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)
Better Late Than Never
When it was announced last week that the Serious Fraud Office of the UK had arrested five people in connection with the failure of Xclusive Leisure we breathed a sigh of relief that maybe, just maybe the UK government was going to focus on the real issues in ticketing and not the red herrings they have prior to this action.
It’s clear that consumers are being gouged and defrauded out of millions of pounds and the arrest of those behind this and the subsequent prevention of future scams should be at the top of any government ‘ticketing’ agenda.
This is an area that has been overlooked for years.
A quick search on Google for ‘Chelsea Tickets’ yields 490,000 results, including some Sponsored Links below, some of which
…clearly are in violation of the CJPOA of 1994 but not much has been done to stop these perpetrators nor has much been done to prevent companies like Google from profiting from a contravention of the law. The Proceeds of Crime Act of 2002 states:
“If a person obtains a pecuniary advantage as a result of or in connection with conduct, he is to be taken to obtain as a result of or in connection with the conduct a sum of money equal to the value of the pecuniary advantage.”
Certainly it’s arguable that the selling of advertising of illegal behaviour is a ‘pecuniary advantage’ as the advertiser has a reduced competitive environment and therefore is willing to pay a higher than market price for the advertising.
Time will tell whether or not the SFO is truly ’serious’ about these crimes or is trying to make a statement leading up to 2012 and the London Olympics, we hope it’s the former.
Work for the Fans in a Down Economy
At the Billboard Touring Conference in New York last week participants discussed what’s in store for the live music industry as the economy enters a steep recession. Pricing was one of the key points discussed and many in the audience want to lower ticket prices as the economy falters and consumers reduce their discretionary spending.
There was a contrarian voice in the room in the form of KISS member Gene Simmons. A full-throated capitalist, Simmons told the audience not to cut prices,
“You’re training an entire generation of people to pay less for something and then more for something else. They won’t know what the value is and they’d rather pay less every time,” the media superstar stated, warning that lower prices would dilute the value of concerts in the long term. “If they’re used to paying $100 for a big thing, then give them $100 worth of entertainment, put 10 bands together.”
While I agree with his sentiment, the overall industry has to look at pricing given the number of businesses now competing for fans’ wallets. It’s in everyone’s interests to keep the fans coming out in tough times and pricing is one of the ways we can do this. I was speaking last week with Dean James of MAMA Group, who is seeing strength in his small club business. He thinks that a £12 cover and another £12-15 on drinks makes for a great Saturday night and keeps the fans coming back. Charging £25 for bands like Primal Scream only leads to empty halls and a downward trend on prices…
as you can see the last trade on Seatwave for this show was at £14 per ticket.
Conventional wisdom will tell you that live events are not as badly affected by a recession as other sectors of the consumer discretionary economy and I would agree we have the characteristics of an anti-cyclical business (fans go 1-2 times per year, perceived as a treat, no real replacement offering) but we test this notion at our peril if we allow the upward spiral of prices to continue unabated.
Why Do Business with Companies that Threaten You?
“All tickets purchased on this site are governed by our terms and conditions. In particular, we draw your attention to the fact that all tickets are for personal use only and cannot be resold under any circumstances. Resale or attempted resale is grounds for seizure or cancellation without refund or other compensation. The Event Partner and its affiliates, successors, or assigns may enforce these terms in accordance with the provisions of the Contracts (Rights of Third Parties) Act 1999 (the Act).”
These are the less-than-comforting words that confront every purchaser of a ticket on seetickets.com in a pop-up screen just before completion of their online purchase (with the terms and conditions stating that “Any resale or attempt to resell the tickets at a price higher than purchased will result in your orders being cancelled without prior notification”). Remember See Tickets is run by the same person who’s been lobbying Parlaiment to prevent fans from being able to resell their own tickets - his incentives are not really aligned with yours. Theatre Tickets Direct offer similar terms and conditions:
“Resale of tickets purchased through this website is prohibited. Resold for commercial gain ticket becomes voidable and the ticket holder may be refused entry or ejected from the venue.”
Both are indicative of the out-of-touch and consumer unfriendly approach to the world. Both companies seem to be stuck back in the mid-twentieth century. Threatening your customers before they’ve even taken receipt of your product is never a good strategy unless of course your customers are not your customers. Both companies in question are engaging in anti-competitive behavior to prevent fans from buying and selling tickets themselves. It seems that you, my friends, are the new competition.
Remember that ticket agents want to make sure they sell all the tickets they have as they make more money this way. If fans are able to buy and resell tickets more tickets are for sale in the market (supply) which the laws of economics tell us will satisfy the demand and/or drive down prices – both outcomes are bad for ticket agents. So instead of focusing on how better to serve their customers these companies would rather try to scare you out of their markets.
As I’ve said before, the law regarding terms and conditions of the sale of tickets has not yet been tested under UK legislation. Until a case reaches the court – for example, where a member of the public takes on one of the sellers in the primary ticket market – we can only guess at the outcome. For our own part, Seatwave has always asserted that the terms and conditions with which event organisers seek to bind consumers are extremely unfair and fly in the face of market forces. The lack of refunds, exchanges, returns and a ‘no right to re-sell’ policy could all potentially be challenged under the Unfair Terms in Consumer Contracts Regulations.
We’re doing all we can at Seatwave to provide the mechanism by which customers can buy and sell tickets with confidence and peace of mind because we understand that good businesses in the twenty-first century align themselves with the interests of their customers, not against them.
Consumers need to stand up to the practices of bullying sites such as seetickets.com and voice their opinions and when you cannot, we will stand up for you. When fans can’t make an event, do they really want to be hamstrung with the option of either throwing away a worthwhile ticket or face the threat of legal action?
Without fans’ patronage, these sites will soon be conscripted to the dust bin of history which is where they belong. It’s now up to you to seize the initiative and make it clear that the way you’re being treated simply isn’t right.
