The Hot Seat: Luke O’Sullivan, The Hi-Fi

Published in The Music Network

 

Luke O’Sullivan has kicked a lot of goals. A former AFL star, O’Sullivan made the switch from Carlton Football Club to the live music business in 1997 with the launch of Hi-Fi Melbourne. In 2009, Hi- Fi launched its brand in Brisbane’s West End. Now, O’Sullivan and his team are preparing to tackle Australia’s largest market when Hi-Fi Sydney opens its doors next February or March in the Moore Park Entertainment Quarter. TMN caught up with the entrepreneur.

Why did it take so long to find a Sydney site?
I looked at a couple of hundred buildings. Pubs, warehouses, disused cinemas, bowling alleys and roller-skating rinks. We needed a minimum of 1,000 square meters. It’s pretty precise in terms of the space you need for the right capacity to make the business work. We learned that Sydney had very few spaces big enough, and property prices were overinflated.

You searched for eight years?
On and off. In the last three-to-five years, it’s been pretty concerted and focused. Prior to that, we dabbled for three or four years. Had I known it was going to take so long, I probably wouldn’t have started.

Sydney’s live scene is currently going through something of a wash cycle. Smaller venues are changing hands or putting themselves up for sale. Is now a particularly risky time for Hi-Fi to launch there?
I don’t have a crystal ball, so I don’t know. We’re committed to do it, we’ve always wanted to do it, so we’re doing it. There’s been such a phenomenal response. We’ve already got about 35 gigs we’re close to contracting in the first two months. Capacity is key. For the smaller capacity venues it’s really challenging. It’s hard to make it work at the 300-500-capacity mark. Most internationals can’t do it at that level because it’s not viable for them to. And most headline domestics need more tickets to sell to make it worth their while. It almost gets a little easier the bigger you go.

When you opened the Brisbane venue, it had a “multi-million dollar” fit-out. Are you putting-in a similar amount of cash for the Sydney site?
Yes. We’re ensuring we’ve got scalability. We’re going to compartmentalise so you can do 500-600 in that venue, and not have those punters swimming. And then we can scale it up to 900-1,000 and then scale it up again to the mezzanine with 1,200. And then scale it up again to 1,400. Originally the capacity was 2,000. But we compressed it because we realised size is not the answer. A lot of people get carried away and want a bigger capacity but the action is all around the 1,000-1,400 mark.

Some folks complain about the sound at The Forum. You’ll be tackling that?
We’re completely gutting the site. All that will remain from the original building will be the stage, the toilets and the air- conditioning unit. We’ll deliver the same level of production, sound and lighting that we have in Melbourne and Brisbane.

What is it about the Hi-Fi brand that is working?
We all just fell into it about 15 years ago. Once you work it out, and you’re in the space, you live it and breath it, you get pretty familiar with what bands want, what punters want. And if you stick to that and get it right in one city it makes sense to replicate that in other cities. We don’t have to get too caught-up with being cool and hip and being the latest and best-looking bar in Melbourne. It’s all about the bands. It’s all content-driven. We’ve got to make sure everyone can see the band and everyone can get a drink. When you distil it all, it’s pretty simple.

The Academy Music Group in Britain bares a resemblance. Their plan is to have an Academy in every city in Britain. Will the Hi-Fi do that in Australia?
There are similarities with the models but differences with the markets and populations. Perth we’d certainly have a look at. If we were to take it any further we’d look at opportunities in Asia.

You tried a joint-venture in Vietnam?
We licensed our brand to an operator to have a look. It was good fun, we really enjoyed it and we learned a lot from it. After a period of time it wasn’t working. But it was a low risk, and we went in carefully.

Are there other Asia markets you’re looking at?
Singapore makes a lot of sense. It’s not a big market in terms of population, but strategically it’s critical because it’s a major hub. Most of the international artists coming to Australia fly through Singapore, and none are playing there.

During your sporting career, did you know you’d get into live music?
No. But I was always interested in the entertainment industry, and in business. By the end of my career, I was running out the door.

What skills from the field do you bring to nightlife?
Whatever attributes you bring to both, I dare say, is probably innate. In certain cases, sportspeople do get a leg-up because they made good money which has funded them into business opportunities that maybe they’re not well-equipped to handle. I wasn’t that. I made nothing (laughs).


