Jon Landau, Bruce Springsteen’s manager, posted a missive yesterday responding to a contention that Springsteen’s organization had held back 95 percent of the good seats at a concert in New Jersey. The allegation was in this story in the NJ Star-Ledger.

You can read the story and Landau’s response and judge for yourself whether there’s a contradiction or not. After acknowledging that Springsteen, like every artist, holds back tickets for friends and family of an enormous touring operation, Landau seems to deny the story’s main contention:

The 2,000 to 3,500 tickets closest to the stage are on the floor and more than 95% of them go to the public, making the basic premise of the Star Ledger headline [”Springsteen withheld best tickets from the public at NJ concert, records show”] inaccurate. Secondly, with regard to seats held in the best sections on either side, we always blend guest seats with fan seats so that there are never any sections consisting entirely of guest seats.

I think there are some interesting things about the Star-Ledger story.

1) In my experience, Landau’s explanation rings true; comp tickets aren’t often or largely directly in front of the stage. There’s of course always a triple-A guest list, but the idea that some 90 percent of the best seats at a show at a Bruce Springsteen concert were turned over to VIPs doesn’t seem likely. In arenas, comp seats tend to be in the side areas closest to the stage; the Star-Ledger story seems to fudge this distinction.

2) The idea that 90 percent of the best seats at a show of a shittier, greedier artist might go to VIPs or to artist-scalped fans is, however, entirely plausible.

3) Note that the Star-Ledger didn’t do the story about a shittier, greedier artist. The one who gets targeted is the only top-tier figure who has dared to speak out against Ticketmaster and Live Nation.

4) Left unsaid is this very real distinction: It’s the artist’s show. Barring holding the tickets back for secret scalping, artists are welcome to keep all the seats back they want. It’s their show, and the money is coming out of their pocket. The issue is when parasitical organizations like Ticketmaster or Live Nation are doing the under-the-table shenanigans.

The story gets junkier from there, including this part:

And, ticket brokers say, [the Springsteen ticket holds] helped drive up prices on the secondary market. Although tickets sold for $95 and $65 in the initial sale, some tickets were selling for hundreds of dollars more on the secondary market.

“Simple economics 101 would tell you that any time you restrict supply the price will be much greater,” said Robb Kenison, a ticket broker from the Washington, D.C., area. “I would not be surprised if a seat in 109, 110, 120 or 121 was double if not triple what it would have been had they sold even 50 percent of the seats in the sections.”

Quoting a scalper complaining about high ticket prices is like quoting a car thief about high car-insurance prices.

Back in the 1990s, when Pearl Jam got drawn into its battle with Ticketmaster, the band, too, became the focus of similar criticism and second-guessing—much of it, as here, from news outlets that never bothered to write about the much-more-outrageous behavior of Ticketmaster before.

Just caught up with the All Things Digital interview with Irving Azoff. Kara Swisher is not an unformidable person, but the eight minutes of excerpts we get do not indicate that she was informed or knowledgeable enough about the issues involved to take advantage of a prime opportunity to question a guy who is poised to be the most powerful single person in the history of the music business.

Instead, using a decrepit journalist trope, she merely quotes the opposition, Bruce Springsteen:

AZOFF: We think that everything we do evolves first around what’s good for the artist and good for the fan; that’s our new business plan.

SWISHER: The criticism from Bruce Springsteen, who is not a small act, is that, I don’t want to go through this. I don’t want to be sucked though this..

AZOFF: [flash of irritation] I would basically just say that Bruce Springsteen is uninformed about what the potential of this could be for him.

SWISHER: The idea that you have all these levels, that have to come through you, could be frightening to people …

AZOFF: Everything that’s gone on in the music business has always been frightening … They were frightened of Napster, frightened of iTunes. This is just normal evolution of where the business is going. It’s a myth that there’s not competition out there.

Azoff artully deflects her question into an answer about the industry being frightened, rather than fans and artists. Then he makes a statement that any head of a potential massive combine might make … and Swisher didn’t follow up.

Here’s what else she didn’t ask:

One: Isn’t there a conflict of interest between being a manager and booking a concert tour? What’s good for Live Nation might not be good for a particular artist. It’s like having a real estate agent selling you houses he already owns. Two: Auction pricing. The easiest way for Live Nation to get around scalping is to scalp the tickets themselves, by auctioning them off to the highest bidder. The company’s term for this is “dynamic pricing.” It’s coming.

Three: Both of these companies are in precarious financial shape; shouldn’t a Wall Street Journal reporter ask whether both shouldn’t be allowed to let their respective stockholders take it out on their misguided managements? Specifically, Live Nation used to be called Clear Chanel; that company bought up the U.S. concert industry, and now can’t make it work. (Case study here.)

From TicketNews.com:

Miley Cyrus will sell VIP ticket packages to her show on the site ILoveAllAccess.com, which is offering “[e]xclusive access for Miley Cyrus fan club members only, with special password, until June 9 17:00 BST,” according to their Web site. ILoveAllAccess.com is owned and operated by Ticketmaster’s Front Line Management, which is Cyrus’s management company.

VIP tickets, which will cost $295 each, are not yet available for sale. Instead, they state that tickets are “coming soon.” Myley Cyrus tickets officially go on sale on Monday at Ticketmaster. ILoveAccess.com states that the ticket package includes a seat in the first 25 rows, access to the pre-show party, a gift bag, a souvenir, and parking.

It’s a glimpse into the future. Front Line Management is Irving Azoff’s management company. Ticketmaster is the the company he now runs. And Live Nation will be putting on as many of the shows that Azoff can manage.

TicketNews quotes a Ticketmaster competitor:

Don Vaccaro, president and CEO of TicketNetwork, told TicketNews that “this appears to be nothing more than a bait and switch by Miley Cyrus.” Vaccaro added that “her camp doesn’t disclose to her teenage fans that she is withholding her best tickets to scalp them at almost $300 each, leaving her true fans without access to some of the best tickets.”

The American Antitrust Institute has just published an anaysis of the merger. It’s not positive:

The discussion considers two other attributes of the proposed transaction that make it even more problematic.  First, one of the chief concerns raised by the merger is that Live Nation Entertainment would be a vertically integrated enterprise with dominance or substantial power on six market levels.  The new entity would therefore be able to use its strengths in some markets as leverage to gain customers or compliance in others.  Moreover, this vertical integration would effectively frustrate new entry, because as a practical matter it would require firms seeking to compete seriously against Live Nation Entertainment to enter the industry on several levels at once.  The second factor is that the merged entity would likely enjoy market power not just as a seller but also as a buyer.  In essence, the company’s market dominance would benefit it in both ways.

