Thursday, February 26, 2009

The Live Nation/Ticketmaster Merger: A Look at Possible Impacts



The music industry is currently abuzz about the proposed merger between concert ticket giant Ticketmaster and the world’s largest concert promoter, Live Nation (which also sells tickets.) On February 24, the U.S. Senate Judiciary Committee held a hearing on the matter that included representatives from both Ticketmaster and Live Nation, as well as the independent promotions/ticketing and public interest sectors. The House Judiciary Committee took up the case today (February 26).

The hearings examined antitrust concerns raised by the possible merger. Committee members seemed skeptical that the deal — supported by witnesses Irving Azoff and Michael Rapino — would lead to $40 million in “efficiencies,” lower ticket prices, and create more revenue streams for artists, as the two men suggested. You can watch the CSPAN video archive of the Senate hearing here; read witness testimony here.

Consider the playing field. Until the end of 2008, Live Nation had a deal with Ticketmaster to handle the ticketing for their US events but began selling its own tickets after their deal with Ticketmaster expired. This means that Live Nation had recently moved from being a Ticketmaster customer to a Ticketmaster competitor.

The field has also changed on the superstar artist side. In 2007, Live Nation began experimenting with so-called “360-degree” deals with a handful of top-tier artists, including Madonna, U2, Nickelback, Jay-Z and the Jonas Brothers (These deals vary from contract to contract, but they typically give Live Nation a slice of merchandise and/or concert and recording revenue.) On Ticketmaster’s side, a recent merger with Azoff's Front Line Management Group put Azoff — a powerful music manager with a star-studded roster that includes The Eagles, Christina Aguilera, Guns N’ Roses and many others — in charge of the combined company.

Some are concerned that the proposed Live Nation/Ticketmaster merger would create a monopoly force with influence over ticketing, promotion, venues and artist representation. Live Nation and Ticketmaster counter that the arrangement would create stability in an ailing industry, drive innovation and ultimately reward fans. Although there’s plenty of evidence that consolidation in the music industry benefits few in the long-term, some, including music biz curmudgeon Bob Lefsetz, are suggesting this merger might help move the industry forward.

Since this proposed merger would likely affect the entire industry, we’ve been paying close attention. In the interest of providing a balanced look at the possible pros and cons of the proposal, FMC solicited statements from a handful of experts, including Stephen Weisz (founder and CEO, In Ticketing), Albert A. Foer (President, The American Antitrust Institute), Peter Jenner (Manager of Billy Bragg and Emeritus President of the International Music Managers Forum), Michael A. Einhorn (Silberman School of Business; former member of the Antitrust Division at the U.S. Department of Justice), Eddie and Wolfgang Van Halen, Journey and Seal (the latter artists provided by representatives for Azoff). Click here to read them all.

It remains to be seen how the merger will impact the industry if and when it goes through. For now, we thought it would be constructive to present a few different sides to the debate.

We’ll be inviting everyone who commented to submit replies in the coming weeks. We’re also interested in what you have to say — send your comments to casey@futureofmusic.org, and we’ll consider them for publication on our site.

1 comment:

Cousin Chris said...

My feeling is one of disappointment in LiveNation. Yes, it looked like the surcharges on their new ticketing system might have been just as egregious as Ticketmaster's, but it seemed like there was real possibility with a new major player in the music ticketing industry for the consumer to benefit. Now...hopeless. I have absolutely no faith that their merger will lead to lower ticket prices, as they claimed in the hearing. Also, what does their merger say about the ability to challenge Ticketmaster? Is the company just that indestructable? I have never heard a music fan say something positive about Ticketmaster (though the creativity people have displayed in conveying their hatred for the company has been impressive) and yet, here Ticketmaster is today still reigning over the live music industry. This merger is depressing in pretty much every way I can think about it: the precedent it sets for ticketmaster challengers, the continual outrageous fee prices, the decreased competition in the music ticketing industry, and the strengthening of an entity (ticketmaster) that has proven itself to not be fan-friendly over and over again.