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Live blogging the Senate hearing on Ticketmaster/Live Nation

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My account follows the jump.

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."

Questioning begins

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.

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10 Comments

Jim, a friend of mine in Chicago sent me your link and thought I'd be interested. Yes, it was interesting to watch. And I'll say upfront that this merger between Live Nation and Ticketmaster will be bad for the concert going public. I agree with Jerry whole-heartedly. But something strange was happening when I was watching his testimony. It felt like deja`vu, all over again. That sounded like me talking about Jam, 20 years ago - Back in the 80's and early 90's, I was in the concert business. I had a small company that did shows in Chicago and around the midwest. I was able to get arena acts but only outside of Chicago. I did do one (with Jam) in Chi-town at the UIC Pavillion.

I got the giggles when Jerry talked about the Aerosmith tour, and how he doesn't even get the call. I knew the feeling. It happened to me - a lot. Example: Back in the 80's I did RATT at a club (Broadway Jacks), then at the old Embassy Ballroom. The shows were a success and Ratt and their management were happy with my performance. But when they came back to play the Rosemont Horizon (Allstate), I didn't even get the call - Jam did. But back then they were all powerful. The big cheeses. (People used to joke that Jam stood for Jewish American Mafia) Didn't Flipside Productions sue them back in the 80's in court for antitrust and win? Makes me wanna go, hmmmmm. In those days if you tried to do a show at the Park West, Riv, or Bismark they would just direct you to Jam, and forget about the Aragon. Even though I did end up doing 4 or 5 shows (3 different acts) at the Aragon with Jam, and it wasn't because they just wanted to be nice to me. But they were fair.

With that said... The root of the problem here isn't so much Live Nation or Ticketmaster, and the merger. It's what it was 20 years ago, and will be 20 years from now. It's the big agents, and mostly, the managers who want to get big, fat retirement checks for their bands(and commissions)before they fall out of favor with the public. They want their's, and they want it NOW! The powerful agents, and managers could put an end to this "one-stop-shop" crap right away, by letting Jam and the few other big indie promoters compete on a level playing field for tours. But don't hold your breath. And it's going to get way harder after this merger.

It's a fight for survival. Like the woman who was attacked by that Chimp. She was out matched, but did survive.

Oh... and Live Nation is the chimp in this case.

"Azoff claims that on average, last year, Ticketmaster only made $2 per ticket in service fees."


Rhymes with "surgery"

I didn't know about the potential merger until a friend sent me this link. I just want to say that I went to purchase two tickets to the Mega Ticket country concert series at Nissan Pavilion in Gainseville VA and had to go through Live Nation. After spending an hour preparing (getting seating charts etc)to get online and purchase the tickets I wanted, the site finally starts working and I purchase my tickets. Approximately 11 hours LATER, I get a call from a rep of Live Nation saying there was a glitch in their system and I didn't get charged enough for the tickets I got!!! Apparently the tickets THEY OFFERED me after I selected the section/price I wanted to spend, was actually in the next price range up from what I paid!! They said I could either pay the extra ($200 more each) or try to find seats in the lessor priced section, or cancel my order!! They didn't offer anything for the inconvenience they were now causing me...if I wanted to change my tickets for the lesser priced section, I'd now lost a day of ticket sales. I asked this rep if she was going to be able to get me similar seats (close to the aisle) and she just said well, it would be first available...again, after an entire day of sales!! Now, I'm waiting for a supervisor to call me!! I'm sorry, but you don't go find your customer AFTER they've purchased your product and then tell them they didn't pay enough for the product they've already purchased!!

Ever has Ticketmaster been a problem. Back in the '80's, every TM agent I knew (and I knew several) had 2-3 machines up front and at least one the back room. All had a scalping biz on the side. Being first on line either at the venue/box office or at the local TM vendor, I was ALWAYS amazed when my tix were less then optimum. As a Dead Head since the 60's, I was a devotee of the band and their mail-in program. I NEVER paid more than $55-60 for a ticket and on average the price was in the $25-40 range. Now the Dead are back for a Spring tour. Cool! They had a pre-sale both on-line and thru Grateful Dead Ticket Sales (GDTSTOO.COM). I opted for the mail-in as I always got righteous tix from the crew. My tix from GDTS for MSG suck, to be frank. During the pre-sale, I also checked on-line at TM and was immediately directed to their 'sister' site and good tix were already in the $500-600 range. At first I blamed the Dead for getting greedy on what may be the last of their tours. But the real felon here is TM/Live Nation. They control just about every venue the Dead will play. $650 for a Dead show - I don't think so! Anyone who pays that is not a real follower anyway. The pre-sale price, btw, was $100/per tic. OUTRAGEOUS, by any means!

