Why a Ticketmaster-Live Nation merger will cost you

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Posted by madcityradio.com on February 11, 2009 at 15:54:32:

In Reply to: Live Nation, Ticketmaster Agree On Merger posted by madcityradio.com on February 10, 2009 at 13:49:07:

Music giants confirm plans to form concert behemoth

by Greg Kot | Chicago TRIBUNE
February 11, 2009

Concert ticket prices have doubled in the last decade, and consumers can expect no relief now that Live Nation and Ticketmaster, the two most powerful entities in the concert business, confirmed Tuesday their intentions to merge.

It's easy to see why Live Nation Inc. and Ticketmaster Entertainment Inc. want to blend their operations into a new entity called Live Nation Entertainment. They are competitors who would create a company with roughly $6 billion in annual revenue that would operate the majority of major concert venues in America, sell the tickets to events at those venues, and manage many of the artists who play there. Their union would instantly create a full-service music company that would reduce the economic clout of other concert promoters (including Chicago's Jam Productions), ticket sellers and even record companies.

Far more difficult to fathom is how this partnership would in any way benefit consumers, and how it could pass muster in a federal antitrust proceeding.

News of the merger has already set off alarm bells in some prominent corners. Connecticut Atty. Gen. Richard Blumenthal and U.S. Rep. Bill Pascrell (D-N.J.) are among officials calling for investigations and hearings into the merger. Last week, Pascrell denounced Ticketmaster for funneling fans seeking to buy Bruce Springsteen concert tickets to Ticketsnow.com, a company owned by Ticketmaster that sells concert tickets significantly above face value. Springsteen himself called the Ticketmaster redirection of his tickets "a pure conflict of interest."

In an open letter to his fans, Springsteen went further: "The one thing that would make the current ticket situation even worse for the fan … would be Ticketmaster and Live Nation coming up with a single system, thereby returning us to a near monopoly situation in music ticketing."

In addition to creating its own ticketing company, Livenation.com, Live Nation has completed deals with major artists such as Jay-Z, Madonna and Shakira to represent them in a variety of multimedia platforms and share in revenue streams from merchandise to recorded music.

Ticketmaster has been expanding its business as well, recently partnering with Irving Azoff's Front Line management company and a stable of talent ( Christina Aguilera, Eagles, Guns N' Roses) that would play many of the same arenas booked by Live Nation. In merging, Live Nation-Ticketmaster would hold a significant position in every aspect of the music business.

The merger brings together the two companies most responsible for the rise of concert ticket prices in the last decade. Ticket prices for the top 100 tours in 2008 averaged $67, more than double the 1998 average—far outstripping the overall rate of inflation. Industry insiders predict that prices will continue to increase, with a greater premium put on the best seats.

Now that Ticketmaster has a stake in the secondary ticket business, where tickets are resold at market value, it can create a more fluid price structure for concerts. In effect, each seat could be offered for bidding, putting an end to the era of fixed-price tickets, especially for high-demand acts.

Such a system could mean consumers will no longer have to scramble to sign on and gain access to overloaded Web sites for high-demand shows. And it could mean that long-reviled service fees would no longer exist, or be folded into the price of a ticket.

But those positive results may not compensate for the higher ticket prices brought on by an auction-based ticketing system. In that world, the concertgoers with the most cash would prevail every time. That's not always the case in the current system, which in theory gives all consumers equal access to all tickets for a fixed price.

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