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Music

Ticketmaster and servant

Is the United States Department Of Justice’s approval of the controversial Live Nation and Ticketmaster merger yet another knife in the heart of the music consumer, or is it more like the last desperate gasps of a doomed giant?

Like most things in life, the answer is somewhere near the middle.

First, the predictably bad news. As the DOJ stated in their announcement, “the merger, as originally proposed, would have substantially lessened competition for primary ticketing in the United States, resulting in higher prices and less innovation for consumers.”

To try to avoid this, a number of conditions have been imposed on the merger, but they’re only hoping to retain the level of competition that existed before the merger. Talk about setting the bar low: during the period between 1996 and 2003 when the two companies originally worked together, ticket prices grew by 82%.

One the main factors driving this merger was Live Nation’s failed attempt to compete against Ticketmaster over the last five years (when it tried to operate its own ticketing service), which should give you an idea of how impossible it will be for any smaller ticketing companies to compete against this new behemoth.

The new company (named Live Nation Entertainment, to avoid unpleasant associations with Ticketmaster) will be in the unusual position of not only promoting tours, but also owning the venues, selling the tickets, and in some cases (like Madonna, U2 and Jay Z) also operating as the record label. Oh wait, we nearly forgot that the parent company Clear Channel Communications also owns more radio stations than anyone else.

It’s incredibly optimistic on the part of the DOJ to hope that forcing Live Nation Entertainment to sell off its college sports ticketing division (Paciolan) and allowing a competitor (AEG) to license Ticketmaster’s software will create any meaningful competition against an entity that controls so many layers of the entertainment industry. Sure, there are provisions against anticompetitive bundling and retaliation, but as many have pointed out, these will be tough (if not impossible) to enforce.

Try buying a $22.50 ticket to the July 29 heavy metal festival Canadian Carnage at the Molson Amphitheatre, and you might be shocked to see a $15 service charge tacked on by Ticketmaster (more than a 50% surcharge). While it’s plausible that cost savings resulting from the merger might someday be passed down to consumers, history has shown that this is not really how capitalism works. The only way that Live Nation Entertainment will start lowering their massive service fees is if someone else is undercutting them, but also moving enough tickets to actually affect their business. The first part of that is easy, but the second is not.

Currently, you don’t really have any other options for most arena shows, so expect to get hosed badly for the foreseeable future. For club gigs however, you do have other possibilities. Want to go see Killing Joke at the Phoenix? Ticketmaster will tack $9.50 on to the $25 ticket, but if you buy it at Rotate This, the fee is just $2.50, and only $2 if you go to Soundscapes.

However, don’t expect this huge discrepancy to cause Ticketmaster (or the new company) to lower their service charges, as you need to be much bigger than an independent record store to make them worry about losing business.

This brings us to the good news, even if it’s buried in doom and gloom.

Brown Paper Tickets (a “fair-trade” ticketing service) approached the situation with a surprising amount of bravado and confidence in a recent press release, and after pondering their argument, we’re starting to think they may be on to something.

As you can see from the Killing Joke example, Ticketmaster and Live Nation don’t seem to care too much about competing for the club scene. They rely primarily on big arena shows to pay the bills, as smaller tours just can’t give them the profit margins they need. Sure, they may also own smaller companies like TicketWeb to maintain some presence in that market, but their bread and butter is the big-time shows. The only problem with this, is that there are fewer and fewer big shows for them to throw their weight behind.

It’s really only oldies acts and a smattering of fly-by-night pop sensations that can fill the huge venues anymore, and the former are all on the verge of retirement. The major labels have not invested in a new generation of pop heroes to replace them, and even if they had, the internet has helped create a generation of listeners who care more about supporting a large array of smaller name artists than a few big ones. The music industry landscape is changing at an incredible rate, and this brave new world doesn’t favour the superstar model anymore.

So while this merger means that it will be even tougher for any other company to compete at a stadium level, that market is shrinking, not expanding. The smaller independent promoters and ticketing services are much better equipped to navigate the growing audience for club shows and mid-level artists. In a battle between an expanding market and a disappearing one, the winner over the long term will always be the former.

In the meantime, the only way you can avoid being gouged by service charges is to take your business elsewhere whenever possible.[rssbreak]

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