The paper also considers whether the merger, suspect on its surface, might yield efficiencies that warrant not challenging the transaction.  In this regard, the Department of Justice may consider only efficiencies that (a) arise specifically from the merger and would not be attainable in other reasonable way, (b) are not speculative and whose benefits are
verifiable, and (c) outweigh the harm caused in every adversely affected market.  The efficiencies claimed by the parties satisfy none of these requirements.

Emphases added. The whole paper is available here.

___________

Previously in Hitsville:

A new Ticketmaster Phish screwup
An economist on scalping
Live Nation’s NYC parking fee three-card monte
Ticketmaster’s definition of the word ’scalping’
Bono, noted Live Nation employee, ducks merger questions from DeRo!
The Corgan meltdown—It gets worse
Ticketmaster, Live Nation, and the ’secondary market’
The best article yet on the Ticketmaster/Live Nation debate
Hillary Rosen—She’s baaaack!
Ticketmaster service fees: Where the money goes
Live-blogging the House hearings on the Ticketmaster/Live Nation Merger
“Re”-selling tickets that don’t yet exist
Liveblogging the Senate’s Ticketmaster/Live Nation Merger hearings
Seal & Van Halen in Azoff’s corner!
Updated! 26 questions that should be asked at the Ticketmaster/Live Nation merger hearings tomorrow Ticketmaster shareholders sue to stop merger
How Live Nation does business
Will the Live Nation/Ticketmaster merger mean higher concert prices?
Another suit against Ticketmaster
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

TicketNews reports that the NY senator is planning to introduce a bill that would … well, I’m not sure exactly what it would do:

New York Sen. Charles Schumer, a vocal opponent to the proposed merger of Ticketmaster and Live Nation, said he is planning to introduce a bill this week that would prohibit all sales of tickets on the secondary market until two days after the tickets initially went on sale to the public.

That seems to mean what it says—that scalpers couldn’t sell tickets for two days after they go on sale. Later in the story, though, we get this:

Supposedly, brokers would not be allowed to purchase tickets until two days after they went on sale, but how that would be monitored was not yet explained. However, his proposal would require brokers to register nationally with the Federal Trade Commission to help eliminate fraud.

The story says the bill would also outlaw presales, where scalped tickets are offered before the real ones even go on sale. It also says that Ticketmaster and Live Nation said they would support the bill.

Anything that messes with scalpers is a good thing,  but it’s hard to see how this would affect scalping at all, which is probably why the companies are OK with it.

The issue isn’t when the tickets are resold.  The issue is the corruption of the process of putting tickets into the hands of the public. If you allow scalping, it sets in motion a variety of efforts by the scalpers to amass the best seats.

This involves everything from paying off insiders for tickets or setting up computer programs to buy the tix automatically many times faster than humans can.

Hard to see what Shumer’s bill would do to stop that.

From a Reuters story on the prospects for the merger, republished on the Billboard site:

Live Nation board member Ariel Emanuel is a powerful Hollywood manager who is also brother of Rahm Emanuel, the White House Chief of Staff. Ariel Emanuel was also a major Hollywood fund-raiser for Obama’s election campaign.

Julius Genachowski, nominated by Obama earlier this month to be the new chairman of the Federal Communications Commission, was on Ticketmaster’s board until March 10.

___________

Previously in Hitsville:

A new Ticketmaster Phish screwup
An economist on scalping
Live Nation’s NYC parking fee three-card monte
Ticketmaster’s definition of the word ’scalping’
Bono, noted Live Nation employee, ducks merger questions from DeRo!
The Corgan meltdown—It gets worse
Ticketmaster, Live Nation, and the ’secondary market’
The best article yet on the Ticketmaster/Live Nation debate
Hillary Rosen—She’s baaaack!
Ticketmaster servce fees: Where the money goes
Live-blogging the House hearings on the Ticketmaster/Live Nation Merger
“Re”-selling tickets that don’t yet exist
Liveblogging the Senate’s Ticketmaster/Live Nation Merger hearings
Seal & Van Halen in Azoff’s corner!
Updated! 26 questions that should be asked at the Ticketmaster/Live Nation merger hearings tomorrow Ticketmaster shareholders sue to stop merger
How Live Nation does business
Will the Live Nation/Ticketmaster merger mean higher concert prices?
Another suit against Ticketmaster
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

Detailed here, at Consumerist.com.

Not that big of a deal: The company put some Phish tix on sale early, recalled them that night, apologized to fans and gave then $50 gift certificates—though, as one fan noted, that’s like $27 after service fees.

A week or two ago I discussed a blog post on scalping by an economist named Eric Crampton.  I called him British; he’s actually a Canadian teaching in New Zealand. The original post is below.

he and a colleague were kind enough comment on a couple of issues. One was my precis of what he meant by the concept of “clearing.” I glossed it as ““everything selling for the top price people will pay for it.”

The colleague, Paul Walker, wrote:

Demand curves slope downwards so the market clearing price will be such that only the marginal person will in fact pay what they actually think the ticket is worth. All intra-marginal consumers will pay less than what they think the ticket is worth. That is, they will pay less than their maximum willingness to pay. Your statement would be true under first degree price discrimination, but we just don’t see that in practice.

(He also discusses this more on his own blog, here.

The really interesting question the original post raised was why tickets aren’t sold at market prices.

A British Canadian economist, Eric Crampton, discusses scalping here. When he talks about “market clearing” he means “everything selling for the top price people will pay for it,” and in his world that’s how things not only should work, but do, which is why scalping takes place and “clears” the tickets appropriately.

I respect that position but don’t agree with it. Some of these free market types: You’d think a little kitten dies if every goddamned thing in the world isn’t sold at top price.

But I do have some observations to make about other conundra he ponders.

For the first, there’s too much hand-wringing over why tickets aren’t priced higher than they are. Of course it’s because rock stars don’t like the image of charging $500 or $1000 for tickets.

That was 1963, and the idea has been a key part of the rock ‘n’ roll ethos ever since.

But it’s really a larger issue than that. Very few entertainment options in American life aren’t subject to scalping, from sports to Broadways shows, which means that few of these are priced appropriately outside of the broad tiered pricing we are all familiar with. (I don’t know how things are in England.)

In some venues, the practice has been scaled back: Not too many movie theaters have that pricier loge seating. More often, as in rock shows and on Broadway, though, there has been a move to monetize the very best seats.

