It was not the Iran-Contra hearings, but today's hearing on the proposed Live Nation-Ticketmaster merger (held by the Senate Judiciary Committee's Subcommittee on Antitrust, Competition Policy and Consumer Rights) did not disappoint. I missed the first 50 minutes of the webcast and, unfortunately, the government does not quickly archive such things. But what I saw and heard was enlightening and entertaining.

Live Nation downplayed its dominance while smaller competitors warned of allowing a powerful company to become even more powerful. Ticketmaster Entertainment's Irving Azoff could not answer some simple questions and was unable to elude pointed questions through the sort of vague, slippery lexicon used skillfully by today's executives. Rapino held up better. Overall, though, Azoff and Rapino seemed cowed and sometimes confused by their questioners while other witnesses -- all critics of the merger -- spoke with passion and purpose.

Here are some recaps for you two peruse:

• The Wall Street Journal's Deal Book liveblogged the webcast and has as close to a transcription as we'll get. "3:21: Azoff goes for the nuclear option. 'This business is not as healthy as you think….I might be home thinking about how many people we have to fire and how many accounts we have to cut.'"
• Chicago Sun-Times.
• Reuters.

Posted by Glenn at 6:17 PM | Link
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It is quite ironic that a new secondary ticketing service launches just as a public debate roars about how a Ticketmaster-Live Nation merger would raise ticket prices. Regardless of the number of tickets Ticketmaster offers only on its secondary sites -- that's the hot topic these days, the number of tickets that don't get sold at face value -- there are plenty of tickets sold at face value that others will resell.

New companies -- and their investors -- see legalized scalping as a lucrative market. As Officialboxoffice.com goes to show, the market is not yet saturated enough to dissuade new entrants.

Officialboxoffice.com was started by the UK trade group Concert Promoters Association. The site is meant to provide potential buyers with a safe marketplace. The CPA does have a valid concern. Fraudulent ticket sellers undermine their business by bringing in uncertainty. That can push down attendance.

According to an NME article, buyers who get scammed will either get their money back or (since the site is backed by promoters) will still be able to get into the show. Those are good selling points but the site's Terms & Conditions page says nothing about being let into a concert if you a buyer gets scammed.

It's nice that the site encourages sellers to charge a "fair price," but its revenue model says otherwise. If there's such great value in providing a trustworthy secondary ticketing service, there is less need for the not-for-profit group to charge more than a small flat rate for the service. The value of the service to fans will be realized in higher attendance and greater ancillary revenues. But Officialboxoffice.com is a self-sustaining entity that takes a percentage of the total cost to the buyer. When tickets are sold at very inflated prices, Officialboxoffice.com makes more money.

And it is also nice that Officialboxoffice.com says it is only a service to be used by concertgoers who cannot attend the show for which they bought tickets. "We do not condone touting," reads the About Us page. Unfortunately, I do not see any controls in place that would discourage touts and enable only "true fans" to sell tickets.

With or without Ticketmaster, a secondary ticketing market exists and many concertgoers will have paid far more than face value. I would love to see critics of Ticketmaster speak out against Officialboxoffice.com and other secondary ticketing services, but it's not going to happen. While Ticketmaster gouges fans, so goes the public's sentiment, everybody else is merely providing the valuable service of connecting supply and demand for entertainment events. Let's be honest. There's little rosy idealism in the secondary ticketing market. Entrepreneurs are simply out to cash in on the public's abundant willingness to pay more than face value.

Posted by Glenn at 1:20 PM | Link
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Live Nation shares are currently up 10.22% to $5.50. Ticketmaster Entertainment shares are up 15.36% to $7.08.

Ticketmaster was at $25 in August 2008. Live Nation was at $17 in August. Investors obviously feel what executives at both companies feel: a merger is one way to deliver a return on investment in the face of a sour economy and dimming prospects for entertainment companies in general. Just as important to the companies, they could stop taking revenue and market share from the other. Ticketmaster gets around losing Live Nation's ticketing revenue. Live Nation gets access to Ticketmaster's database and its healthier balance sheet.

