VENUE ENTERTAINMENT

Ticketmaster-Live Nation Merger Equals Price Increase?

// June 25th, 2009 // EVENT NEWS

Probably the biggest stories in the music business to ever affect fans— since the Hippy Movement— is the merger between Ticketmaster and Live Nation. Not that we here at Venue Entertainment represent a news company, but this is one of those stories of a lifetime that we had to talk about.
To really understand the acquisition, you need to know a little bit about the business. Obviously, Promoters and Venues make their money from doing events and use companies like Ticketmaster to process the transactions, just like Visa or MasterCard do for credit card transactions. However, what you probably don’t know is Ticketmaster’s customers are actually Promoters and Venues, not ticket buyers. Ticketmaster has their 10-15% service charge, but also allow venues to have their 10-15% service charge, and Promoters to have their 10-15% service charge to keep everyone happy—more about this later. Now to the acquisition:

It's almost done. As first reported last week by the Wall Street Journal, a plan to merge industry giants Ticketmaster and Live Nation was announced this morning  [Feb 10]. And if it goes through, don't expect the music business to ever be the same again.
Billboard's Ray Waddell sums up the size of this new corporate powerhouse: "The merger would create the most powerful and influential entity the music business has ever known. As manager, ticketer, [promoter], venue operator, merchandiser and more, this giant would tap into revenues, if not outright control them, from virtually every source in the chain: live performance, merchandising, ticketing, content, sponsorships, licensing and digital."
Antitrust issues certainly loom. In this Times story by Dawn C. Chmielewski, one source is quoted as estimating that "the combined company would control ticketing rights for 80% of the concert halls, amphitheaters, sports arenas and other venues where live events are staged."
To read through the full article, check out: The day the music biz changed: Parsing the Live Nation / Ticketmaster press release [UPDATE]

-- Todd Martens
LA Time Reporter

The real issue here is not the mergers in general; it’s the idea of Independent promoters and artists having to compete with a mega company. Not only would the company have 80% of the ticketing rights, but also have ownership of 30% of the major venues in the US. This will be problematic with new artists or promoters looking to get their start. Ground-breaking music will suffer. Not only will they have to compete for booking dates, but also for pricing. Live Entertainment could easily out bid any of its competition for both the venues they own and the artists. Imagine if the only mainstream music performance you went to was done by one company. What would the variety be like?
From the other prospective, there is no doubt that will be the biggest merger in the music business ever. However, going back to making everyone happy and service charges, if the merger did happen or some type of partnership similarly occurred, there is no doubt that ticket prices will never go down.
"There are obvious synergies between Ticketmaster and Live Nation," said Alan Krueger, an economics professor at Princeton University who has done extensive research on the concert industry, in an e-mail. "I think a combined company could be much more innovative in distributing music and pricing tickets.
We can blame Ticketmaster, Promoters, Venues for high priced tickets, but really with low album sales for artists, ticket scalping, the down economy and some many other thing, everyone needs to boost prices to stablize the industry. Not to say that greed hasn’t played a major row in price spikes, but looking forward, innovation and synergy is what matters most in reducing the amount of companies fighting for a piece of the pie within the same event. A partnership between a ticketing company and promotion company makes sense in reducing service fees stacked on top of each other.
So what is our position? Down with mergers that eliminate competition, but up with mergers that lowers prices by creating higher profitability! Combining innovations and synergistic partnerships is what Venue Entertainment is all about. No matter if the merger happens or not, we will make sure our community will always have options in the events they can attend—at an affordable price.

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