Still, it’s been done fairly quietly; and the press, as Hitsville has charted variously, goes along with it for the most part, parroting producers’ claims that the price hikes are all about “flexibility” or “consumer choice.”  (Just as Ticketmaster execs use euphemisms like “dynamic pricing” for higher ticket prices or refer to scalping as “the secondary market.”)

In other words, the main reason entertainment tix in the U.S. are not all sold at their full market value is that there is a long-standing cultural distaste for that practice.

Secondly, again trying to come up with a sober explanation of why an artist would sell a ticket for less than its market price, Crampton postulates:

I can buy that the artist would want the most enthusiastic fans up at the front rather than the boring folks who can afford to pay $1000 per ticket. Giving an economics lecture is a lot worse if the students up front seem less interested than you think they ought to be, and I’d fully expect that the effect is greater for musicians. Why shouldn’t they trade off some monetary income for being able to put on a show that’s more fun for them?

As is explicit in Trent Reznor’s detailed explanation of how he tries to thwart scalpers, the issue is more rewarding one’s supposed “true fans” than trying to buy a little enthusiasm in the front rows, which is always there no matter what. With very rare cases, everyone in the front section of every show I’ve ever gone to is, if anything, too enthusiastic.

In those case, I’m the guy with the free ticket who just wants to watch the show, and I’m invariably surrounded by inebriated frat boys yelling “Roxanne!” or “Rosalita!” They are the ones who paid top price at the least and, at the most, several times top price to a scalper to get up front and holler.

High ticket prices have had the effect of making it virtually impossible for anyone to admit they saw a bad show—you’d feel like an idiot after having paid more than $100!

Jim Farber in the NY Daily News details how Live Nation has been slipping its parking fees in and out of the ticket prices for shows:

A parking fee by any other name is still a parking fee.

A day after music lovers panned a new $6-per-ticket parking charge for shows at New Jersey’s PNC Bank Arts Center, promoter Live Nation eliminated it from its Web site - only to pile it back on top of the basic ticket price.

When the Daily News called to ask about the sneaky switch, and why there was no real change in overall ticket prices, Live Nation suddenly reversed itself and again itemized the parking fee on its Internet purchase page.

Link via the Daily Swarm. At the end of the story, Farber mentions the obvious thing: That the company makes a lot more money by making the fee part of the purchase price.

Joe Freeman, a senior VP of Ticketmaster, writes in to the WSJ today to say … well, basically to confirm everything Ethan Smith wrote in his pungent piece last week detailing how Ticketmaster is helping artists scalp their own tickets:

Ticketmaster’s Platinum ticket program isn’t used to mask scalping (”Concert Tickets Get Set Aside, Marked Up by Artists, Managers,” Marketplace, March 11). To the contrary, and as our Web site states, Platinum tickets are primary sales that enable “artists and other people involved in staging live events to price tickets closer to their true value and participate more fairly in the economic value of the experience they’re providing to fans.”

Note how right after he says the program doesn’t mask scalping he … masks scalping.

By the way, I left in the parenthetical reference to Smith’s original article to call attention to the fact that the Journal doesn’t link to the original stories when it posts letters to the editor on the web. As newspapers die it should at least be a footnote that many could not manage simple new concepts like web linkage, much less evolve their thinking on the macro level to meet technological change.

[Please send me any stories I’ve missed and I will post.]

The WSJ goes after artists who scalp their own tickets today:

Less than a minute after tickets for last August’s Neil Diamond concerts at New York’s Madison Square Garden went on sale, more than 100 seats were available for hundreds of dollars more than their normal face value on premium-ticket site TicketExchange.com. The seller? Neil Diamond.

Ticket reselling — also known as scalping — is an estimated $3 billion-a-year business in which professional brokers buy seats with the hope of flipping them to the public at a hefty markup.

In the case of the Neil Diamond concerts, however, the source of the higher-priced tickets was the singer, working with Ticketmaster Entertainment Inc., which owns TicketExchange, and concert promoter AEG Live. Ticketmaster’s former and current chief executives, one of whom is Mr. Diamond’s personal manager*, have acknowledged the arrangement, as has a person familiar with AEG Live, which is owned by Denver-based Anschutz Corp.

The writer, Ethan Smith, who has not heretofore impressed us with his coverage, redeems himself here, detailing a system that bills itself as “fan to fan” sales but is really limited to artists’ scalping their own tickets. He even names names:

Virtually every major concert tour today involves some official tickets that are priced and sold as if they were offered for resale by fans or brokers, but that are set aside by the artists and promoters, according to a number of people involved in the sales.

That includes recent tours by Bon Jovi, Celine Dion and Van Halen, and a current tour starring Billy Joel and Elton John. Spokesmen for Bon Jovi and Ms. Dion had no comment. A spokesman for Van Halen said that the band could not be reached. A booking agent for Messrs. Joel and John did not respond to requests for comment.

* Azoff!

—————

The CEO of Livestub.com, a ticket reselling site, op-eds in Billboard today against the merger. Michael Hershfield, noting that traditional tour income was hitting a wall, continues:

On the re-sale side of the ticket business, however, revenues have exploded. Traditionally, almost all the ticket inventory across the secondary sites belongs to brokers, often with the same tickets showing up on multiple sites simultaneously. Despite the crucial role brokers play in the industry, and the fact that it was on their backs that the biggest secondary marketplaces succeeded, primary sale participants greedily eyed their profits.

The actual secondary marketplace operators had already carved out their pound of flesh with the 25%-30% in fees added to purchases (and the original motivator for launching LiveStub), and now these “primary” players wanted their piece of the secondary ticket pie. They realized that the real money was to be had in the secondary marketplaces.

I don’t agree with the idea that brokers are crucial. (Hitsville’s position is that selling tickets above their purchase price should be illegal, but that artists should be able to charge what the market will bear.)

But the rest of his argument is interesting; he says that Ticketmaster needs to control the secondary market because that’s the only way to keep the ticket manipulations of the promoters and artists secret:

Theoretically, the only way to make sure this practice wouldn’t be discovered is to actually own a secondary market outright or to have an exclusive, high-level relationship with one. Creating a vertically integrated “walled” system where tickets would go directly into a preferred secondary marketplace and stay there was the ideal way to make more money.

Unfortunately, with the potential merger of Live Nation with Ticketmaster, this scenario is no longer hypothetical. Consumer concerns about a single primary seller of live event tickets should be amplified by the possibility of this entity using the anonymous cover provided by the secondary market to play by different rules and engage in duplicitous behavior with consumers.

