The controversy over live performance ticket pricing appears to haven’t any finish, and Ticketmaster – the dominant ticket vendor in North America – is taking the brunt of the storm.
The US Division of Justice is as soon as once more investigating the corporate over alleged anti-competitive practices, and a congressional committee has taken up the trigger, ostensibly on the facet of customers who’re complaining about what some see as more and more unreasonable costs.
This comes on the heels of some high-profile controversies over ticket costs and gross sales. In 2022, followers of Bruce Springsteen have been up in arms over “platinum” tickets for the Boss’s tour that offered for as a lot as USD $5,000.
And in November, Ticketmaster’s gross sales system appeared to crash beneath the load of monumental demand for tickets to Taylor Swift’s The Eras tour.
In a brand new – and really wide-ranging – interview on the Bob Lefsetz Podcast, Michael Rapino, CEO and President of Ticketmaster mother or father Reside Nation Leisure, addressed all of those points and extra.
Rapino has been CEO/Prez of Reside Nation since 2005, and steered the corporate via its much-debated merger with Ticketmaster in 2010.
Extra just lately, he skilfully guided Reside Nation via the uncertainty of the pandemic years (see 2020 and 2021 under), whereas delivering all-time-record annual revenues and ticket gross sales in FY 2022 ($16.68bn in income; over 550m tickets).
(Rapino was properly rewarded for this efficiency: he earned USD $139 million from Reside Nation in 2022, together with $116.7 million in inventory awards.)
Rapino’s look on the Lefsetz podcast was an opportunity to make a optimistic public case for his firm extra forcefully – one thing he says he uncared for to do prior to now.
MBW listened in; listed here are 5 issues we realized…
1) LIVE NATION/TICKETMASTER ISN’T A MONOPOLY, says Rapino, AND THE PROFIT MARGINS ARE THE PROOF
In keeping with US Senator Amy Klobuchar, who sits on the Senate Committee for Client Safety, Ticketmaster controls about 70% of the music ticket market within the US.
“In reality, there is no such thing as a different alternative. It’s a monopoly,” she informed the media.
Nonetheless, Michael Rapino argues the concept Ticketmaster (beneath Reside Nation’s possession) is a monopoly is predicated on a false impression of what the corporate does, and the way the reside music enterprise operates.
Venues themselves decide who sells tickets for them, and artists, via their brokers, set the worth of tickets, Rapino defined on the Bob Lefsetz Podcast.
“Within the easiest context, a venue, wherever you’re, decides who’s going to be their ticketing firm,” Rapino mentioned.
He mentioned there may be “irony” in the concept Ticketmaster controls the costs for large-scale exhibits, as a result of “typically that venue [owner] is a billionaire that’s constructing a billion-dollar-plus enviornment or stadium.”
The world places out a request for proposals, and ticketing corporations equivalent to Ticketmaster, AEG and SeatGeek put in proposals.
“You wouldn’t discover a monopoly in historical past that has a ten%, 11% margin. Monopoly means you may have sufficient pricing energy to have a really excessive margin return… [this] is a low margin enterprise on the core.”
Michael Rapino, Reside Nation
In the end, in Rapino’s view, it’s the venues that basically have pricing energy.
“Though it doesn’t look like it on Twitter at occasions, it’s a aggressive course of. … We simply misplaced the stadium in Washington to SeatGeek. So what [venues] ask for, somebody can pay.”
Most often, the ticket vendor takes a 20% lower of the ticket value, with the remaining going to the venue and the artist. That proportion can enhance to 25% or 30% on higher-end seats, Rapino defined.
For Rapino, the smoking-gun proof that ticket-selling isn’t a monopolized enterprise is the revenue margins. He says his firm’s total revenue margin is round 10% or 11%, with margins from ticket gross sales sometimes within the 2% to 4% vary. LN’s sponsorships enterprise, he says, sees a lot increased margins of round 35%.
“You wouldn’t discover a monopoly in historical past that has a ten%, 11% margin,” he informed Bob Lefsetz. “Monopoly means you may have sufficient pricing energy to have a really excessive margin return. So… [this] is a low-margin enterprise on the core.”