The jumps also show many investors are not terribly worried about a merger not getting regulatory approval.

Additional reading with quotes from analysts:

• Forbes.com: "We have watched the two sides playing a game of mutually assured destruction over the last year, with both stocks seemingly going down with each move."
• AP: "Such a deal would cap a year long process of increased competitiveness between the two companies."
• The Ticker: Anti-trust concerns exist "given the conflicts between Live Nation's size in the concert promotion industry and the fact that Ticketmaster provides ticketing for many of Live's competitors. In addition, having the concert promotion and talent management under one roof could cause conflicts of interest."

Posted by Glenn at 11:29 AM | Link
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From the Wall Street Journal's Ethan Smith (hat tip to none other than the Lefsetz email):

Ticketmaster Entertainment Inc. and Live Nation Inc. are close to a merger, people familiar with the matter said, in a deal that would consolidate two of the most powerful forces in the music industry under one roof.

The newly created company would be called Live Nation Ticketmaster, and would combine the world's biggest concert promoter with the world's dominant ticketing and artist-management company. The combined firm would be able to take advantage of close relationships with hundreds of major artists to find new ways to do business in the ailing music industry.

The boards of both companies have yet to approve any merger, these people said, and sticking points remain. One potential hitch: Because the merger would concentrate so much power in the music industry under one company it would require review by antitrust authorities. Nonetheless, the deal, which would not entail an exchange of cash, could be announced as early as next week.

If regulators could stomach Ticketmaster's market dominance before Live Nation got into ticketing, it should be able to withstand this merger.

Posted by Glenn at 8:34 PM | Link
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Ticketmaster filed a 10-Q quarterly report yesterday. Now that it is a standalone company, it's easier to go through its financial performance than when it was part of IAC. And we're better able to see what companies like Live Nation are eager to capture for themselves.

• For the three months ended June 30, 2008, total revenue was $382.37 million, up 30% over the previous year. Domestic revenue was up 31%. The average revenue per ticket increased 10% ("higher convenience and processing fees due, in part, to annual contractual increases"). The number of tickets sold increased 9%.
• For the six months ended June 30, 2008, total revenue was $731.35 million, an increase of 23%. The number of tickets sold increased 5% while the average revenue per ticket increased 8%. Domestic revenue growth, driven by acquisitions of TicketsNow and Paciolan, increased 22%.
• Live Nation, Inc. (including its subsidiary House of Blues) represented approximately 18% ($68.83 million) and 23% ($67.49 million) of its combined revenue for the three months ended June 30, 2008 and 2007, respectively, and approximately 17% ($124.33 million) and 20% ($119.4 million) of Ticketmaster's combined revenue for the six months ended June 30, 2008 and 2007, respectively.
• For the six months ended June 30, 2008, operating income dropped 19% to $55.7 million.
• For the six months ended June 30, 2008, head count increased 22% and gross margin slipped to 36% from 38%.

Live Nation represented a large chunk of Ticketmaster's revenues. The company does not plan to renew its contracts with Ticketmaster, the last of which expire on March 1, 2010, according to this SEC filing, and has announced it will begin its ticketing service in January 2009.

Posted by Glenn at 6:00 PM | Link
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• Ticketmaster, owned by the IAC conglomerate, will be one of four IAC divisions spun off into a separate public companies. Said IAC chief executive Barry Diller, "Ticketmaster is entering the most dynamic era in its history and its ability to participate fully (with its own currency) in shaping the live entertainment industry is critical." My opinion? This comes at a good time for Ticketmaster. The company stands before a wealth of opportunity in a changing entertainment industry. Management will be in a better position to take steps. (Biz Journals)

• Radio revenues were down 7% in September. (Radio Ink)

• Economist Aaron Schiff sifted through Jamendo's data on album donations. "Over the 22 months there were 1,454 donations made, for a total value of US$21,150. So each artist is receiving very little money, if anything. ... Across all donations the average was $14.55." (26econ.com, via Digital Audio Insider)