———–

The head of AEG, Live Nation’s main competitor, blasts the merger in a chat with Billboard’s Ray Waddell:

[Anschutz Entertainment Group president/CEO Tim] Leiweke pointed out that Live Nation produces two-thirds of concerts held at the country’s top 50 arenas and top 50 amphitheaters, and that Ticketmaster accounts for 94% of the ticketing. “This merger won’t create a new idea on how to sell more tickets,” he said. “It’s all about the bottom line.” Consequently, the consumer will ultimately end up paying more, he predicted.

—————

The Financial Times editorializes against the Live Nation/Ticketmaster merger:

Its dominance in ticket sales would be worrying. Technology makes it easier to enter the market; challengers are emerging. But the merger would deal a blow to competition. Live Nation would presumably stop building up its rival ticketing business.

A greater concern comes from “vertical integration”. A single entity running the entire process – from signing up the talent, to staging of the concerts and selling the tickets – would stifle competition. This would work against the fans in the longer term, no matter what innovations were on offer initially.

So Christine Varney, President Barack Obama’s choice to lead the Justice department’s antitrust division, should take time to unpick the deal and exact strict concessions if it goes ahead at all. This is one of those happy moments for governments when the popular course is also the right policy.

While I agree with the paper’s position, it’s interesting how its knowledge base of the issue, like that of other publications, is weak. For example, nearly fifteen years after Pearl Jam’s futile battle with the company, no competitor has emerged—and the only one that presented any challenge to it … was owned by LN. Secondly, it’s not technology that has prevented others from entering the market; it’s Ticketmaster’s exclusivity deals with venues an artists, which, as we have sen, the fans have to pay for.

__________

Sound off with Dave has testimony of how it certainly seems as if someone’s “re”-selling tickets before they get sold in the first place:

Let’s take one recent high-profile example. Paul McCartney is slated to open the new Joint at the Hard Rock Casino and Hotel in Las Vegas. When tickets went on sale recently, those who were on Ticketmaster.com at 12:00 PST were completely shut out of the sale. Not a single ticket was there to be had. I tried, for one ticket, at the top of the hour.
[…]
However, you could find tickets for sale at TicketsNow immediately following the sale. There wasn’t even enough time to process an order, then go to TicketsNow to post your newly purchased tickets for sale. But, there they were, albeit at a much higher ticket price.

—-

From the yKvz blog, news that some challengers to Ticketmaster are trying to figure out a way to break the stranglehold the company has on venues via its creative kickback scheme. Their plan? Buy them off:

With the proposed $2.5 billion merger between TicketMaster and Live Nation looming large, many venue owners and promoters are up in arms, deeming the deal anti-competitive and monopolistic (they may be right - the deal is being examined for possible anti-trust violations). Now ShowClix, a TicketMaster competitor that launched in early 2007, is launching the Fair Ticketing Fund, setting aside up to $5 million to entice venues and promoters away from the pending Live Nation Entertainment goliath. Other ticket vendors are also beginning to offer similar deals, including TicketBiscuit, which launched a $10 million fund last week.

Emphasis added. Wouldn’t it be nice if venues contracted with ticketing vendors based on how cheaply and efficiently they could get tickets to fans?

—————-

This Bloomberg story speculates that LN’s largest shareholder would oppose the merger with Ticketmaster. It seems that it was just a shot at Barry Diller and that the investor, Read more

To hear Hitsville tell the story, the nation’s music writers are spending all their time writing positive record reviews, a fact some readers find endlessly disputable!

So why is Jim DeRogatis kicking everyone’s ass in covering the Ticketmaster/Live Nation merger?

U2, you will recall, has one of them-there “360 deals” with Live Nation, though in their case excluding recordings, so maybe it’s a “310 deal.” Here DeRogatis gets Bono to at least address the question. And the famously loquacious singer says …

“I haven’t really spent any time thinking about it. I’m just thinking about this [promoting ‘No Line on the Horizon’] …”

There’s more … the inimitable DeRogatis (with whom I once hosted a radio show) stays in Bono’s face.

I don’t remember Bono being asked about this by the Times or Rolling Stone.

Jim DeRogatis just posted a letter from Smashing Pumpkins leader Billy Corgan supporting the Live Nation-Ticketmaster merger.

Corgan’s been a fairly popular touring artist for some 15 years or more, now, so I don’t want to dismiss his position out of hand.

But on the face of it it sure looks like he’s carrying Live Nation’s and Ticketmaster’s water, right down to parroting the companies’ contention that the touring market is “broken”:

The ’system’ that was once the modern record business, essentially ushered in with the meteoric rise of the Beatles, is now helplessly broken. And by almost every account available cannot be repaired. Personally I would add to that a healthy ‘good riddance,’ as the old system far too often took advantage of the artists as pawns while the power brokers colluded behind the scenes to control the existing markets. This control often saw the sacrificing of great careers to maintain that control. Look no further than the major record labels’ intense fight to slow down the progress of Internet technologies that more readily brought music and video to the consumer because they couldn’t completely control it. This disastrous decision on their part has destroyed the economic base of the recording industry. It is now a shadow of its former self.

Note, too, that Corgan is talking about the recorded music industry here. The crazy thing is that the reason Azoff and Co. have been saying the touring industry is broken is that it’s broken for them, in that by their lights artists have too much power in the process.

Why Corgan is helping them out of a position they got themselves into is a mystery.

Corgan has been a punching bag for a lot of people for a long time, particularly some other artists and critics in Chicago during his impressive rise. His band never spoke to me artistically, but I personally always sort of admired his determination. The first time he appeared on 120 Minutes, as I recall, he took some tough shots at the scene that sometimes scorned him. I liked the idea of his punching back the first chance he got; it was a very Chicago thing to do. I barely wrote about him, but he was always courteous, even co-hosting our radio show one week when DeRo was out of town.

All that said, he really seems to be taking leave of his senses.

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.”

Ray Waddell, in Billboard, crunches the numbers and makes what seems to me to be the best case possible for the situation concert promoters find themselves in these days. Waddell covers the concert industry for the magazine, and probably knows as much as anyone about it. It’s a long and complex piece, with lots of figures and not much of the lies and posturing we saw at the hearings from the merger’s principals, and worth reading, even if you don’t agree with it.

He raises many interesting points. I want to address one, stemming from a case study he gives of a show by a Latin singer, Luis Miguel:

The concert grossed $808,575, according to Billboard Boxscore, an impressive total for a 19,000-capacity venue. Miguel could have made up to $730,000, based on the common concert industry practice of giving the artist 90% of the box-office gross and leaving the other 10% for the promoter. But the promoter in question—concert business giant Live Nation—may not have made money on the show.

