By Laura Rich
July 23, 2010

Revenue is down, the music business is a mess and the scalpers just won’t let up

by Laura Rich, contributor

Irving Azoff has his back up against a wall. The Live Nation (LYV) CEO faces declining ticket sales at the concerts his company produces and his company’s 2009 revenue was down well below expectations at $365 million from $450 million the year before.

What’s more, he doesn’t trust the numbers about concert tours and he seems to have had it up to here with scalpers and the so-called secondary ticket business.

“There’s always going to be ticket brokers, secondary ticket business,” he said. “But they have no skin in the game, they’re not the guys putting tens of millions in.”

In a lively conversation with Fortune magazine managing editor Andy Serwer at the Fortune Brainstorm Tech conference in Aspen, Azoff rehashed some of the ground he covered more antagonistically at the company’s investor day earlier this month. There, he admonished investors who were selling shares and driving the price down 20% as “short-sighted” and blamed the press for spooking artists into rethinking their marketing strategy.

In Aspen, Azoff similarly went after Pollstar, which reports numbers on ticket sales for the music business. He has been on the attack against the company’s methodology, claiming it was based on simply “calling up tour managers.”

“A tour manager can call up and say ‘we did a million four’ and they print it,” he said. “I thought the Eagles numbers were inaccurate so I didn’t submit it, so they called me up” and he gave them some figures that he didn’t think were final. “And the industry was up 17% to 11% down because I remembered to report one tour.”

Azoff attributed the company’s poor revenue figures to the merging two massive companies – Live Nation and Ticketmaster, which it acquired last year for $835 million (cash and stock) – and the chaos of the ticket business. But that’s where Azoff is extremely bullish.

“We think of ourselves as an e-commerce opportunity more than a ticketer of live events,” he said. “We eventually think we can ticket everything”

To that end, the company is developing a dynamic ticketing system in an effort to retain the activity it has lost after the sale to scalpers and ticket brokers. The system will put ticket prices in line with demand, shifting prices on the fly based on demand.

Where he wasn’t bullish was recorded music. “Recorded music has become your marketing tool for your entire career,” he said. “There’s a reason Madonna did a deal with whatever clothing line now instead of 15 years ago. The money coming in from third-party branding is kind of replacing recorded music.”

With that said, he was asked whether that might mean he could get back Pearl Jam, which began refusing to play at Ticketmaster events in the 1990s. “They released their last album exclusively through Target. They sold out like everyone else, what can I say.”

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