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The marriage of Ticketmaster and Live Nation: Say hello to the $400 ticket?

May 11, 2010 |  2:30 pm

A POP & HISS COMMENTARY

Bruce_springsteen_lat_6

Monday was a historic day in the music business. Concert promoter Live Nation Entertainment posted its first quarter results as a newly merged company with ticketing giant Ticketmaster. Much of the post-earnings-call press has focused on the stats. The highlights: Concert attendance for the first quarter was down 3%, and the company's revenue from resale site TicketsNow has fallen sharply. 

But listen carefully to the conference call discussion with Live Nation Entertainment Chief Executive Michael Rapino and there are hints about the controversial company's future. And they are far removed from some of the pre-merger talk, especially when Rapino and Ticketmaster chief Irving Azoff went before Congress and noted that 40% of all concert tickets went unsold. 

Rapino told The Times last year: "In my business, the cheaper the ticket price the better. I'd love for more consumers to walk into an amphitheater, park, have a beer and eat a hot dog. There's no advantage to me to have anything but sold-out shows."

All sounds reasonable, and could lead one to believe a merger would be good for the consumer. The combined entities could use their data and power to better price concerts, and the fan wouldn't have to worry about being gouged. Why, just look at Live Nation's U2 tour, in which about 10,000 tickets per show were priced at an economical $30 -- binoculars not included. 

So where is the company sensing a growth opportunity? Concert prices! 

"Our fundamental belief at Ticketmaster/Live Nation is the answer to grow our business is less about trying to make $5 or $6 million in service fees off secondaries and much more important to figure out how to capture that $1 billion in up-sell on the face value of tickets," Rapino said during the conference call.

The exec was answering a question about TicketsNow, which came under fire last year after fans trying to buy tickets to see Bruce Springsteen said they had been redirected from Ticketmaster to the resale site, where tickets had a steep markup. The New Jersey attorney general's office launched an investigation, and as part of the fallout TicketsNow further separated from Ticketmaster. 

"The minute we had to unlink from our website, that business over the last year has deteriorated," Rapino said.

Indeed, he noted that TicketsNow is currently bringing in about $1 million to $2 million annually. That's down from the $15 million it used to rake in. 

Thus, the strategy going forward: "So, whether it's seat maps, dynamic pricing or just convincing the band that the front row is worth $400, not $100, we're noticing a great reception by artists worldwide who would like to capture more of the upside, and our first goal is to figure out how to price the house right."

So let's back up. TicketsNow, the company's brokerage site, is suffering. To compensate, the face value price of the concert ticket will likely change, and notice it's not for the cheaper. To be fair, Rapino was speculating about possibilities and not stating any absolutes. But suddenly, the face value of a front row ticket at a concert jumped a whopping $300.

Proponents of such "dynamic pricing" strategies would argue that the front row is already being sold for $400 on sites such as StubHub, so it might as well be sold at that value from the start. That is, after all, what the market dictates, and dynamic pricing and "seat maps," which easily allow a user to see how much more Row B costs versus Row XX, will add more tiers to concert ticket pricing. Would you pay a little extra for an aisle seat? Someday (perhaps sooner rather than later) you might have that option.

Now, I don't expect massive corporations to buy into my concert-going ideals. I would, for instance, like to see Peter Gabriel before one of us retires, but his recent Hollywood Bowl show was priced out of my budget -- even the nose-bleed seats were pushing close to $100 when service fees were added in. I don't expect anyone at the concert biz to feel bad about that -- nor should they. After all, I should have paid closer attention in math class rather than studying journalism. 

But take note -- the Justice Department only approved the merger between Ticketmaster and Live Nation in January. It took all of four months for the newly formed company to hint at higher-priced tickets. Four months. 

And the beauty of it all? The company can conveniently trace the change in strategy to the public's complaints about its handling of Springsteen tickets on TicketsNow. Hey, you forced them to re-evaluate their business, and you can no doubt look forward to "no service fee Wednesdays" to score some cheap lawn tickets in Irvine. 

"If we do that," Rapino said of dynamic pricing, "that would be the biggest way to grow our gross revenue versus any secondary strategy that was just capturing the fee side of the business." Generally, the company is thinking of ways to capture the difference between the face value of a ticket and the final price sold on broker sites. 

So, who's ready to go in on a pair of $750 VIP Roger Waters tickets?

-- Todd Martens

Photo: Bruce Springsteen at the Sports Arena in 2009. Credit: Wally Skalij / Los Angeles Times

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