WGME Vol. 4: Satan’s Box Office (Live Nation Ticketmaster)

Welcome to Vol. 4 of “Who's Got My Extra?” — Jamtopia's series all about the business and pleasure of concert tickets.
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Editor's Note: I tried to cover the Live Nation and Ticketmaster merger as an update to my open letter to Nathan Hubbard about the Phish ticket debacle at Live Nation but the story has escalated to the point where it needed a full post. Also, huge props to Chris Walters at Consumerist for coining the phrase Satan's Box Office. Genius.

Late in the day on February 3rd, the Wall Street Journal reported that Live Nation and Ticketmaster are “close to a merger” — a deal that would centralize control of concert ticket sales, artist management and concert venues under a single corporate umbrella.

Per the article, the two-headed beast's prospective name is Live Nation Ticketmaster Live Nation Entertainment Inc. Too bad they didn't go with Masternation. It could've been the name and corporate manta all rolled in to one. Plus it would've made for some hilarious antitrust hearings.

Unfortunately, the name won't be Masternation, and if you're a concert ticket buyer there's really nothing funny about the prospective merger.

For starters, Live Nation had just barely rolled out Live Nation Ticketing, a long-awaited challenger to Ticketmaster's alleged but never proven monopoly over ticket sales. With this merger, it'll be back to business as usual, thwarting your chance of seeing sub 30% service fees any time soon.

The one thing that would make the current ticket situation even worse for the fan than it is now would be Ticketmaster and Live Nation coming up with a single system, thereby returning us to a near monopoly situation in music ticketing.
— Bruce Springsteen with Jan Landau and the entire Springsteen Tour Team

Then, you've got the fact that both companies seems to over-promise and under-deliver on customer experience, with a recent disaster from each making the fees feel all the more painful.

On January 30th and 31st, Live Nation's new online ticket service was brought to its knees as fans tried desperately to score Phish tickets. The fan backlash was fast and furious, resulting in a public apology from Phish and a “sorry, but trust us we're working on it” from Live Nation CEO Nathan Hubbard.

Some people who couldn't get access to the tickets had a bad experience, and we're sorry for what they went through… We understand exactly what the problem was and… put in place those fixes so we can do better next time.
— Nathan Hubbard, CEO Live Nation Ticketing

Find more coverage of the Live Nation Phish ticket fiasco right here on Jamtopia.

Then, on Monday, February 2nd, it was Ticketmaster's turn for a PR nightmare when Bruce Springsteen tickets went on sale. As usual, Ticketmater used their “sorry, we're sold out page” as a chance to merchandise above-face-value tickets from their secondary concert ticket marketplace TicketsNow. Allegedly even before tickets were sold out.

But they forgot: you don't fuck with Jersey and you certainly don't fuck with The Boss! Enraged at Ticketmaster, Bruce Springsteen and his home state decided to fight back in style.

On February 4th N.J. Representative Bill Pascrell Jr. called for an investigation into the relationship between Ticketmaster and TicketsNow. Attorney General Anne Milgram complied, launching an investigation the very same day.

Meanwhile, Springsteen wrote an artful public letter to his fans, essentially tearing Ticketmaster a new one.

Last Monday, we were informed that Ticketmaster was redirecting your log-in requests for tickets at face value, to their secondary site TicketsNow, which specializes in up-selling tickets at above face value.

We condemn this practice… The abuse of our fans and our trust by Ticketmaster has made us as furious as it has made many of you.
— Bruce Springsteen with Jan Landau and the entire Springsteen Tour Team

And you know what that means, time for another “sorry, but trust us we're working on it” letter. This one came from Ticketmaster CEO Irving Azoff, who offered specific examples of the changes they're making and even plans to pony up for some refunds.

We recognize that we need to change our course… We will never again link to TicketsNow in a manner that can possibly create any confusion during a high-demand on-sale.

If any fans inadvertently purchased tickets in the resale marketplace believing in error they were purchasing from the initial on-sale, we will refund the difference between the actual purchase price and the face price of the ticket.
— Irving Azoff, CEO Ticketmaster Entertainment

Finally, this morning, February 6th, TicketsNow posted a special message on their site announcing they're going to be “the first and only resale marketplace to prevent the posting of speculative tickets before the actual onsale.” Well it's about time.

A heartfelt thank you to Bruce Springsteen and the state of New Jersey for making enough noise to spark these changes at Ticketmaster and TicketsNow.

All in all it's been a crazy week for the concert ticket industry. This post will serve as a running commentary in the weeks that follow, as I'm sure there will be plenty more craziness.