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The Hot Seat: Andrew Kronfeld, President of Global Marketing, UMG

Published in The Music Network

 

The world, we’re told, is becoming a smaller place. Well, Andrew Kronfeld knows the place intimately. A seasoned executive with Universal Music Group, Kronfeld was promoted in August to President of Global Marketing, a new position. From his New York offices, Kronfeld now controls the worldwide marketing levers for the globe’s biggest music company.

He joined PolyGram in 1991, working at the U.S-based PolyGram Label Group in various marketing posts. From 1995-98, he was part of Island Records’ marketing team, and in 1998 moved to London to become director of international marketing at PolyGram International, responsible for working globally with such artists as Shania Twain, the Bee Gees, Sheryl Crow and U2. Kronfeld admits to being “media shy,” though on a recent trip Down Under, he gave a rare interview to TMN on what turned out to be his 20th anniversary with the company.

Andrew, you were recently promoted to a new global role. What do you want to ultimately achieve?

The biggest thrill for me is when we take an artist from a territory and expand them into a much bigger region. When Universal is successful, it’s when we have acts coming from a lot of different markets and spreading the music to other places. It’s not just about American artists or UK artists. I want to make sure the likes of our Australian artists are getting a look internationally and succeeding. It’s about building bridges and making the music global, because the fans are. The way the world works today, kids know what’s going on elsewhere. The digital world allows so much openness and sharing.

So where does Australia fit into the global plan?

Australia is a top-five market. Australia has always had a great history of breaking global talent and it just feels like it’s been a while since there’s really been an Australian act that’s popped on the world stage. We feel like it’s imminent and we want to be a part of it.

Apart from the tyranny of distance, why else have Australian bands gone on to the “big stage” so irregularly?

I’m disappointed. It feels like it should be more. The tyranny of the distance is probably the #1 factor because it’s about time spent making sure people know you. But part of it also is what’s hot in Australia over the last few years has been a little off-cycle from what’s hot in Europe or America.

What’s your typical day like?

A big part is spent focusing on our biggest projects around the world and making sure we’re coordinating our energies responsibly. I try to touch base with our key markets, our key artists and managers throughout the day so I can get a good understanding of what’s happening, particularly on our priority artists. In a New York day, I might start the morning with phone calls to Europe, have America in the afternoon, and Australia and the rest of Asia in the evening.

How many days a year are you away from home?

More or less 100. A hundred plus. Almost every other week.

What are your thoughts on how the role of a major music marketing executive has changed of late?

When I first started in marketing, it was very much about advertising. And it was old- school advertising. If you had a big hit, you went to television with it. And you basically were there to coordinate activities. You didn’t really have responsibility for as much creative-ideas generation as you donow,andabigpartofwhatwedo today is making sure the touch points are connected between so many various parties. And the artists do so much more now than they ever have, using social media and creating direct interfaces with their audience. At the label, we have to make sure we’re coordinating with them and we’re all speaking from the same hymn book.

Why does a multi-national like Universal need a global marketing function?

Because if we’re going to succeed in what we do, we’ve got to have our artists’ shared around the world. If we become completely parochial and if we go out and just work locally, we’re not maximising the potential. Music is a global language. It’s something we take pride in at Universal. Perhaps more than music with each other. And we’re not thinking strictly on local and regional terms.

There’s been unconfirmed reports majors will abandon CDs by the end of the 2012. Is that a possibility?

I don’t agree with that. Our job is to make sure that we provide music in any format that the consumers want. Obviously digital is growing at a tremendous rate, and physical is declining in most markets. But it doesn’t mean there isn’t a physical business and it won’t be for many years to come. Personally, I buy vinyl. Something that we declared dead 20 years ago has found a niche. There’s going to be an audience for the foreseeable future that is going to want music in (CD) format. Our job is to make sure the consumer has choices.

 

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Rockin’ Summer: Oz Enjoys Solid Touring Season—Can It Last?

Published in Billboard Magazine
Australia’s live scene has enjoyed a long, hot summer like no other. Most promoters say the live business Down Under has never been healthier, and new statistics published by the Australasian Performing Right Assn. (APRA) and trade group Live Performance Australia seem to back it up.