The concert appears to be a success until one looks at the money left on the table. Although the Cricket Wireless Amphitheatre can hold 19,391 fans, only 11,045 bought tickets to see Miguel. The singer made money, thanks to a gross driven by a high top-ticket price. But Live Nation makes most of its money on the things people buy once they get to the concert: concessions, parking and its split of Ticketmaster’s service charges. And all of those things sell better when a venue is full—no matter how much people pay for tickets.

As I’ve said before, I find it hard to account for LN capo Michael Rapino’s contention that he’s playing on average to 40 percent empty houses. But for the purposes of the argument, let’s stipulate that.

Hmm .. it sems like an almost insoluble economic problem. They have inventory … it’s sitting on a shelf  … and it’s highly perishable—worthless at a minute after showtime.

Whatever can be done?

The article crystalized a feeling that I had several times while watching the hearings on the merger: Why does Live Nation need to merge with Ticketmaster to deal with the alleged broken concert industry?

In this case, why couldn’t it just, you know, sell the farther-back seats for less money?

I mean, I studied Latin, not economics, and I could figure that out. The promoter wants as many bodies as possible in the venue. What do they care how much the tickets are? The artist can do the math, and continue to take 90 percent of the gross. If I’m remembering correctly, Rapino said he made $14 in concessions and the like from each patron in addition to the relatively tiny $4 he made off the tickets. Let’s take those as the truth. Hell, the could give the empty seats away for free and make money.

Waddell notes farther down in the story that some promoters do just that. Why doesn’t Live Nation? As I noted before on the subject of what average capacity LN is operating at, I don’t want to be glib about an industry I don’t work in, but I still think that if all Michael Rapino can do is fill his venues to 60 percent capacity on average, the concert industry isn’t broken, Live Nation’s management is.

Indeed, I recently got an email from someone who added an additional wrinkle: Paraphrased, the point was simply that LN controls too many goddamn venues.

Why are the company’s bookers not putting acts in smaller rooms? Because LN has to keep its own buildings in action, even if they’re too big for the artist in question.

Are these guys squirrelly or what?

In an ideal market, concert promoters would have arms-length relationships with all of the venues in any particular town, so that they could place their shows with as much correspondence to their audience estimates as possible. (There will always be flops and unexpected sellouts, of course, but the promoters ideally would like the tools to place their bets according to their best intelligence.)

Live Nation chose not to do that, instead investing in purchasing lots and lots of huge structures and making management deals for lots and lots more. (And let’s face it, they did that to grab a monopoly control of the industry.)

It turns out that that might not be the best way to run a concert promotion company. Another thing Rapino asked for sympathy for during the hearings was the fact that the real estate market was tanking.

In both cases, why should consumers have to worry about a company that made bad business decisions?

Finally, all that said, I’m not sure if I even buy the premise. One thing Rapino and Azoff never made clear was who exactly was holding a gun to Rapino’s head when he overpays for rock tours in the first place. The only thing I can think of is that a competitor (AEG is really the last one standing) wants a particular show as well. If that’s the case, again, it’s Rapino’s job not to make bad deals.

(And let’s not forget that supermanager Azoff is the guy who spearheaded the move into sky-high tickets and demanding every last dime from promoters.)

As far as I can tell, the position as articulated by Rapino and Azoff in the press and before Congress is that they would like reality to be different for them. They would like the anti-trust laws to be relaxed, they’d like people to stop complaining about high ticket prices and just pay them, they want to sell tickets and scalp them, they’d like AEG to go away and they would like artists to stop asking for so much money.

That last item might be the key one—but more on that next week.

Hitsville live-blogged the Ticketmaster/Live Nation hearings earlier today; here’s the result, put into easier reading order:

_______

Our witnesses today, according to the subcommittee website:

Michael Rapino
President & CEO
Live Nation Worldwide, Inc.
Beverly Hills, CA

Irving Azoff
CEO
Ticketmaster Entertainment, Inc.
West Hollywood, CA

Robert W. Doyle, Jr.
Partner
Doyle, Barlow & Mazard, PLLC
Washington, DC

Peter A. Luukko
President & COO
Comcast-Spectacor
Philadelphia, PA

Luke Froeb
William C. and Margaret W. Oehmig Associate Professor of Management, Owen Graduate School of Management
Vanderbilt University
Nashville, TN

Ed Mierzwinski
Consumer Program Director
U.S. PIRG, the Federation of Public Interest Research Groups
Washington, DC

________

Hitsville is excited. The company leaked early on that big stars like Don Henley, U2 and Jay-Z would be coming out in favor of the merger. Maybe Don Henley, no stranger to the public political arena, will be a surprise guest!

___________

The House link for the webcast seems to be here. I’m checking with C-Span to see if there will be a feed there.

DeRogatis is blogging here.
_________

Bill Pascrell, Jr, a rep. from NJ, is going to testify as well, and then sit on the committee, but won’t ask questions. I assume he just wants to get his face out there on the side of Boss fans everywhere, but I could be wrong.
______

The Chair is Hank Johnson, from Georgia. He doesn’t sound well-disposed to the merger. He is mocking the companies list of artists who are supporting the merger. He says the subcommittee made “monumental” efforts to get artists at the hearing, as one assumes they would!

He’s quoting Springsteen saying the merger would make a bad situation worse.
$500 and $800 Cohen tickets on sale on TicketsNow, with additional $100+ fees, he says, before the tizx went on sale officially.
_________

The ranking member (highest Repub.) is Howard Coble, from South Carolina. “I am not the hippest member on Capitol Hill, he says. He lists TM’s big artists, apologizing for mispronouncing Christina Aguilera’s name. He likes Earl Scruggs and Lyle Lovett.

He’s suspicious. “A lot of sway over the little guy.” He mocks the “convenience charge.” “A lot o consumers would say it’s not convenient.   He says the burden is on the companies to demonstrate the deal isn’t bad for consumers.
Read more

Hilary Rosen will forever be remembered as the hackiest flack of them all–shilling for the record industry during the Great Napster war of 200-2003 as head of the RIAA, demonizing file-sharing and generally taking the most extreme position possible on behalf of an industry that combined avariciousness and stupidity in a way that wouldn’t be seen again until the housing loan debacle that sparked the current financial meltdown.