February 7, 2009, 10:00 am

Not sure how I missed this before, but it seems the idea of a combined Live Nation Ticketmaster isn't sitting too well in Connecticut either. According to a Bloomberg article from Thursday the 5th, Connecticut Attorney General Richard Blumenthal said he's been speaking with “several” other state attorneys general about a possible investigation into the merger. Said Blumenthal, “there are various issues that have to be assessed. The size of the resulting entity and its potential market dominance could be anti-competitive so far as it creates an entity that has excessive market share.”

Meanwhile, life goes on at Live Nation, where they've started trumpeting a new partnership between Starwood Hotels & Resorts and Live Nation. Thanks to the partnership, if you're a member of the Starwood Preferred Guests (SPG) program you might find yourself rewarded “with robust music offerings including special ticket offers, premium seats and interactive artist experiences for select Live Nation concerts,” not to mention “access to retail discounts for artist merchandise and House of Blues restaurants purchases, and a wide array of other benefits.”

And SPG member or not, you're sure to be seeing a lot more ads for Starwood hotels and the SPG program in conjunction with Live Nation events and at Live Nation venues. In the press release, Phil McAveety, Chief Brand Officer for Starwood reads a page from the American Express playbook when he says, “we’re always seeking new ways to offer unique experiences that our members can share with those close to them, and are thrilled with the opportunities that this partnership creates.”

February 7, 2009, 6:16 pm

Now this is contextual advertising at its finest. I just took a look at the Jamtopia RSS feed and Google AdSense placed a Tickets Now ad right under the Satan's Box Office post!

February 8, 2009

Not sure how it took me four days to find this post from Bob Lefsetz on the Live Nation/Ticketmaster merger but I'm sure glad I did. It's a stinging critique of pretty much the entire music business. Here's a little spoiler — it ends with the labels being toast and fans getting screwed, with less variety and higher ticket prices. But hey, at least Wall Street's happy!

In order to make the stock go up, Live Nation had to establish its own ticketing entity. The fact that it doesn’t work well is irrelevant. Where else are you going to go? The scalper? Oh, Ticketmaster owns its own. And it does resell its own tickets on TicketsNow. Yes, acts are scalping their own tickets despite Ticketmaster’s denial. So, the consumer gets screwed. What else is new?

But when Ticketmaster is scalping its own tickets, it is guaranteeing the spread to the act. Yes, the vaunted act. The greed starts there. If you want to blame anyone, blame the act. That’s why the fees are so high. Because of the kickback to the act.

The Wall Streeters are just as stupid as Clear Channel, they just don’t get this, they don’t see that at some point the Rolling Stones and the Eagles just won’t be able to do it anymore, and then what?

And the fan is screwed. Consolidation has not helped the fan one bit. Label consolidation reduced the variety of music. Promoter consolidation drove the price of concert tickets sky high. Music itself may be free, but going to the show is a once a year event. And after you’ve seen the dinosaurs, do you really need to go every year?
— Bob Lefsetz, The Lefsetz Letter

February 9th, 2009, 8:00 am

Last night NYTimes.com posted an article entitled Merger Expected of Ticketmaster and Live Nation. The article has plenty of new details about the deal:

Contrary to what's been previously reported, the new company is said to be called Live Nation Entertainment Inc. NOTE: Still not as cool as Masternation
Barry Diller will become chairman
Irving Azoff will become executive chairman and chief executive of Front Line Management, the Ticketmaster-owned artist management firm
Michael Rapino will become executive the chief executive and president
The merged company would have almost $6 billion in revenue

The article goes on to say that the merger is “about a 50-50 merger with little or no premium for either company’s shares; both companies will have seven board seats.”

And finally — just like basically every other article about the merger — it wraps up by suggesting the record labels and fans are gonna get screwed. Fancy that.

Meanwhile, NY Daily News is reporting that NY Senator Chuck Schumer is joining up with NJ Rep. Bill Pascrell in demanding a federal antitrust probe of the merger by the FTC and DoJ.

Fans who thought they were going to 'The Promised Land' of Springsteen found themselves in the 'Badlands' of ticket scalpers.
— Sen. Charles Schumer

But don't get your hopes up too high. According to this article from today's Wall Street Journal, “people close to Live Nation and Ticketmaster have said they expect to win regulatory approval with ease because the two companies are not really competitors.” Yeah, because Live Nation never even got chance to become a competitor.

