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Thursday, February 12, 2009

5 Reasons to Hate The Live Nation and Ticketmaster Merger

If ever there was ever a reason for anti-trust legislation, this is it. The boards of concert promoter and artist management company Live Nation and the hated ticketing agency Ticketmaster have approved a merger, with the new company to be called Live Nation Entertainment.

How can this be anything but bad for the pocketbooks of concertgoers? In an era when more competition would be a good thing, we get less.  Ticketmaster draws the ire of customers by adding various "convenience charges" to the face value of the ticket, usually increasing the overall costs by 25 to 33%, depending upon the face value of the ticket. A recent post to the Leftsetz newsletter talked about a $12 advanced sale ticket to a club ($14 at the door) that wound up costing $21 as a result of service fees, or more than the day of show price.

OK, so what's so bad about this merger?  Let me count the ways.

1) You think that ticket prices will go down as a result of the merger? Guess again. No competition means no incentive to lower prices.

2) Up-selling. The customer list of the combined companies will be huge so expect the new company to use them to up-sell the customer to extract every last $$$.  Limo to the concert? Hotel party room? New CD or digital download by the artist? You'll get a chance to buy it all in addition to your ticket. Don't expect a discount though.  That's not the Ticketmaster/Live Nation way.

3) Secondary ticket sales. If tickets to a concert are sold out, you'll be directed to a fan-to-fan ticket sale site to buy a ticket at scalper price. Guess who gets a piece of this? This is already happening with TicketsNow (which is owned by Ticketmaster) but expect it in a big way soon. In fact, there was a pretty big dust-up with Bruce Springsteen just last week in this regard.

4) Ticket fees included in the face value of the ticket price. I'm surprised they haven't been doing this all along.  If there's only a face value price that you're paying, you have no idea what the extra charges are. Unfortunately, they could be a lot higher than even what we're now used to paying. They'll be charging more but you'll think that you'll be paying less!

5) Have you ever seen a company get bigger and provide better service or products for the consumer as a result?  A public company is in the business of selling its stock, not its products.

From a legacy artist standpoint (coming from Live Nation's management) this deal is probably a good one. There's an economy of scale in terms of ticket sales and the ability to make a lot more money. That doesn't necessarily help the business though, since what it really needs is artist development.  Helping already well-off legacy artists make more $$$ isn't a long term solution.

At least this merger is not the sure thing it probably was during the Bush years. It's too early in the Obama administration to predict how they'll deal with an antitrust case though.  And since the merger was announced, both company's stock prices have taken a beating, so Wall Street isn't convinced either. Only time will tell if the merger is to be granted or not, and how much it will end up costing consumers.

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