Rosen was there on the front lines as the industry accomplished the neat trick of holstering up, pulling out its guns, sticking its head in the sand and firing wildly … managing only to shoot itself in the foot. She  was no Jack Valenti: In the years since, as we’ve seen, sales have declined 45 percent, the labels are facing extinction, and it couldn’t have happened to a nicer group of people.

Anyway, since her disastrous years with the RIAA, Rosen has tried to rehabilitate her image by letting it be known that she was a voice inside the organization for accommodation and trying to position herself as a liberal commentator on the cable news networks. Most recently, she’s been calling herself “political director” of the Huffington Post, whatever that means.

And now … she shows her true colors, and will be a “strategy adviser” in DC for the Live Nation/Ticketmaster merger. I just saw my friend Jim DeRogatis talking about it on his blog, but it seems it was first reported by the NY Post. (More detail on her lobbying firm in this WashPo story.)

Is there anything worse than a corporate Democrat? (Wasn’t it one of the South Park boys who said, “I don’t like conservatives, but I really fucking hate liberals”?) Having spent years whispering into the ear of the RIAA as it embarked on its calamitous, destructive and pointless legal war on file-sharing, Rosen’s now going to be brushing lint off the labels of the creepy monopolists as they look innocently into the cameras and skulking around Washington to sneak the merger through a new Democratic administration.

The new Live Nation is shaping up into a real rogues gallery; hard to find the comparison, but it’s a little like Enron merging with Blackwater and bringing on Dick Cheney to run things and Baghdad Bob to lobby Congress.

Live blogging today, this transpired:

[Rep.] Sherman hones in on [Live Nation’s] Rapino on ticketing fees, finally, making him explain where the fees go. “So when I think I’m paying Azoff [metonymy for Ticketmaster’s service charges], I’m paying you?” he asks. “You’re also paying the venue and the artist,” Rapino replies.

It has long been an irritant to me that most people writing about Ticketmaster don’t say where the fees go. Now there’s no excuse. The head of LN and TM have testified before Congress saying that Ticketmaster service fees are kicked back to the venues and artists.

Two issues. One, I should have made clear I was talking about the mainstream press and the music magazines; industry operations like Billboard of course take it as a given.

Secondly, another interesting aspect of this is which artists get the money. Readers know Hitsville never tires of citing a 15-year-old Billboard story in which Aerosmith manager Jack Douglas tells about going to Ticketmaster to lower fees for the band’s 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!”

… which tells you that not every artist is lining up at that trough. Last week, for example, I said that it was hard to believe Bruce Springsteen wasn’t getting part of the $43 in fees accompanying the purchase of a pair of tickets to his upcoming tour. My understanding now is that that was a cheap shot, and that Springsteen doesn’t participate in Ticketmaster kickbacks.

That, in turn brings up the issue of where that money goes. If Springsteen had demanded a cut, would it have jacked the fees up even further? Or is he, in effect, just letting Ticketmaster or a promoter like Live Nation just pocket what could have been his cut?

Like so much of the money involved in this sleazy ongoing story, the amounts involved are mind-boggling.  Springsteen has about fifty dates scheduled right now. Say the average venue is 20,000.

In other words, Ticketmaster, the venues and his promoters will be skimming some $20 million in ticket fees alone off the back of his tour.

Please refresh for updates …..

_________

Things were just getting interesting. Froeb made the point that, in effect, the artist should have control of the whole process and get the true value of the tickets. (That’s Hitsville’s position to, along with a ban on scalping.)

But all of a sudden Sherman said time was up. The hearing’s over. Ended with a bang.

___________

Hard to believe Rapino is happy with these admissions. Avoff: “They go to building holds, sponsor holds, band holds, record company holds. They go out the door multiple places.”

Now we get to the true craziness.

Sherman: Why are you not selling tix for their true value?

Azoff: They are worried about the press. I always say, “That’s the guy who’s getting in for free!”

Hey! He’s talking about me!

Avoff makes a pitch for “dynamic pricing”—that’s auctioning.

__________

Sherman is asking by far the best questions. Now he’s pinning Azoff down on where tickets to a concert go. “Inventory control is not a perfect science,” Azoff says.

That’s an extraordinary euphemism, give Azoff’s replies immediately following:

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.

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 is the first time to my knowledge this has been publicly acknowledged by a major person in the music business. It’s the headline of the day.

__________

Sherman jumps on Rapino for saying that the average ticket price of $50 is a deal. Not in San Fernando Valley it’s not, Sherman says.

Here again, he’s picking and choosing his figures. He’s mentioned the 7000 club shows Live Nation puts on; that far outweighs the number of arena shows. Think what the avg. ticket price of them are. $200 and $300 top ticket prices at major shows are common now.

Sherman hones in on Rapino on ticketing fees, finally, making him explain where the fees go. “So when I think I’m paying Azoff I’m paying you?” he asks. “You’re also paying the venue and the artist,” Rapino replies.

It has long been an irritant to me that most people writing about Ticketmaster don’t say where the fees go. Now there’s no excuse. The head of LN and TM have testified before Congress saying that Ticketmaster service fees are kicked back to the venues and artists.

Sherman finally sums up the issue: “So what I think is the Ticketmaster service charge is really a disguised portion of the price. They are forcing Azoff to pretend like he’s charging a lot when it’s really coming back to you.”

_________

Rapino is also playing up the idea that new artists aren’t being created—and that the merger might help that. But of course, the industry has become increasingly consolidated over the last 15 years, which coincides with the alleged dearth of new artists.

He also says he doesn’t hear complaints from consumers about high ticket prices.  Very hard to believe.

He and Azoff also hitting another common refrain: That artists have to charge high ticket prices to cover the costs of their elaborate productions. This is more legerdemain: I don’t care how much the Police, or Madonna, or Neil Diamond, or the Stones, or Pink Floyd spend on their sets. They gross hundreds of millions of dollars on those tours.

As LN keeps testifying, the artists take essentially all of the gate, and then there’s merchandise, tour sponsorships, their kickback from ticketing fees, and the like. The cost of the sets aren’t zero, of course, and it’s expensive to take large entourages on the road. But it’s a pittance compared to the money they are making.

Azoff is referring to “problems of the secondary ticketing process.” He means that he’s not getting that money. That’s what the “problem” is.

__________

Sherman asks Azoff if many of his artists have empty seats in the room. Both Azoff and Rapino play this up big time; Rapino repeats his number that “40 percent of seats go unsold.”