Seems like we're gonna find out how the Obama administration feels about vertical integration sooner rather than later.

February 9th, 2009, 10:00 pm

A few more developments I came across today seem somehow worth sharing.

First, David Carr of NY Times heard from Tom Morello (aka The Nighwatchman) about the merger on Sunday. In his article Big Music vs. Fans and Artists, Carr quotes Morello as saying…

Fewer and fewer gatekeepers mean fewer choices and higher prices for fans. One huge monolith means no choice at all. Fans and artists must develop some organized counterweight quickly or resign themselves to their fate.
— Tom Morello via email to David Carr

So I'm guessing he's against the merger. But then again, who IS in favor the merger?

Glad you asked. According to the print version of this Wall Street Journal article about the merger, “people close to the situation say that several of the high-profile acts associated with both companies — including [Live Nation 360 artist] Bono, [longtime Irving Azoff client] Don Henley and [Live Nation 360 artist] Jay-Z — are likely to speak out in favor of it in coming days.”

But according to a pair of posts on Hitsvile and Idolator the WSJ has excised that paragraph from the online version of the article. One can only speculate as to why, but the print version apparently remains unchanged :)

One thing that also hasn't changed is the number of people who want to sue Ticketmaster, and two new cases have just been announced.

To kick off the legal festivities, we've got Bloomberg reporting that that Ticketmaster is being sued for conspiracy in their attempt “to monopolize the resale market for sports, concert and show tickets.” The case seeks unspecified monetary damages and an injunction to stop “redirecting” consumers to Tickets Now.

For you law geeks, the case is Ellen Diamond v. Ticketmaster Entertainment Inc., CV09-0912, U.S. District Court, Central District of California (Los Angeles).

Ticketmaster's legal team up North might want to start sharpening their pencils for our second case. A few hours ago Reuters reported a scalping suit filed against Ticketmaster in Canada. Per the article, the company is being sued for $411 million USD (C$500 million) for using Tickets Now to scalp Smashing Pumpkins tickets (among others) in Ontario, one of three Canadian provinces with laws against reselling tickets on the secondary market at more than their face value.

A Marketwatch article about the lawsuit quotes Luciana Brasil, a lawyer with Branch MacMaster, one of two firms handing the case formally known as Henryk Krajewski and Ticketmaster Entertainment Inc., W09-371983, Ontario Superior Court of Justice (Toronto).

Typical corporate photo of Luciana Brasil

Customers have voiced concerns over the fact that tickets for the most popular events can ostensibly sell out in minutes, only to become immediately available in the secondary market at much higher prices.
— Luciana Brasil of Branch MacMaster

Okay, so it's not a great quote, but it's a darn good corporate head shot. Either way, I'm hoping we'll hear from Billy Corgan tomorrow. Maybe he'll take out another full page ad.

Just a little sidebar here since it's been bugging me a little. Most of these articles keep saying that Ticketmaster was “redirecting” people to Tickets Now. Well that may be semantically correct, but from a technical standpoint that's not really the case. What Ticketmaster did was prominently merchandise Tickets Now on their “sorry, we're sold out” page. They didn't automatically send you to a Tickets Now page (i.e. redirect you in a technical sense). You had to take action, clicking a link which would then take you to the inventory page on Tickets Now. Not sure if this subtle nuance impacts the case, but the talking point seems to be that they “redirected you“ when in actuality they just used a well designed banana to get you, the chimpanzee, to get yourself from one side of the lab to the other.

February 10th, 2009, 7:00 am

For those who have been following along, this should come as no surprise… USA TODAY and the Wall Street Journal are reporting that the boards of Live Nation and Ticketmaster have unanimously agreed to merge, though there's been no formal announcement.

Per a USA TODAY article, “the companies are poised to say that consumers will benefit.” Yes, and I am poised to say that I'm the best blogger on the planet. Doesn't exactly make it true now does it?

Some of the consumer benefits outline include the ability to pick the exact seat you want (because that works SO well for the airline industry) and avoiding the “confusion and sticker shock” when you see the handing fee. So now presumably, you'll just know in advance that you're getting pilfered.

Speaking of dollars and sense, some financial aspects of the deal were also revealed. Per that same article, “the deal calls for Live Nation to offer 1.384 shares of its stock for each Ticketmaster share” and “shareholders in each company will own half of the equity in Live Nation Entertainment.” As for the 14-person board, Live Nation and Ticketmaster also each have seven representatives.

The WSJ Journal article includes a few more details about the timeline, and also some speculation about the new name: Live Nation Entertainment, Inc.

