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Last week both the House and Senate committees grilled panelists including Ticketmaster CEO Irving Azoff and Live Nation CEO Michael Rapino about the impending merger. Bill Wyman (@hitsville), myself (@ticketbiscuit) and a handful of others covered the events via twitter. You can check out the live stream here and here.
The Senate session was brutal. Seth Hurwitz of IMP Productions and Jerry Mickleson of JAM laid into the behemoth companies like cold assassins, and both Azoff and Rapino stayed on the defensive most of the time. The overwhelming feeling coming out of this session was that the merger would be very bad for independent promoters.
My favorite part of this session was when one audience member said to a panelist (probably Hurwitz) – ‘Dude, you were under oath!” After the cameras had quit rolling but the mics were still on. One telling moment was when Mickelson approached Azoff after the hearings in a sort of détente manner, assuming him that the testimony was not a personal attack. It is clear where the power is currently, and the consequences of upsetting the forces that be (see Pearl Jam).
Then came the House session, and it looked like Rapino had taken a crash course from Dale Carnegie. He was much more polished and convincing, helped somewhat by the undereducated committee and their softball inquiries. Robert W. Doyle, a partner with Doyle, Barlow & Mazard in DC had some excellent sound bytes, but despite his eloquent words and pointed delivery, I came out of this session pretty convinced that the merger will pass muster and Live Nation Entertainment will be born.
- Ticketmaster will jettison TicketsNow. I think they will have to for approval. And I think Azoff is cool with the idea. Joe Lewi (@eventpromoter) posted to his blog that he expects this as well.
- Live Nation Entertainment will try to do some cool things with the “Amazon” storefront concept- that you can buy tickets, songs, merchandise, etc. through one portal. Rapino mentioned this in his testimony. This will be convenient, but customers should also expect to pay for this convenience. Charging for convenience is how these guys make money. Since this whole move is about control, LNE will try to build / buy a competitor in the music distribution space. They will not even approach Apple’s market share because the interface will suck.
- Rapino seemed to gain some support in the house hearing when he said that the new company would hire people, instead of laying folks off. The committee didn’t ask him if the new jobs would be American jobs. In fact, a source of mine, a former Ticketmaster employee, shared that Rapino’s claim was unequivocally false. According to the source, Ticketmaster has been outsourcing both development and QA activities to their Shenzen office, which opened in January of 2008 – and the new development jobs will likely be in China instead of the US, since the Chinese only demand about 30% of the salary of their US counterpart.
- The market will striate – with LNE owning the “top end” arenas and amphitheatres, and the middle market pursued aggressively by viable ticketing competitors such as ourselves. LNE will soon look to expand its footprint in the middle market as growth on the top end stagnates, and fears will resurface regarding their abuse of leverage.
- Ticket prices will not come down. This merger never was about what is good for the fans. It is about control and profit, plain and simple. Convenience fees will probably go away, but ticket prices will increase to compensate for the lost revenue.
A question I get often is: what does this mean for us (TicketBiscuit)? From a business perspective, the news of this merger has had positive effects. Venues and promoters are looking for options. They see that this much centralization of power is not good for the overall ecosystem. With our Music Liberation Fund, we’re removing the risk of switching away from Ticketmaster. And, we’re the only ticketing company continuing to invest, daily, in tools that help our clients sell more tickets. It’s always been our position to compete well, execute flawlessly, and do the right thing for our clients. And we’ll do that, merger or not.
A colleague forwarded me this article today – apparently Spirit Airline is considering making customers pay for the privilege of booking tickets anywhere other than their ticket counters in airports.
http://online.wsj.com/article/SB123604492886515417.html
Wow. Spirit must have some Ticketmaster folks on its board.
This is effing hilarious, and a good example of why the air travel industry is in such dire straits. I assume that Spirit Airlines either has paid up front costs for their reservation system or pays an annual licensing fee, but I doubt the cost ties directly to usage volume. I further suppose that the costs incurred by having ticket counter agents and space at airports exceeds the costs of the online reservation system.