2) ‘ALL-IN’ TICKET PRICING COULD BUILD BACK TRUST WITH THE FANS
One main subject driving unfavourable perceptions of the ticketing enterprise are the extra charges added at checkout, which may usually drive up the worth of a ticket properly past the preliminary value proven to ticket-buyers.
Usually there might be a facility charge – an extra income for the venue – a bank card charge that will seem as a part of a processing charge, and a service charge. In all, it could make a major distinction within the ticket value.
Reside Nation’s most up-to-date controversy over charges got here earlier this 12 months, when The Remedy went on tour, making a degree of limiting ticket costs, with the bottom tickets promoting at round $20.
However then Remedy followers went on-line, sharing screencaps of their Ticketmaster procuring baskets displaying service charges, facility costs and processing charges that in some circumstances have been increased than the $20 ticket itself, greater than doubling the worth. Remedy frontman Robert Smith mentioned he was “sickened” by the apply.
“Ticketmaster’s job has been to take that punch within the head for the business. That’s been a part of why they rent you. There’s no glory in being the ticketing firm.”
Michael Rapino, Reside Nation
Tickemaster responded by providing partial refunds on the charges.
“We went to the venues and mentioned we’re going to scale back [the fees] by $10 and for those who don’t wish to be a part of us, we’ll eat the distinction,” Rapino mentioned. “About half the venues mentioned ‘Alright we’ll be a part of you on that,’ and the others mentioned ‘Good luck, eat it.’”
Rapino defined it like this: “The problem in our business is we now have saved … the distribution price outdoors of the worth. Typically, if you purchase one thing at Walmart or Goal, it’s all in-built [to the price]. In our enterprise, for a lot of causes, it has stayed outdoors. We don’t assume they’re junk charges, they’re not lovely add-ons to make a ton of cash.”
And Rapino says he can be joyful to see the business to an “all-in” ticket pricing mannequin, the place charges might be included within the marketed value.
“We’re joyful [that] Pearl Jam introduced it in the present day on their world tour,” he mentioned, referring to the 90s alt-rock band’s announcement that it’s going to have “all-in” ticket pricing for his or her exhibits.
“We’re speaking to others,” Rapino added. “We might go all-in pricing tomorrow. We might love the business to do it.”
However Rapino sees a variety of resistance to it within the business. He says ticket sellers are anxious about dropping their aggressive edge in advertising and marketing in the event that they’re the primary out of the gate to supply all-in ticket costs.
“If it’s a $46 ticket and $73 at checkout, you’re going to win [by advertising the ticket at] $43 {dollars} on Google search each time.”
He famous that StubHub tried all-in ticket pricing a number of years in the past, “and so they ended up pulling out of it and mentioned their enterprise went down 15% or 20%. I feel that scared individuals. … thus far we in all probability all have been scared. You’re going to [have to] do it by yourself. The artists aren’t going to provide you a break.”
He provides that even when shifting to all-in pricing isn’t “rational,” with the followers annoyed as they’re, “we’ve acquired to construct some belief again.”
Rapino mentioned: “We haven’t achieved a superb job as an business, and particularly on my entrance as Reside Nation/Ticketmasater, explaining out loud what occurs with the ticket charges, how they’re set. There hasn’t been an enormous motive, traditionally, for me to … say the venue, my shopper, is taking many of the cash, or the artist is setting the ticket value.
“Ticketmaster’s job has been to take that punch within the head for the business. That’s been a part of why they rent you. There’s no glory in being the ticketing firm.”
3) DYNAMIC PRICING HAS BEEN A PR HEADACHE, BUT THE INDUSTRY IS LEARNING TO DO IT BETTER
The arrival of “dynamic pricing” – ticket costs rising or falling in real-time in response to demand – has confirmed to be one other PR headache for ticket sellers.
The controversy over Bruce Springsteen tickets in 2022 was an ideal instance, with “platinum” tickets – these for significantly fascinating areas within the enviornment – rising to as a lot as $5,000 per individual.
But it’s a apply that Rapino defends, arguing that many companies, together with airways and motels, have lengthy practiced dynamic pricing.
“Most dynamic merchandise aren’t charging the identical value on the final day,” he famous.
