How SFX, Azoff-MSG Are Changing Music’s Start-Up Rules

A picture of Azoff and Dolan and their joint venture.

(from Billboard, October 14, 2013)

Two veterans have started two new companies in the music business, SFX Chairman Bob Sillerman and former Live Nation CEO Irving Azoff.

Sillerman has been busy with his Electronic Dance Music (EDM) startup which has created 15 EDM festival businesses in the last year. In the coming weeks Sillerman will discuss with institutional investors the potential of SFX Entertainment and the wider youth-led EDM market. This could value the company at up to $1 billion by some estimates.

Azoff has teamed up with his good friend and artist client Jim Dolan, Chairman of the Madison Square Garden (MSG) Company, to create a new joint venture called Azoff MSG Entertainment (AMSGE). This company will operate in artist management, publishing, live entertainment branding, and digital services.

These two veterans have made very notable moves lately. They are showing investors a new way to think about the music business in this digital age. They are making the argument that music, like technology, should be a consumer-facing platform where one builds a business around music instead of battling to own rights as a lower-margin music “supplier” like a label publisher.

SFX has been very open about its ambitions. It has been pitching brands the opportunity to get in front of millions of consumers through its roster of major EDM events. Billboard learned SFX is asking for as much as $50 million from marketers for one of several global branding opportunities.

Azoff is less explicit about his plans. Azoff’s vision is to use music as a platform to leverage artist relationships more efficiently under one roof blending traditional artist management with live branding and digital media. The combined power of AMSGE helps it in reaching out to brand partners offering live artist sponsorship packages.

Sillerman and Azoff are not far off from today’s Live Nation, which has been developing a music-as-a-platform concept for several years now. These two smaller businesses could have a significant impact in rewriting the rules of the game.