So the airline is, in effect, penalizing consumers for utilizing a more efficient means of transaction. WTF? I can follow (but not necessarily agree with) the thinking behind charging fees for checked baggage or in flight refreshments. These things drive up costs. But not online booking.
What if other industries followed suit? Fees for online banking? For booking hotels online? For using the drive thru at restaurants? For pumping your own gas?
The parallels to live entertainment are obvious. I have often wondered why so few promoters and venues choose to flip the common fee arrangement on its head. That is, charge fees for a box office (ticket counter) sale but offer incentives (no fees) to purchase online. We have a couple of clients who do business this way, and their online sales represent over 90% of their total ticket sales. Self Service is more efficient.
If customers and computers are doing the work, it frees up your resources to grow the business. Our system is one of the few ticketing systems out there with the flexibility to allow venues and promoters to set the fee structure that their customers see (completely independent of the per ticket fees we charge for providing ticketing services). In essence, it empowers businesses to encourage the self service option.
It’s time for more businesses to embrace a shifting paradigm. Encourage the efficient transaction and grow your business the right way, instead of taking the easy route and squeezing your customers who self serve.
Oh, and Spirit, if you guys want to REALLY grow revenues, you should try an online check-in fee, a boarding fee, or even a “seat bottom cushion flotation device” fee.
Geez.
Most of you have probably seen the press release by now, but for those who have not, we made a very big announcement today. Essentially, we’re allocating $10 Million dollars to contribute to America’s live entertainment venues and promoters to help keep them independent.
What does “independent” mean? Basically, not involved contractually with Ticketmaster and/or Live Nation. In my opinion, Ticketmaster has done more harm than good in the live music space as of late. The most recent troubling revelation was that Ticketmaster allegedly used its secondary ticketing subsidiary, TicketsNow, to inflate ticket prices for high demand concerts. Ticketmaster has denied any wrongdoing and an investigation is pending. But the whole thing just looks bad.
And now the impending merger with Live Nation. Live Nation enjoyed relatively favorable customer relations until earlier this year. Many folks (including us) were rooting for Live Nation’s new ticketing platform at launch. We know that they’re competitors. But competition is good in this market. It keeps talent accessible and fees low. But our cheering, like that of many, turned to jeering upon first learning that Live Nation’s fees were as high – if not higher – than those of Ticketmaster. And based on the experience of many a Phish fan, the Live Nation ticketing systems were seemingly insufficient for a massive onsale event.
From a business standpoint, the merger makes great sense. It makes sense because TM’s and LN’s previous competitive stance toward each other would have ultimately ended in mutual destruction. It makes sense because they have complementary strengths. It makes sense because Wall Street loves it; the stock price of both companies jumped at the mere rumor of the merger.
I will also acknowledge that this deal will be good for some. Major headlining acts will benefit. Management companies could benefit. Advertisers could benefit. But make no mistake about it: in this relentless focus on financial benefit and the money to be made, music fans, independent musicians, independent venues, and independent promoters, in my opinion, will lose out. In short, this deal will represent the largest consolidation in the history of the live music industry.
Consolidation means fewer choices and higher prices for fans. And that’s what the Music Liberation Fund is meant to fight against.
Is there something in it for us? Yes. Are there strings attached? Sure. But we’ll make all of that perfectly transparent to those who qualify for fund proceeds. The bottom line is that artists, fans, venues, and promoters need a choice. And with any luck, the MLF will help ensure that they always have one.
This is the second article in a series where we pick the brains of live entertainment promoters to discover their tips and techniques for staying successful amidst worsening economic times. If you’ve got some good tips you’re willing to share, please email Eric Housh or DM @ticketbiscuit.
