Concert, rehearsal venues get wired

LOS ANGELES/NASHVILLE (Billboard) - It's 9 p.m. at The Gig in Hollywood and a crowd of L.A. hipsters is trickling in to catch the evening's act.

The bar itself is just one of several live music venues scattered throughout the city that caters to emerging artists hungry for a stage -- however small -- to hone their skills and attract a following. Attendance tonight is sparse, maybe 30 patrons hang on the bar or linger on the beer-stained dancefloor.

But the band on the dinner-table-sized stage plays to a much larger audience. Practically unnoticed to all but the performers are four domed, Vegas-style security cameras hanging from different areas of the ceiling capturing their every move. The Gig films all performances -- three a night, seven nights a week -- and broadcasts them the next day from its Web site, http://www.liveatthegig.com.

The Gig is riding a tide of revolution in the concert business. The ongoing explosion of high-speed, broadband Internet penetration in the United States has sparked a growing need for quality, exclusive multimedia content. Live performances fit this bill perfectly, and everyone from small clubs to major media companies are getting hip to this fact.

The huge success of AOL's delivery of the Live 8 concerts last summer made it clear that both consumer demand and the potential to offer compelling product exist. For Gig owner Peter O'Fallon -- a film and TV director -- recording and broadcasting shows is a way to not only marry his twin passions of video and music, but also an attempt to develop new revenue streams made possible by the Internet.

For the acts that pass through his doors, it's free online exposure that rivals any multicity tour, allowing them to post links to their performances on MySpace or send to friends, fans and promoters.

For the industry, it's a rapidly growing business model that is changing the dynamics among artist, label, venue and digital music services.

THE BIG BOYS

AOL hosted its first originally produced live concert in 2003 featuring the Foo Fighters from the Black Cat in Washington, D.C. Since then AOL Music Live has delivered exclusive live webcasts by such artists as Usher, Rod Stewart, Nelly, Avril Lavigne, Josh Groban and Ashlee Simpson.

Erik Flannigan, VP/GM of AOL music, movie and TV, says venues are far better equipped to accommodate digital delivery these days. Back in 2003, "We were essentially bringing in all the crew and all the facilities and capabilities to the venues to make (digital delivery) happen," Flannigan says. "But you're seeing buildings built in the last 24 months, as well as those on the horizon, already presuming that capability is going to be desired and needed."

The cost and difficulty of digitally wiring a venue is waning, Flannigan believes. "I think it's fair to say that the cost of putting in T1 lines and a lot of backbone pieces you need to do this stuff has come down dramatically in the last year as have the bandwidth costs simply to deliver this programming," he says.

The world's largest promoters, AEG Live, Live Nation and House of Blues, which Live Nation acquired just weeks ago, have all bought into this concept, some more aggressively than others. HOB was the pioneer with live webcasts from its clubs dating back to 1995.

"We first focused on live digital delivery of shows because nobody else was doing it," says Jim Cannella, national director of corporate partnerships for HOB. "The whole world was mesmerized by the infinite opportunity the Web represented, there were widely accepted technology standards to put your arms around and a market of hungry consumers which was doubling in size every few months."

Then the dot-com bubble burst and things got complicated. "Digital initiatives started to be viewed as high-risk use of capital, and there were no devices that could transport the content people spent hours trying to find," Cannella observes. "By the time MP3 players got easier to use, the two-page artist release had turned into a 10-page long-form agreement."

Today Live Nation, also the world's largest venue operator with its 40-plus amphitheaters, is making a "substantial commitment" to wire 120 venues and festival sites throughout North America and Europe with the ability to capture and repurpose thousands of live concerts. Live Nation currently has 36 wired venues in the States and broadcasted more than 350 concerts from around the world last year.

And Live Nation has been creative in the outlets for these concerts, including TV, mobile phone carriers, terrestrial and satellite radio, online and other digital music distribution avenues. "There's no end to the uses once (the content is) captured," says Bruce Eskowitz, president of global venues and sponsorship for Live Nation. "It opens up tremendous opportunities with 3G, SDTV, HDTV, live ringtones, etc. The problem up to now has been the ability to capture it cost effectively."

