The German live entertainment industry was turned on its head just days ago when the Federal Cartel Office blocked CTS Eventim’s takeover of the Four Artists concerts and events agency and also ordered the ticketing giant’s exclusivity agreements with clients to be torn up.
However, whilst the news might be akin to CTS having applied for a house extension, only then to be turned down and told to burn down its garage, DEAG Deutsche Entertainment is keeping its head below the flames in its neighbourhood in an effort to concentrate on its own destiny.
Established in 1978 and listed since 1998, DEAG’s core business spans rock, pop, jazz and classical music, as well as arts and exhibitions and a growing family entertainment division, with activities in record sales, rights exploitation, sponsorship, merchandising and ticketing. From a geographical perspective, though, the focus has been shifting.
Last month, the company confirmed that it had discontinued its direct activities as a local promoter in Austria with the aim of concentrating “even more strongly on the growth markets of Germany, the UK and Switzerland”, with the UK “increasingly developing into DEAG’s second home market”.
Through its UK subsidiaries, Kilimanjaro Holdings and Raymond Gubbay, as well as Flying Music Group, which was acquired in August, DEAG is now one of the leading promoters and theatre producers in the UK, with the country generating 40 per cent of the company’s turnover in 2017.
The Flying Music Group takeover has provided DEAG with an additional inventory of 500,000 tickets per year for the company’s ticketing business in the UK, MyTicket.co.uk.
We can’t compete – and don’t want to compete – any more with Live Nation and Ticketmaster, because the economics don’t work
“Acquisition for us has been a tool to grow our overall business, but we’re not looking at acquiring a ticketing company,” DEAG’s chief marketing officer, Detlef Kornett, told TheTicketingBusiness.com. “That would currently make no sense. But whether we continue to grow by integrating promoters into the group, it is too early to say.
“We’re trying to diversify our business. We want a stronger foothold in family entertainment: musicals, touring shows, ice shows, comedy and tribute acts, as well as a bit of jazz and classical music.
“If you do that, then you have a big basket of products that can reach broad demographics and it allows you to be shielded from volatilities in the rock and roll business. A large proportion of our business is rock and pop, but we can’t compete – and don’t want to compete – any more with Live Nation and Ticketmaster, because the economics don’t work.”
Kornett, who refused to comment on the latest developments involving Eventim as “not all arguments from the Competition Commission” have been publicised yet, was keen to underline DEAG’s positioning in the market. The company, he said, wants to focus on forging closer relationships with casual and committed customers and broaden its customer base through a more diversified offering, rather than setting sights on challenging the market’s biggest players.
“DEAG would like to stay independent within a world that’s dominated by Live Nation, Ticketmaster, CTS and their promoters,” he added. “We have to make sure our tickets get sold for our events.
“Live entertainment ticketing has developed into a very important pillar of our business plan and a growth segment for us. We work with bands and artists over a long period of time. In real terms that means you also work with their fans.
In sports, life is a lot easier as so much work has been done on researching the customers and they can be segmented
“Particularly in continental Europe, there was a long time when you didn’t know the fan – so we had to develop a ticketing arm to grow the customer base and get to know our customers.
“In the UK there was access to customer data, but using it and growing it became more important with the changing landscape.
“In sports, life is a lot easier as so much work has been done on researching the customers and they can be segmented. Commonly they are fans that are heavily rooted with a team and also spectators who are interested, but not as committed. We need to reach those people who are interested, but aren’t currently the ‘big fans’ – and that’s how we will grow our ticket sales ticketing business.
“It’s a reality that the market has changed and it’s not only 100% committed fans coming to these events. Modern facilities have the capability to offer diversified products to a diversified customer base.”
DEAG pushes the MyTicket brand to customers in Germany through partnerships with media companies that provide print, television and online platforms.
In the UK, DEAG has tripled its customer base over the past 24 months “by offering attractive products, supported by some good and solid marketing”, Detlef said.
“We’re not trying to differentiate ourselves in price, but we offer a certainty that you deal with the promoter of the act directly. That approach will help us to grow.
“We’re not trying to compete with Live Nation or CTS – our main objective is to deal with our customers directly. We are working this angle successfully already, but we know there is still lots of room to grow and to do to improve and be more specific and direct.”
The art lies in getting in contact with that group of customers in their relevant time period ahead of the event
Arguably the biggest conundrum facing DEAG – and other operators in the sector – is how to lure younger generations to shows and gigs. According to Kornett, the ticketing sector needs to adapt to those who prefer to buy tickets closer to the events.
“The key issue is the time-lapse between tickets for concert going on sale and the event. It is often nine, even 12 months before. Millennials and Generation Zs have difficulty with that type of time-lapse. That’s not their current lifestyle,” he said.
“The art lies in getting in contact with that group of customers in their relevant time period ahead of the event.”
One way to engage youngsters is via online platforms – one of which is Amazon Tickets. However, identifying the right route to market also carries risks.
DEAG has worked with Amazon Tickets on a number of projects. However, Kornett is cautious about what the future holds for the relationship, especially considering Amazon’s disruptive approach to other sectors.
“In terms of reward, Amazon creates incremental ticket sales for us,” he explained. “They know consumers that bought merchandise of a particular band and bands of a certain genre. We wouldn’t have been able to reach those people otherwise.
“On the flipside there is a certain risk. Amazon has succeeded in introducing disruptive models in various sectors. In those sectors, Amazon has made sure in the end that they have benefited from the service.
“If the end-game scenario for Amazon is ‘how can we create a more disruptive model’, then falling from one monopoly to the next is not something we’d want to do. We’d like the market to be diversified.
“We’re here to build our own customer base, create and participate in revenue streams and build tour business step by step, but positively, as recent years have shown.”