Page last updated at 14:59 GMT, Friday, 13 February 2009

Fears over concert ticket firms' merger

Madonna on stage

By James Melik and Duncan Bartlett
Business reporters, BBC World Service

There are fears that the cost of watching your favourite artist performing live could become even higher after a proposed deal to create a new giant of the entertainment industry.

Thousands of Madonna fans have paid between 65 ($93) and 175 ($250) to see her shows at British arenas in July and those prices do not include the fees charged by agents such as Ticketmaster.

The concerts are part of the singer's Sticky and Sweet tour, which helped her become the top money-making artist of 2008.

The music magazine Billboard estimates she earned 170m ($243m) last year, despite weak CD sales.

Now Live Nation, the company which promotes tours by Madonna and several other big stars, is planning to merge with Ticketmaster, the world's biggest ticket agency.

Judicial review

The deal has prompted concern among music fans both in Europe and the US, where Live Nation operates the majority of concert venues as well as managing many of the artists who play in them.

Taking away choices is obviously not going to help

Steve Butcher, Brown Paper Tickets

Opponents say the deal with Ticketmaster will create a music industry superpower with no serious competitors.

The US Justice Department is investigating the proposed arrangement, which is unlikely to be completed by the end of the year, amid fears that the merger would threaten competition.

"It is very interesting that Live Nation has just entered the ticket market in competition with Ticketmaster," says Washington-based anti-trust lawyer Marc G Schildkraut.

"Their business was tour promotion and then all of a sudden they were selling tickets and, soon after, we are looking at a merger."

Mr Schildkraut says the US authorities will want to know whether the merger will harm consumers by removing competition, thus allowing the one dominant company to raise prices.

It is estimated that Ticketmaster's share of the ticket sales market in the United States is 65% while Live Nation, which is new to the ticketing business, has a 15% share.

Chris Martin of Coldplay
Tickets for Coldplay's world tour went on sale a year early

Ticketmaster operates in 20 global markets and is involved with arenas, stadiums, professional sports franchises and leagues, college sports teams, performing arts venues, museums, and theatres.

Both companies have a strong presence in Europe and other parts of the world and are involved with sports as well as music promotion.

Barry Diller is set to become chairman of Live Nation Entertainment and he immediately sought to dispel the notion that the deal would lead to higher ticket prices.

"Ticketmaster does not set prices. Live Nation does not set ticket prices. Artists set the prices," he says.

Smaller promoters, many of which use Ticketmaster, fear that the tie-up with its biggest rival would hurt the independents.

Steve Butcher, chief executive of the Seattle-based agency Brown Paper Tickets, maintains the merger would threaten competition.

"The combination will give them more control over the market place," he says, "The more choices you have the better the situation."

"Capitalism works really well when there is a healthy competition between providers and services and consumers can vote with their dollar," he says.

"Taking away choices is obviously not going to help the situation."

Conflict of interest

The merger is getting extra attention after recent complaints about Ticketmaster's handling of ticket sales for a Bruce Springsteen tour.

Bruce Springsteen
Bruce Springsteen can command millions of dollars for live appearances

Within minutes of tickets going on sale and apparently selling out, Ticketmaster diverted disappointed fans to its secondary ticketing resale site TicketsNow, which was selling Springsteen tickets at much more than the face value.

Since that incident surfaced, blogs have been full of similar complaints from people who tried to buy tickets for such shows as Radiohead, Leonard Cohen and Phish.

Ticketmaster ran into trouble with the Justice Department in the mid-1990s after a conflict with the grunge band Pearl Jam.

In a populist move, Pearl Jam wanted to charge $18 per ticket and asked Ticketmaster to only charge a $1.80 service fee per ticket in order to keep the total ticket price below $20.

When Ticketmaster refused, the band asked the Justice Department to intervene and Pearl Jam was eventually forced to cancel concerts because it could not find venues which did not have exclusive deals with Ticketmaster.

Budget trend?

Although groups such as the Rolling Stones and U2 may still be able to command large sums for tickets to their live shows, other bands could struggle in the current economic conditions.

Music journalist Robert Sandall says ticket prices have become over-inflated in recent years and are now set to fall.

He expects this will encourage experiments.

"We might see something along the lines of the budget airlines, whereby people who go online to buy concert tickets early get them at the best prices," he says.

"Prices would rise for people who buy tickets closer to the date of the event."

But when tickets for concerts often sell out within minutes of being made available to the public, that concept would appear to be some way off.

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