Will Live Nation Ticketmaster Merger Go Ahead?

Posted by | Oct. 20, 2009 | 4,231 views

monopolyThe proposed merger between the world’s largest live music promoter and the monopoly ticketing company Ticketmaster is looking like it is on increasingly shaky ground. First, on 9th October the UK Competition Commission stated the proposed merger “will limit the development of competition in the market for live music ticket retailing”. Then on Friday 16th October a second blow came when leaks emerged from the United States Department of Justice stating that they could “sue to block” the merger.

Both companies rationale behind vertically integrating both companies is supposedly based around strengthening a “flagging music industry”. So they think there merger is the silver bullet to save the industry? Frankly, in TMVs view the arrogance of such views is blinding. On a more realistic level the proposed merger essentially means the two companies would posses a monopoly level of control over global music ticketing – and hence concert ticket prices!

If anything Ticketmaster is already a monopoly and has unashamedly raised fees associated with booking tickets for far too many years as it is (one just needs to reminisce about the Pearl Jam Ticketmaster scandal in the 90s). Drilling down, executives at both companies have argued the sorry state of the business necessitates a merger, and that unless they are able to set ticket prices closer to what the market will bear, artists will not be properly compensated for their work. Hold on a second, so Live Nation and Ticketmaster are stating a monopoly will be better for artists? How is beyond us here at TMV.

Digital Music News reported last week that Joe Angland, an antitrust specialist, had stated, “Adding to the likelihood that the government will oppose this merger is the near universal anger consumers have about high ticket prices”. Obviously the Ticketmaster debacle in terms of Bruce Springsteen and sending fans to its higher priced ticket reseller TicketsNow cannot help the case for the merger.

Yet, more real reasons for preventing the merger would be the fact that it is actually bad for the music industry generally. Firstly, it would lead to redundancies, which are not good for a recession, especially for an industry that has witnessed serious head count reductions over the last decade. Secondly, artists signed to non-Live Nation/Tickmaster affiliated management companies would surely be worse off?

Live Nation has artist like Madonna, U2 and Jay-Z amongst many others on its books. Whilst Irving Azoff, Ticketmaster’s head honcho, also owns Front Line Management, an artist management company with more than 200 artists including The Eagles and Miley Cyrus. Yet with leaks implying serious concessions will need to be made, could it mean Front Line is not being included in the deal? If that was the case TMV believe it may be the deal breaker that breaks the camel’s back! Obviously, management of the Front Line roster of artists is what brings the key synergies to the proposed merger.

The fact Live Nation and Ticketmaster want to “develop an airline pricing system that adjusts the price of concert tickets based on demand” is a scary thought for artist and music fans alike. Will these companies be transparent in their reporting to artist regarding the price differentials and number of concertgoers paying different prices? As currently I believe most promoters pay set fees for artists based on set price tickets (not variable demand-based pricing).

Furthermore, even though artists are only probably receiving around 6% of their income from recorded music sales instead of the 50% it was a decade ago, surely increasing ticket prices will only have the same effect as over inflated CD prices – Less people buying tickets and working out alternate ways to enjoy live music…FOR FREE.

Furthermore, such a pricing system would only work to undermine music fans’ faith in a band – or even worse create a backlash. Whilst such a system may be viable for those manufactured pop bands (as they generally only have 18 month careers), it cannot be good for long-term career artists, who depend on the relationship of trust they have with the music fan.

More artists need to stand up to prevent such consolidation, as whilst it may look good on paper for the companies concerned there are serious issues of; monopoly and too much control over all aspects of the live music business. Going further, it does pose serious risks to competition in the live music market place. Monopolies benefit no one but the companies who run the monopoly.

Any such vertical integration in any sector little own the music business should be viewed as anti-competitive. For two companies to combine and control ticketing, live concerts, touring merchandise and artist management on such a level is NOT a good thing. The companies’ argument of the need to rejuvenate the “flagging” music business may have held some sway with regulators had we still been in the midst of a recession. But now with most economies signalling the recession, as over, it seems a pretty lame excuse for consolidation today.

On a final note, with Billboard reporting the fact that Live Nation’s stock market price was down more than 40% below their 52 week high. Whilst Ticketmaster’s was only down 12% leads to TMVs view that Live Nation needs this merger more than Ticketmaster does. However, the fact that Front Line Management, which is owned by Ticketmaster’s CEO, may be on the regulators proposed chopping board to be cut out from the deal, means Ticketmaster would be more likely to walk away from the merger than Live Nation.

Other Users Also Read:
Is Live Nation Prevented from Bundling Live Performances into Ticket Sales Now?
Labels Getting Into Live, Are They Already Too Late?
TMV Looks back On Our Predictions to See Where We Were Right and Where We Got It Wrong

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Posted by on Oct 20 2009. Filed under featured, Live Industry. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry

4 Comments for “Will Live Nation Ticketmaster Merger Go Ahead?”

  1. Excellent post! I agree with much of what you said in this, but I’ll have to think more about parts of it.

  2. [...] Will Live Nation Ticketmaster Merger Go Ahead? Share and Enjoy: [...]

  3. theskiguy

    Well well well…I am so glad that I have enjoyed live concerts from major artists for so long. It’s been a wonderful life. And it’s now over. Record companies revenues are shrinking for obvious reasons and now the live concert experience is becoming obscenely out of reach due to too many hands in the pot and unfair/unethical ticketing practices – much as professional sports in some cities. I feel very badly for artists trying to break-in because their payday has become many more years off – if they can afford to stick with it. Perhaps it is a statement about our conutry – too many hands in the same pots and no new pots being created. As Nick Lowe sang, “And so it goes….”

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