Ticketmaster Merges with Live Nation - Case Study Example

Ticketmaster merges with Live Nation Introduction Many have called it many things but the last 10 years in the music business has been nothing less than rocky. At the beginning of the century record sales were up and the business was looking for increased sales due to the internet and it's great ability to spread the word. Unfortunately for the music industry, it did not happen that way. In fact for several years, with each new trial was a loss. This paper will discuss the history of what happened, how that led to the merger of Ticketmaster and Live Nation and how that merger affects the stakeholders involved. History Ten years ago, the record labels saw a way to increase sales by getting involved with the internet. The goal was to spread the word about music faster than ever before and generate a new outlet for income. This whole idea was based on the customer buying music downloads from the online stores. In order to do that there would have to be encrypted legally authorized music. It was soon to be found out that this was almost an impossible task. It would take many people in full time jobs to manage this, but the damage had already been done. There were then many side businesses built on digital downloads which eroded not only the internet but previous business as well (Waddell, 2009). The idea, then, became consolidation. It was determined that if they consolidated more of the companies it would help them gain in the competition for customers. They were now faced with plunging record and music sales of all kinds. Merging these companies meant becoming more diversified and taking on more than the sale of music. They began to diversify and include management, merchandising, agencies and promotion and all were driven by the economy and the sales of music as the time. However, the decline in music sales continued and many of the large companies as well as some of the mergers were eliminated from the business. Some of those eliminated were companies like Tower Records and Circuit City. Consolidation also became part of the live music venue. Ticketmaster in 2008 was a leading investor in smaller management companies during the latter half of the decade. They were able to assure that these companies bought with them large pieces of the business. Live Nation was picking up merchandise firm signatures and music e-commerce companies like Musictoday. When merchandising was added to Live Nations menu of ticketing, promotion and sponsorship services it was able to strike multirights contracts with such artists as Madonna and Jay-Z (Peoples, 2009). In the beginning of the decade, you could go down to the store and buy a ticket to a venue and you were sold a paper ticket. While you can still buy a ticket this way, chances are when you get there the tickets will be sold out. The day when you can pick up a local ticket for a Sunday evening concert are gone, especially if you want to see some of the hot acts. Tickets are now only made available to the public after VIP tickets are sold to fan clubs etc. This created a online secondary market which has been in great demand by the customer who wants to buy tickets in his own time and does not mind paying for the convenience. Tickets Now has held a large piece of the business of selling tickets after tickets were sold out. Ticketmaster and Live Nation Just about a month before Ticketmaster and Live Nation announced their plans to merge, Live Nation had started its own ticketing company. The reason that Live Nation had decided to control its own ticketing was so it could then control some of the fan club profit available. This opportunity, because of the information it provides, allows for targeting of populations for ticketing sales, even before the tickets are available. This gave them a larger piece of the market. Ticketmaster too has evolving to become a full service company selling tickets and boosting sales of other products. Pricing of tickets has become even more strategic at this point (Waddell, 2009). Live Nation and Ticketmaster are the two biggest forces in the music business today. In making a bid for merger, essentially the whole business is sewn up in one company. Everything that happens from the time the entertainment is booked until the time the concert is over is controlled by Live Nation or Ticketmaster and secondary tickets by Tickets Now. Ticketmaster has dominated events for over two decades. They sold 141 million tickets worth more than $89 billion with a market share of 83% for major venues. Live music is now the only really healthy segment of the music business. In 2009, North American concert revenue was $4.4 billion. which was a 10% increase over 2008. Tickets is a company that has sold second sale tickets when they are not longer available. They have done a good business over the last few years and are now being purchased by Ticketmaster for $265 million. Antitrust Scrutiny These are the two biggest faces in live music today and Tickets Now was the third. The merger combines Ticketmaster, Live Nation and Tickets Now into one company. There was much antitrust scrutiny over this because it reduced competition almost to zero. The Justice Department did many interviews with all of the stakeholders involved before rendering any kind of decision about the merger. The merger was approved by the Justice Department with some concessions (Chmiellewski, Fritz, Lewis, 2010). This is a $889 million deal. The two companies were told that they must create a couple of rivals to ensure that competition occurs. Ticketmaster will give Anscher 12 Entertainment group access to its technology so that AEG-can create its own ticketing service to provide for competition. Ticketmaster must also divest itself of a subsidiary that provides software for venue operators that want to sell their own tickets. Comcast has signed a letter of intent to do this (Chmiellewski, 2010). Live Nation has been prohibited from retaliating against venue owners that defect to their competitors. Stakeholders There are many stakeholders involved here. and these have not been really well liked companies. Both companies are known already for their anticonsumer behavior. They have not had to be customer friendly because the business has been dominated by them. Many of the artists in the past have complained about, especially Springstein. Customers and artists alike feel that the decision is a mistake. Customers believe that Ticketmasters is stress inducing and because of the way they have done business before, tickets are seldom available. There will be many inconveniences with the merger of these three companies. Ticketmaster and Tickets Now had already tied up many concerts full array of tickets only to have them available through Tickets Now. Tickets Now only sells higher price tickets when regular tickets are gone. Will the price of tickets to the consumer increase with the merger of the three of these companies Certainly in the beginning has to be yes. There will be no other way to get tickets so they will be able to charge what they choose and the public will pay the price in order to get a ticket. At a later date, that could change based on the new competition that is supposed to be built. It is hard to imagine, contrary to the Justice Department decision that this will not be a monopoly, however. Artists who already find Ticketmaster and Live Nation difficult to deal with will most likely continue to have problems. Certainly this is not a situation that encourages one to be more customer friendly than they were before. Bruce Springsteen tells a story already in which he believes that tickets were not available for the average customer to one of his concerts because of manipulation by Ticketmaster and Tickets Now(Chenillewski, 2010). Springsteen says they are now Goliath with their hands in every pocket of the music business and the statement would be true. They now control the artistes and owners, the tickets, the prices, the concerts, the merchandise and anything else related to the business. Promoters, personal managers, artists and the public alike will all have to deal with this new conglomerate for anything related to their end of the music business because it is now all run by this new company. The new companies that are spawned from the deal that was made by the Justice Department may give rise to some competition but not soon. This may create great issues for everyone for where will the price of a ticket stop There is some hope on the horizon for those that believe this company should not happen. The fact that owners and operators can now have access to the same software that Ticketmasters uses may provide competition based on customer service. Artists, owners and customers would much rather deal with a company that is customer friendly. Will they be able to get the tickets to the public The answer is just not known yet. Conclusion The live music part of the music business is the only viable piece left at this point. How that is handled is extremely important. Ticketmaster, Live Nation and Tickets Now were already dominating the field and now they will be allowed to merge into one company. Will this be good or bad for the stakeholders It is difficult to tell at this time as we will only know when there has been a chance for others to step up to the plate and take away some of the power that these companies have gained. If that does not happen then the answer will be yes, all of the stakholders will be hurt. References Chemillewski, D., Fritz, B., & Lewis, R. (2010). Ticketmaster-Live nation merger gets Justice Department approval. available at http://www.musicnews.com Peoples, G. (2009). The Decade in Music. Billboard.biz. available at http://billboard.biz. Waddell, R. (2009). The Decade in music. Billboard biz. available at http://www.musicnews.com Read More