Ticketmaster is one of those companies that always got a free ride back in the old media days. Now its position is such that issues that were a scandal ten or twenty years ago—and were almost never reported on in major papers—are referred to in passing.

Right now, Live Nation, formally Clear Channel, has basically fired Ticketmaster as its ticket broker and is building up its own ticketing service. The news yesterday (WSJ story here) is that it got a new client for it—SMG, out of Philadelphia.

That gives Live Nation somewhere between a fifth and a quarter of the country’s ticketing business. More on that in a minute. First, consider this from the very end of the Journal story, emphasis added:

Ticketmaster has long-term contracts with venues, giving it exclusive rights to sell tickets. The company makes its money on service charges and other fees. It has been able to maintain its dominant position by paying its client venues a portion of the fees it collects, and by installing proprietary technology that would be difficult to replicate.

The event-ticketing business is a scam from the beginning. We don’t pay a “checkout fee” at Wal-Mart. But the concert business has weird economics. If you’re desperate to see, say, the Police reunion tour, you shell out for the $90 tix and go along with all the additional ticketing, and handling, and delivery fees the ticketing system demands.

You don’t have another way to buy the tickets!

This parasitical position—roughly akin to being allowed to shake down music fans before they enter a concert—wasn’t enough for Ticketmaster. The company’s genius, which should have been illegal, was to jack the fees up even more, and kick part of the money back to the venues and bands. That’s how the company got those “long-term contracts” the Journal mentions. (The company doesn’t mention the band part of the equation, but that’s part of the mix as well.)

In other words, consumers were paying to help Ticketmaster keep its monopoly, mugger-like position. And the venues had no incentive to put the ticketing business out to bid, or find new and cheaper ways for people to get their tickets.

This process was entirely unreported in the mainstream press at the time. (One of the few to look at Ticketmaster in depth was Eric Boehlert, who did a lot of nice reporting for Billboard on the company in the ’90s.)

And now it’s mentioned, matter-of-factly, at the end of a story, as it is in the Journal today.

So as far as the news today, it’s easy to see why Live Nation wanted that business back. Why should it settle for kickbacks? And using its own massive share of the live event business as a starter, it can leverage that influence into deals with companies like SMG.

Two questions:

One, the ticketing business is an artificial construct, but once it’s there, fine. The venues didn’t want to deal with the hassle of printing their own tickets, they farmed the biz out, and consumers got screwed, but at least there was the cover of the poor saps’ having to buy the things through a different entity, namely Ticketmaster. But since Live Nation has taken the business back over, what’s the justification for it? “You can buy a ticket from us, but we’re going to charge you another $15 to buy this ticket from us.”

Two, why didn’t the Journal reporter find out the details of the new ararngement with SMG?  Says the story:

Starting late in 2009, it says, Live Nation will sell tickets on behalf of SMG, a Philadelphia company that manages more than 200 major venues, including the Los Angeles Forum and Chicago’s Soldier Field. The companies say that during the deal’s five-year term, Live Nation will sell the vast majority of tickets to events at SMG venues — at least 25 million of about 30 million tickets. Those sales represent an estimated $50 million to $60 million in ticketing fees.

The story doesn’t explain about the kickback part of the arrangement, or explore why the kickbacks are even necessary.  As for the figures, I assume they are for the entire, five-year period. But I don’t understand the math that produces the “$50 million to $60 million in ticketing fees”; the implication is that the average ticketing fee is $2 or so.