But quietly, impresarios are wondering just how long the good times will last. Some festivals have fallen by the wayside, and some promoters admit that the super-heated concert business will cool down. But not just yet.

“Last summer was awesome,” says promoter Paul Dainty of Dainty Consolidated Entertainment. “A lot of people came into it wondering if the market could sustain all those tours. It was one of the busiest summers ever.”

The promoter presented acts like Bon Jovi, Michael Bublé, Miley Cyrus and Enrique Iglesias, all of whom did “storming business,” Dainty says. “Basically everything we did was sold out. It was a phenomenal summer.” Dainty has another phenomenon on his hands with Eminem, whose three open-air shows—Dec. 1 at the 60,000-seat Etihad Stadium in Melbourne and Dec. 2 and Dec. 4 at the 50,000-seat Sydney Football Stadium—sold out in about 30 minutes.
Ticket pricing is a hot topic at the moment. “We’re now seeing tightening in the market, definitely in relation to tours that have very high premium-ticket prices,” Dainty says. “If you see a $300 ticket, it’s getting much tougher to get those away. If your second price is $150-$170, people are targeting those.”

Australians are relatively flush at the moment. But they’re discerning as to how and where they spend their cash, veteran promoter Gary Van Egmond says. The economy is in good shape, the local dollar is flying high against its U.S. counterpart, and the word “recession” isn’t mentioned—or felt—in these parts.

According to a recent Credit Suisse report, Australians are the world’s wealthiest people on a median basis and second in the world behind only Switzerland on an average basis. Australia’s relative financial comfort means more money to spend on entertainment. And how.
A new study of live music’s economic impact found that the business generated $1.2 billion Australian ($1.2 billion), a figure that includes ticket sales and revenue from food and drink.

The study, conducted by accounting firm Ernst & Young and commissioned by the APRA and the Australasian Mechanical Copyright Owners Society, found that Australia’s live music sector generated total profits and wages of $652 million Australian ($670 million) and supported close to 15,000 full-time jobs. Live Performance Australia’s separate “Ticket Attendance & Revenue Survey” found live entertainment ticketing revenue in 2010 grew 22.6% to $1.3 billion Australian ($1.4 billion).

Concerts and festivals are big business in Australia. “Per capita, it’s easily the biggest live market in the world,” says veteran promoter Michael Chugg, who in 2011 presented Bob Dylan, Keith Urban and Dolly Parton, among others.

International tours will slow, but “it won’t happen this summer,” says Chugg, who anticipates a cooling-off in the festivals space. “There will be a settling-down of what’s been going on. We’re seeing that already.” Chugg’s company, Michael Chugg Entertainment, called off the Sept. 29-Oct. 2 Great Southern Blues Festival, citing “unsatisfactory” ticket sales, while the promoters of Soundwave Revolution (which blamed the loss of a key headliner), Funk N Grooves (poor ticket sales) and Rewind (again, ticket sales) all felt a chill. Canberra’s long-running Stonefest reconfigured its live rock music component because attendance was tumbling.

In the past 10 years, the festivals circuit on these shores has literally exploded. Some players refer to it as the “festivals frenzy,” where, it seems, every major city has a choice of more than a dozen fests during the summer.

“There’s certainly a lot of [festivals],” says Paul Piticco, co-promoter of Splendour in the Grass, which was headlined by Coldplay, Jane’s Addiction and Kanye West. “If you look at the summer festival schedule now, there’s a lot of new festivals. From the time Parklife starts right through to Bluesfest, you’ve got Future Music, Big Day Out, Laneway, the new Harvest festival, Homebake, Good Vibrations . . . It’s a dance from the time it gets warm to when it gets cold again. It’s quite packed.” Splendour—one of Australia’s most popular multiple-day fests—reportedly sold 30,000 tickets, roughly 2,000 short of a sellout. But it still made money, Piticco says.

Peter Noble, director of the iconic Bluesfest, says, “Discretionary spending is tighter this year than last year. The economy tells you, ‘You cannot maintain the level of festivals in Australia, and the supply of talent doesn’t exist.’ Economics then pushes up the price of talent and makes it unviable. The big events will remain established. The midlevel ones will do it tough. And it is going to get a whole lot tougher before things improve.”

