The institution that is Free Enterprise is on the cusp of a potential transformation with regards to the ticketing industry. The behemoth ticketing company that is Ticketmaster is joining forces with live events and promoter juggernaut Live Nation to form a hydra of megalomaniac proportions – guess what… I’m all for it.
From a competitive standpoint, this new entity would seem to have the advantage over its dwindling number of rivals. When you put the pieces together, a fairytale wedding of horizontal and vertical integration emerges. In this honeymoon, you will see a new conglomerate with the ability to control booking (thanks to Irving Azoff’s Front Line Management), promotions, venue operations, sponsorship, merchandising, primary and secondary ticket sales, and marketing.
Sounds like an attractive couple, one that any parent would approve of. However, the parents in this analogy have a little more at stake. Just ask anyone holding a stock certificate bearing the name of Live Nation or Ticketmaster. The only thing positive about this merger has been its ability to provoke heated debates in the media and on the internet. You will notice that most of these articles focus on whether this will be good for the consumer, good for the industry, good for the artists.
What you don’t see floating around is whether this is good for the stockholder. Personally, if I was at the annual shareholder meeting of one unsuccessful company where it was announced that we were merging with another unsuccessful company to form a much larger unsuccessful company, I would have thrown my shoe at the podium. It’s no secret that Live Nation has yet to post a year-end profit. Ticketmaster is having a tough time as well, and rather than continue competing against each other, they have raised the white flag.
What this merger will ultimately succeed in doing will be failing to create value. Typically, when two companies merge, you trim the fat and lower your overhead and expenses. In this scenario, you have two distinctly different companies with very little overlapping interests, so I am having trouble seeing how they are going to cut costs upon consolidation. Not exactly an ideal diet.
If anything interesting is going to come of all this, it would involve the realignment of the absurd ticketing fees, the source of stigma for Ticketmaster since its inception. Online Ticketing isn’t a complex beast anymore, and it doesn’t require the outrageous fees Ticketmaster attaches to each ticket sold. Upon merger, it seems counterintuitive to continue to charge these fees. Considering the history of the escalating ticket price tells us that a kickback to the promoter/artist became common practice in order to secure their services. Now that you are in bed with the promoter, albeit even under the same roof in that gilded bed, what possible justification can they have for such high fees? They will be relegated to lower them by market forces which will cut into their profit margin, exposing the chink in the armor. If they do away with ticket fees altogether, expect an auction-format through their secondary ticketing site TicketsNow, eventually eliminating the word “face value” from our lexicon. So what happens if this bold experiment backfires?
This new company is going to have to dream up new creative ways to make money, despite the fact that they have an imbedded roadblock to creativity. Consider this…at the end of the day, Front Line Management is an artist management company, and as such has a duty to their clients to secure the best deal possible for them. Once Live Nation’s assets merge with Front Line/Ticketmaster, we see that Front Line’s 10 percent manager commission actually becomes a 10 percent discount they receive for having the artist perform. From the artist’s standpoint, this has got to sting where they pee. I’ve seen better deals at firework stands.
As for creativity, well, that gets thrown out the window when you realize that your concert-viewing experience will be relegated to whatever performers are in Live Nation Entertainment’s stable. Can you really blame them for booking any artists than their own when you’ve got 10 percent of your money coming back to you?
Where is the little guy in all this, the Independent Promoter? Well, they aren’t getting a fair shake either. You thought the barrier to entry was tough before? Azoff will tell you that the artist/promoter loyalties are too strong to break, but any band that understands simple economics will fly the coup to join his new team. On the flip side, you will begin to see a mass exodus of promoters once their contracts with Ticketmaster expire. Where will they turn?
The government will ultimately chime in on this dilemma and likely base their decision on whether the barrier to entry for competitors is too great. It does seem a daunting task at first glance, unless you have the means to replicate what this new Live Nation Entertainment can do. There are a few of us out there that can do it at a high level and I am confident that the battle-hardened promoters and artists of the world can see that there is an attractive alternative. A company like Track Entertainment is well positioned to accommodate them, what with our proprietary ticketing system, in-house event and marketing arm, and our wealth of website properties.
Now you’ve got pissed off performers and downtrodden promoters. What about the linchpin of the industry – the consumer? Ask anyone that loves live music their thoughts on Ticketmaster or Live Nation (lest we forget they were once part of Clear Channel Communications) and you will get a bevy of profanity-laden responses. This is well deserved, of course, considering their history of sticking it to the consumer. It can be considered gospel that the fans are frustrated with their ticket buying experience on the Ticketmaster website. Forget the outlandish service fees, think of the time wasted trying to access their endlessly overloaded website the day tickets go on sale. You also have the personal privacy issue, with both companies having access to business info on promoters, venues and customers all going into one pot now. In the end, we are left with a situation where two non-customer orientated companies are teaming up to double our frustration.
On its face, this merger sounds like a raw deal for all those involved, but fear not. Should it pass muster with our government, I foresee excellent opportunities for streamlined companies to pick up the pieces left behind. In doing so, the customer will be rewarded with lower service fees, a greater focus on servicing their needs and an overall more satisfying experience. Those willing to seek out a more efficient, cost-effective, customer-friendly alternative can and will find a company that views their wants, needs and desires as paramount above profit.
Andrew Fox is the CEO Track Entertainment a full-service Multi-Media Entertainment Marketing Company that owns and operates a network of entertainment and nightlife related sites that include Wantickets.com a digital ticketing platform, Clubplanet.com (The #1 Nightlife Directory), Allhiphop.com (The #1 Hip Hop Lifestyle site), NocheLatina.com (Latin Social Networking site), Deluxexp.com (Nightlife concierge site) and a weekly Music TV Show on Fox (FearlessMusic.com).
