Pop & Hiss

The L.A. Times music blog

« Previous Post | Pop & Hiss Home | Next Post »

A kinder, friendlier Live Nation Entertainment? Cheaper tickets come with a cost

July 16, 2010 |  9:15 am

Live Nation Entertainment pricing After noting during an investors meeting that ticket sales for the top 100 touring bands are down 12% this year, Live Nation Entertainment's major executives went on the defensive Thursday, blaming the press for "scaring" artists from touring and arguing that acts need to alter their pricing strategies. 

The company's CEO, Michael Rapino, and executive chairman, Irving Azoff, painted a grim picture for the second half of 2010 yet noted that major artist tours, and a more customer-service-focused approach, were on tap for 2011. 

Journey, Kenny Chesney, Neil Diamond, Van Halen and Fleetwood Mac were among the artists cited by Azoff as plotting outings in 2011. He added that Christina Aguilera, whose 2010 summer tour was taken off the docket, would be on the road next year. He also noted that more dates are on the horizon from the cast of "Glee," the hit Fox musical-comedy.  

Yet the company, a recently merged pairing of ticketing powerhouse Ticketmaster and promotions behemoth Live Nation, would first have to navigate a limp 2010.

"The press has implied the sky is falling," Rapino told Wall Street investors, yet he also noted that the company's operating income for 2010 will be down significantly from that of 2009, perhaps by as much as $80 million, and said Ticketmaster's sales are down about 12% from those of 2009.

"The press," Rapino said, has "scared about every artist" out of touring in the fourth quarter. A number of major tours have struggled in 2010, including the refurbished Lilith Tour, and once-can't-miss artists such as the Jonas Brothers have been canceling dates, as outlined in this front-page story in Friday's Times. Amid rampant reports of a down market, Rapino said, "a lot of artists who had planned to tour are now saying they're going to sit it out."

Yet the company's top brass did more than point fingers at the media, and promised a leaner, friendlier model for 2011. But first, artists would have to budge on ticket prices, executives said. Jason Garner, the company's CEO for global music, acknowledged that "ticket prices need to come down" and directed the second half of his statement at artists and managers: "Your guarantee needs to come down."

To that end, Live Nation Entertainment promised that "dynamic pricing," which would add numerous pricing tiers, would be more widely implemented in 2011.The company's executives said they were months away from introducing a ticketing inventory system that can adjust prices in real time. 

Think of the future of buying a concert ticket not too unlike that of buying an airline ticket, in which the price can go up or down in the days leading up to an event based solely on demand.

Live Nation Entertainment ticket fees

"The front row is [worth] a whole different price than even 10 rows back, or 100 rows back," Rapino said. "You can now get more creative with the artist and price the house differently. That gives you a chance to bring the back-end of the house way down."

As an example, Azoff pointed to a recent Eagles date in Sacramento. Tickets, he said, were as low as $28 for what the commoners may refer to as the nosebleed seats. The top non-VIP tickets at Eagles concerts are running around $200 this summer. 

The cheaper options, however, don't come without a cost, and getting a prime seat won't be any easier. At the the Eagles' gig in Sacramento, for instance, Azoff noted that the "front 24% of the house was priced significantly higher" than it had been in the past. 

The graphic at the top of this post, which the company offered during its presentation for investors, is an example or a proposed pricing scale. While the lowest third of tickets are indeed cheaper, prices for about half of the house are shown to be rising.

It's an attempt, Azoff and other Live Nation executives said, to capture the money the company believes is being lost to the secondary market. In fact, Garner argued that front-row seats at most concerts are under-priced, 

If a $100 seat, for instance, sells through a broker for $400, Garner put forth that the ticket should therefore cost $400 from the start, although he wasn't able to answer how the secondary market would further adjust and inflate prices. 

Yet executives also addressed numerous consumer complaints in a bid to change their company's image. In acknowledging that tickets are often too expensive, Azoff noted that the industry has faced "runaway production costs." The veteran artist manager conceded that "the consumer is going to be just as happy with a stage set that may fit in 12 trucks as opposed to 22" if it were to help bring ticket costs down.  

Rapino promised that numerous consumer-friendly changes were in store. For one, the executive said he would end Ticketmaster's $2.50 charge to consumers to print their tickets with their own ink and computers. A slide shown during the presentation indicated that the company intended to make up the difference via sponsorships.

Other changes include the promise to began refunding service fees on tickets to shows that are canceled. Currently, Ticketmaster refunds only the cost of a ticket sans fees. 

Additionally, executives noted that fees could be cut across the board by as much as 64% if the company begins collecting service fees on season and group sales, as detailed in the graphic above. The company also proposed collecting fees on tickets sold at venue box offices, which generally give consumers a break, essentially making the case that spreading the fees around would make them less offensive to the buyer.

-- Todd Martens


Musical acts' summer tours encounter heavy weather

Images: Screen shots taken from Live Nation Entertainment's Thursday meeting with investors, which was broadcast live online.