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

A POP & HISS COMMENTARY

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

Comments

[Tim]

I hear Google is looking to build a ticketing platform to compete with this BS monopoly. Can't wait for some healthy competition and keep these guys (and gals) in check.

[Debby]

I don't really understand what this article was about, what I do want is lower ticket prices, wait-ticket prices for the concerts I go to are fine(indie concerts) it's the fees that suck, those ticketmaster fees and those facility fees suck.When I have to buy a $10 ticket, add the ticketmaster and other fees, I come out paying $30-$40 or more, It's horrible, I haven't been to a gig in 8 months because of this! lower the fees!

[Keebi]

Nope, say hello to saving gas when I stay home, discovering new bands on youtube/going to cheaper venues.

[Rob Levine]

While I agree that concert tickets are too expensive, I think the new Live Nation is less interested in raising prices than it is in capturing more of the price for which tickets are sold - ie, getting more of the markup that now goes to scalpers for the artist and promoter. The fact that Peter Gabriel tickets are so expensive may have more to do with the fact that . . . .many people want to see Peter Gabriel.

[Michael O'Neal]

I can't justify spending more than $60.00 to $80.00 for a premium seat for anyone. We all have to stretch our dollars more, evidently except for the execs at Live Nation, AEG, Goldenvoice, Nederlander, ect... and the over the hill crew of rock "artists" touring. With a 15,000 to 20,000 seat house how come they can't settle on a nice average of 40 to 50 bucks. I'll stick to seeing the new artists, or the older ones who play because of the music. Thanks El Rey, Palladium, and my local honky tonks where I can afford a ticket and so can ALL my friends.

[ejluther]

"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. "

Well, I certainly would like them (or, at the very least, the artists themselves) to feel bad about that - much of concert pricing is ridiculous and either gouges the poorer fans or leaves them out of the show entirely.

[Joel]

I don't normally take the time to comment but I need some way to vent my frustration at the greed of the concert business.

I work for a major record company and when I'm not working with music I'm either creating music or listening to it. Without trying to sound TOO cliché I am extremely passionate about songs and often the best way to experience a great song is in a live setting. However, on principle I no longer attend large concerts because the pricing of tickets for music fans is outright disgusting. On one side I am empathetic towards the fact the market can dictate prices but why does a music experience have to be limited to the wealthy and/or stupid? How can kids without rich parents afford these prices? How can people with moderate incomes and bills to pay afford these prices? Take into account the cost of service charges, parking, transport/fuel, refreshments, merchandise and maybe the fact you also may want to take a partner and/or child???!?! I don't care how good Aerosmith or U2 are, I'd rather go on vacation for the weekend!!

I know a lot of people in the UK and Australia have paid very large amounts of money to see an 1 hr 30 mins worth of 'entertainment' from Whitney Houston recently to be left disgruntled with a poor performance and for the fact she talks for half the show.

All in all, over the long term I don't see how consistently cheating people out of money is going to be good for business, people will lose interest and use their income in different ways. This is short term greed.

p.s. If you spend $400 on a concert ticket to stand close to a human being you see on television (regardless of your disposable income) you're quite frankly... an idiot getting mugged off.

[Tim]

Hey assoff - be sure to keep this email template you're going to have to use it a lot this year and to your buddy Mr Henley...how does it feel to have to discount your tickets to fill seats?

New ticket packages have just been released for the upcoming Eagles and Dixie Chicks concert with Field tickets available for $99. Fans can purchase a 4-pack of tickets in Outfield Terrace Boxes for only $255 - that's a discount of $85! Or, purchase six (6) tickets in Outfield Terrace Reserved for just $198, a savings of over $100!

Why not price them right off the bat and allow us to buy at more reasonable prices? Your greed will make you some short term $$$'s, but the long term impact will haunt you and your legacy forever!

[Eric Housh]

Huge shocker. Anyone who bought into Rapino's early claims that concert ticket prices would actually go down was delusional. LNE is the definition of big business, and they will make as much profit as they can- they have a responsibility to their shareholders to do so.

The good news? every single town in America has fantastic local venues showcasing awesome local and regional acts. Most of these are not served by LNE, they are served by smaller, more fair ticketing companies like ours.

So pay the exorbitant prices at LNE shows if it's really worth it to you, but if not, support your local music scene. You can see ten shows for the price of one average LNE ticket. And you'll not feel so damn dirty afterwards.

[Steve]

Ticket Brokers hold less than 5% of the tickets for any given concert and not all of them are the premium seats ( I know I am one of them). Assoff and his crowd think they can price all of the lower Level seats at stupid prices when in reality only a very select few seats will comand that price. These guys are idiots and it will come back to haunt them. VIP Bon Jovi at 1800 per ticket and you must buy 2. I have never gotten more and $350-400 for any Bon Jovi show so I would like to know who is paying $1800.

[Brad Schy]

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.

Obviously studying markets are a little over Mr Martens head as well. If he looked at the secondary market he would have seen the lowest priced tickets for about $40 and reasonably good seats at $100. Many were lower than the original price. Box seats were as low as $100, substantially under face value. This illustrates the risk that speculators/brokers take which may actually assist in the affordability of tickets for some events-If one is willing to pay attention to the market.

[Andy]

No way it isn't the promoter and the bands who want more money. Right now I am in a lame situation. I want to see Furthur at the Santa Barbara Bowl tickets are 39 dollars. Not bad, on Ticketmaster they are 55 dollars with all the fees. That is about a 40 percent markup! I can go to the Santa Barbara Bowl itself and buy the ticket with 9 percent sales tax, but is it worth the gas money from San Luis Obispo an hour and a half away.