Eskowitz says his company's current digital initiative is about extending Live Nation's relationship with its customers. "An important new way to expand this relationship is through the recording and distribution of the live concert," he says.

From AEG Live's standpoint, the success of the Live 8 broadcast led to a major programming and marketing collaboration among AEG Live, AOL, XM Satellite Radio and Live 8 executive producer Kevin Wall, a joint venture called Network Live.

Since its inception, Network Live has broadcast live performances by Bon Jovi, Madonna, the Rolling Stones, Green Day, Keith Urban and Gretchen Wilson.

"We essentially will work with an artist in any venue, traditional or nontraditional, and I would say right now we're seeing a real sea change in that most venues are moving toward making themselves available for wiring," says Aaron Grosky, VP of music for Network Live. "You don't get a large preponderance of venues being prewired, however, they are all extremely amenable and excited about us coming in and making the broadcast available from their venues, essentially extending their local presence to a national or even global level."

A venue that is wired to the max, such as AEG Live's Nokia Theater in New York, "not only allows you a great amount of efficiencies in not having to bring in digital production elements, but also in having an amazing production. It really makes for a beautiful delivery to the end consumer."

And, at least at these still-early stages of the wired-venue game, cannibalization of the live music customer hasn't been an issue, according to executives interviewed for this report. "You're creating additional relationships between an artist and a consumer," Grosky says. "For a music fan, there's nothing that can replace going to a show, the communal environment, the energy, the vibe, the heat in the room, everything that comes out of being there firsthand."

CLUB BY CLUB

Today, clubs such as Los Angeles' Roxy or Washington, D.C.'s 9:30 Club outsource the recording process and air the content on existing Web sites like MySpace or NPR.com, respectively.

Increasingly, venues like the Gig take this a step further by not only spending millions to retrofit their establishments with their own recording equipment and production facilities, but also justify this investment by launching their own Web sites that serve as the exclusive online home for this content.

Across town from the Gig, nestled amid palm tree-lined film studios and the Bob Hope Airport, lies CenterStaging Musical Productions -- a 150,000-square-foot facility housing 11 rehearsal studios and a sound stage.

In the last year, the company overhauled the entire establishment to capture and broadcast the performances taking place within its walls.

CenterStaging's outlet is http://www.Rehearsals.com, a Web site where fans can stream rehearsal footage of their favorite acts as they prepare for their upcoming tours.

On the surface it couldn't look more different than the Gig. Whereas the Hollywood bar is a decidedly DIY affair with exposed wires and a makeshift control room housing two Dell computers and a rickety air conditioner, CenterStaging's upscale production boasts a multimillion-dollar state-of-the-art facility that spares no expense.

Each rehearsal room can be quickly equipped with up to 14 high-definition remote-controlled cameras and multiple mics. There's one control room just to manage the lighting, with separate production and editing rooms for audio and video.

Yet another room boasts 160 terabytes of server capacity for video and another 20 just for audio. According to executive VP of business development Tommy Nast, the facility is equipped to capture more than 300 hours of content a day.

With such recording and broadcasting capabilities, a venue as small as the Gig or as large as CenterStaging can expand its capacity to the world.

The benefits are many. The promotional opportunities make it easier to book acts and at the same time inspires artists' best performances.

"After about four or five takes, you almost forget the cameras are there," says Dryden Mitchell, lead singer for Alien Ant Farm, during a session to be aired soon on Rehearsals.com. "But it's always in the back of your mind. You still watch what you say and remember to suck your belly in."

A CONCERT CASH COW?

Although neither the Gig nor Rehearsals.com has started doing so, both companies plan to sell advertising on their sites to recoup their investments.

"Ultimately, the idea is to monetize it," O'Fallon says. "At the moment, there's not a tremendous amount of money to be made until there's tens of thousands of people visiting the site."

Live music is "definitely" a revenue producer for AOL, according to Flannigan, with such heavyweights as Intel, Nissan, Chevy, Lexus and Absolut onboard as advertisers.

