper scowl, the predictable rap sheet and an ear for a catchy hook, Jay-Z will repeat this ritual through the summer on a much larger, more lucrative scale. The club show is a warm-up for the 33-city Rock the Mic tour he is headlining with 50 Cent, the muscled, glowering rapper du jour. Touring with them are the hyperactive Busta Rhymes, the playful Missy Elliott and several other acts. Playing to crowds of 20,000, Jay-Z should net around $100,000 per performance, or more than $1,000 per minute onstage.
That's $3.3 million or more for a summer of work, good pay even for Jay-Z, who has sold 30 million records. Musicians of every stripe will make a pile of money touring this summer. The Dixie Chicks, the country crooners who came under fire for opposing the war in Iraq, sold more than $45 million in tickets for 57 shows in less than a week. Eminem, the white-rapper-turned-actor who sold more discs last year than any other musician, sold $5.2 million worth of tickets to 88,000 people for two upcoming sold-out shows at Ford Field in his home city of Detroit.
Graying geezer groups reap the biggest riches, bankrolled by baby boomers who can afford stiff ticket prices. You could see The Who for free at Woodstock in 1969; last year tickets to see the band's two surviving members creak onstage sold for an average of $77 apiece.
The loftiest perches on Pollstar magazine's annual list of highest-grossing acts are held mostly by aging rock stars: Last year Paul McCartney ($103.3 million), who charged a top ticket price of $250, the Rolling Stones ($87.9 million) and Cher ($73.6 million) topped the charts. McCartney plowed through 90 dates in 14 months, playing two-and-a-half-hour shows for half a million people in Rome, 100,000 in Moscow's Red Square and 35,000 in the Beatles' birthplace of Liverpool, U.K.
By the time the Eagles wrap up the 40-date first leg of their supposedly last tour, dubbed Farewell I (wink-wink), they will have earned at least $30 million in guarantees — before T-shirt sales. Even Cher, whose own farewell tour has stretched out for more than a year, will stay on the road through the end of August, flanked by the mechanical elephant that appears on stage with her.
Labels Seek Slice of Concerts
The concert business has never been bigger, in dissonant contrast to the recorded-music business. While music sales have dropped for three years in a row, from $13 billion to $11.5 billion in 2002, hurt by Napster-style digital piracy and a lackluster flow of hot new acts, the tour business has climbed for four years straight, from $1.3 billion in 1998 to $2.1 billion last year. Thus musicians increasingly rely on road shows for their income.
Performers frequently moan about never seeing a royalty check from their record label, no matter how many discs they sell. But a top concert draw can take home 35 percent of the night's gate and up to 50 percent of the dollar flow from merchandise sold at the show. The labels get none of it.
"The top 10 percent of artists make money selling records. The rest go on tour," says Scott Welch, who manages singers Alanis Morissette and LeAnn Rimes.
Now the music labels, hungry for revenue from any source, are mulling over whether to make a grab for a piece of the tour biz. One company already has: In October EMI Recorded Music signed a deal with Brit singer Robbie Williams that gives the label a cut of the pop star's merchandise, publishing, touring revenue and sponsorship.
Williams, unknown here but huge everywhere else, is a former boy-band star who has sold 26 million records since 1995 and regularly sells out concert crowds. His current European tour includes three nights at England's cavernous Knebworth Stadium, where he will cavort in front of 150,000 people each night. Hence EMI's willingness to pay him an estimated $20 million for a 25 percent stake for his nonmusic revenue, in addition to hefty per-album advances.
EMI officials say they are pursuing similar deals with other musicians, both superstars and new acts. Other label executives are eyeing the idea, albeit less openly. Vivendi's Island Def Jam may create a tour division. At Sony Music, before he left the top job earlier this year, the embattled Tommy Mottola is said to have asked several top acts to share the wealth; they demurred.
For more, go to Forbes.com..