Ticketmaster near-monopoly in Canada entrenched by planned merger

Canadians hoping for a strong competitor against Ticketmaster Entertainment Inc. in the event-ticket business now face what one critic calls the "disturbing" likelihood that the U.S. company's dominance will be reinforced.

Ticketmaster and event promoter Live Nation inc. confirmed Tuesday that they plan to combine their acts in a so-called "merger of equals."
The combination of North America's biggest ticket distributor and biggest venue operator would operate under the name Live Nation Entertainment.

The arrangement between the two Los Angeles-based companies is likely to face intense scrutiny from U.S. antitrust authorities - especially because Live Nation recently developed its own ticketing service working in competition against Ticketmaster.

That service is just gaining momentum in the United States and Live Nation was planning to extend it early next year to Canada, where Ticketmaster has overwhelming dominance of outside ticket sales for major entertainment and sports venues.

A combined company would have enhanced power over both performers and audiences.

The proposed merger "sounds like it's a disturbing development," said Mel Fruitman, vice-president of the Consumers' Association of Canada.

"The original word was that Live Nation said they were going to go out there and compete with Ticketmaster for the sale of tickets. Now they've gone in the opposite direction."

Ticketmaster is estimated to sell tickets on behalf of more than 80 per cent of the major arenas and stadiums in the United States, and it has a similar market share in Canada, said Fruitman.

"They control at the moment most of the major venues, and it's my understanding that many of those contracts were due to expire within the next year or so, and we were looking forward to seeing some competition," Fruitman added.

"This combination with Live Nation, who controls the venues, with the ticket sellers is certainly something that the Competition Bureau needs to look at, because that really is locking up the industry."

However, he could not say what leverage the Canadian government could place on a merger between two big American companies.

Fruitman said Ticketmaster generates a significant volume of complaints to the Consumers' Association, particularly over the array of extra charges it places on tickets.

"The one that annoys most, certainly annoys me the most, is when I say I will print out my own tickets, and they say, 'Oh, we're going to charge you for that.' So they charge you for saving them the cost of printing the tickets - how perverse is that?"

There also are concerns a lack of choice for online purchases, and about Ticketmaster's dual sales arrangement: it sells tickets at its Ticketmaster phone and online operation, and also provides a reselling service for already purchased tickets through TicketsNow.com.

"Tickets seem to sell out almost immediately," Fruitman said. "There's suspicion that they are flipping tickets over to TicketsNow.com."

This has provoked attempted class-action litigation in Ontario, where lawyers say Ontario's anti-scalping law has been violated and people have been overcharged at Ticketmaster and TicketsNow.com since February 2007.

Two law firms claim Ticketmaster and other defendants owe $500 million in damages to victimized event-goers.

Ticketmaster has insisted its system is fair and doesn't violate the law.

There also have been privacy worries, with the federal privacy commissioner saying last April that Ticketmaster Canada Ltd. was violating federal legislation but had since brought its practices up to standard.

"It's not very user-friendly, and has never been user-friendly," the Consumers' Association's Fruitman said.

TicketMaster to get some competition

January 2009 could be the beginning of a new era for concert-ticket buyers who are fed up with high prices, extraneous service charges and a lack of competition in the marketplace.

That's when Live Nation will start taking on Ticketmaster in the United States - with plans to do the same in Canada by 2010 - and there are already promises being made about how the new competition will empower the consumer.

"We still believe the venue, the artist and the fan would love an alternative ticketing company," said Live Nation chief executive Michael Rapino during a recent conference call. "I think it's probably the only industry in the world ... that doesn't have a good No. 2 or No. 3 (competitor)."

"We believe that competition will drive a better price for the fan."

In the other corner, Ticketmaster recently announced that it is "experimenting" with selling tickets with no extra fees attached, as long as the customer prints out their tickets at home.

Even though ticket buyers have long vilified Ticketmaster for introducing those fees in the first place, company president Sean Moriarty insists he's been advocating for "the fan-friendly move to no-fee or all-in pricing."

"The initial reaction from fans has been overwhelmingly positive," he said during a conference call.

"We look to lead the way with this dramatic new approach and fundamentally change the way tickets are sold."