• Songza is a new music search engine/social networking site. Like Seeqpod, Songza allows users to search for songs, add them to playlists and share with friends. (Mashable)

• Video of the new Nokia U.K. music store featuring the new Nokia N81. (Engadget)

• Musicians take issue with the National Association of Broadcasters' characterization of the radio performance royalty as a "tax." (Variety)

Posted by Glenn at 7:56 AM | Link
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• Britney Spear's new album, Blackout!, is likely to debut at #1 on the album chart with first-week sales of up to 350,000. (Billboard.biz)

• At the final public hearing on media ownership, FCC Chairman Kevin Martin said he supports the easing of low-power-FM rules, allowing AM stations to operate on FM translators, reinstating tax breaks to minority investors and requiring that a radio station have a physical staff at all hours of operation. (Radio Ink)

• The National Association of Ticket Brokers issued a statement about the Hannah Montana ticket controversy. and pointed the finger at Ticketmaster and its secondary market operation, TicketExchange. The company, insists the brokers group, "actively encourages" consumers to buy and sell tickets on its secondary market exchange. (Ticket News)

• The U.K. Nokia Music Store is set to launch today. Users can buy tracks for 80p each ($1.60), buy albums for £10 to £12 ($22 to $24) or stream an unlimited number of songs for £8 ($16) per month. The service downloads tracks to Nokia N81 and N95 8GB mobile phones as well as the user's home PC. (Webuser)

• As was previously rumored, the CD version of Radiohead's In Rainbows will be distributed by XL Recordings outside of North America. (Hollywood Reporter)

• If you noticed some fancy cars in the video for 50 Cent's "Amusement Park" video, they were part of the marketing deal the rapper inked with General Motors. The Pontiac G8 -- a one-of-a-kind custom -- and G6 GXP were placed in the video to help spotlight new Pontiac models. So add cars to the long list of projects for 50 Cent: Recorded music, concerts, a movie, two autobiographies, Vitamin Water advertisements... (SOHH)

• Guitar legend Robert Fripp lambastes EMI over sales of King Crimson downloads after the license period expired. (The Inquirer)

• A Q&A with imeem.com's chief executive and chief marketing officer. "We think our direct ad sales from brand sponsorships and our multiple ad network partnerships will be our primary sources of revenue. We’ll also have commerce-related offerings, like digital downloads and ringtones. Right now we are the #1 iTunes affiliate partner." (New York Times' Bits blog)

Posted by Glenn at 8:57 AM | Link
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• Snocap and CD Baby are ending their short-lived partnership. CD Baby artists will be able to work directly with Snocap outside of their normal relationship with CD Baby. Snocap will waive the initial $30 annual fee for those who make the switch. It appears there were too many cooks in this particular kitchen. Wrote Snocap CEO Rusty Rueff in an email that went out Friday, "These experiences have shown us that SNOCAP works best when used directly by artists without the extra support of CD Baby." (Digital Audio Insider)

• Two promotion bits of news at Billboard.biz: LiveNation has a deal with the Seneca Indians to book events at the Seneca Events Center and the Bear's Den Showroom at the Seneca Niagara Casino Hotel in Niagara Falls; and AEG has acquired an interest in Grit Rock Rodeo, operator of the Wrangler ProRodeo Tour and the World's Toughest Rodeo.

