1:45 P.M.: The hearing on the proposed Ticketmaster/Live Nation merger is underway on Capitol Hill in front of the Senate Judiciary Committee's Subcommittee on Antitrust, Competition Policy and Consumer Rights--and right off the bat, it looks as if it won't be a very pleasant afternoon for the controversial ticket broker and the giant concert promoter.
In introductory comments, three of the senators on the committee--Chuck Schumer (D-NY), Orrin Hatch (R-UT) and Amy Klobuchar (D-MN)--make it clear that they are very skeptical, to say the least, of the two giant corporations joining to control live music in America.
Schumer may have realized there are big points to be won in his home state by complaining about the way Ticketmaster recently sold tickets for the upcoming tour by Bruce Springsteen and the E Street Band, and as a recording artist himself (he fancies himself a singer), Hatch may be against a huge company that's likely to have little time for smaller artists (despite its claims otherwise).
But Klobuchar holds the trump card: She's the mother of a Hannah Montana fan still angry that she couldn't buy $60 tickets for her daughter and herself, being steered instead to the so-called "secondary market" (which the new Live Nation Entertainment hopes to control) and facing prices of $350 to $2,000 per seat.
2 p.m.: The Ticketmaster/Live Nation reasoning becomes obvious during the opening comments by Ticketmaster's Irving Azoff and Live Nation's Michael Rapino, set to become the two top execs at the merged corporation.
Rapino says Live Nation is not a giant national monopoly, but a "decentralized business run by local entrepreneurs." He cites the benefits of its shows to local economies, claiming one two-day event at the Alpine Valley Music Theatre in East Troy, Wisc., last summer pumped $5 million into the surrounding area. He did not name the artist; apparently, that's not important.
"Live Nation does more than anyone to promote young artists," Rapino claims. "We're probably the largest artist development company in the business right now." (Sure, it's really done wonders for up-and-comers like Jay-Z, Madonna and U2, all of whom have "360 deals" with the company.)
Both execs try to make that the case that they're really just diehard music fans. After citing his childhood in Danville, Ill., and recalling traveling to Comiskey Park to see the Beatles, then reminiscing about promoting bar bands like Dan Fogelberg and REO Speedwagon during his time at the University of Illinois at Urbana-Champaign, Azoff claims that the business he loves is in dire straits due to the current economy.
"This business is in far worse shape than many people realize," Azoff says, asserting that the merger is necessary to save it.
Curiously, when Azoff says the word "merger," it sounds a lot like "murder."
2:15 p.m.: The anti-merger testimony begins with Jerry Mickelson, co-founder of Chicago-based concert promoters Jam Productions.
He calls the merger "vertical integration on steroids" and says the giant corporation would be the "poster child for why the country has and needs antitrust laws."
Seth Hurwitz, co-owner of Washington, D.C.'s legendary 9:30 Club, asks, " How much control is too much? You can't blame Live Nation at this point any more than you can blame a shark for eating people."
Committee Chairman Herb Kohl (D-WI) maintains that competition is what's best for consumers, and he asks why Live Nation and Ticketmaster disagree.
"Mr. Rapino, you strain our sense of common sense. Mr. Azoff, explain to us why we should let you merge," Kohl says.
Rapino insists, "There's lot of compettion in the concert business right now." He says that in Chicago, Live nation promotes 16 percent of the shows, while Jam promotes 29 percent.
"The model needs to change and we believe this is a good start," Rapino says
Azoff adds: "This if the first time in the history of the music business that would give the artist control." They're trying to say the merger will... help up and coming young artists.
Kohl says he "is disturbed" by the corporate witnesses' "unwillingness to discuss the main reason for the merger"--increasing profits for themselves and their shareholders.
2:22 p.m.: What could be stranger than this: Hatch rallies to the defense of independent promoters struggling to compete with Live Nation, noting that Chicago's Jam Productions promoted 130 arena shows in 1996, but only 35 in 2008.
(Jam may have promoted more shows than Live Nation, as Rapino testified, but many of those are small club and theater shows, while Live Nation seeks to dominate the biggest, most profitable shows--those at the Allstate Arena or the United Center versus the Vic Theatre or the Park West.)
2:25 p.m.: Rapino claims that whatever market share Jam has lost in Chicago or Hurwitz has lost in Washington, D.C. is not the result of Live Nation, but of the far smaller national promoter AEG Entertainment.
