TM - LN Merger, con’t…
This Tues., the CEO’s from Live Nation and Ticketmaster (along with several others) testified before the Senate Subcommittee on Antitrust, Competition Policy and Consumer Rights. If you’ve got a free couple of hours its worth the price (free) to watch the posturing, positing, dissembling and downright lies being told around the room.
Bob Lefsetz has a good review of the hearing although I have to disagree with his analysis that the live music industry is broken and we have to “take this chance.”
There’s fear mongering about “foreign” interests which are sweet coming from a Canadian
Michael Rapino, President and CEO of Live Nation, told the Senators. “Our stock has declined by nearly two-thirds. Our real estate holdings have been gutted. Our hard work is not producing the rewards it should. We face the very real possibility that if we don’t find a solution, we could ultimately be bought by a foreign-owned entertainment conglomerate like the majority of record labels.
Posturing (Seth Hurwitz):
“If this merger is allowed to happen, my biggest competitor will have access to all of my sales records, customer information, on sale dates for tentative shows, my ticket counts, they can control which shows are promoted and much more,”
As an aside, everyone in this industry is nutz about data and who has access and controls it. In reality the most sophisticated use of data in ticketing is to load emails into a CRM system and send people offers to buy Metallica tickets because they once bought AC/DC tickets for their nephew.
And the whoppers:
“Scalping should be illegal,” Azoff continued. “I wouldn’t have bought it [TicketsNow].”
from a person who’s been in negotiations for the past two years on a broker rollup plan.
This show ain’t gonna end anytime soon and if these companies needed anything to pull themselves out of a slump they should be selling tickets to the hearings.
Proposed Crown Jewels restrictions not good for fans
The Government wants to protect the Crown Jewels. No, not just the ones safely locked away in the Tower of London, but “events of national importance”, such as the FA Cup, Wimbledon and the Six Nations rugby. After having reviewed the issue four times in the past three years, the Culture Minister last week issued yet another consultation on these Crown Jewel events and how fans get to see them, or not see them as the case may be.
If an event achieves ‘Crown Jewel’ status, the secondary market will be “invited to exercise self-regulation and restraint in respect of ticket resale”. And it’s not just sport – “major international cultural occasions”, to quote Gerry Sutcliffe, Minister for Sport – might also fall within its ambit.
Repeatedly MPs have concluded that the secondary ticket market benefits fans and increases opportunities for people from all walks of life to attend such events. Fans have benefitted greatly - as has been acknowledged by the Government - from the rise of an organised secondary market with rational pricing and peace of mind. So it’s odd that the Government now wants to restrict this new “green shoot” of business in the UK?
What would the Government prefer – a return to the bad old days of touts lurking outside venues looking to make a quick buck with no consumer protection?
Seatwave has provided access for those who have never previously had the opportunity to attend these events. A customer recently told me he had entered the ECB ballot for ten years in an attempt to see the Ashes and never got a ticket. Now, thanks to the secondary market, if he wants to go, he just goes. Rugby fans are also choosing Seatwave as a place to buy and sell tickets with three times more people buying Six Nations tickets from the site as at the same time last year.
There is an interesting trade-off in all this that the Government, desperate to show that it is acting in the interests of its citizens, is keeping very quiet. Ministers need to retain the support of sporting bodies in the lead-up to the 2012 Olympics, and so are willing to trade the benefit of fans to curry favour with the big-wigs.
For their part, the sporting bodies want the Government to reduce competition so that they can sell more tickets to corporate fat cats at higher prices. In 2008 the RFU earned over £64 million from sponsorship, ticketing and hospitality – certainly the Government has better things to do in the credit crunch than protect this revenue stream. Unsurprisingly, such restrictions would leave fewer tickets available for the average fan.
And to take a sporting example, the restrictions against the resale of football tickets in the UK just don’t work. If you want a ticket for a match, you can usually find one at any of the less reputable sites, and a quick search of Google shows tickets being offered for five or six times their face value. But the sellers register their sites offshore, meaning no comeback for fans, no revenue for the Chancellor and subsequently no fan segregation at the grounds, which completely defeats the legislation’s objective.
The answer is a fair and open market where fans can see the breadth of what’s available and where ticket prices are transparent. How much more taxpayer money will be wasted before the Government puts this issue to bed and stops allowing sporting bodies and other event promoters to put their own interests first?
If anything, we believe that the interests of fans would be best served by a government review of the proposed Ticketmaster and Live Nation merger, which, if approved would allow one giant music powerhouse to completely control supply and prices, creating a stranglehold on the wallets of fans. It seems odd that the Government will permit the creation of a market-dominating force in this industry, yet wants to prevent fans from being able to resell tickets they have rightfully purchased.
We will continue to advocate a system where fans have the opportunity to attend the events they want, and urge the Government to consider an approach rooted in a fair market.
Marty Pompadur Interview
Marty Pompadur, chairman of News Corp Europe joined Seatwave.com as non-executive director to its board in July 2008. Here, Marty tells us more about his role at Seatwave.com and the challenges the company faces…
1. What does your role at Seatwave involve?
As a non-executive director on the Board of Seatwave, I contribute to the strategy and development of the business in conjunction with the executive team. The role differs from an executive position in that I provide support, counsel and perspective to the Board, based on my industry and corporate experience.
