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CDs May Be Dead, But Rock 'n' Roll Lives On


The concert experience will never be subject to illegal downloads.

Remember the good old days when bands made money from album sales? As a reasonably successful bassist who goes by the name Paul McCartney once said, "John and I literally used to sit down and say, 'Now, let's write a swimming pool.'"

My, how things have changed. Scott Welch, manager of Alanis Morissette and LeAnn Rimes said, "The top 10% of artists make money selling records. The rest go on tour."

Other managers agree. "I look at a CD as part of the marketing of an artist, more than as an income stream," manager Jeff Rabhan, told the Wall Street Journal. "It's the vehicle that drives the tour, the merchandise, building the brand, and that's it."

Album sales fell to 428.4 million in 2008 from 500.5 million a year earlier according to Nielsen SoundScan. But this is more of a worry big labels like Sony (SNE) than it is for Apple (AAPL), which recently exceeded one billion downloads from iTunes, or for the bands themselves.

According to Billboard, concert grosses were up nearly 13% in 2008 over the prior year. Ticket sales for the top 100 acts in North America rose 4.3% to $2.38 billion, and ticket prices for the top 100 tours averaged $67. Touring is no longer a loss leader for the business of selling records -- live revenues now make up the lion's share of a group's income. Up to 90% of a ticket's face value often goes to the artist, and anything left after paying the tour's expenses is pure profit.

Fact is, with all the noise being made about illegal file sharing, you still can't duplicate the experience of being part of the crowd at a rock show via a PC. In the words of Ticketmaster (TKTM) CEO Irving Azoff, "I've been a manager, I've run a record label, I've produced TV shows and movies -- pretty much everything. And, still, the most powerful thing I know of in entertainment is the live experience. The performer onstage receiving the adulation of the fans -- there's nothing like it, and that's never going away."

Alan B. Krueger, a professor of economics at Princeton University and the world's foremost "rockonomist," agrees.

"It should lead to more creativity in terms of live performances," he wrote. "A concert is more than just an artist at a microphone. Look at all the light shows at a U2 concert."

U2 is, by all accounts, an incredibly dynamic live act. But, can Bono and Co. bring their lavish staging and production to the fans while still turning a profit?

The band's current tour in support of its new release No Line on the Horizon is the first of three tours U2 is expected to do as part of its 12-year contract with concert promoter Live Nation (LYV) at a cost of $750,000 per day -- even when they're not performing.

With 200 trucks transporting three identical stage set-ups (each one cost $40 million to build and takes two full days to disassemble), 500 crew members on the payroll, and an Airbus (EADS) A320 on hand to shuttle the group across the globe for the duration of the 18-month, 100-date extravaganza, it took three months just to reach the break-even point.

They'll also be emitting enough CO2 for all four musicians to fly to the planet Mars and back, or the equivalent of leaving a standard 100-watt light bulb on for 159,000 years, researchers at estimate.

What are Bono et al doing to combat this?

Encouraging tour staff to use canteens rather than disposable water bottles and asking venues to use environmentally friendly soap and toilet paper and to allow drivers of hybrid vehicles to park at discounted rates.

Wait, wasn't it Bono who famously proclaimed that "My prayer is that we become better in looking after our planet"?

Well, yes. But that was almost a year ago, after all. And perhaps the whole recycled toilet paper idea will work out.

In short, what does all this mean for artists unable -- or unwilling -- to lay out almost a million dollars daily in order to attract crowds with a spectacular show?

David Hood, one-fifth of blue-collar southern rockers the Drive-By Truckers, said, "The collapse of the record business has been good for us, if anything. It's leveled the playing field in a way where we can keep slugging it out and finding our fans. They follow us from city to city, see the shows, get drunk and buy shirts. Thank God they can't download those."

Rock 'n' roll ain't dead. It's alive and well on a stage near you.

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