DEAG at 40: ‘We’re like an armada, ploughing through the sea.’

DEAG, one of Europe’s leading live music promoters, is celebrating its 40th anniversary this year.

It has evolved, through organic expansion and strategic acquisition, into a pan-continental powerhouse working in several major European territories, with a range of artists that includes Ed Sheeran, Aerosmith and Iron Maiden.

But its DNA is in Berlin, its roots entwined with the fall of The Wall and the re-invention of a city.

Its origin story has the whiff of rebellion, and even four decades later the company’s culture is still based on fierce independence and a commitment to a fair deal for fans as much as its own bottom line.

It was founded by Peter Schwenkow (pictured), then in his mid-20s, who still runs the show. He caught the live music bug first as a road manager, then working for Konzertdirektion Jänicke – at the time Berlin’s biggest live music promoter.

Some broken promises led to disillusion, which soon gave way to resolve, and the decision to create a new company with a new approach. The company was initially called Concert Concept, changing to DEAG in 1995, but the approach remains essentially the same.

Here, CMO Detlef Kornett (pictured below, inset) tells MBW about DEAG’s earliest days, consistent growth, many high points and current challenges…

Can we start by going right back and asking you about the roots of the company – the context in which it was created and the philosophies on which it was founded?

In 1978, because of the ongoing political situation, Berlin was not the sexiest place in Germany, let alone Europe.

So it was quite a daring step to base a business on the belief that artists should be playing here.

But there was also a lot of opportunity, so Peter decided to bring artists to Berlin, confident that they would learn to love the city.

Were many or any international acts coming to Berlin at that time?

A lot were coming to Germany, but much less to Berlin, because of the travel restrictions etc.

The early years of Concert Concept are tied to Berlin and what was happening there at the time, but how much was the establishment and growth of the company tied specifically to the Waldbuhne amphitheatre?

Well, the story of the Waldbuhne is closely linked to the Rolling Stones concert of 1965, when fans ripped the place apart and it led the police and the authorities to believe you shouldn’t have music events for young people there.

It took a number of years before there were once again the levels of tolerance to host rock concerts, and through those years the venue more or less fell derelict.

So there was a lot of work to do, a lot of investment needed, and a lot of courage needed to say, This should be the outdoor amphitheatre venue in Germany, which it has become.

Concert Concept took on that challenge, managed the venue exclusively for 28 years and put on many great shows.

Can you tell us a bit about two extremely important events promoted by Concert Concept in the 80s: Concert for Berlin in 1987 and Pink Floyd in 1989?

They were two landmark events in the lead-up to the Wall coming down, although of course nobody knew that at the time.

They were definitely part of a move to a more open relationship with the GDR and to a more prosperous Berlin.

I think there were about 1.9 million people in the city at the time, all of whom wanted to go to those concerts, which caused a bit of a problem. And for the second concert, with Pink Floyd, it unfortunately led to riots and violence on the GDR side – it was pretty ugly.

But the fact alone that so many people came to see the events at the Wall helped make Berlin as a market. Before then, people would say, You go to Munich, you go to Frankfurt, that’s where people have the money; in Berlin it’s all a bit dull and grey.

These concerts proved that idea wrong and were highlights in the development of Berlin as a key market for concerts.

This is a hard thing to quantify, but do you think those concerts played a part in the unification?

I think Peter would be very modest about that, but what we can say is that the concerts were another spark in a combustible pot.

Which spark led to the explosion? Who knows. But they were important events for people in the West and the East. That area [either side of the wall] was pretty run down, you couldn’t go there without the police, and having a rock concert there meant a lot; it meant freedom.

It must be interesting for all of you to see that Berlin is now probably one of the top five coolest cities in the world, talked about in the same way as New York and London.

That’s very true. In 2001 I played a role in attracting a major investment into Berlin, and even then it looked quite dull and everyone was very sceptical. It has developed in the last 15 years in a way that we could previously only have dreamed about.

Post-unification and into the ’90s, the story becomes more about expansion outside of Berlin.

Yes, I think it was the period where we became a national promoter, not just a Berlin promoter, and we looked further afield, to Switzerland and the UK.

What were the key acquisitions in that process?

The acquisitions began with Good News in Switzerland and Barrie Marshall’s Marshall Arts in the UK, who was then replaced with Raymond Gubbay Ltd , all of which brought more artists into the DEAG fold.