Riding Ups And Downs Down Under: As ARIA Awards Approach, Australia Sees Cause For Optimism

Published in Billboard Magazine

 

The music market in Australia, like its counterparts elsewhere, has had its share of ups and downs in recent years. In 2011, however, it’s been mostly up.

A new wave of home-grown acts are making their mark, live music remains strong as ever, and digital music sales are booming. Physical sales are in decline. But they’re not crashing, leading executives note.

“It’s a buoyant market,” Universal Music Australasia president George Ash says. “There’s a real wave of creativity coming through the industry at the moment. There’s a lot of opportunity from artist creativity to services in the digital world. It’s entrepreneurial and, best of all, creative.”

That creativity will be on display at the Australian Recording Industry Assn.’s (ARIA) annual awards taking place Nov. 27 in Sydney. Three acts–Goyte, Boy & Bear and Drapht–lead the field with seven nominations each. Indigenous artist Geoffrey Gurrumul Yunupingu and rock act Eskimo Joe earned six nods. Birds of Tokyo picked up five nominations, while pop singer Guy Sebastian and late rocker Billy Thorpe earned four nods each.

Certainly the music industry should feel more upbeat at this year’s awards.

The Australian market slipped off a cliff in 2010, registering a decline in value of 13.9% to $384 million Australian ($390 million). It was a sobering result considering the Australian record business had returned to growth in 2009. Although ARIA no longer publishes midyear market figures, sources suggest the market has returned to growth in 2011. But it’s still below the 2009 figure.

Piracy continues to be a thorn in the industry’s side. However, there’s a sense that the government, Internet service providers (ISPs) and content owners are reaching common ground.

“The biggest challenge remains making significant breakthroughs on controling unauthorized downloads and to continue to develop existing and new legitimate services,” says Denis Handlin, chairman/CEO of Sony Music Australia & New Zealand and president of Sony Music Southeast Asia & Korea.

Handlin, who also serves as chairman of ARIA, points to discussions held between the content industries and the ISPs, convened by Australia’s attorney general.

The attorney general’s office in October also announced an inquiry into “safe harbor” practices that, Handlin says, “provide a very positive outlook for a system that will minimize illegal use and encourage more legitimate services.”

Piracy clearly hasn’t gone away, but the “P” word seems to be disappearing from the vernacular Down Under and the industry is pushing ahead with its Music Matters education campaign that launched in August to promote the value of music.

Australia’s record business never took the approach of suing file sharers, and the industry has watched from the sidelines as film trade association AFACT has taken legal action against iiNet to hold the ISP accountable for copyright infringements. AFACT’s ongoing case has largely faltered, and a High Court showdown is due the first week of December. If AFACT wins, it may pave the way for further action against ISPs. But that’s a big “if.”

Regardless, Australia’s ripening digital marketplace is entering an unprecedented phase of activity. Spotify is hiring staff ahead of its Australian launch, while market-leading brick-and-mortar retailer JB Hi-Fi should make a big splash with its anticipated Now subscription platform and download service. The retailer, which has 200-plus locations, reckons that Now will boast between 6 million and 8 million licensed tracks when it arrives before year’s end.

The action doesn’t stop there. BlackBerry launched its BBM music service in early November. And Universal Music and Sony Music’s Australian companies have formed a joint venture called Digital Music Distribution, which supplies music services including the music radio programming on the Foxtel pay-TV platform.

“Australia is probably a bit behind Europe and North America when it comes to streaming models, but what we lack in market penetration we make up for in proliferation,” says John Watson, president of Eleven: A Music Company and John Watson Management. “Things are certainly in a state of flux right now. The good news is that the business is now totally listening to the needs of consumers. The days of the music industry acting like King Canute and trying to hold back the tide are thankfully behind us now.”

Digital music services are jostling for a sizable business. In the year ending June 30, the digital market grew by 32%, according to Billboard sources. Digital revenue Down Under now accounts for 40% of all sales, up from 27% in 2010. Soon, the market will be evenly split between physical and digital sales.

Australia’s digital revolution is set against the backdrop of the Labor government’s National Broadband Network. It’s an ambitious national rollout of high-speed cables, intended to connect nearly everyone in this vast and sparsely populated country of 22 million.