The decision to dump the three-decade-old Ticketmaster name appears to acknowledge the widespread public distaste for the ticketing giant, which has long had a reputation for gouging consumers with service fees that can add 15% to 50% to the cost of a ticket.
— Ethan Smith writing for the Wall Street Journal

You can expect a formal announcement some time today. Getting rid of the public's distaste for Ticketmaster might just take a little bit longer.

February 10th, 2009, 9:00 am

Sweet. Jim DeRogatis has jumped in the fray with a nicely written summary of the Live Nation Ticketmaster merger. There's some good historical context in the article, but my favorite part was the summary of predictions about the changes the new company will make.

Among other things, industry observers predict:

Dynamic pricing so you'll be bidding for seats and the best seats will always go to the biggest spenders
Invisible service fees so you'll never know what the band is charging and what's going to Live Nation Entertainment
Less competition so you'll have fewer shows to choose from as LNE squeezes-out local and national promoters (e.g. Jam, AEG Live)

Sounds like the the feature list from hell to me.

February 10th, 2009, 11:45 am

Well here's the news straight from the source as the merger plan was officially announced on a joint conference call today.

Live Nation and Ticketmaster Entertainment to Combine in Merger of Equals to create World's Premier Live Entertainment Company. Combination Will Drive Greater Access, Transparency and Choice in Ticketing to Serve Fans, Artists and Entire Live Entertainment Industry. Will Improve Live Event Attendance, Supporting Venues and a Healthier Industry.
— Live Nation / Ticketmaster press release about the merger

I'm still digging through it all, but in the mean time here's the webcast, presentation deck, and official press release.

February 11th, 2009, 12:45 pm

More to come later, but for now I wanted to talk about what I think is the most interesting part of the conference call and aftermath — some finger-pointing between Ticketmaster and Visa over the Bruce Springsteen flap.

During the conference call, future Live Nation Entertainment Barry Diller blamed Visa for processing problems that resulted in fans being directed to Tickets Now before face-value tickets were actually sold out.

What really happened was that there was an actual glitch — a little tech glitch in the system that had nothing to do with the availability of tickets. It had to do with, I think it was, Visa that couldn't process the data, so it kind of froze the system for a bit.
— Barry Diller during the LNE conference call

But Visa quickly denied the claim. In an email to Bloomberg, Visa spokesman Joe Carberry said the credit card company’s system was “fully functional” during the sale and that Diller’s comments were “inaccurate.”

Then later in the day, Ticketmaster issued their own statement which seems to back up Visa, saying that fans saw a “system maintenance-related error message“ which presumably had nothing to do with Visa after all.

Basically it was a great way to start off on the wrong foot — some BS finger-pointer and a whole lot of crow eating.

February 11th, 2009, 1:52 pm

Well it looks like or Sen. Schumer and Rep. Pascrell are going to get their wish. Bloomberg is reporting that the U.S. Justice Department opened an investigation of Live Nation Inc.’s proposed merger with Ticketmaster Entertainment Inc.

This will be the first test of the Obama administration’s antitrust policy, and they're already talking tough.

The agency is committed to vigorous enforcement of the merger antitrust laws and will conduct a thorough investigation.
— Gina Talamona Justice Department spokeswoman

Game on!

February 12th, 2009, 7:00 am

There's wasn't a ton of new news about the merger yesterday, but I did find a really nice Live Nation Ticketmaster news round-up over on Bill Wyman's blog Hitsville.

And though it's two days old already, on Tuesday Wyman had another great post with his five arguments against the Live Nation/Ticketmaster merger. Here's a summary:

Antitrust issues: despite their pleas to the contrary, the two companies were indeed competitors — specifically in the areas of artist management / 360 deals and in ticketing
Inherent conflicts of interest: a single entity that manages artists and books tours will tend to favor the most profitable (touring) artist, leaving the rest with nowhere to go and nobody to complain to
Screwing over consumers: as the new company tries to maximize shareholder value (er, profits) you'll see higher ticket prices and more crowded shows (thanks to the ticketing business) plus jacked up prices for parking and ads on everything (thanks to the 360 deals)
Power: per Wyman, “the company will use its power to crush its opposition in the marketplace” — meaning non Live Nation artists will get squeezed out unless their management and booking company play the game: meanwhile plenty of venues and promoters will wake up to to find their once partner Ticketmaster is a direct competitor so they'll either have to compete with them or trust a competitor to do their ticketing (and have access to all of their data)
Live Nation and Ticketmaster are thugs: um, no further description necessary

Wyman wraps up with a few suggestions about what should be done, the centerpiece of which is that the Justice Department should refuse to allow the merger. All in all a really nice post with some great insights about the industry in general and the merger specifically.