• The state of Connecticut began allowing ticket brokers and individuals to resell tickets for whatever amount they desire. The law places no limits on the amount of the resale but does require brokers to refund the price of the ticket, plus fees and delivery charges, when the event is canceled. (Ticket News)

• The Country Music Association has teamed up with the National Business Association and Vanderbilt Universal Medical Center in Nashville to offer comprehensive health care to CMA members. (Press release)

• Of all the commentary on the new Radiohead album, the best comes from Jupiter's David Card. On the "Most.Revolutionary.Concept.Ever" commentary compiled by the New York Times' The Lede blog, Card wrote, "Most of them are pretty naive." That goes for Pitchfork, The Guardian and Lefsetz, and I agree -- though short-sighted or overexcited may be better than naive. In the end, this Radiohead event is mostly symbolic. If 15 to 20 major artists follow Radiohead's lead in the next 18 months, I may change my mind. (Sorry, Charlatans, you don't count.) An additional note: Those people calling it revolutionary must forget, or did not know, that Magnatune has had a similar model for years. Its artists have cut out the middleman, let people pay according to how they value the music and have made a decent living a country mile or two from mainstream attention. (David Card)

• Getty Images, which acquired Pump Audio in June, has launched its Soundtrack online music licensing service. Soundtrack will make available over 20,000 tracks (from independent artists) for use in broadcast, film production and advertising. (Press release, via Hypebot)

• Somewhat related to the music business: A U.K. regulator has ruled that music service provider Music Choice is the legal owner of and has exclusive rights to the bullseye logo that is also associated with retail giant Target. The article points out the U.S.-based target has international branding problems beyond Europe. Coles, Australia's second-largest retailer, is also called target and has virtually the same logo. (Financial Times)

Posted by Glenn at 7:41 AM | Link
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The Wall Street Journal's Joseph de Avilla has an article today on fans who find ways to access fan club-only ticket presales. Fan clubs, which typically cost $30 per year, give their members pass codes to pre-sale ticket opportunities. Some fan club members are selling those pass codes to non-members through eBay, Craigslist and, in one instance, a website called UltimatePresales.com.

"This practice irks fan-club managers, who want to ensure that only fan-club members benefit from the codes. But there appears to be little they can do to stop the practice, short of expelling members they catch selling the passwords and revoking tickets bought using someone else's code.

A variety of individuals -- both novices and professionals -- are behind the sale of these codes online, says Larry Peryer, president of UltraStar Entertainment LLC in Brooklyn, N.Y., which manages presale ticketing for artists such as the Rolling Stones, the Police and Sting. It may be a fan-club member trying to make extra money on the side. Or it may be a team of professionals employing an army of collaborators to join multiple fan clubs to gain access to several codes. These professionals may use the codes to buy prime tickets to resell, or may put the codes up for sale on sites such as eBay, Mr. Peryer says."

There's nothing illegal about selling these codes, so bands and fan clubs are starting to come up with preventative measures. UltraStar, by the way, is owned by promotions (and soon to be ticketing) powerhouse LiveNation.

Posted by Glenn at 12:15 PM | Link
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TicketNews' article on LiveNation's future ticketing plans brings up some good questions. When the company handles its own ticketing, after its deal with Ticketmaster expires at the end of the year, will cost savings be passed on to consumers? How much money will hit LiveNation's bottom line?

Investment bank Morgan Joseph estimates LiveNation was worth $130 million to $150 million in annual revenue to Ticketmaster, and that LiveNation could increase its EBITDA by up to $30 million by selling its own tickets.

Will customers realize anything from the cost savings? I won't hold my breath. But LiveNation could drop ticket prices if it takes care of its own ticketing. From the report: "In addition, we believe the move could also allow Live Nation to lower the various miscellaneous fees that fans are charged, which could ultimately bring down ticket prices and thus drive additional attendance at Live Nation shows."

Posted by Glenn at 10:45 AM | Link
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• LiveNation and Ticketmaster will not renew their relationship when the current contract expires at the end of the year. That will open the door for LiveNation to beef up its own ticketing operation (which recent acquisitions should allow it to do). Sources say the 14-15 million LiveNation event tickets purchased annually give Ticketmaster around $100 million in service fee revenues. (Billboard.biz)

• SoundExchange is allowing small webcasters -- defined as those with annual revenues of $1.25 million or less -- to pay 10-12% of revenue instead of the per-performance royalties set earlier this year. The deal includes a usage cap to "ensure that this subsidy is used only by webcasters of a certain size who are forming or strengthening their businesses." (Radio Ink)