Again, the congressman doesn’t have enough knowledge of the business to say, “Jesus, why is your board keeping you on as head of this company if you don’t know how to place artists in the the right venues? All of your bookers must be entirely incompetent, particularly because, since many shows do sell out, that means many, many other shows have more than 40 percent of the venue unsold.”

I have to confess I don’t understand this figure. I’ve spent a lot of time at concerts, and I’ve always thought the problem is booking acts into too-small venues so sellouts are more likely. Either the industry has changed of late or Rapino is conflating attendance at a broader spectrum of events than he’s letting on—I don’t know, Broadway roadshows or monster truck shows or something. I’d be happy to be proven wrong, but I can’t believe attendance at mid-sized-theater-and-above rock shows is anywhere near that figure.

Even if it were 80 percent that would mean many shows were, say, 60 percent full, and again, it would be hard to believe the company’s bookers could continually make those sorts of deals.

__________

Great question to Rapino: You’ve said said you might have to lay off employees if you don’t merger. If you do merge, you’ve claimed $40 million in efficiencies. Will that come from layoffs?

Rapino says, incredibly, that he didn’t say that, but that he might have to lay people off, but that the merger will create jobs. It hard to take that seriously.

________

The subcommittee is taking a twenty-minute break.

_________

Rep. Brad Sherman, from the San Fernando Valley in California, questions next. Can LN’s ticket agent, CTS, go to AEG and compete with TM? Rapino says yes. Sherman, delightedly, says, well, that would open competition! He seems to be on LN’s side.

He asks Azoff if he will ask his board to sell TicketsNow. He says he will, but hedges mightily. He says “the secondary market really needs cleaning up.”

_________

Coble’s next. He asks a clever direct question of Rapino:  Does Live Nation currently compete with TM, and what will they do if they don’t merge?

Rapino doesn’t really answer the question, though the obvious answers are “yes” and “”will continue to compete.” Coble’s not up enough on the subject to follow up.

The Vanderbilt guy again takes the opportunity to spin for the merger.

To Azoff: Will this improve efficiencies in the industry and will it lead to reduced ticket prices?

Azoff responds in a way that contains about 18 angles of disingenuousness—or lies, if you want to call them that. Example: He says, Gee, if we can increase reselling, then the price of tickets will go down. But reselling, which is his word for scalping, is all about selling tickets at greatly increased prices.

He whines that MTV stopped playing videos. Gee, if only there were some forum on, say, a revolutionary international communications network  that could allow fans to see any artist video they want any time.

Azoff says the company will be like Switzerland. Allow me to quote myself:

Azoff says his management company was “decentralized.” Yeah, right. Readers will I hope have noticed that Hitsville has refrained from making reference to the famous sobriquet attached, many years ago, to Azoff—”the poison dwarf”—on the grounds that it’s an ad hominem attack and that it makes fun of his height. But it’s worth noting that Azoff has a longstanding reputation as a major industry motherfucker, and people who get called things like that generally don’t run “decentralized operations.”

… or “Switzerlands.” I won’t say what they do run.

_____________

Azoff refers to the “old Ticketmaster.” Ha! He explains again about the ticket fees. He stresses credit card fees again. He says that the Pearl Jam debacle had to do with venues refusing to accept lowering the fees.

He says he convinced the Eagles to eliminate fees. But of course the band was one of the pioneers of the extra large service fees; around the time Pearl Jam was risking its career to lower a $5 fee (those were the days), the Eagles were pushing the envelope with $20+ fees.

__________

Rapino says they get zero of the scalping market. It reminds me that earlier he said LN makes $4 on every hundred dollars in tickets. Other reports have said the company loses $4 on every hundred. Not sure which is right.

___________

Rapino admits that Clear Channel had a name as bad as Ticketmaster’s. I would like to take some credit for this:

http://www.salon.com/ent/clear_channel/

____________

The chair starts questioning. He says fans are “forced” to pay exorbitant prices. I think this isn’t quite right. Ticket prices aren’t the issue. It’s the deception and screwing along the way that that’s the problems.

Azoff says the system is broken. It’s not. It’s like a pickpocket being caught. “The system is broken!”

_________

Mierzwinski makes a good point: TM has corrupted the ticketing at publicly owned venues. Why should public bodies help fund venues that are ripping fans off? (My restating of his more politic point.)

_________

Next Ed Mierzwinski, from the U.S. Public Interest Research Group. He says the PIRGs were there back when Pearl Jam fought TM. He notes that Pearl Jam’s experience explains why artists aren’t speaking up against the merger today: Disappointing but not surprising artists aren’t here today.

Bad for consumers, artists and independent promoters, he says. Violates the Clayton Act.

1) TM the dominant player in ticket sales; we thought LN would compete; now they want to merge.

2) A vertical monopoly as well; combined firm would have tremendous market power over artists, venues and consumers.

He says sure that artists might find other places to play: Amer. Legion Hall or county fairground, Doesn’t say an important point: Rock tours are v. complicated these days; in most cities, no place to play, realistically, that isn’ta LN venue.

_________

Next up, Luke Froeb, a Vanderbilt prof and a former govt. lawyer. He’s trying to give a detached view of the economics of the industry. He seems to be discounting the horizontal integration aspects.

Innovation is important, he says, and then makes a very strange argument, that the music industry in in the throes of technological change, and that the merger would allow the companies to innovate better. This would be “crucial” to the economy. I hate to sound glib when talking about a guy who obviously has had a great deal of experience in these matters, but this seems to me to be crazily, almost deliberately, disingenuous. Don’t we want companies to compete to give them the incentive to innovate?

This seems to take an upside-down view of the world. Merged and protected, they won’t innovate. They will just exploit their power.

_______

The guy from Comcast, Peter A. Luukko, is up next. He seems to run the company’s sports teams and its venue management arm.  He says he’s in favor of the merger! He’s speaking in favor of vertical integration; he says it provides for creative cross marketing and “synergistic opportunities.”

The sports integration we’ve seen is different; the sport teams is the draw, and it has a right to market itself as it sees fit. Also, there are hundreds of thousands, if not millions, of 76er’s, say, seats available each year. In one town, by contrast, there are only, say, 30K Springsteen seats available in a certain year, creating much more opportunities for abuse.

_________

Next up, a lawyer from DC, I assume an antitrust guy named Robert Doyle. He says merger will eliminate competition in ticketing, reduce competition in reselling, reduce competition in top-tier artist management, and reduce competition in concert promotion industry.

He gives a pretty precise recapitulation of some of the corporate moves the companies were making against each other and points out that they are in effect each eliminating each other’s biggest potential competitor.