February 12th, 2009, 10:30 am

I had barely finished reading hypebot's 6 predictions for Live Nation Ticketmaster when I learned about this fascinating Rory Maher article that speculates on how the new company will make enough money to justify the deal. Maher's conclusion:

According to our analysis of the new company’s revenue streams, it will have to jack up ticket prices by double digits to make the merger worth the trouble.
— Rory Maher via PaidContent.org

I'm no whiz, but Maher uses lots of numbers and acronyms to make his point pretty convincingly.

Based on a few key assumptions about the combined company's next two years — tickets accounting for 40% of revenue, modest 5 - 8% revenue growth from concessions sales and sponsorships, and 4 percent expense growth — Maher and his team generated these estimates of the impact of higher ticket prices Live Nation Ticketmaster's current 7% margin:

2 - 8% ticket price increase: margin improvement of between -0.8% and +1.3%
10% ticket price increase: margin improvement of more than 2%
15% ticket price increase: margin improvement of more than 3.6%

Maher raps up saying, “the bottom line is that if the merger fails to create incremental returns for Live Nation Entertainment, consumers win but shareholders lose. If the merger does generate enough incremental returns, on the other hand, shareholders win and consumers lose. I’m putting my money behind the shareholders.” I'll take that bet too.

February 12th, 2009, 5:00 pm

Adam Satariano at Bloomberg just posted an article stating that Live Nation’s top shareholder opposes the merger.

That's right. Sam Shapiro, president of Shapiro Capital Management Co. (note: worst website ever!) has come out publicly as opposing the merger, saying he's already spoken to Live Nation CEO Michael Rapino to voice his concerns.

Live Nation is much better going it alone.
— Sam Shapiro on why he opposes the merger

Shapiro went on to say that he thinks the deal would be approved from an anti-trust standpoint, but that organizing shareholders to block the merger is still “an option.”

Block away my good man. Block away!

February 14th, 2009, 10:00 am

In the previous update I reported on a Bloomberg article suggesting that Live Nation's largest investor Sam Shapiro opposed the merger, aying Live Nation is better off “going it along.”

Well yesterday Mr. Shapiro clarified his posting, saying the Bloomberg article didn't sufficiently reflect his opinion of the merger.

Turns out he's not anti-merger. Just anti-Barry.

I'm very much against going into business with Mr. Diller.
— Sam Shapiro on Barry Diller

Apparently he doesn't like “poor returns” of the companies Diller leads, though he may support the merger “if Diller accepts diminished authority.”

In terms of the article, this one's all about the Benjamins. Shapiro made no mention of Ticketmaster's shoddy brand reputation or abysmal customer service as reasons not to get in bed with them.

Meanwhile, there was a bit of good news for Live Nation yesterday. Reuters reported that Live Nation expects to beat Wall Street's forecasts for fourth-quarter adjusted operating profit. Plus, this year's summer concert ticket sales are up since last year.

Take a look at our post about the most expensive concert tickets of 2008 to see where all the money went.

And finally, a little levity to round things out. According to post on Consumerist, Ticketmaster redirected a woman to TicketsNow and sold her Jimmy Buffett tickets that don't even exist for over $800.

Apparently her tickets are for seats 99 and 100 but the row only has 50 seats. Oops.

More Live Nation Ticketmaster Merger Coverage

Search thousands of concert tickets on Jamtopia.

WGME Vol. 4: Satan’s Box Office (Live Nation Ticketmaster)

February 7, 2009, 10:00 am

February 7, 2009, 6:16 pm

February 8, 2009

February 9th, 2009, 8:00 am

February 9th, 2009, 10:00 pm

February 10th, 2009, 7:00 am

February 10th, 2009, 9:00 am

February 10th, 2009, 11:45 am

February 11th, 2009, 12:45 pm

February 11th, 2009, 1:52 pm

February 12th, 2009, 7:00 am

February 12th, 2009, 10:30 am

February 12th, 2009, 5:00 pm

February 14th, 2009, 10:00 am

More Live Nation Ticketmaster Merger Coverage

February 4th, 2009

February 5th, 2009

February 6th, 2009

February 8th, 2009

February 9th, 2009

February 10th, 2009

February 11th, 2009

February 12th, 2009

February 13th, 2009

February 14th, 2009

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