The music business may be in turmoil, but Rapino couldn't be happier. He is the CEO of Live Nation, a two-year-old spinoff of Clear Channel that generated $4.4 billion in revenue in the past 12 months by running concert tours - more than any other outfit in the world - and owns venues large and small, like the House of Blues chain. The performance business is thriving, in oft-noted contrast to the selling of CDs, which has been buffeted by everything from the advent of file sharing to the disruptive effects of Steve Jobs' iPod. For years CDs were the cash cow, and artists toured to promote their albums. Today major artists make 75% of their earnings from touring.
But Rapino isn't satisfied with dominating the concert business. He is mounting an audacious attack on the record labels and seeking to poach their most important assets - their stars - by turning Live Nation into a one-stop operation that handles their every musical need. His offer: We already operate your tours. Why not let us make your albums, sell your merchandise, run your website, and produce your videos and a range of other products you haven't yet thought of? This is the age of the empowering Internet, after all. Artists are in charge. Who needs a record label?
Depending on whom you believe, Rapino's strategy will either reinvent the ailing music industry and turn Live Nation into a powerhouse - or cripple his company. Certainly it's brash talk for a concert promoter whose toddler-aged company has never put out a single record. But artists have been listening closely since Rapino landed a giant catch. In October he struck a first-of-its-kind deal with Madonna, who bolted her longtime label Warner Bros. and signed a ten-year contract estimated at $120 million to let Live Nation handle every part of her business except publishing.
“The labels are in a jam," says Guy Oseary, Madonna's manager. “For a company to do well in music now, it's got to be in all aspects of the business. And Live Nation is the risk-taker. It's leading the charge."
At the heart of Rapino's strategy is his company's ability to connect to 35 million people who attend Live Nation shows every year. Already Rapino has a database of more than 25 million concertgoers. Say you're looking for tickets to Coldplay, a group Live Nation promotes. If Rapino has his way, his company will sell you a downloaded song along with the ticket. Or maybe a T-shirt with a download. Or maybe the website will use its trove of consumer information to turn you on to a new band you might like.
“He can touch a lot of different people and flag like-minded fans," says Jim Guerinot, who manages Nine Inch Nails and Gwen Stefani. “And that's a proposition that starts to get really interesting." Sitting in his loft-like Beverly Hills office, Rapino puts it more bluntly: “I am the worst enemy of the labels."
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