ProduceYou

Today the Wall Street Journal revealed that Ticketmaster’s stranglehold on ticketing revenue isn’t as “complete” as they’d have us believe.  “Starting late in 2009,” it says, “Live Nation will sell tickets on behalf of SMG, a Philadelphia company that manages more than 200 major venues, including the Los Angeles Forum and Chicago’s Soldier Field. The companies say that during the deal’s five-year term, Live Nation will sell the vast majority of tickets to events at SMG venues — at least 25 million of about 30 million tickets. Those sales represent an estimated $50 million to $60 million in ticketing fees.”

This is a MAJOR win for Live Nation as they have now stolen Ticketmaster’s #2 client.  Earlier this year, Live Nation announced they would be ending their OWN client relationship with TM, taking all of that inventory of out TM’s system as well.  However, to truly appreciate the game changing nature of this move, you have to consider what TM has become.

When a company is allowed to exist as a near-monopoly for so many years, they become lazy, uninspired and reliant on a singular revenue stream.  Ticketmaster clearly fits the bill on all 3.  What’s worse for TM is that the “consumer at large” absolutely hates them.  Faced with no clear alternative in the market for so many years, concert fans begrudgingly paid the service fees to get their ticket.  TM’s internal mgt team not only hasn’t cared, but doesn’t even consider the ticket buyer as their customer!  To TM the venue and artist manager are customer and the ticket buyer be damned.  Case in point - TM will bend to the will of any manager who wants to pad their net revenue per ticket, but by RAISING the service fee.  TM will then provide that money as a kickback to the mgr.

Contrast that model to Live Nation, who’s main source of revenue is NOT service fees, but a blend of multiple revenue sources.  These are revenue sources where the fan actively participates and appreciates the business entities involved.  Coupled with exclusive ticketing rights for big name artists, LN has set a solid base from which to operate and actually REACT to consumer sentiment or changing trends.  They have also existed outside of a corporate umbrella, an uncomfortable situation for Ticketmaster who now finds itself  spun off from Barry Diller’s IAC.

Predictably, there will be those within the TM ecosystem who will tell you today’s announcement doesn’t hurt TM in the long run - that TM’s business is much bigger than just one client.  However, TM CEO Sean Moriarty was quick with his retort, “SMG lacks authority to make a deal on behalf of the municipally owned venues it runs because it is generally required to award services based on competitive bids.  We will continue to compete on an individual basis for all venues seeking ticketing services.”  Note to readers: Moriarty’s shotgun press releases always come from a place of panic.  Read between the lines and you see just how upset he is.

And so the great “Ticket Wars” wage on.  As we near the start of 2009, the world will be watching to see if and when Live Nation’s own ticketing platform takes off.  Until then, give LN their moment.  Today was the day the mighty Death Star was weakened.

Wall Street Journal Article: http://online.wsj.com/article/SB122108892557921303.html