October 12, 2007 Alfred Branch Jr.
Madonna’s deal to abandon Warner Music for concert promoter Live Nation signals more than just a tectonic shift in the music distribution business: It shows how far Live Nation is willing to go to break the hammerlock Barry Diller’s Ticketmaster has on online concert and sporting ticket sales, according to the Associated Press.
The core benefit to Live Nation of the $120 million recording and touring contract with the pop superstar is the opportunity to tap into concert, recording, merchandising and other lucrative revenue streams. But don’t discount the role that lowly ticket fees play.
Ticket buyers may be annoyed by the $5 or more in convenience and delivery fees tacked on to every ticket ordered online or over the phone, but they’ve proven to be a gold mine for Ticketmaster, a unit of IAC/InterActiveCorp.
Regulatory filings show that Ticketmaster’s revenues jumped 14 percent to $1.1 billion in 2006 and generated almost a 25 percent operating profit margin for the nation’s largest seller of tickets.