July 22, 2006

Concert, rehearsal venues get wired

By Antony Bruno and Ray Waddell

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

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,

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.


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

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

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."


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,

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."


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

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

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."