Monday, January 07, 2008

The Ultimate Consolidation Has Begun: Live Nation Ticketing

When Clear Channel began gobbling up radio stations in 1997, accumulating a total of over 1,200 at one time, it was a concern. This consolidation was a direct result of the Telecommunications Act of 1996 and led to what many argue was a major blow to the music business.

In 2000, Clear Channel acquired SFX Entertainment, which was at the time the world's largest events promoter and producer. SFX was also a significant owner of concert venues and had gone on a significant buying spree prior to the acquisition.

Clear Channel got a lot of flack because it dominated the concert promotion business, owned so many venues and an overwhelming number of radio stations. It was widely believed that Clear Channel was leveraging its control in order to compete unfairly in the concert business. The message to artists was, Let Clear Channel promote your show or else you won't get your show advertised on our radio stations and we won't spin your record. Even if an artist was willing to take a chance with another promoter, they would be relegated to performing in second-tier venues in most markets since Clear Channel owned the most valuable venues.

Ticket prices went way up following the Clear Channel buying spree. I remember reading articles expressing complete shock that Clear Channel would be willing to drive prices so high so quickly. The result was many shows going undersold. The price for a ticket would later come down but apparently just low enough to generate some more sold out shows - they are, of course, still through the roof.

The cost of putting on a show in a Clear Channel venue also skyrocketed after consolidation. There were several rooms in which I used to promote where the cost literally doubled.

Pressure on Clear Channel became greater as its anti-competitive practices became more apparent. It was the connection between radio and concerts that chaffed the most - the major labels didn't like the "do or die" attitude they got when considering promoting their tours with someone else. This is perhaps the primary reason why Clear Channel spun off its concert business to form Live Nation in 2005.

To say "spin off" is a bit of a misnomer. With the diminishing importance of radio, Live Nation is the entity that came away with the real power. Since 2005, Live Nation has gotten largely into merchandising and, through its acquisition of Musictoday, is a significant website developer, fan club operator, shopping cart/order processor, and VIP ticket provider.

Ticketmaster, equally loathsome amongst music fans, has single-handedly dominated the ticketing industry for as long as many can remember. People have grown to dislike Ticketmaster even more in recent years as its service fees continue to skyrocket despite the huge cost savings to providing ticketing services online.

Both Live Nation and Ticketmaster have been equally dedicated to squeezing as much money as possible out of the concert-going public while keeping their costs at a minimum (i.e., contributing very little to the process). Now things are going to get even more interesting.

In its July 28, 2007 issue, Billboard reported that Live Nation may not re-up its contract with Ticketmaster and will instead opt to handle its own ticketing. Digital Music News reported this morning that Live Nation will announce its new ticketing plans on January 11. It is perhaps a sound business strategy for Live Nation but a travesty for artists and concert-goers.

Ticketmaster was by no means a check and balance to Live Nation and vice versa. However, by allowing Live Nation to control virtually every facet of the live concert event, together with merchandising, fan clubs, and artists' entire web presence, they can ensure that they control every aspect of an artists' career outside of the recorded album . . . and they are vying for that as well.

If we thought Ticketmaster was a threat with its exorbitant fees, and Clear Channel for its control of the airwaves, and the major labels for recorded music, what is to become of the future of music when Live Nation controls it all? They have proven that they will increase ticket prices to the highest extent possible, they will charge independent promoters ridiculous fees to put on shows in their venues. There is no reason to think that they will handle their ticketing business any better than Ticketmaster and will certainly not treat their artists any fairer than the majors. In fact, they will no doubt ensure that they will maximize their own profits at the expense of artists in the few arenas in which the artists used to make money.

This is a slippery slope, indeed. Clear Channel's mentality in the radio business showed that advertising was always a priority over music. Now, with Clear Channel-groomed business heads leading the Live Nation surge, what is to happen to the music industry when they, a single corporation, control it all?