Senators grill Ticketmaster’s chief

[25 February 2009]

By Herb Jackson

The Record (Hackensack, N.J.) (MCT)

WASHINGTON - Executives from Ticketmaster and concert promoter Live Nation argued Tuesday that their merger could save an ailing music industry, while U.S. senators and concert promoters questioned whether it would create a monopoly.

Under pressure from Sen. Charles Schumer, D-N.Y., Ticketmaster’s chief executive refused to defend the company’s decision last year to buy TicketsNow, a Web site where ticket brokers and others charge steep markups to sold-out shows.

“I would never have bought it,” said Irving Azoff, who took over after the purchase.

Schumer opposes the proposed merger and wants Ticketmaster to sell TicketsNow regardless of whether the merger, which is also under review by the Justice Department, goes through.

“You’re the only ticket seller in America with a wholly owned secondary seller,” Schumer said at a hearing of the Senate’s anti-trust subcommittee. A similar House subcommittee holds its own hearing Thursday.

Ticketmaster’s practice of using the same computer screen to tell fans that concerts are sold out and that marked-up tickets are available from TicketsNow caused an uproar earlier this month from outraged fans of Bruce Springsteen.

The company has since ended the practice and offered compensation to some Springsteen fans.

Azoff also told the subcommittee he was “shocked and embarrassed” by a computer glitch that prevented some Springsteen fans from completing ticket purchases until after concerts in the Meadowlands had sold out, leaving only higher-priced TicketsNow tickets available.

After the hearing, Azoff conceded that it was company practice, and not a computer glitch, to put the TicketsNow promotion on the same screen as the message that the show was sold out. That practice was ended after Springsteen issued a public apology to fans and said he had not been told about it in advance.

The merger presents new issues. Live Nation is the nation’s leading concert promoter, and Ticketmaster is the No. 1 ticket-seller, and promoters said their combination would stifle competition and hurt fans.

“Ticketmaster and Live Nation can go to any venue (and) say, ‘If you want my concerts, you have to use my tickets,’ ” said Jerry Mickelson, chairman of JAM Productions in Chicago.

Mickelson said Live Nation controls booking acts into 90 percent of the amphitheater market for the summer outdoor concert season. He also said Ticketmaster is the exclusive seller of tickets for 90 percent of the top 50 arenas and 80 percent of the top 100 concert halls in the country.

Mickelson said he uses Ticketmaster for some concerts he promotes, but if the merger is completed, the merged company would be able to outbid him for signing bands because it could also tap some of the revenue from ticket vending.

Mickelson and Seth Hurwitz, co-owner of IMP Productions and the 9:30 Club in Washington, both said they were concerned that the merger would also mean that Ticketmaster would no longer be a neutral party and a competing promoter would gain access to proprietary information about ticket sales.

“It’s a big matter,” Hurwitz said. “Your sales history is what you base your next offers on for your bands. You deserve to have that information, not competitors.”

Michael Rapino, president of Live Nation, told the subcommittee that sales information would not be available to the promoter division of the company.

He said that bands’ demands for money are the reason ticket prices have increased faster than inflation, and he tried to turn Mickelson’s arguments around by saying high prices result from too much competition from promoters.

“The true monopoly is the artist,” Rapino said. There’s only one Aerosmith, and when their agent calls and says who will bid the most for our tour ... if they only call one person, that person can set the price.”

He said the combined company would be able to hold ticket prices down because it could leverage ticket vending revenue as well as merchandising, advertising and other revenues.

At the same time, Rapino said the music industry was suffering because of the drop in revenue from sales of recordings and a new business model had to be developed to keep it from foundering.

“Our business is bleeding, and the real victim is the artist,” he said.

Azoff also defended the much-despised service charges Ticketmaster adds to the price of a ticket, saying some of the revenue from that fee is paid as a rebate to agents and to venues.

But Sen. Herbert Kohl, D-Wis., the subcommittee chairman, questioned why the company would charge lower prices for tickets if its goal is to increase value for shareholders.

The promoters said it would not lower prices.

“Blaming artists for ticket prices is completely out of context,” Hurwitz said. “The question is how much control is too much and when do they get told to stop? They haven’t been told yet, and they obviously will continue until they are.”

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