"There is certainly a large collection of advertisers out there who want to associate their brands with live performance," he says. "Some of the biggest consumer-product advertisers in the world are starting to feel like digital live music is a fantastic showcase for their brand."

AOL has a ready-made "billboard" of sorts on each computer screen where advertisers can reach consumers. Flannigan thinks live webcasts could also be an "enormous" ancillary revenue stream for artists, "especially artists like Pearl Jam or Bruce Springsteen that are mixing up their shows every night," he says. "There really are 10,000-15,000, even 20,000, people who are interested in what's happening at every single show, and if you add that up it could result in some very meaningful money."

Grodsky says the primary value of a Network Live broadcast is the "simultaneous launch across these multiple platforms that really creates an unprecedented impact from a visibility perspective." Then there is the resulting product.

"This asset that we create, this hi-def, Dolby 5.1 sound, piece of live concert footage, is something that (the artists) own," Grodsky says. "It's a copyright we don't take ownership of, nor a master we get control of, so it's something they can use for live DVD, live audio CD, exclusive product for retail, bonus content on the Web, really the things they can do with it are endless. So you're creating a high-quality asset for them to leverage down the line."

Lastly there is a revenue possibility through a revenue-share on the backside, Grodsky says. "The business model is pretty standard as it relates to the revenue that an artist shares in from the distribution of the exhibition of the content," he adds. "But the ability for them to create additional revenues through their own exploitation of the master after the fact is unprecedented."

It seems the financial breakdown of this new revenue stream is still evolving. "Obviously, this is a complicated area because there will be rights issues that need to be figured out," Eskowitz says. "But we believe there are a wide variety of potential revenue streams for this live content."

Cannella says digital delivery is easier and cheaper than ever, but getting clearance to offer the product to fans is tougher. "That's why we believe our technology partners like Motorola are key to the equation by encouraging innovation and not being afraid to help underwrite a good idea," he says. "It's rare, but if a label can see you more as a promotional partner than a threat, then those good ideas can become profitable."

Rehearsals.com's Nast figures it will take about six months to reach its traffic goal of 1 million-2 million hits a day, which he feels are the numbers needed to sell advertising on any real scale.

Sweetening the deal is that they retain exclusive rights to the content, in most cases, as artists aren't paying extra for the shoot. Participating acts can freely use the footage for their own purposes, such as DVD B-Roll, etc., but don't share in the advertising revenue gained from the site.

"The artists are recognizing the promotional value of it that's going to spike their tour sales, CD sales, and DVD sales," Nast says. "We're able to amass millions of eyeballs with all these platforms, making us a great promotions and marketing partner."

Consumers are responding to this digital content in a big way, Eskowitz says. "At the moment there is a tremendous thirst for content on a number of platforms, including mobile phones, online, television, satellite radio and more."

As more venues get wired, more artists want to put their concerts out there in cyberspace, according to Grodsky. "Now we're at a point where they're coming to us, really seeing the value and offering their content," he says. "We're getting a lot of positive feedback, almost to the point where we're filtering more than we pitch."

At the Gig and Rehearsals.com, many of the acts being recorded are unsigned. Rehearsals.com has a mix of well-known acts such as the Cars, Tom Petty and the Pussycat Dolls, but also a host of relative unknowns. The Gig is exclusively focused on unsigned artists.

Although a long shot, both hope to capture the performance of an act that one day may make it big, thus bringing great value to such an early "before-they-were-stars" performance.

"Just imagine if one of these guys becomes the next Nirvana," O'Fallon says.

This gives these venues a vested interest in the artists they work with, investing in them the way labels once did.

"We have an A&R process," Nast says. "We spend a lot of time listening to these artists and looking at their potential, their history. I'd put the emerging artists on our site against any A&R exec."

It's this nurturing of young talent that drives O'Fallon more than anything else. He's even started to promote the idea to other venues across the country, possibly establishing a network of smaller venues with recording capabilities -- with all footage aired on the Gig's Web site.

"The thing that's so great about the Web right now is that it's the Wild West," he says. "There's a tremendous amount of freedom for expression and showcasing artistic ability."

Reuters/Billboard