Sequoia Slentz is an independent promoter that does events all over the country through his company CleanBox Entertainment. He is the booking agent for the “Killer’s of Comedy” which features comedians from the Howard Stern show. Sequoia also books all of the West Coast Shows for “The Fab Faux,” a Beatles tribute band featuring Will Lee from David Letterman’s show and Jimmy Vivino from Conan O’Brien’s.
I caught up with Sequoia the first time on January 20th, four days before the scheduled Fab Faux show at the Orpheum in Los Angeles. “At this point last year, I had sold this show out- 1400 tickets – without spending a dime on advertising,” he told me, continuing, “this year, I’ve done it all – radio, mailers, you name it, but to no effect.” Four days left until show time, and Sequoia had almost half of the house left to sell.
This tale is all too common lately- promoters struggle to sell tickets in the face of an economy that has forced people to eliminate line items from their budgets. Line items that are typically seen as discretionary, such as concert tickets, are often the first things to go.
The next time I talked to Sequoia was last Thursday, January 29. The Fab Faux show did not sell out, but he did move enough tickets to make money. I asked him to share his secrets for success.
Negotiate, Negotiate, Negotiate!
The thing about the economy is that it impacts almost everyone, and that includes venues, radio stations, hotels, and many other businesses. This opens up incredible opportunities. “The idea is to spread the deficit around. Radio stations need to sell ads. Hotels need to fill rooms. Venues need shows. We all need each other, we gotta help each other out,” Sequoia states. He advises to negotiate with the venues for discounted rates, and with radio stations for discounted air time or ticket giveaways. “Radio stations have an incredible amount of inventory, and they’re willing to deal to sell them all.”
Working with Hotels was effective for Sequoia as well. As part of his effort to increase sales, Sequoia struck a deal with the Kyoto Grand Hotel to offer discounted tickets to hotel visitors. After the deal was sealed, he was approached by four other hotels wanting to ink similar partnerships. “If these guys have empty rooms, they’re losing money – so again, you can help each other out.” He says to also negotiate for inclusion in email blasts sent from the hotel, venue, or radio stations to their respective customer or fan lists. “It’s free and easy – most of the time they will be glad to.”
Being creative also helps. For this last show, Sequoia approached a Professor of the Music Institute and convinced the professor to give his class extra credit for attending the show and writing a paper on it.
Use the Tech Tools
Sequoia uses email marketing religiously. “I’ll use it to communicate with my lists, and I used promo codes to give folks the opportunity to buy tickets at a discount price.” While promo codes are a very effective way of generating sales and tracking marketing effectiveness, Sequoia cautions against the “double pitch.” “If I send an email out on the on-sale date, and someone buys a ticket at full price, then I send that person another email closer to the date announcing half price tickets, one of two things will happen. Either they will become trained to wait for the discount, or worse, they will get mad and not buy any more tickets at all. Both are bad, obviously.”
He says the way to avoid the double pitch is through careful customer management or third party surplus ticket sellers. “I used a surplus seller for this show and it ended up putting an additional $3k in my pocket at the very last minute. I was very happy with it.” Surplus sellers have opt-in databases of people who agree to be notified when discount tickets become available, so the dangers of discounting are mitigated.
Pay attention to the details
“The littlest mistakes can kill your operation. In 2008, I put the tickets for the Fab Faux show on sale in early October, and the show sold out without me spending a dime in advertising. This year, I put them on sale a month later- in November.” While this may sound harmless to the lay person, Sequoia says it was probably a key factor in the slow sales. “Sure, all of the bad economic news was weighing on people’s minds, but also, in November people are thinking about Thanksgiving, and Christmas, and travel, and mentally budgeting. The entire frame of mind changes.” He advises that promoters pay close attention to on-sale dates and times, and the trends of how the tickets move. “I’ve already put the tickets for the October 2009 Show on sale,” he added.
Stick it out
Business will continue to be tough for promoters, with recent estimates saying that the economic recession will last well into 2010. But while the business is admittedly tougher, Sequoia says it’s actually good for his operation. “We’re learning a lot and having to become better and more creative. Not all promoters will come out of this, but if you can stick it out, you will be positioned securely.”
