The Daily Swarm links to a post from Bob Lefsetz about how Live Nation is supposedly handing so-called secondary market sales, or what you or I would call “scalping.” Lefsetz:

I had a long conversation with a promoter who told me that with regard to a show he was promoting, Ticketmaster was guaranteeing the secondary market for the act.

Let me explain this to you. A certain number of tickets are pulled from the manifest and ultimately sold on TicketsNow. Ticketmaster guarantees a certain gross payment to the act for these tickets, far in excess of the usual payment per ticket.

If true, the idea shows a new level of sleaziness in this merger. Now, Azoff and Rapino were fairly honest about their vision of what they called “new flexibility” in pricing post-merger. That’s promoterspeak for a variant on auction pricing, where they could basically sell better seats at astronomical prices, a longtime industry desideratum.

I’m not sure though if I understand the process as described here. (And note that it seems to be part of the band’s deal with Ticketmaster, not Live Nation.) If TM is going to be kicking back some of the service fees to the band anyway, they cut a deal for a certain percentage and then, one would think, the company can sell the tickets how they see fit, right?

But maybe not. As Lefsetz says:

Does Ticketmaster pull tickets from the original on sale and sell them on TicketsNow, bypassing the traditional 10 A.M. free-for-all feeding frenzy?  I don’t know the answer to this.  But I suspect not.  Because Ticketmaster is a public company and the additional revenue would have to show up somewhere in the accounting.  In any event, I’ve got no confirmation/independent corroboration stating this occurs.

What I suspect might be happening is that this is just a twist of the process by which, in the tour contract, the promoter gives the acts a chunk of the seats. Here’s how Azoff described the process under questioning at the Congressional hearings last week:

Azoff:  Inventory control is not a perfect science.

Rep. Sherman: If there’s ten thousand seats in the area, are you selling 10,000 tickets?

Azoff: Never. On average we might see 80 or 85 percent of the seats.

Rep. Sherman: Are those the good ones or the bad ones you’re not getting?

Azoff: The vast majority of the best seats in the house.

This could just be Ticketmaster saying, “Hey, you know those seats you’re getting from the promoter? [Casually] Want us to handle scalping them for you? Let’s see, the nominal price is $100, we’re talking 1000 of the best seats in the house, you can probably get $400 each, we’ll give you $350 grand to save you the hassle. Win-win all around!”

Note that in Lefsetz’s scenario, he has TM pulling tickets before the sale. This is a more baroque (and even shadier) scenario, where in essence TM is saying, “Pssst—Hey, let’s scalp some of the tickets we’re selling for you and not tell the promoter.”