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.Â
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.Â
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.Â
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)
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.”
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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…
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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.
Glastonbury bucks the trend…
Question:
How can music festivals beat the credit crunch?
Answer:
Put up your prices and borrow money from your customers!
It was announced this month that the organisers of the Glastonbury Festival are releasing tickets early for next year’s event, without the headline acts being confirmed. What’s prompted this?
For Glastonbury 2009, fans can either book a place with a £50 deposit per ticket or buy tickets outright at £175 (plus a £5 booking fee). The festival’s organisers say that the deposit will allow fans to ‘spread the cost’. How very generous and public spirited of them. But it does sound remarkably like a Christmas Club scheme….and we all know what happened to Farepak.
The price of a ticket for Glastonbury 2008 was £160, so the 2009 price represents an inflation-busting nine per cent increase. Michael Eavis & Co say that the price hike is due to ticket prices previously being set too low and barely covering their costs. But this does seem to be inflation gone mad.
Actually this may all be Glastonbury’s answer to the credit crunch. Any small or large business now has an option – get your customers to pay nine months in advance on the off-chance that they might wish to partake of your services nine months later.
Sounds like a great wheeze. And by the way if you don’t end up wanting to come (because we haven’t told you what our ‘service’ will be) you’ll only get £40 of your money back because we’ve used up £10 ‘administering’ your money. What next? Sainsbury’s asking for £50 for next March’s shopping bill? £50 for a meal out next June – but we won’t tell you what’s on the menu?
If you buy a ticket for next year’s festival and, at a later date, decide that you don’t actually want to go or can’t make it, what options are open to you? Not many. The organisers won’t allow you to resell your ticket and you’ll only be allowed a refund until 8 May (and even then you’ll still have to pay the £10 charge). Alternatively you can ‘insure’ your ticket for £3.90 (2.2 per cent of the value of a ticket), which is a pretty steep charge. Oh and don’t forget the additional £4.50 postage.
This is all about offloading risk on to the loyal fans of the Glastonbury Festival. Either that or it’s poor judgement on the part of the organisers. But watch out – if this one goes belly-up, there will be no bail-out from the Government.
Change of tune but still off-key
Last week Tim Bradshaw wrote in the FT that Marc Marot of the Resale Rights Society is unhappy about Madonna’s deal with our competitor viagogo. Why? Because the deal ‘did not protect consumers or help artists’ and was an example of the industry’s inability to self-regulate.
Since when did commercial partnerships have to pass the ‘Marot test’? Take the recent announcement that the online DVD rental service Lovefilm will take over Amazon’s film rental service – did it protect consumers? It will provide them with a better service but will lead to reduced competition and potentially drive prices up. And what about Coldplay offering their new album exclusively on MySpace – good for Coldplay but no help to other artists, and consumers have to go to MySpace to hear Coldplay. Do we hear Mr Marot complaining about that?
In reality the Madonna deal is good for the artist in question, the official reseller, consumers and the secondary market as a whole. The only people it’s not good for are Marot and the RRS because they aren’t able to extract their shake-down payment from the deal. Madonna gets a slice of the resale market, her partner gets a trophy deal and consumers increase their purchasing options.
So why is Marot complaining (again)? The reality is that while Seatwave and others were investing millions to develop consumer-focused businesses that have taken an increasing share of the ticketing market, managers and naysayers like Marc Marot were calling for the secondary market to be banned. Once they realised that governments are unlikely to ban services that increase consumer protection and lower prices they decided to change their tune and demand a slice of the pie. But the world doesn’t work that way.
So now the market is sorting itself out – as markets always do. Some artists are moving their tickets directly into the secondary market, deals are being done in new ways and industry leaders are moving forward. But not those who missed the opportunity – they scream, threaten, lobby and will say anything to get people to listen to them. What Mr Marot doesn’t understand is that the only test that matters is the one given by consumers every day.
Seatwave Top Sellers- Peter Kay from £29.99
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- Jay-Z from £44.06
- Aerosmith from £48.54
- Suede from £25.50
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- Reading Festival from £32.50
- Leeds Festival from £45.00
- V Festival from £117.00
- T in the Park Festival from £115.00
- The Who
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- Florence and the Machine from £23.24
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- Robbie Williams
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