1) Antitrust issues

The line from the companies is that they do not compete. Ticketmaster, Why, we just sell tickets. And Live Nation, Why, our dad had a barn, the neighbors wanted to play, we put on a few shows….

In reality, the two companies were directly competing in two ways. For the first, Live Nation, through its 360 deals with the likes of Jay-Z, Shakira, U2, Madonna and such, was moving decisively into the talent arena, leveraging its large influence over the U.S. concert industry.

Ticketmaster, for its part, had just merged with the industry’s biggest and most powerful management agency.

Both companies, in other words, were positioning themselves to be powerhouses in the music industry’s new post-label world.

Secondly, Live Nation had recently dumped Ticketmaster as its ticket agency and was forming its own to compete. But then, suddenly, the two companies agreed not to compete, and instead merge. I’m not a lawyer, but it’s hard to tell that story without using the phrase “agreed not to compete.”

2) Inherent conflicts of interest

The conflicts of economic interests that the two companies will provoke are legion.

Now, the subjects of the 360 deals already established—U2, Madonna, the others—were already in one sense risking their best interests when it came to touring. You could imagine Live Nation moving big tours around to maximize the company’s benefits, even if it might not be best for the artists. (What if Shakira and Madonna both wanted to tour one summer, but the company’s analysts argue that, with the economy in the tank, fans might only be able to afford one. Does one tour, or both? If both, whose gets announced first, to get the best shot at the money out there?)

However: Those artists each got tens of millions of dollars up front, and presumably knew what they were getting into.

But the merger tosses the hundreds of Irving Azoff’s Front Line management artists into the stew. Some artists are sure to get run over in the mix.

And if the artists don’t like it, where else can they go? And what are they going to do, anyway—complain to Azoff?

He’s the executive chair of the new company.

I don’t know the particulars of how Front Line is set up, but in the end it’s a management company, which takes a percentage of its artists’ income. Now those artists are cutting deals for tours with Live Nation, which, in the end, will now own a piece of them. Won’t the company in effect be getting its artists to perform at a ten percent discount? How does this help the artist? And doesn’t it mean Live Nation has an economic incentive to book as many of its own artists as possible?

3) Screwing over consumers

Music fans are facing a nightmare scenario where the two most ruthless and most consumer-unfriendly institutions in the industry are joining forces. We will see higher ticket prices, as the new entity experiments with pure auctions for shows; it could mean the dawn of the $1000 concert ticket. And as ever-pricier 360 deals are struck, the company will monetize anything it can, from jacking up parking fees to slapping advertising on everything that doesn’t move and some of the things that can. It will also cut costs wherever it can as well, which could mean fewer security and ushers or even traffic directors after the show.

(This is a subject for another time, but I noted last week the dismaying reappearance of general-admission arena shows. That used to be standard operating procedure in the industry—until kids wound up dying in the crushes. In an environment in which the promoter has to eke out every last dollar from the giant ATM machine that is the modern concert facility, the economic temptation will be overwhelming. Do the math: a few thousand extra bodies on the floor times a $75 ticket times a 50-date tour and all of a sudden you’re talking a $7.5 million potential increase in the grosses. These the promoter and the artists will happily collect, until the next tragedy, when the cycle will begin all over again.)

4) Power

The company will use its power to crush its opposition in the marketplace—both other promoters, and other artists. Through several corporate iterations, Live Nation became the largest concert operation by gobbling up the nation’s network of heritage promoters, from Bill Graham presents on down—and going to war, as it did with Jam in Chicago, when it couldn’t get its way. Once merged with Ticketmaster and Front Line Management, the largest music-management company in the country, the new operation will control both the nation’s biggest concert venues and many of the biggest artists. Now, of course certain stars, like Bruce Springsteen, will be able to make a living even if open war breaks out. But for many less prominent performers who can still make a very good living touring, the new Live Nation will not only control the venues but also a pretty good chunk of the product it needs to fill it, giving the company leverage against them it didn’t have before.

Other management and booking companies, too, will soon learn to pay Live Nation’s game; even a dispute involving one artist could end up affecting the touring abilities of another if they have the same management.

As for Ticketmaster, as the dominant ticketing company, it has long-term contracts with venues and promoters across the country; they will now be competitors, which will have to either develop their own proprietary ticketing system or entrust a direct competitor to handle its ticketing.

And the combined company will also have even more muscle to flex in cities and towns across the country, making life difficult for its competitors and ensuring that politicians continue to ignore the companies’ many anticonsumer policies.

And if the politicians, artists, promoters or music fans don’t play the game Live Nation wants, they risk being frozen out of it. Why? Because …

5) … both Live Nation and Ticketmaster are thugs

The battle Pearl Jam reluctantly got into with Ticketmaster fifteen years ago was prompted by a $5 fee the band thought was unnecessarily high. Around the same time, the manager of Aerosmith was quoted in Billboard saying that he too had gone to Ticketmaster to try to lower service fees for an Aerosmith tour: “[Ticketmaster Chief Ned Rosen] said, ‘I’ll tell you what I’ll do. Let’s raise the service charge a dollar, and I’ll split it with you.’…I’m going to sell, literally, 2 million tickets through the Ticketmaster system this year….Here he was at this meeting, trying to fuck fans out of another dollar!”

The company ran over Pearl Jam. Flash forward fifteen years, and Ticketmaster is a company that sells a process that takes a few microseconds of computing time for $50.

The company charges customers extra for printing out their own tickets. It is a complete parasite in the colon of the concert industry … and it has a market value equal to that of the largest concert promoter in the country.

As for Live Nation, it has presided over astonishing increases in top ticket prices. Overall, the concert industry goes up and down a bit; what doesn’t go down are those top prices: $175 for floor seats to the upcoming Billy Joel/Elton John shows, for example. (For an upcoming Eagles show, the top seats are $184, and all of the seats are more than $100, save for a few areas back behind the stage.)

The company took marketing at its venues to new lows, running commercials on video screens between acts and jacking up prices everywhere it could, including many fans don’t suspect. (The venues get a hefty chunk of merchandise sales, for example.)

What should be done?

The Justice Department should refuse to allow the merger, for all the grounds above. More than that, the new Obama administration could take a look at Ticketmaster as it exists today.

Ticketmaster holds a monopoly position in ticket sales right now; that’s how it gets away with charging $50 for a negligible service. It keeps that monopoly position by kicking back parts of those fees to the artists and venues. The government should disallow that practice, and force the industries involved (which also include many different performing arts shows and sports) to stop the kickbacks and keep an arm’s length relationship with Ticketmaster.

It could also force any ticketing company to details all of its prices prominently, including the service charges, at the onset of the buying process, rather than at the end, so consumers understand what they are buying and why.

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Previously in Hitsville:

Thoughts on conflicts of interest
Constantly updated: The Ticketmaster-Live-Nation unholy-matrimony news round-up!
Five arguments against the Live Nation/Ticketmaster merger
Irving Azoff kicks it old school
The music industry’s Putin
Bad merger coverage
WWBD (What would Bono do?)
Billboard’s analysis of the Ticketmaster/Live Nation merger
Springsteen and Landau bash Ticketmaster and Live Nation!
P.S. on Ticketmaster: A case study, starring Bruce Springsteen
Why the potential Live Nation-Ticketmaster merger is a very bad idea
Is Ticketmaster trying to muddle the fees issue?
The Azoff-Ticketmaster deal: Bad news for concert-goers—and the music industry
Why you so seldom read about obscene Ticketmaster-style ticketing charges