New Venues, High-Tech Concerts: AEG's Plan to Come Out of Covid - Rolling Stone
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New Venues, High-Tech Concerts: AEG’s Plan to Come Out of Covid Stronger Than Ever

Construction of new music venues and technology updates are happening faster “as a result of not having to remodel the airplane while still flying in the air,” says the concert company’s CEO Jay Marciano

Photo by: John Nacion/STAR MAX/IPx 2020 5/13/20 A view of Webster Hall during the coronavirus pandemic on May 13, 2020 in East Village, New York City. COVID-19 has spread to most countries around the world, claiming over 270,000 lives with over 3.9 million infections reported.Photo by: John Nacion/STAR MAX/IPx 2020 5/13/20 A view of Webster Hall during the coronavirus pandemic on May 13, 2020 in East Village, New York City. COVID-19 has spread to most countries around the world, claiming over 270,000 lives with over 3.9 million infections reported.

A view of Webster Hall during the coronavirus pandemic on May 13, 2020 in East Village, New York City.

John Nacion/STAR MAX/IPx/AP

Depending on who you ask, live music won’t be back in full force for months, seasons, or even several more years. Even after a Covid-19 vaccine rolls out around the globe, it’ll be a while before concert tours can reassemble and restart.

So AEG, the largest music promoter in North America after Live Nation, has been spending the limbo period trying to find silver linings in the severely disheartening situation. Three of AEG’s top executives — CEO Jay Marciano, North American President Rick Mueller, and Chief Digital Officer Brooke Michael Kain — tell Rolling Stone that the company has been using the down time to develop new venues and work on tech-specific projects that should improve the concertgoing experience but have fallen on the back-burner for years.

Due to Covid’s mass cancelation of events, the company laid off 15% of its workforce in June, while also furloughing 100 employees and introducing steep pay cuts. But the funding for these new projects comes from separate budgets — and AEG expects the company to benefit from seeing them through. Execs, though declining to specify financial figures, also say this strategy should result in an influx of hiring opportunities when touring is able to resume.

Building brand-new venues

“In North America, we have five new venues coming,” Marciano says. “We didn’t stop construction and renovation on development.”

Whenever Covid stops being a barrier, AEG will open a 2,000-capacity room in Atlanta and a 3,500-seater in Boston. Cincinnati is getting a property with 2,500 indoor seats and 6,000 total. And AEG is also building a 4,500-capacity residency theater in partnership with Resorts World — a new casino-resort that’s supposed to open on the Las Vegas strip in summer of 2021 — as well as a 4,000-seat room that they’re renovating inside the new Virgin Hotel property, which used to be the Hard Rock. “Those are all well under construction, nearly completed in some cases,” Marciano says. “They will be ready by the fall of next year when we think we’ll most likely be reopening this industry.”

Mueller describes the initial list of artists who’ve agreed to Resorts World residencies as “pretty damn high-profile” but won’t reveal who’s on board just yet.

“We also just announced a new venue in London,” Marciano adds, referring to a 4,400-seater that’s coming as part of a regeneration of the Olympia London, which is undergoing $1.3 billion in renovations and will likely open in 2024. “So, the good news is we still feel confident in the longterm health of the business to continue to invest capital.”

Upgrading older venues, contracts, and business structure

AEG is also looking into refreshing older venues, with new ventilation systems being one of the big-ticket talking points. Mueller says the company was already on track to upgrade bathrooms with touchless faucets and air dryers because they’re more environmentally friendly, but these goals have become a bigger priority during the pandemic, as leaders weigh the possibility of another health crisis in the future.

After Covid, artists will also be clamoring to get back onto the stage en masse. When asked if AEG is revisiting contracts to make them more artist-friendly, Mueller says negotiations along those lines are happening. “We’re coming back to a different economy,” he says, adding that some financial arrangements have had to change, but declining to give specifics.

Then there’s radius clauses — common parts of contracts that prohibit artists from playing at a competitor-owned venue within a certain distance and amount of time. Mueller says these historic clauses are more crucial with festivals than tours. “But, yeah, there’s a lot of festivals to play in the first half of the year that have moved to the back half of the year, and there’s going to be a log jam,” he says. “I think that the flexibility is going to be the key.” Marciano adds: “I think you’re going to find that, on all sides of the industry, everyone’s going to be more open to negotiation.”