This merger should not only be prohibited, it should pave the way fpr all Attorneys General of every state (and the Federal Gov't) to probe into the whole TM/LN biz. Put these roaches under the light. They say their biz is to promote music and the artists, but they in fact do the opposite - especially in the case of new artists. And while we are at it, let's take down Clear Channel!

Kind regards,
Huge on Long Island

No one should criticise Jerry Mickelson or Arny Granat. NO ONE! They are the only people to stand up to Clear Channel. (I know everyone wants to say Live Nation, but it is Clear Channel.) Clear Channel has bought out every other promoter in the United States but Jam and I believe United Concerts in Utah. Keith - this is not the same thing you were suffering from 20 years ago, not at all. Clear Channel owns radio stations, venues, promoters, merchandise companies and now attempting a ticketing agency. This IS a monopoly and if it wasn't for the Bruce Springsteen fans causing a stink this merger would have gone down successfully the same as all of Clear Channels other purchases. Pearl Jam fought a good fight in the 90's but have now given up on it. The only folks to keep fighting are Jerry Mickelson and Arny Granat.

M Rapino doesn't want to talk about anything because they call themselves Live Nation but they are really Clear Channel. They, Live Nation/Clear Channel, are hidden behind the names of the companies they have purchased. The names of the companies do not change - only the ownership and where the money goes. That is the reason you can not find them in the phone book. Clear Channel must have realised if they changed the names of all the companies they own to Clear Channel they would have been questioned sooner.

Clear Channel has been buying live music related businesses and forming a monopoly for years with out anyone saying anything. The US Senate is now finally involved. May I repeat FINALLY!

Do not criticise J Mickelson or A Granat. Thank them for bringing up some valid points on why this merger should not go down. Maybe the US Senate will get more involved in Clear Channels business and see what a monopoly they REALLY have going!

Nobody has given a thought to the job losses it will cause in the merging companies

JIM, the artist SHOULD set the price. Then the fans that complain about the price of tickets, should complain to the artist, not the ticket company and promoter. But as I hear, the artists are in a pickle. They need to make money touring when in the old days they could make their money from record sales, and tour to support the album and ramp up sales. But as you know, it's hard when someone can download the songs they like for pennies, or free. That is one reason I would think ticket prices are so high, along with the unions (don't get me started there), advertizing, etc.

DANA - My experience is not like what Jam is dealing with as far as this Live Nation/Ticketmaster thing, but it's close. Someone who is keeping you from doing business, is someone keeping you from doing business. I hung in there for ten years, and made an okay living. So no harm, no foul.

And as far as Jam fighting Clear Channel. SFX was the company buying up all the major promoters throughout the country. Then SFX sold there company to Clear Channel. So the fight started with SFX. Also, I heard from a good source close to the situation that Jam didn't make a deal with SFX because they were lowballed, when SFX were giving huge deals to Cellar Door, Pace Concerts, Bill Graham Presents, and others. Jam probably thought that they could beat them back. They did, at least for awhile.

And again - THIS LIVE NATION/TICKETMASTER DEAL WILL HURT THE FANS AND PUT A LOT OF PEOPLE OUT OF WORK.

I hope JAM wins this one. Believe it, or not.

Ticketmaster makes more money than you would think.

Fred Smilek is the acting president of the Society to Save Endangered Species. It was founded two years ago by Fred Smilek along with his two best friends Charles and Jonathan.

Dana, the decade from 1990 - 1999 is called the 90s. 90's is possessive.

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This page contains a single entry by Jim DeRogatis published on February 24, 2009 1:49 PM.

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