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Ticketmaster/Live Nation Merger Could Raise Ticket Prices


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Ticketmaster/Live Nation Merger Could Raise Ticket Prices

By Eliot Van Buskirk EmailFebruary 09, 2009 | 11:06:26 AMCategories: Music

Live Nation and Ticketmaster are expected to announce a merger Monday in a deal that could lead to a dramatic change in how event tickets are sold: from the fixed price norm that often results in quick sellouts for popular shows to an auction-based model that legitimizes what scalpers have always done.

If Live Nation and Ticketmaster merge, the combined entity could bypass the primary ticketing system partially or completely, forcing fans to bid against each other for tickets in Ticketmaster's TicketsNow secondary market rather than selling them at a fixed price in the primary ticket market, the way they have done in the past.

"This deal is not in the best interest of fans," said Michael Hershfield, the co-founder and CEO of LiveStub -- a secondary ticketing company much of whose business would disappear if Live Nation and Ticketmaster merge. "This deal would mean that Live Nation would have direct access to Ticketmaster's ticketing solution, including its resale marketplace TicketsNow. Live Nation could potentially harness Ticketsnow and begin to offer performers the opportunity to list tickets on the resale system without ever listing in the primary market. "

The upshot for fans, in many cases, will be higher ticket prices.

Even leaving aside the idea that these two live music behemoths would no longer have to compete with each other for venues and tours, the more immediate threat to fans is that tickets could be sold by auction rather than at a single price.

While the combined company might take the opportunity to ditch the "convenience" fees that are detested by fans -- or at least internalize the fees (which are divided between Ticketmaster, the promoter, and sometimes the performing artist and other parties) -- the idea of bypassing the primary ticketing market entirely and introducing them directly into the Ticketsnow auction system could give prospective audience members with more cash to burn a big edge over impecunious fans -- even if those other fans are quicker on the draw when it comes to buying tickets.

In other words, thickness of wallet -- and not quickness of response -- would become the salient factor when trying to buy tickets for hot shows.

Last week, Ticketmaster weathered a storm that could be a sign of things to come, if the merger goes through. When it sold tickets to a Bruce Springsteen show through TicketsNow, rather than through its primary ticketing system, the company drew ire from both The Boss and the federal government.

Springsteen complained about his fans being subject to a "bait and switch." When they went to Ticketmaster.com to purchase tickets at their $95 face price, many were directed to Ticketsnow where the tickets were priced as high as $2,000. As a result, Ticketmaster faces a regulatory probe -- and that's before it even gets the chance to try the same approach with all of Live Nation's tours.

"At 10 a.m. on Ticketmaster they were all sold out, then at 10:01 a.m. the same tickets are on TicketsNow for double the price," said Senator Charles Schumer (D-New York), who is looking into the issue, said in a statement. "We want to find out: how did they become available at TicketsNow so fast?"

Not only would the merger between Live Nation and Ticketmaster allow the combined company to expand this strategy of selling tickets only via auction, but it could also effectively rule out the rest of the secondary market for tickets (StubHub, LiveStub, eBay and so on).

Ticketmaster's Ticketsnow service includes a driver's license verification system, meaning that it could make itself the only place where the tickets can change hands.

The boards for both companies were said to have been close to an agreement on Sunday night to merge the companies in a cashless, all-stock deal, according to the Wall Street Journal. If the remaining sticking points are smoothed over, Live Nation and Ticketmaster are expected to announce their plans to merge as early as Monday.


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