You also expanded outside music at that time, was that due to fears generated by an over-reliance on a music market that was beginning to be threatened by the internet and piracy?

It was more to do with an increasing number of players in the market, it was becoming extremely competitive and more and more high risk. Plus there was such a big demand for other entertainment, aside from rock and pop.

And that’s when things like theatre shows, family shows and general entertainment shows played in, because there was a thirst for them here in Berlin – it’s not like the West End of London where you always have those shows; here they were not so prevalent, but we believed there was a market for them and it made sense for us to build a second leg to stand on.

When did everything get consolidated into the company we now know as DEAG?

The main period of consolidation happened in the mid-to-late ‘90s and then, almost 20 years ago now, DEAG went onto the stock market and became a public company as part of the New Market initiative of the 2000s. Not all of those initiatives went well, as we all know, and I think DEAG is one of the few survivors from that time.

But that made a big difference, becoming a public company, and all of the transparency and reporting requirements that come with that. DEAG was one of the first companies in this market that was willing and able to offer that level of transparency, professionalism and quality.

It also meant that we had access to capital markets in order to finance our business and to be able to invest while guarantees were getting higher and higher and higher. And we needed to take a business that was maybe seen as being about brown envelopes in smoky dressing rooms towards something that could be seen as open and honest.

I think that was a big decision, a big move and it created the DEAG group that you know today.

When did Live Nation arrive in Germany and what sort of difference did that make?

Well, Live Nation officially only arrived only three years ago in Germany and the difference to before is the same as in every other market: because of the vertical integration and the different business model, you get outbid in many cases, and the ability of LN to finance guarantees for multiple years makes bands quiver!

Some promoters in our group have worked for 25 or more years with Metallica, for instance, and then Metallica decides to go to Live Nation.

At the end of the day we learn to live with those type of setbacks, move on, and we are trying to be as diverse as possible in order to balance those developments.

Also, every so often , the artists stay loyal and / or they appreciate the service, the individual attention, and you continue to work with them.

What do you think have been the biggest changes in the live market in the 40 years since DEAG was founded?

I think electronic ticketing would be number one; it’s hard to imagine or remember what the business was like without it – it changed the whole business.

Also, in terms of infrastructure, between 1990 and 2008, there were eight major arenas built in Germany and they have provided the stages for many huge concerts and events.

We were also the first promoter to put classical music on a major stage, and that changed things not just for us but for everyone else, because today there are more players than ever in the marketplace and it seems natural that you see a Lang Lang or a Bocelli in a sold-out arena, but it is actually only a recent development.

What do you think about the shift in power between live music and recorded industry in the last decade or so and where do you see the balance now?

Mainly I find it difficult, when talking about artists and about experience and life, to talk about ‘power’.

It is a matter of fact that, apart from the absolute superstars, artists have to make their living from live more than from recorded music, that is true. Look at how many streams you need to become a millionaire and you get a feel for how few artists will get to that level.
Therefore there is a bigger focus from artists and management towards being on tour and working lots of dates, alongside a realisation that you have to make the most of your opportunities.

That’s where the power comes in, because if this is your livelihood then you want to squeeze the maximum amount out of it – whether that’s out of the promoter, out of the tickets, out of secondary tickets, or whatever revenues streams come along.

Does the fact that live is the honeypot mean that negotiations with managers and agents are harder these days?

I’m not sure if they are harder, but certainly the terms are tougher and tougher and the margins are tighter and tighter – which means if you get it wrong, you can get it awfully wrong, as we’ve seen, with many companies going under. That’s always a good indication of how tough things are!

In real terms, the biggest squeeze is, sadly, always on the consumer. When you look at the trend in ticket prices, it clearly shows that whatever negotiations are taking place between different parties, the results are always reflected in the ticket price.

And so, whilst revenues have been growing, i.e. Germany less people are going to concerts and events. They are paying higher prices, and they are going more often, but there are slightly less people, a smaller audience, and in the long run that is not good. You do worry if there’s an end to that spiral.

How big a problem is secondary ticketing at the moment, and are you happy with how much is being done to combat it?

Well, I think the UK is at the forefront of tackling secondary ticketing, perhaps because it is home to many artists and managers who want to ensure that things are in better order at home than abroad.

