Last week, I wrote about Great Britain questioning the Ticketmaster-Live Nation merger. I just wanted to provide a quick update, as news today indicates that the U.S. antitrust authorities have similar worries about the deal. The Wall Street Journal reports:
Negotiations are continuing between Justice Department officials and executives of Ticketmaster Entertainment Inc. and Live Nation Inc., and no final decision has been reached. But department officials have let it be known that there are elements of the proposed merger that could prompt them to sue to block it, said one person familiar with the situation.
The ticketing giant and the world's largest concert promoter "now sense they need to make some serious concessions," and are worried the Justice Department will seek to block the deal, this person said.
The article doesn't offer any specific examples of what some of those potential concessions might be, but they likely include selling off various assets to allow for better competition. It does, however, provide this nifty chart explaining just why the merger poses such a huge advantage for the new entity in the concert space:
I'm not sure how you get around a merger providing close to 80% control of concert ticketing and promotion. In order to do so, I'd imagine there are some pretty creative minds trying to find concessions that will trick satisfy the Justice Department so that the merger can go through.
Of course, beyond the likelihood that they won't identify concessions that the DOJ would find adequate, there's a secondary worry: the new Obama administration inspired Justice Department could seek to make an example out of Ticketmaster-Live Nation. This is its first high profile case, and DOJ's new antitrust chief Christine Varney has made no secret of the fact that she intends to be tough.
Interestingly, the parties admit that the merger would provide for the following new way to sell concert tickets, sure to aggravate pretty much every concertgoer:
The two companies would like to develop an airline-style pricing system that adjusts the price of concert tickets based on demand. They say the merger is necessary to get that done because it would reduce the number of contractual relationships required to approve such complex transactions.
Because there's nothing that brings me more pleasure than checking an airline ticket price, only to find out that it has gone up an hour later. I just can't wait to have the same experience with concert tickets.
Actually, I wouldn't be too concerned with airline-style pricing for events, since some of the major issues I've had with Ticketmaster and Livenation arise from different sorts of demand than the airlines. (I'm not saying I like either system, I'm just saying they're different.)
The biggest issue with concert tickets is that for popular shows, the demand for tickets far outstrips possible supply, and for various reasons (The New Yorker had a good article about this a few weeks back) the artists don't want to let price determine demand because it would price out most of their fans. (We've seen the same thing with sports: high ticket prices mean a lot of the fans are suits with deep pockets, and the rowdy, raucous and supportive fans are relegated to the upper decks, or their living rooms.) The problems arise when hundreds of thousands of concertgoers all jam the "lines" ("tubes"?) at the same time, and crash the site. Neither of these businesses has figured that out, and airline ticket pricing schemes won't help that scenario a bit.
Why? Because airlines very rarely have to cope with a situation where demand far outstrips supply, and they can always add more or larger planes to a route in order to satisfy the demand (in addition to raising prices). Musicians can add performances, but if they are not motivated solely by money, they often don't.
For performances which are not as popular, I'd be fine with airline-type pricing. Shows that don't sell out would see their ticket prices go down, shows close to capacity would see prices go up. That's fine. But that's not the major problem with the industry. The problem is with exacerbated fans who spend hours on the Internet only to find that the seats have all disappeared and gone to resellers charging ten times face value.
Until 10000 people are all vying for a seat on the next flight to Chicago, only to find that Travelocity is the only one selling seats and the cheapest one is $2200, airline pricing won't be a major issue for concert promotion. Once tickets to an event are sold out, they're sold out, unless you pay a super-premium. If tickets on the 7:00 to Chicago are sold out, you can take a later flight, change in Atlanta, or get in your car in drive.