Anyone who has attended a concert in the last ten years probably bought tickets to the event from Ticketmaster, which has more or less monopolized the web based ticket-purchasing business. The average person probably could not even name another ticketing website. However, the time soon comes to reevaluate the way Ticketmaster has been mistreating its customers. The ever so unpleasant convenience charge will be a woe of the past. Ticketmaster's long term contract to sell concert tickets for Live Nation is to come to an end December of this year. January 1, 2009 will mark the first day of Live Nation's freedom to revive the concert industry. In light of the loss of Live Nation, Ticketmaster has designed various side operations known as secondary ticket sellers. These companies buy numerous seats just as an event goes on sale and then resells the seats for three to six times face value. With the termination of the contract, Live Nation has a chance to turn the souring industry around.Over the years since Live Nation split from Clear Channel it has earned the coveted position as North America's largest concert promoter, not to mention its stock has more than doubled. The company has already shaken up the music industry by signing a deal with Madonna. With such a position in the live music industry, ticket sales for Live Nation events make up about 15 percent of Ticketmaster's overall revenues. The loss of Live Nation has the potential to cause a severe blow to Ticketmaster's billion dollar business. Ticketmaster is known for its obscene service and convenience charges that generally raise ticket prices 25-35 percent. Michael Rapino, Cheif Executive Officer of Live Nation, feels Ticketmaster's reputation has prevented people from attending concerts. "Seventy percent of people didn't go to a concert last year, and even the average concert fan only attends about two shows a year," Rapino noted. The key to explanding the concert industry is less expensive concert tickets. However, there is more to this than just lowering ticket prices and taking a cut of Ticketmaster's monopoly. Rapino is looking to revolutionize the concert industry and the role his company plays in the growing industry. "When a fan buys a ticket, we learn an enormous amount about them: What bands they like, where they live, how much they are willing to spend," Rapino said. "Someday, a fan will be sitting in a bar and his cellphone will text message 'Sonic Youth are playing tonight. Do you want to go?' He'll buy his ticket over the phone and walk to the concert." One of the main problems with the music industry is its lack to grasp new technology. Rapino realizes the importance of understanding the consumer. In fact, in a brilliant marketing move, he chooses to focus on consumer wants and needs. According to Live Nation executive and operator of the Electric Factory, Larry Magid claims, "You have to be more responsive to fans nowadays."
With the music industry slowly sinking into a bottomless pit as payback for overcharging fans for recorded music over the years, Ticketmaster might want to reconsider its profit making strategy. Of course the company needs to generate a revenue, but if another company can generously reduce ticket prices, Ticketmaster might be in for a rough ride. However, Live Nation could be in for a rougher ride. By the end of last year, Live Nation stock had plummeted by 43 percent. Wall Street is worried by Rapino's bold moves. While supporting ventures into other profit areas, perhaps some of the deals may be overly ambitious. There is even some talk that Live Nation over payed for the Madonna contract priced somwhere around 110 million dollars. In an article at Ticket News, Brian Thompson and Alfred Branch, Jr. state, "While the move to take over its own ticketing from Ticketmaster will no doubt help Live Natio
n improve its profitability by cutting out the middle man, there are certainly costs associated with building a ticketing operation". They go on to discuss the necessity of offices, investors and an entire team devoted to the ticketing department which currently do not exist at Live Nation. Live Nation has entered a ten year agreement with CTS Eventim, the largest European ticketing company based in Germany. The deal will allow Live Nation to utilize the Eventim ticketing platform which is arguably the most technologically advanced ticketing system in the world. According to Jane Cohen and Bob Grossweiner at Ticket News, "The new ticketing platform will allow Live Nation to control customer data, to create enhanced ticket-based concert products and to capitalize on expanded distribution channels and sponsorship opportunities." Rapino has found himself a company that will help him achieve his new profit goals. Though his moves may be bold it seems he has a clear path set for his company. Rapino goes on to explain the technological advancement of the Eventim ticketing system as well as how Live Nation hopes to use the concert ticket as a means of bring artists closer to the fans.Regardless, the end of Live Nation's contract with Ticketmaster marks the end of an era in the live music industry but also leaves room for less expensive concert tickets and more satisfied concert goers. As the hackneyed strategy of concert as promotional tool for recorded album deteriorates, the live music industry will be the means of the paradigm shift. Soon the recorded album will switch places with the live show and become the promotional tool for the concert experience. As quickly as the CD sunk to the bottom, the concert experience will rise to the top of music industry revenue. Simple as it may be to illegally download mp3s, watching a YouTube video of a concert could never replace the experience of being a member of the audience.
1 comment:
I really enjoyed your post on the coming change in the concert industry. As someone who has been taken advantage of by Ticketmaster, your post and useful links to its related groups has really helped inform me of how the ticket-selling system works. However, there is some ambiguity in some of your claims. Your use of quotes were very informative and represented the Live Nation view quite directly. Specifically, your quotes of Michael Rapino, the CEO, personalized the view of Live Nation and what it hopes to achieve. It is seeking to sell cheaper tickets so that more people can afford to attend concerts. Furthermore, it seeks to gain feedback and consumer preferences in how it operates. However, there were a few unclear areas in your argument. You claim that Live Nation seeks to improve profit goals by signing with CTS Eventim. Looking objectively, how does ending its contract with Ticketmaster and forming a new one with CTS Eventim, increase profit? Although Ticketmaster is overpriced and a large consumer faction are missing out on concerts, doesn't it still sell out many concert tickets for Live Nation? Although it only adheres to a small margin of those who can afford tickets, in the end, Live Nation is not losing money because many if not most of its shows sell out anyways. You also mention that Michael Rapino seeks to improve new technologies in ticket sales, but it is still ambiguous what those new technologies are. An example you use is someone receiving a text message about a concert and being able to go that night simply by making a phone call. Is that not a technology that Ticketmaster provides? Lastly, in your introduction, you state that Live Nation's stock has doubled, while later on in your post, you state that its stock has plummeted by 43%. Besides these vague statements, you successfully prove your argument that Live Nation's ending contract with Ticketmaster will change how the ticketing system works.
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