“We’re getting it done faster as a result of not having to, you know, remodel the airplane while still flying in the air.”

Turning to tech

Marciano says his teams are focusing on a couple less glamorous, but still exceptionally important engineering-related projects — such as ticketing improvements, contactless payments, and data marketing. We didn’t cut back at all in that area,” he says. “If anything, we’ve doubled down, meaning that we brought more engineers on board.”

With mobile ticketing, Marciano says AEG employees regularly found themselves fixing things on the fly as they were actively selling tickets, so the pandemic has allowed those employees to design permanent solutions. “We’re getting it done faster as a result of not having to, you know, remodel the airplane while still flying in the air,” he says.

The goal is to make as many experiences, as contactless as possible. For one, Kain is working on making the digital ticket as powerful as a wallet, allowing users to preload a set amount of money or link a credit card. She wants to fans to be able to order a beer through an app, reducing the need to physically exchange payment, while also minimizing lines. Ordering a beer requires age verification, though; AEG is also looking at doing that digitally so that attendees don’t have to queue up for 21-plus wristbands or stamps.

If an attendee is waiting in a long bathroom line, Kain wants to be able to send a notification that alerts them to a shorter line nearby. If a toilet is out of order, they could get an alert for that too. The executive is considering the same kind of logjam avoidance when it comes to transportation: If attendees pay for parking or coordinate ride-sharing in advance, it would reduce traffic jams on the grounds — and reduce fan frustration.

The contactless model also makes it easier for AEG to give attendees perks like seat upgrades and merch discounts. “When you scan in, you could get a notification like, ‘Hey, you’ve come to my venue twice this week; here’s a dollar off a beer,’ or whatever it might be,” says Kain.

“To get these things coordinated from ticketing platform to venue operations to the backend marketing technology that makes it all work, it takes an incredible amount of time and bandwidth,” adds Mueller. Festivals, for example, often have their own apps filled with lineups and set times, maps, and sponsorship activations. On the other hand, everything done for a small club would instead be done on the general ticketing app.

“I think what probably would have taken me three years is going to end up taking a year,” Kain says.

In return for all of this, of course, AEG is getting in-depth data on concert-goers’ habits. “This allows us to know the consumer better, which is just going to make us more efficient at marketing, knowing who’s in the venue, and understanding spending habits,” Mueller says.

But everyone has to play the waiting game

Marciano believes touring will resume in fall 2021 — but, he says, the industry needs a vaccine to be distributed widely and proven to be effective. (Though Live Nation is considering linking test results to tickets to get limited-capacity events off the ground, AEG and its ticketing arm AXS are not interested in that path.)

Marciano says the concert business doesn’t function well in a socially distanced manner. “We built an industry based upon selling out,” he says. “It’s important for the experience… The first 50% of the tickets pay for expenses like the stagehands and the marketing, the ushers, and the rest and the venue, and the other 50% is shared between the artists and the promoter — so, if all you’re going to sell is 50% of tickets, nobody’s making any money. Selling 85% of tickets is roughly the break-even.”

In venues like arenas, it’s simply not cost-effective to go through the expense of producing a show that can only sell 50% of the seats; in clubs and smaller theaters, AEG expects a “gradual ease” back into things, with some reduced-capacity shows. Marciano notes that co-headlining and package tours could eventually help here, both by enticing the consumer to spend money and allowing the acts to save money through shared resources. But any company-wide plan will depend on how a vaccine is rolled out.

“Costs are only going to go up in terms of sanitation and staff to make sure we’re keeping patrons safe and the venues clean upon reopening,” says Mueller.

As Marciano points out, the economics of touring are “built on repetition.” Touring doesn’t doesn’t function well for any of the players involved — promoter, venue operator, or artist — if the number of gigs in a run has to be kept curtailed. “Some of these major tours are carrying 20 to 30 semis worth of equipment,” says Mueller. “You miss one or two shows? That’s a lot of money.”

“Whether you’re an artist that sells out a thousand-seat clubs or you’re an artist that sells out stadiums, you’ve got to do it a fair amount of times before it becomes profitable,” says Marciano. “It doesn’t do us any good to have five states open and ten states closed. We really need the country to open at once.”

In This Article: AEG Live, music industry


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