Best (Worst?) Couple

by Colin Peters (Journalism), published June 22nd 2010

The United States Department of Justice has approved a merger between the world’s largest ticketing company, Ticketmaster, and the world’s largest promoter and venue operator, Live Nation.  The result is Live Nation Entertainment.

Many fear the merger will lead to an obvious monopoly.  Major artists such as Bruce Springsteen and Pearl Jam opposed the merger.  The latter actually sued Ticketmaster in the ’90s for operating a monopoly; a case they lost.  Leon Janikian, Music Industry Coordinator and Associate Professor of Music at Northeastern, expressed his concern with the impact the merger could have on business.

“I am always concerned about a scenario that has the possibility of minimizing the ability of entrepreneurs to enter into a healthy business that is competitive and encourages goodwill and creativity,” he explained.

Leading up to the merger, Live Nation annually promoted and produced over 22,000 events: concerts, theatre, comedy, dance, and sports.  These events had a total attendance exceeding 50 million.  Live Nation owned and operated 117 venues, 42 of them international.  Previously, the venues that Live Nation owned sold tickets exclusively through their services.  While Ticketmaster reigned supreme in ticketing sales, Live Nation did serve as a healthy competitor.

Following the Justice Department’s approval, Live Nation Entertainment will begin to take shape.  The new company will dominantly operate the online ticketing market; all venues previously owned by Live Nation will now be represented alongside their old competition.  In addition to event promotion and production, Live Nation has management deals with artists like Jay-Z, Madonna, U2, The Rolling Stones and Shakira; similarly, Ticketmaster owns Front Line Management, a management company with over 200 artists such as The Eagles, Neil Diamond, and Miley Cyrus.

Live Nation and Ticketmaster argued that a merger would cut back on inefficiencies and middleman costs.  The antitrust subcommittee of the Senate Judiciary Committee called a hearing last year in which Irving Ahe, Ticketmaster CEO, defended the idea of a merger.

“The music business is in far worse shape that most people realize,” he explained. “This merger will allow the live music industry to avoid repeating the mistakes of the record business.”

The deal does come with strings attached.  Ticketmaster is required to license its ticketing software to its primary competitor, Anschutz Entertainment Group, the second largest concert promoter and operator of major venues.  The ticketing giant must also agree not to retaliate against venues that choose a different ticketing service.  According to the New York Times, the United States Department of Justice will also subject Live Nation Entertainment to antitrust provisions for the next ten years.  Department of Justice officials argue the merger conditions will provide a healthy environment for competition and eventually bring ticket prices down.

As the digital music becomes the norm, one thing is certain: live performance is a music experience that can’t be simulated.  With the music industry struggling and record sales dropping, live entertainment continues to be an extremely valuable business, one that made Ticketmaster roughly $1.5 billion in 2009.

“I am convinced that the live music industry is vibrant and aggressive,” said Janikian.  He added, “People want to attend live performances and do so in great numbers.”

What will happen to ticket prices and live entertainment in the future is uncertain.  Changes in artist management are also uncertain.  Live entertainment is rapidly changing, developing, and facing many uncertainties. Where the business will go isn’t clear, but one thing is for sure:  for Live Nation Entertainment- business is good.

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