He says he’s been doing interviews with venues and says they are afraid of a combined TM/LV.

_________

Azoff says AEG has told TM it feels it can terminate its venue agreements if the merger goes through.

__________

I don’t know if any of the Reps will jump on this, but Azoff just said, “We’re in the service business; if our customers don’t like it they will go somewhere else.” But that’s of course the point. They can’t go anywhere else. 

__________

He says many requests could not be filled for the Bruce shows. They modded their credit card software and it couldn’t handle the demand, resulting in frozen transactions and error pages.

No consumers were directed to TicketsNow from error pages, he said.

This brings up an interesting, unanswered question from that incident. I’ve read all the complaints and I have to say it’s unclear as to whether it’s actually true fans were “redirected” to the scalping site. I think that they instead all hit a button on the page that took them there, but the button didn’t say, “Hey, we’re taking you to our rapacious scalping site.”

TM also sent a note out saying the tickets went on sale at 10 a.m., though it really started at 9. That note also had a link to TicketsNow, he said and confused consumers who ended up there. He says he’s taking the TicketsNow links off their site.

________

Azoff up next.

He says TM gets the complaints when someone gets hurt in a mosh pit. I think that’s a dumb thing to bring up—LN will definitely be responsible when someone gets hurt in a mosh pit.

He says he’s going to explain the Springsteen imbroglio in detail.

_________

With a straight face, Rapino says LN found it easy to get into the ticketing business. That’s like saying Haliburton found it easy to get into the Iraq contracting business. The problem is that if you don’t control hundreds of venues across the country, you can’t break into the business.

Front row tix, he says, might cost $150. Is he joking? Most floor seats, sometimes most of all the seats, are higher than that at many shows.

________

Of the witnesses, it will be interesting to hear Peter A. Luukko: he runs all the sports teams and sports venues in Philadelphia. Not sure what his position is going to be.

Rapino’s going to talk first. Let’s see if they learned anything on Tuesday. He’s going to cite some facts: 17,000 employees: 35 percent market share. Market cap $250M; $700M in debt. We have no large shareholder. 7000 concerts for “young artists” where we lose $10M to $20M.

Highly competitive marketplace. 4 percent margin business.  Competitor AEG, owned by a multibillionaire! 31st richest man in America; they promoted five of top ten concerts last year; LN did four. They are the true integrated companies. He says that AEG’s Staple Center is worth more than LN and TM combined. (The companies have lost 70 percent of their value the last few years.)

Not sure right now, but I think Rapino is choosing his words carefully: Top five concerts ($2M to $3 grosses) is different from top five tours ($200M to $200M grosses!).

Rapino says they have “relentless” competition. Own 18, lease 70 venues, he says. A small percentage.

_____

The chairman recalls being down one day and going to a Parliament-Funkadelic concert—he notes that Coble probably wasn’t familiar with them. Pascrell sites Bruce Springsteen’s “Promised Land.”

_______

Smith says he thinks TM should sell TicketsNow. He says he has legislation to ban automatedticket-buying programs, too.

_______

Smith is there to jump on the Springsteen issue. He says he got 1000 complaints about the imbroglio. He’s jumping on a quote he says he saw from a LN source, that the hearings were a “distraction.” He kicks that one around the ring a while.

“This isn’t just live PR—it’s a bad deal for the American people! … You don’t have to have a Ph.D in economics to see it for what it is.”

________

I can’t find a WSJ live-blog of the hearings… please let me know if anyone finds it.

_________

Rep. Lamar Smith, from Texas, zeroes in on the vertical integration issue. He’s not a supporter.

_________

The ranking member (highest Repub.) is Howard Coble, from South Carolina. “I am not the hippest member on Capitol Hill, he says. He lists TM’s big artists, apologizing for mispronouncing Christina Aguilera’s name. He likes Earl Scruggs and Lyle Lovett.

He’s suspicious. “A lot of sway over the little guy.” He mocks the “convenience charge.” “A lot o consumers would say it’s not convenient.   He says the burden is on the companies to demonstrate the deal isn’t bad for onsumers.

______

The Chair is Hank Johnson, from Georgia. He doesn’t sound well-disposed to the merger. He is mocking the companies list of artists who are supporting the merger. He says the subcommittee made “monumental” efforts to get artists at the hearing, as one assumes they would!

He’s quoting Springsteen saying the merger would make a bad situation worse.
$500 and $800 Cohen tickets on sale on TicketsNow, with additional $100+ fees, he says, before the tizx went on sale officially.

_________

Bill Pascrell, Jr, a rep. from NJ, is going to testify as well, and then sit on the committee, but won’t ask questions. I assume he just wants to get his face out there on the side of Boss fans everywhere, but I could be wrong.

___________

The House link for the webcast seems to be here. I’m checking with C-Span to see if there will be a feed there.

DeRogatis is blogging here.

________

Hitsville is excited. The company leaked early on that big stars like Don Henley, U2 and Jay-Z would be coming out in favor of the merger. Maybe Don Henley, no stranger to the public political arena, will be a surprise guest!

_________

Our witnesses today, according to the subcommittee website:

Michael Rapino
President & CEO
Live Nation Worldwide, Inc.
Beverly Hills, CA

Irving Azoff
CEO
Ticketmaster Entertainment, Inc.
West Hollywood, CA

Robert W. Doyle, Jr.
Partner
Doyle, Barlow & Mazard, PLLC
Washington, DC

Peter A. Luukko
President & COO
Comcast-Spectacor
Philadelphia, PA

Luke Froeb
William C. and Margaret W. Oehmig Associate Professor of Management, Owen Graduate School of Management
Vanderbilt University
Nashville, TN

Ed Mierzwinski
Consumer Program Director
U.S. PIRG, the Federation of Public Interest Research Groups
Washington, DC

Hitsville’s coverage of the Senate hearings Tuesday is here.

___________

Previously in Hitsville:
Live-blogging the House hearings on the Ticketmaster/Live Nation Merger
“Re”-selling tickets that don’t yet exist
Liveblogging the Senate’s Ticketmaster/Live Nation Merger hearings
Seal & Van Halen in Azoff’s corner!
Updated! 26 questions that should be asked at the Ticketmaster/Live Nation merger hearings tomorrow Ticketmaster shareholders sue to stop merger
How Live Nation does business
Will the Live Nation/Ticketmaster merger mean higher concert prices?
Another suit against Ticketmaster
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

A judiciary subcommittee meets at 10 a.m. EST; schedule and webcast here.

Witness list here; members of the subcommittee here.