But some industry watchers predict concertgoers won't be won over by Ticketmaster's new strategy, and that Live Nation will eventually be held in the same esteem as their much-maligned rival.

"Competition is good, it keeps everyone on their toes," said Tim Baker, the head buyer for Sunrise Records, which handles the lion's share of Ticketmaster's retail sales in southern Ontario.

"But I don't know if it's going to mean one bit of difference for the general public or not, to be perfectly honest."

Terry McBride, founder and president of Vancouver-based Nettwerk Music Group, said there are major changes coming in the ticketing business but he predicted most will improve the companies' bottom lines, while doing little to reduce prices.

"Ticketmaster just moved the fees within the ticket price," McBride said of the company's plan to do away with separate service charges.

"All they really said was rather than stand outside, the fees are now going to stand inside the ticket price."

Ticketmaster has told investors that is true but, said Moriarty, the company believes consumers won't complain about paying the extra fees as long as they're invisibly bundled into the price.

While both Ticketmaster and Live Nation say they expect that competition and recessionary pressures will drive prices down somewhat, they also don't believe today's highest-priced tickets are too expensive.

When Madonna played a few Canadian dates on her world tour this year the most expensive ticket went for $350, and Rapino doesn't think fans will balk at that price point for music's biggest acts.

"That's their one or two chances a year where they have to go out and have that Kodak moment - we think the fan still wants to do that," Rapino said.

"We think those consumers actually can still afford and will go to one or two shows next year, and we haven't seen anything in history that says they don't go when economic times are bad."

Moriarty said the whole range of ticket prices will probably decrease a little as fans question the true worth of a concert experience, although he believes promoters won't be forced to drastically slash prices.

"(Recessionary worries are) something almost everyone is feeling," he said.

"There's no question I think you're going to see some adjustment in price, but I still think fans are going to be committed to experiencing live entertainment."

And yet even as the companies predict ticket prices will have to come down, they're still experimenting with how much they can charge.

For Nickelback's upcoming tour the band is selling "rockstar packages" for $495 per person - plus additional service charges and taxes, of course - which come with a top ticket, a T-shirt, poster, VIP pass and guitar picks.

A Britney Spears "Toxic VIP Experience" ticket goes for $549.50 and includes an invitation to a preshow party, a ticket to the show, a backstage tour, a "tour gift item," laminate tour pass and free parking, among other add-ons.

Offering all those extras to die hard fans is part of Live Nation's strategy to commoditify (is that a word? not sure) every aspect of the concert experience - from selling a line bypass on the way into the show, to the advertisements that fans see throughout the venue, what they eat and drink on site, and even reselling the concert itself.

"We still are working on a much bigger project (about) how can we institutionalize the sale of the live show online and through mobile (phones), and we believe that the future of that will come together soon," Rapino said.

Live Nation's foray into the concert market will be limited at first, and fans won't have the choice of selecting which company to buy tickets from.

Live Nation will sell tickets for venues it owns or operates, and has the rights to some limited sales for the all-star artists it works with, including the likes of U2, Madonna, AC/DC, Jay-Z, Nickelback, Coldplay, and the Jonas Brothers.

The company's reach is further limited in Canada currently, since it only controls two venues, Toronto's Molson Amphitheatre and Vancouver's Commodore Ballroom.

But the company is already promoting more and more shows in Canada - with sales going through Ticketmaster - and it was Live Nation that put on this summer's inaugural Pemberton Festival in British Columbia.

It's unclear whether the three-day festival that included performances by Coldplay, Jay-Z, Nine Inch Nails and the Tragically Hip will return next year.

Baker of Sunrise Records said he just hopes the new ticketing business doesn't scrap all the old traditions of concert going for the sake of profit.

Both Ticketmaster and Live Nation are moving toward more and more e-ticketing, which will allow fans to flash their cellphone to get into a venue with no paper ticket required.

"That's fine if we can reduce waste and stuff like that, but it's not the same as a ticket," Baker said.

"I still have a Jimi Hendrix at Maple Leaf Gardens ticket from the late '60s. People have their bright, colourful tickets from the Montreal Canadiens. I don't want to see the demise of the actual real ticket."