German Live Biz Catches Fire

Despite continuing declines for recorded music sales in Germany, the country's concert business is booming.

German promoters estimate that concert revenue in 2005 reached 3 billion euros ($3.6 billion), a 5% gain over 2004. There are no official figures for 2003, but research company GFK estimated the live market at 2.7 billion euros ($3.3 billion).

The past five years have seen consolidation in Germany, with the country's largest promoters, Bremen-based CTS Eventim and Berlin-based DEAG, buying up smaller regional operators.

"The German live entertainment market is currently very buoyant," DEAG CEO Peter Schwenkow says.

Growth came in 2005 despite a limited number of superstar tours. Insiders predict double-digit revenue growth for German promoters in 2006, with a schedule that includes Robbie Williams, the Rolling Stones, Depeche Mode, Eric Clapton, Eros Ramazzotti, Santana, Bon Jovi and Madonna.

Schwenkow says the live business has benefited from a gloomy mood among German consumers brought about by rising unemployment and disillusionment with the country's politicians. "In times of uncertainty," he says, "music fans seek moments of relief by going to concerts."

CTS and DEAG now dominate the concert market in such large cities as Berlin and Munich. The recent round of consolidation began in 2000 when CTS acquired majority stakes in the businesses of promoters Marek Lieberberg (Frankfurt) and Peter Rieger (Cologne). Since then, CTS and DEAG have each taken control of a dozen promoters and ticketing firms.

CTS CEO Klaus-Peter Schulenberg describes the tie-up with Lieberberg as the "star alliance" of the German business, bringing more leading artists to Germany than in the past.

Lieberberg remains managing director of Marek Lieberberg Konzertagentur, which he says sold 1.6 million tickets for 700 concerts in 2005, including attractions like Anastacia, Bruce Springsteen and Mark Knopfler. He also reports brisk business for 2006 shows by leading domestic acts Xavier Naidoo, Reamon, Sasha and Dick Brave.

Schulenberg says CTS' revenue totalled 220 million euros ($266 million) in 2005. But he insists the company credo remains "profit precedes turnover."

"We will refuse tours that we see as too risky," Schulenberg says, "where—after serious calculation—we think we cannot make a profit." The company worked with U2, Elton John and R.E.M. in 2005.

CTS struck a strategic alliance with U.S.-based Clear Channel Entertainment in 2003. At that time, CCE acquired a 20% stake of Lieberberg's MLK, which now promotes all CCE concerts in Germany and Austria.

DEAG is also allied with a U.S. events giant. In October 2005, it formed a joint venture with Ticketmaster to create online-ticketing operation Ticketmaster Deutschland. The company is expected to launch mid-2006.

Also in 2005, DEAG acquired majority stakes in Klaus Bönisch Konzertagentur and the parent company of promoter Music Pool Germany, bringing into the fold such touring acts as Chris DeBurgh, Deep Purple, Manowar, Höhner, Christina Stürmer, the Black Eyed Peas, the Eagles and classical violinist Nigel Kennedy.

Schwenkow says DEAG will step up its involvement in classical music across Europe during 2006. He claims the high ticket prices for classical concerts can generate profit margins for promoters of 12%-18%, compared to 5%-6% on pop events.

"We want to become the No. 1 promoter for classical concerts in Europe," Schwenkow says. DEAG has accordingly signed up tours by such classical names as Anna Netrebko, Placido Domingo and Jessye Norman for 2006.

In 2005, DEAG had a turnover of more than 100 million euros ($121 million) from its German businesses and stakes in Swiss and British concert firms.

The rise of CTS and DEAG with their U.S. links has raised some fears among Germany's remaining independent promoters. "We mustn't leave our business to the large groups and multinationals," Hamburg-based Karsten Jahnke says. "We require many independent and innovative concert organizers who are able to assert themselves in the market."

Some independent German promoters are thriving in the shadow of the giants. Berlin-based MCT, for example, handled the 2005 European tour by Germany's current most successful live music export, Universal hard rock band Rammstein. The act played 22 shows, with a total audience of 300,000, MCT managing director Scumeck Sabottka says.

"Ourselves, Jahnke and other medium-sized companies still have top acts," Sabottka notes.

And Lieberberg insists the German market remains competitive. "The scheduling of tours is [still] comparable to auctions," he says. "That's why we don't do Robbie Williams or the Stones. It's just the way things are." ••••