2. What do you consider to be the most exciting challenge for Seatwave?
Seatwave is an entrepreneurial, fast-developing business that is creating the market in which it is developing. The team is vibrant, with international ambitions and have many similarities with the companies I have worked with in the past. The key dynamic is being one step ahead of the game and this team is consistently achieving that.
3. How much time do you spend with the Company as opposed to your other commitments?
As a non-executive director, I contribute on an ongoing basis, but particularly around key events surrounding the Company’s growth. Generally, 10-20% of my time is focused on Seatwave.
4. How do you see the secondary market developing over the next few years?
We are witnessing a major shift in the way consumers gain access to live entertainment and sport. Where once they had little opportunities to attend the hottest events, now they can. Where once they had no other options if they were unable to use tickets they purchased, now they can. Ticketing is moving from being a systems-led business that allowed producers to control a market to an open marketplace that provides fans a multitude of choices.
5. How much of an issue to the market does the economic downturn present?
In the current climate, it is more important than ever that people have peace of mind and market-sensitive prices when buying tickets. One goal of Seatwave is to offer consumers the broadest range of tickets at the best prices. In the theatre world, our recent partnership with Encore is an example of providing a greater choice for fans. The additional scale to Seatwave’s marketplace will help continue to drive down prices overall, ensuring that the theatre experience is more affordable for consumers in today’s uncertain economy. In fact, consumers can now buy tickets for great West End shows on Seatwave at prices near or below face value.
6. Do you expect to see increasing convergence with the primary market going forward?
A fair market – primary and secondary – will ensure that people have an opportunity to buy tickets at a price they are willing to pay. As we say in our manifesto and elsewhere on the site, one reason why Seatwave was established was that the company felt that ticketing agencies were treating consumers badly. That is where Seatwave has helped to lead the market, and developments over the last year (for example, Ticketmaster’s acquisition of Get Me In) have shown that the primary market is now chasing Seatwave.
7. How much level of concern is there at Seatwave about the DCMS/“Crown Jewels” issue?
Government intervention in the ticketing market has historically had horrible consequences for fans. If you look at the 1994 restrictions on the resale of football tickets, it’s been disastrous. The legislation was designed to eliminate hooliganism. Today, there are hundreds of websites illegally selling Premier League tickets at irrational prices. These businesses are incorporated offshore so consumers have no rights if they get ripped off and fans are able to purchase tickets to sit anywhere in the ground so there is no segregation. Hooliganism has been reduced because of the increase in prices from the clubs themselves over the past 14 years and the great work of the British police, it has nothing to do with the Act itself. Our view is that any legislation that would restrict the resale of tickets will ultimately harm consumers the most and we think that’s bad policy.
8. How are the international expansion plans and integration processes progressing?
The Seatwave business is growing rapidly in all the markets we operate. In fact, according to the third-party research firms Alexa and Hitwise, Seatwave is the market leader in each and every country we operate. The business is very well positioned to continue to expand this leadership position as the resale category grows over the coming months and years.
9. Have you been involved in the international expansion?
The international plans have been in place for some time, but I have been involved in helping management think about the particular dynamics of each market and connecting them with the industry leaders in media and entertainment.
10. Are you a Seatwave shareholder?
Yes. Being involved in a fast-growing, exciting business is a real opportunity and, as shareholders, we participate in the success of the business as well as demonstrating our commitment to moving it forward.
11. What changes would you make to the business moving forward?
My role is not to make fundamental changes to the business. There is an excellent management team in place that is driving the business to new levels in terms of its offering and its diversity. As a non-executive, I provide that team with advice, grounding, corporate balance in a fast moving world and a quasi-external check on developments for all stakeholders.
Live Nation - Ticketmaster
Last week the Wall Street Journal reported that the world’s largest promoter, Live Nation and the world’s largest ticketing company, Ticketmaster Entertainment are set to merge. The combined company would control in excess of 70% of the US concert industry and a vast swath of the business in the UK, Holland, Sweden and Denmark.
It would bring together a company that has exclusive rights to Madonna, U2 and Jay-Z with the exclusive ticketing company of the O2 Arena, MEN Arena and Wembley Stadium - under no circumstances would the deal benefit consumers in any way.
The global concert ticket industry has growth by over 12.5% CAGR from 1995 - 2007, the majority of this growth coming from increasing ticket prices.
This fact coincides with the timing that Live Nation, then SFX, consolidated the promoter industry from over 20 companies into one while Ticketmaster acquired:
- Admission
- TicketWeb
- Paciolan
- TicketsNow
- 2B Technolgies
- TickTackTickets
- Ticket Service Netherlands
- SLO, Frontline Entertainment and others
into the market leader it is today. Ticketmaster’s business has also gown over 14% CAGR since 2003 largely on the increase in prices to fans.
So recent history indicates that consolidation in these businesses has coinciding with rising consumer prices. The only conclusion one can make about a combination of these businesses is a continued increase in prices for fans. Even the Boss thinks it’s a bad idea.
However we should take a measured view. Let’s all ask Ticketmaster and Live Nation what they think the benefit to consumers will be from their merger…
…(that’s the sound of tumbleweed)