"I don't make money on the ticket in general... I lose $80 million at the door," Rapino says. In other words, he's claiming ticket sales are a loss leader for Live Nation. So the company makes most of its money... on merchandise and food and beverage sales? He does not spell that out.
2:30 p.m.: Schumer hammers Ticketmaster's Azoff on the Bruce Springsteen secondary market ticket sales scandal. "You'd rather sell a ticket on [inhouse scalping agency] Tickets Now than Ticketmaster because you make more money," Schumer says.
Azoff waffles but finally admits, "It could be way more."
Schumer asks about the specific service charge on the Springsteen tickets, and Azoff claims that on average, last year, Ticketmaster only made $2 per ticket in service fees. Schumer claims the number actually is between $7 and $30. Azoff is given a day to back up his numbers in writing... "under oath so we know they'll be accurate," Schumer demands.
"Your answers obviously don't satisfy me," Schumer says. He asks if Ticketmaster shouldn't sell Tickets Now. "Personally, I don't think there should be a secondary market at all," Azoff says. But he is unclear about whether or not Ticketmaster will get out of the business of scalping.
2:34 p.m.: Schumer keeps pressing Azoff on whether Ticketmaster will sell Tickets Now. "If you'd like to make an offer, Senator," Azoff cracks. Schumer responds that he can't afford to buy a Ticketmaster ticket, much less part of the company. SNAP!
2:36 p.m.: Wait a minute, Irving, it sounds as if you're contradicting what you just said two minutes ago: "One of the primary reasons for this merger is that the whole secondary market situation is a mess."
Seconds later, Azoff defends the egregious Ticketmaster service charges, claiming his company gets only a small portion of the fees that can add $30, $40, $50 or more to the price of a $100 ticket. He claims the bulk goes to credit card services fees and kickbacks (though he certainly doesn't use that word) to artists and venues. But as in the past, Ticketmaster refuses to spell out the exact numbers here. (The Chicago Sun-Times and other news organizations have been pressing the company for this information for a decade and a half, since the controversy surrounding Pearl Jam and the Justice Department investigation in the mid-'90s.)
2:43 p.m.: Klobuchar asks Mickelson to comment on the Live Nation clam that the artist drives ticket prices up by pitting competing promoters against one another.
The Chicago promoter responds that he could go "on and on" about all the artists Jam never got a chance to promote because Live Nation controlled the entire national tour. "We don't get a chance to compete on a lot of these shows because the money is so big, the agents don't even call us," Mickelson says.
2:47 p.m.: Kohl asks Mickelson what will change for Jam if Ticketmaster merges with Live Nation and he continues to sell tickets through Ticktmaster. In addition to the newly merged Live Nation Entertainment now possessing a lot of inside information about Jam ticket sales, "Our competitor would be receiving income from every ticket we sell. That is nothing something I would relish," Mickelson says.
2:50 p.m.: Rapino responds that the ticketing division of the giant new corporation would not share any information with the promotion division. Kohl seems dubious that such a firewall could or would be built.
2: 56 p.m.: Micklelson gives some numbers discounting Live Nation's claim that they control only 38 percent of the national concert market, saying that last year, the company promoted 161 of the top 200 tours. "They dominate the market for arena sales... They own 90 percent of the amphitheater market," he says
As for Ticketmaster, Mickelson claims the company will use its power to shut out any competing ticket seller that might emerge, leaning on the exclusivity agreements the company signs with venues blocking them from selling tickets through any company other than Ticketmaster.
3:01 p.m.: Sen Russ Feingold (D-Wisc.) asks whether a major artist like Bruce Springsteen could tour America without working with Live Nation.
"If he was doing an amphitheater tour, no," Mickelson says. "And as far as Ticketmaster is concerned... no. The combined company, you can't get around them."
3:03 p.m.: Hurwitz on concert market competition: "[Live Nation] is going to keep going [in shutting out competitors] until someone stops them, because why wouldn't they?"
Mickelson: "The ticket seller that was supposed to be neutral and not our competitor would now be our competitor."
3:08 p.m.: Chairman Kohl ends the hearing but vows to stay on top of "this important issue. We'll urge the Justice Department to examine it closely and we'll continue to monitor the situation along the way."
Before C-SPAN's cameras and microphones switch away, however, they capture Mickelson cautiously approaching Azoff, set to become the most powerful man in the music industry should the merger be approved.
"Irving, this has got nothing to do with you," Chicagoan Mickelson says to Danville native Azoff.
"I'm fine. I'm fine," Azoff says. But he sounds anything but.