Concert promoter Live Nation (NYSE:LYV) cut off contract renewal talks with IAC's (IACI) Ticketmaster in August. They've now found their replacement. Beginning January 1, 2009, following the expiration of their current Ticketmaster deal, Live Nation will launch their own competing ticketing service.
The infrastructure for the new ticketing venture will be licensed from CTS Eventim, the world's second largest ticket agency. Live Nation will operate the platform in North America. CTS Eventim will handle ticketing services via partnership in the UK and Europe.
Full details won't be provided until a conference call in January. Among the items likely to be discussed will be a secondary market (resale) ticket platform that Live Nation hopes to implement as well.
Since being spun off from Clear Channel (NYSE:CCU) in 2005, Live Nation has been in the process of transforming itself from a narrowly focused concert promotion business to a comprehensive music services company. In their marketing materials, the company bills itself as "the future of the music business." It's a vision defined by a single, top-to-bottom vertically integrated business: a place where fan club services, Internet content, recording contracts, publishing, touring, promotions, sponsorships and talent management all sit under the same roof.
Ticketing is a natural component in that organizational vision. Arguably, even, it is the glue that binds the pieces together. By operating their own box office Live Nation can cut out the middlemen and reduce dependence on third party services. Of comparable import, controlling ticketing and the point of sale gives them direct contact with customers. That access provides both cross selling potential and fertile pools of customer data that can be used for market intelligence.
Hinting at the not so secret corporate ambition, CEO Michael Rapino said in a statement, "Live nation will use its most important asset, the concert ticket, to build artist careers and customer relationships, forge sponsorship deals, create a fan and arsist friendly secondary ticketing platform and provide a ticketing alternative for 3rd party venues"
Over the past year, Live Nation has made several other large strides toward their goal of vertical integration. In addition to jettisoning properties not associated with core business lines, they also created a recording studio group. In a coup that shocked the industry, they then struck a 10 year, $120m deal with Madonna to handle virtually all aspects of her music career – from concert promotion to image licensing.
Guy Osear, one of Madonna's co-manager's, partly explained the choice by pointing out "in the past, people would tour to promote their albums; [but] today they put out albums to promote their tours." In a world driven by that dynamic, seeking a label whose principal expertise starts with tour promotion does seem logical.
Reportedly, several dozen musicians are in discussions to strike similarly wide reaching (though not necessarily as lucrative) deals. They too, have apparently been wooed by the same logic.
If successful in implementing their vision, Live Nation could become a formidable competitor for both ticket vendors and music labels. A look at a few statistics hints at just how wide reaching they already are:
- On an annual basis, Live Nation puts on more than 10,000 events at over 140 venues in 19 Countries.
- Following the purchase of MusicToday in 2006, fan club websites they administer provide a database of information on more than 20 million music fans, many of which are regular visitors to these sites.
- Live Nation's principal website generates between 8 and 12m unique visitors a month. Fan content, and tour information, makes it a consistent draw. The site is second only to Ticketmaster in web traffic for event related websites. (via Nielsen)
- N. American Concert industry has grown at compound annual growth rate of 15.5% since 2001. The industry generated $3.6b in revenue in 2006, up from $1.8b in 2001. Live Nation is the biggest promoter in the industry. (via Pollstar)
- Ranking ticket sales, Live Nation outsold their closest competitor by a factor of more than 3:1. Between January 2007 and September 2007, their events sold 27.9m tickets. Second ranked promoter AEG Live sold 8.5m (via Pollstar)
- According to Forbes, 75% of earnings for top money makers in the music industry (2006) were earned from touring. The Rolling Stones tour, as an example, grossed near $140m. The band's total revenues were in about $152m. In 2007, the Police reunion tour so far has sold more than 2.2m tickets, generating $243m in gross revenue.
Live Nation could well be on their way to making good of their claim to be "the future of the music business." They've certainly got higher prospects, and a clearer vision, than many of the traditional music labels. The question is: can they battle the labels on one front, Ticketmaster on another, and succeed at both?
Ticketmaster won't go down without a fight. They're moving aggressively into secondary resale markets and in buying EchoMusic last March, they too, grabbed a foothold in fan marketing and direct sale services.
Controlling venues and artists may give Live Nation an advantage but a lot can happen in the next year before Live Nation's new ticketing service launches.