By 2020, the ambition of the NBN is to place Australia among the world’s leading digital economies. In five years, users connected to the network may be able to download at speeds of 10 gbps. The NBN, however, has become a political football, with the opposition Liberal Party seizing on its $36 billion Australian ($37 billion) price tag coming amid a shaky global economic environment. What the Australian digital market will look like in 12 months’ time is anyone’s guess.

At physical retail, JB Hi-Fi continues to lead the way with an estimated 40% of the CD albums market. The No. 1 digital music service is iTunes, handling more than 70% of digital download sales. In the coming months, however, JB aims to chip away at iTunes’ commanding lead.

The challenges facing music publishers in Australia are the same felt by every music business around the world. “Digital is still growing very strongly, which we’re happy about. But if income from distribution of digital product can’t plug the gap, what other revenue sources can?” asks Brett Cottle, CEO of the Australasian Performing Right Assn. and the Australasian Mechanical Copyright Owners Society. “Publishers are facing that same decline in their revenue. And they’re having to deal with a hell of a lot more data and micro-payments.”

Universal Music in Australia is the recorded-music market-leader with a share of about 40%, ahead of second-place Sony Music, and the local companies of Warner Music and EMI. Australia’s independent music scene is a vital one. According to independent labels group AIR, indie acts accounted for 43 out of 125 nominations for this year’s ARIA Awards.

AIR conducted market-share studies in August and found the results favorable. “We realized that our combined members were consistently achieving 25%-35% market share in Australia. That’s a massive chunk of our industry,” AIR GM Nick O’Byrne says. “We also estimate that more than 85% of the different titles commercially released in Australia are indie.”

According to ARIA sales data, indie company Inertia managed 11.5% of market share by distributor in one week during August, an “amazing” result, O’Byrne notes.

On the downside, the Australian industry lost two key music TV platforms when free-to-air Network 10 cut the long-running “Video Hits” weekend show in August, and the publicly funded Australian Broadcasting Corp. this month shed its quiz show “Spicks & Specks.”

“It’s sad,” says Paul Piticco, director of Dew Process and Secret Service Artist Management. “Many people are now connecting the Internet to their TV, where you can essentially program your own music channel.”

It’s a case of losing two music TV shows, and gaining one. Sources say NBC’s music talent show “The Voice” will come to these shores in 2012.

Innovation isn’t exclusively at the technological level. A new breed of artist is coming up and shifting big volumes on some titles. On the albums front, 2011 has undoubtedly been Adele’s year. The British songstress replicated her success in Europe and the United States with some Australian chart feats of her own. Adele’s eight-times platinum-certified (560,000 units) album 21 (Remote Control/Inertia) topped the ARIA albums chart for 23 weeks, a feat eclipsed by only three other sets–Dire Straits’ Brothers in Arms, Delta Goodrem’s Innocent Eyes and Jack Farnham’s Whispering Jack–since the ARIA charts launched in 1983.

Adele’s smash singles “Rolling in the Deep” and “Someone Like You” are both certified five-times platinum (350,000 units). The year’s biggest tracks in Australia were released by U.S. dance act LMFAO and Melbourne-based Gotye. LMFAO’s “Party Rock Anthem” sat at No. 1 for 10 successive weeks and is eight-times platinum (560,000), while Gotye’s “Somebody That I Used to Know” (featuring Kimbra) spent eight consecutive weeks at No. 1 and is certified six-times platinum.

Universal Music Group International COO Max Hole tips Gotye and fellow Australian artist DJ Havana Brown to go on and enjoy international careers.

“I’ve often thought I don’t understand why Australia doesn’t score more consistently than it already does,” Hole says. “Distance is definitely one factor-unless you can come up with a magic song that short-cuts everything. Gotye may well have that magic song.”

Along with ARIA nominees Drapht and Boy & Bear, the year also saw breakthroughs by newcomers like the Jezabels, Stonefield and Cloud Control.

“There is so much great talent out there,” says EMI Music Australia chairman Mark Poston, whose local roster includes Empire of the Sun, Birds of Tokyo and Angus & Julia Stone. “You just need to work smarter and harder [in Australia] to make a sales connection and build fan bases, and to build careers.”