Editorial: Understanding big business in dance music, its major players, and the future of the EDM arms race
When you passed the magazine stand on your way out of the airport last September, you probably forgot to stop and read Billboard’s headline that was attached to a photo of an older man holding a disco ball. Well, that was not just any man, it was billionaire entrepreneur, Robert Sillerman. And he wasn’t grasping a disco ball for no reason – he was sending the message that the dance music bubble will soon land in the palm of his hand.
Big business in dance music is nothing new, but its influence is destined to dominate in 2013, and Dancing Astronaut is here to break down acquisitions past and present, introduce the biggest players that have opened their wallets, and provide insight into the future and where this dance maelstrom could head to next.
If you had stopped to read that issue of Billboard Magazine, you may not have been so surprised to hear the news of Tomorrowland’s international expansion, or the acquisition of large chunks of Miami’s nightlife scene. It is no secret that Robert Sillerman is building a billion dollar dance music empire in the midst of the dance music explosion, but he’s not alone – dance music has landed, and the money is rolling in from all directions. It’s easy to ignore the business behind the music but when the results may very well change the way we experience electronic music culture it’s time to start paying attention.
Intro Robert Sillerman
Former spot holder on Forbes 400 list, Sillerman once built an empire that would go on to transform the entertainment business forever. After selling his SFX Entertainment to Clear Channel Communications for $4.4B, and following a merger with Ticketmaster, Live Nation Entertainment was formed. He wouldn’t stop there, and would be back to revive his company – with help from Pasquale Rotella’s former partner in crime — before making an making a bold, but serious declaration to dance music.
Intro Donnie Estopinal
The former co-owner of Insomniac Events and current CEO of Disco Donnie Presents, Donnie Estonpinal, better known as Disco Donnie, was the first big player to cash in his chips. He sold his promotion company to Sillerman for a reported $2M and this first acquisition served as the fuel that would help re-launch SFX and inspire an EDM fire sale. The next domino to fall was Life In Color – formerly known as DayGlow – a company that Robert acquired for an unknown amount in 2012. At this point, his purchases had remained fairly under the radar, yet to make a ripple in the current dance music wave. Then there was his Billboard interview.
In his interview, Sillerman exposed his hand and admitted to having a budget of $1B with his sights on about 50 companies, 18 of which he had already sent letters of intent. In the same interview, Sillerman admitted, “I know nothing about EDM.” He went on to claim he understands the appeal and describes the genre from his personal perspective: “It’s borderless, it’s free, it’s energetic, it’s a party, it’s a party in your mind.” Do we trust an entire generation of music in the hands of someone with minimal knowledge of it? Yes. His lack of dance music proficiency is not alarming and will not result in its destruction — Sillerman is simply the man behind the desk pulling the strings.
“But I sit in the meetings, to the extent that they are [meetings]. I meet the people whose places we’re buying. And I haven’t a fucking clue what they do or what they’re talking about. Not a clue. And I love it. I just love it.” – Robert Sillerman
Intro Duncan Stutterheim
Last June the ID&T CEO, Duncan Stutterheim, stood next to Live Nation New York President Jason Miller in New York City’s Provocateur club (pictured above) to announce a partnership that would bring their famed Sensation franchise to the United States for the first time. The American dance music fan’s dream-come-true indicated more than it appeared from the outside – forces from both entities were ready to make a splash.
Stutterheim made it clear that his partnership with Live Nation was only a fling and that he would continue to search for his company’s holy matrimony.
“We were looking for a good partner for the first event, and found one with Jason [Miller]… But we haven’t signed anything for the future and are still talking to everyone.” – Duncan Stutterheim
Intro Michael Rapino
Understanding that ID&T and their top-of-the-line dance entities had not automatically become his with the lucrative Sensation deal, Live Nation CEO Michael Rapino, went on the record to declare his stance in the arms race. Equally as thrilled as Sillerman, Rapino called dance music “the most exciting thing to happen to live music in 20 years.” With Europe’s Creamfields Festivals already under his belt, Rapino revealed his tactics under the philosophy of “acquire or hire.”
“We want to acquire some great brands, if they’re available, to build credibility within our own portfolio. We were looking for someone who could help elevate our global strategy… we’ve absolutely got to become more relevant in North America with some marquee events.” – Michael Rapino
Where We Stand Today
Fast forward to the first month of 2013, and it appears the fate of dance music’s fire sale will be coming to fruition. Sillerman has kept his word, having purchased two of Miami’s greatest night life assests: The Opium Group, which operates nightclubs Mansion, Set, Opium, Mokai, and Cameo; and Miami Marketing Group, which manages nightclubs Liv, Arkadia, and Story.
That brings us to the news of Tomorrowland’s international expansion, which has been confirmed as a result of a joint venture between both players in the arms race, and has made sense of Stutterheim’s “we’re talking to everyone” comment. ID&T has joined forces with both SFX and Live Nation to form a North American division, settling the score and landing all the parties what they had hoped for – an American EDM goldmine.
The mega joint venture serves as a solution for both parties, but does not mean peace treaty. Sillerman and Rapino are both on the prowl for EDM entities and their billion dollar budgets are still ripe for the picking. It is no secret that both contenders have opened their wallets, but it appears as if they will purchase every dollar-generating EDM outlet in sight – possibly by the end of 2013.
The next piece of the puzzle could very well be Insominac, parent company to Electric Daisy Carnival and all the “Wonderland” events you could possibly attend in California. The latest rumor surrounding an Insomniac buyout claims that Pasquale Rotella (a man who needs little introduction, pictured above) has bids from both SFX and Live Nation that are supposedly north of $100M.
If Insomniac is gobbled up? That’s anyone’s guess. Eventbrite could be Sillerman’s next prize as it would serve as a ticketing operation similar to Live Nation’s Ticketmaster. Billboard Magazine projects that Pacha New York and RPM aren’t far from being acquired with 4:1 odds, and would serve Sillerman or Rapino with a popular New York venue and the promotion company that, in short, runs the Big Apple. Billboard gives Ultra Music 25:1 odds of acquisition that would make the mega-company a long shot for either contender. Even Dancing Astronaut is listed as a potential target on the road to EDM domination.
The Bottom Line
Sources have said that Sillerman’s purchase of The Opium Group won’t result in any noticeable changes and we expect that to remain true for the rest. Big business backing an event or venue does not — and will not — mean backlash for fans, and the changes will be felt behind the scenes, not in the crowds. If and when you hear the news that your favorite festival or nightclub has been acquired — whether by SFX or Live Nation — do not panic. Sillerman and Rapino have been the cerebral forces to define the entertainment landscape as we know it, so it’s safe to trust them with our new-born baby of a movement. What does some of the industry’s most brilliant moguls and their billion dollar budgets really mean for EDM? Growth.