Across continental Europe there is far less support from artists and managers in the fight against secondary ticketing.

We are completely against it and we don’t do it, but everyone falls victim to professional buyers and sellers, and to a big industry that has no risk in the game, only profits – and that’s not right. It takes away from all parties: venues, promoters and artists.

We – and others – are pushing hard to make sure there is as much of an effort in continental Europe. Italy, I think, has made great efforts, but other markets still need to follow; we need that effort, a united effort, in all territories.

Does it frustrate you that some promoters seem to tolerate, or even encourage, or even participate in secondary ticketing?

We find it utterly frustrating, yes, because if you are in a bidding war, then you right away have the explanation why you lost. And you just follow the on sale, you look at the manifest and the available categories and you realise, Oh, what a surprise, all the best categories are gone, all the best seats are taken already – and then you follow the link right then and there and it says, Good news! On this platform we still have tickets available! – they just cost a lot more. It is incredible.

How important has the UK become to your business and how have you built your footprint there?

When Peter asked me to join in 2014, he asked specifically if I could help him in the UK and internationally, which was a very exciting challenge to me.

I would say the UK has now become our second home market, along with Germany. This year the revenues will be split almost evenly between the two territories.

We did that through acquisition, specifically through Kilimanjaro. With my background in AEG, I obviously knew [CEO] Stuart Galbraith, we got along well and we decided this could be a very good partnership. Kilimanjaro has developed tremendously since then, achieving significant growth and delivering much better returns than either of us could have hoped before.

The RGL business, meanwhile, is six times what it was since we bought it, in terms of profit.
And then just recently we acquired Flying Music Group, which means we now have capabilities to do “West End shows” , classical music shows, rock n roll, comedy, spoken word, YouTube stars, as diverse as you can imagine.

And we have more access to rights. With Flying Music Group we have properties that are marketable globally and we see ourselves being more engaged in that market going forward, producing our own content in markets like UAE or China. That is a major development for us.

And we have done all this jointly with our partners, that is a very important concept for us.
Some companies, perhaps the most obvious ones, are like a giant container ship, ploughing through the seas and taking a 10km turning circle to change direction.

“in our fleet, every ship has its own captain; and a captain of his own ship will always make sure that his crew is in good spirits.”

We’re more like an armada, a fleet of different ships, we’re also ploughing through the sea, trying to catch as many fish as we can. But in our fleet, every ship has its own captain; and a captain of his own ship will always make sure that his crew is in good spirits, there’s enough to eat, there’s plenty of fuel on board, if there’s rust on the outside, you clean it. And if there’s danger ahead, you change direction; you look after your ship and your crew.

That’s the key to success, for us. The leaders in our network are entrepreneurs and they remain the captains of their ship. We have very flat hierarchies, if any at all.

And we collaborate. That is perhaps the strongest element, the exchange of information, the exchange of services, buying together, producing together, that creates advantages that helps develop business and creates opportunities for artists.

In the UK, for instance, recently, RGL and Kili produced Kew The Music [a series of summer concerts at London’s Kew Gardens] together and we have other big projects ongoing that maybe a few years ago would have been unimaginable. This is what happens when you have entrepreneurs, people who have skin in the game, because they will balance risk and reward.

How many tickets do you sell per year as a group and what is the split in terms of territories?

We sell close to five million tickets. It’s hard to say what the exact split is, but it’s roughly 50/50 between German-speaking countries and the UK.

And finally, what have been some of your biggest shows recently and what do you have coming up?

Just a few weeks ago in the UK we had the start of the stadium tour of Ed Sheeran, which was an amazing success – and obviously Kilimanjaro has been involved with Ed since day one.

Last year we were involved in The Rolling Stones tour, co-promoting with our competitor. They played three concerts, the biggest being in the Stadtpark in Hamburg – where we promoted Pink Floyd many, many years ago – with over 83,000 fans. They also played Munich and Dusseldorf, both also sold out.

This year we are proud to work with Iron Maiden, Foo Fighters, Die Toten Hosen, Slayer, Judas Priest and many more. But it’s important to point out, we do more than 4,000 concerts and events every year, and it’s the bread and butter of those 4,000 that keeps the business growing, even more so than a Rolling Stones concert – exciting though those are to be involved with.Music Business Worldwide

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