The big news dominating the music business world over the last few months has been the proposed merger of entertainment-giant Live Nation Inc. and the largest ticket seller Ticketmaster Entertainment Inc., thereby creating Live Nation Entertainment, Inc. The merger is currently under review by the Federal Trade Commission for signs of monopolization of the entertainment industry. The biggest issue in the merger appears to be the size of each corporation.
Currently, Ticketmaster has a market share of 30% for all entertainment event ticket sales and 70% for all concerts. These ticket sales are completed through either the primary ticket sales company, Ticketmaster, or the secondary (resale) ticket sales division, TicketsNow. On the other hand, Live Nation estimates that it is three times the size of its nearest competitor in concert promoting, AEG.
The merger of these two companies would make Live Nation Entertainment a one-stop-shop for concerts. The company would control the largest market share for primary and secondary ticket sales, concert promotion, and venue management. Then you have to look at Live Nation’s ventures into Artist Management and 360-Record deals. If you go to a Madonna show today, there is likely not an aspect of that show that Live Nation does not have a stake in (it is probable that Madonna performs at non-Live Nation venues), aside from ticketing.
If the merger were to proceed, Live Nation would not only gain access to ticketing for their own shows but for the shows of essentially every other concert promoter. The company would have unprecedented access to its competitions ticket pricing and fee structures and could have some say in those decisions. The fear is that this merger would block competition at all levels of concert promotions and harm the consumer through increased ticket prices. Live Nation’s business decisions beg the question, at what point does vertical integration become monopolization?
For further reading on the issue see:
http://www.fmqb.com/article.asp?id=1275227
http://news.bbc.co.uk/2/hi/entertainment/7047969.stm
http://www.bloomberg.com/apps/news?pid=20601103&sid=aClNsIlV6EuI&refer=news
http://www.nytimes.com/2009/02/05/business/05ticket.html