Ticketmaster working to outlaw presales in Florida and Minnesota: Contact your legislators!
March 30, 2009 in Commentary, ticketing news | Tags: florida, grateful dead, legislation, minnesota, presales, scalpers, secondary market, ticketing, ticketmaster | by ehoush | Leave a comment
A twitter friend brought this to my attention last week. I was at the beach getting some much needed R and R but felt that I should weigh in on it today.
According to this article by Al Branch over at Ticket News, Ticketmaster is advancing bills in Florida and Minnesota that would effectively give them greater control over concert presales. You can read the full text of the article here. Now, just the fact that Ticketmaster is lobbying in support of legislation on the ticketing industry should be enough to scare you into action, but if not…
I visited the websites for both the Minnesota and Florida Legislature to get the text of the actual bills- you can view them by visiting the links below:
Minnesota HF 819: Internet Sale of Event Tickets
And
Florida CS/ HB 1287: Resale of Tickets (summary and full text)
Interestingly enough – there are two other bills making their way through Florida as well – SB 1962 (summary and full text) and SB 2074 (summary and full text).
For those of you uninterested in navigating the legalese, I will simplify the gist of the legislation:
Ticketmaster is making a power grab to limit ticket presales and re-sells unless authorized by the primary ticket seller – in many cases, Ticketmaster. So Ticketmaster, in the midst of trying to establish a monopoly on the national scale, is now simultaneously looking to eliminate competition in the presale space and eliminate the reseller market altogether.
For those of you who aren’t savvy in this space, “presales” are tickets that go on sale before they are made available to the general public, often going on sale to, for example, fan clubs. They have been an established component of the concert industry for decades, but now Ticketmaster wants them stopped. Check this language in Florida HB 1287: “requiring that a person or entity that offers to sell or resell over the internet tickets to specified public entertainment or amusement events of any kind may not offer tickets for sale until such tickets have first been offered for sale via an event-provider –authorized outlet or offering.” The Minnesota bill has a similar anti-presale tilt: “The initial seller shall not divert tickets from the initial sale to be sold in any other manner.”
In other words, if Ticketmaster doesn’t feel like allowing a presale in Florida, it won’t happen. In Minnesota, it will be ILLEGAL to have presales.
There is also language in these bills that prevents or limits tickets from entering the secondary market. While in theory (and to the average state legislator) this sounds great, it sets a dangerous precedent. Some of you may recall many moons ago when I blogged about the Seven Principles of the Ticketing Industry. Principle four is what we see in action here- “Where there are nuisances, there are regulators.” It is dastardly (and again, should cause concern) that the very same company causing all of the nuisances is the one driving regulators to action. Of course, the well paid Ticketmaster lobbyists are keeping the true grim future scenario out of the minds of the regulators deciding the fate of the issue, as seen in Florida, where the bill has passed unanimously through two committees so far. If successful, Ticketmaster will both outlaw presales and resells, gaining a pretty tight death grip on the large entertainment venues of Florida and Minnesota.
So, if you live in Florida and occasionally buy tickets to live events, read HB 1287
(it won’t take long) and get in touch with the members of the General Government Policy Council Pronto. They are listed here: http://www.myfloridahouse.gov/Sections/Committees/committeesdetail.aspx?CommitteeId=2469 . At least contact Representative Troutman and let him know that this legislation deserves further scrutiny and revision. Ditto for you Minnesotans: http://www.house.leg.state.mn.us/members/hmem.asp
The answer to scalping is NOT to limit presales or introduce harmful regulation into this industry. The bottom line is this: scalping takes place because the face value of some tickets is significantly lower than the market value. Until all parties involved can agree on how to make these two values close enough at onsale to discourage scalpers, the practice will continue.
In related news: The Grateful Dead may have introduced a solution to this problem. What do you think?