• It's goes without saying, but at least somebody included it in an article. From Bloomberg News on Wal-Mart MP3 downloads from WMG and UMG: "Kevin Swint, Wal-Mart's manager of digital media, said the company is in talks with Sony BMG Music Entertainment and Warner Music Group Corp. as well as other record companies to offer their products in the same unprotected format." (Bloomberg)

• The second annual, five-day Next Big Nashville music festival, a showcase of Nashville's rich music scene, will run September 5-9. Local bands The Pink Spiders, De Novo Dahl, Ghostfinger, Wax Fang, Jeremy Lister, The Features and Freedy Johnston (he recently moved to town) are among the 130-plus bands that will play at ten venues. A five-day wristband will cost only $30. (Next Big Nashville)

• Little Big Town will give away its new single, "I'm With The Band," as a free download tomorrow at the band's website. The freebie will start at midnight E.T. and last 24 hours. (Country Weekly)

• Can you tell something about an artist's longevity from last.fm plays per listener? I would think so, and after compiling a long list of numbers, David of Digital Audio Insider thinks plays/listener, though a crude metric, shows quite a bit about long-term potential. "The Last.fm numbers don't look good for the long-term prospects of the Bravery and the Walkmen. Of all the acts in this analysis with Last.fm audiences of more than 100,000 listeners, these were the only two with less than 20 plays per listener. My suspicion is that bands that receive a fair amount of mp3 blog attention might have their ratios pulled down because there are a large number of Last.fm listeners who have only heard a single track or two via a music blog." (Digital Audio Insider)

• BusinessWeek's Ronald Grover writes about Universal Music Group's International Music Feed, a reaction to MTV's lack of video play. The potential is there, he writes, but the viewers aren't. "According to IMF, it gets an anemic 47,474 unique visitors a month to its Web site. And while it has 17 music channels on the online TV site Joost, and two channels on British cell-phone company Vodafone (VOD), it has just about no U.S. TV presence. ... It ain't MTV, that's for sure. But give Universal credit for trying." (BusinessWeek.com, via paidContent)

• The Rhapsody America joint venture is a case of one company having the brains and one company have the brawn. Will it bring mobile music into the mainstream? (Big Red Horseshoe)

Posted by Glenn at 10:46 AM | Link
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The secondary ticket market is something that gets people riled up, but new companies are extracting a great deal of value. Yes, there's a lot of value in the secondary market. Call it an efficient market-clearing mechanism, or call it a fan-unfriendly prescription for higher prices, but it looks like it's here to stay.

Eric Baker, the founder of Stubhub! is bringing his other ticketing company, the UK-based Viagogo, to the U.S. through a deal with the Cleveland Browns. Viagogo will be the authorized secondary ticket seller for the team.

"(Baker) estimates the U.S. secondary ticketing market at about $12 billion annually, but he said his former company StubHub! controls less than 10 percent, even though it’s the dominate player in the market. With more than 90 percent of the market up for grabs, and with anti-scalping laws crumbling throughout the country, Baker believed it was high time Viagogo made its move."

Extra credit reading:

• "Can the Net Make Ticket Scalping Legit?" at News.com, June 5, 2006. "Analysts now say the Internet is helping to move the secondary market out of the back alleys and into the boardroom. Internet companies such as TicketsNow.com and StubHub are trying to clean up the industry's image by weeding out con artists, offering up no-nonsense pricing and guaranteeing on-time delivery."
• The English band Hard-Fi found out 200 or so tickets for an Edinburgh, Scotland concert were on eBay, so the band demanded each one back from the re-sellers.
• "Elusive, Expensive and Sold Out" at the Toronto Star, July 25, 2007. "The Internet Age may have dramatically altered the landscape for would-be concert-goers, but the simpler times of camping outside a concert venue or local ticket agent to be first in line when the box office opens have been replaced by cyberspace queues where victory goes to the quickest keystroke or fastest high-speed connection."

Posted by Glenn at 10:48 AM | Link
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