About 5 to eight years in the past, ticket sellers “began saying the scaling shouldn’t be the identical” for each present in each venue, Rapino defined.
“We began Pricemaster [Ticketmaster’s dynamic pricing app] years in the past to say to artists {that a} Friday evening in New York shouldn’t be the identical as a Tuesday in Cleveland.”
“As an business, we’re studying methods to value dynamic tickets to demand. We’re slowly placing higher guidelines in place to do it neatly.”
Michael Rapino, Reside Nation
In Rapino’s view, there’s a excellent purpose for dynamic pricing, which is that, when there may be excessive demand for a specific present, however that present value is capped, it’s the scalpers who find yourself with the revenue. Artists themselves ought to study to cost their tickets “nearer to market,” Rapino asserts.
Relating to the controversy over the Springsteen tour, “solely about 1% of the seats have been over $1,000,” Rapino mentioned. In his view, all of the dynamic pricing did was switch the earnings from scalpers to the venue and Springsteen himself.
In Springsteen’s earlier tour, “the tickets went proper to the scalper and resold for $2,000. So this time we mentioned, ‘Bruce, you must truly get that cash. However let’s be certain that we hold the remainder of the home low-cost.”
Nonetheless, Rapino admits the business might have gone overboard with dynamic pricing popping out of the pandemic, because the live performance enterprise boomed and demand soared.
“We elevated extra of the allocation [to dynamic pricing]. The drug acquired somewhat extra horny. We began placing extra of the allocation to extend the gross.”
He added: “I feel we’re studying now. We’ve acquired to observe … the definition of ‘platinum’. We higher be certain that it’s [actually] a platinum seat. And if we’re going to [use dynamic pricing], we higher put higher guidelines in place [about] once we change ticket pricing. … So, as an business, we’re studying methods to value dynamic tickets to demand. We’re slowly placing higher guidelines in place to do it neatly.”
4) THE TAYLOR SWIFT/Ticketmaster INCIDENT WAS ACTUALLY A VICTORY AGAINST BOTS
Within the digital age, scalping has modified fully. Lengthy gone are the times when people confirmed up on the field workplace early to purchase tickets, then offered them outdoors the venue door.
As we speak, scalping is an enormous enterprise carried out by bots that purchase massive chunks of tickets and resell them on the secondary market with massive mark-ups.
And in Rapino’s view, Reside Nation is the one entity within the US market – together with the federal government – that’s attempting to do one thing about it. In actual fact, the Taylor Swift controversy occurred exactly due to efforts to cease bots from shopping for out the home, Rapino mentioned.
They tried to interrupt the doorways down. The truth is we stopped them. We needed to gradual the system, however we saved them out… on the finish of the day we ended up delivering 2 million tickets to Taylor Swift followers.”
Michael Rapino, Reside Nation
“Should you go on the darkish net, you should purchase a complete bunch of software program to attempt to hack the most recent on-sell,” he mentioned. “It’s a really organized and [also] unorganized under-web of the $5 billion persons are attempting to entry,” he added, referring to his estimate of what the secondary ticket market is value.
With respect to bots, “it’s an arms race, it’s an unimaginable mission proper now,” Rapino mentioned.
He finds it perplexing that Ticketmaster was blamed for the Taylor Swift scenario, likening it to blaming Prada for somebody attempting to interrupt into the Prada retailer in Beverly Hills to steal high-end purses.
If individuals noticed movies of this hypothetical break-in at mentioned Prada retailer, urged Rapino, they’d say: “What’s occurring with the Beverly Hills Police Division, we’ve acquired to employees up.”
“They don’t blame the product,” Rapino quipped. “So what occurred with Taylor Swift was the Prada story.
“They [the bots] tried to interrupt the doorways down. The truth is we stopped them. We needed to gradual the system, however we saved them out. They didn’t steal one bag, and on the finish of the day we ended up delivering 2 million tickets to Taylor Swift followers.”
He added: “We’re proud on the finish of the day that the purse didn’t get stolen. We have been capable of confirm [buyers’ identities] and ensure the tickets acquired into the palms of followers.”
5) DEVELOPING MARKETS AND NEW UPSCALE EXPERIENCES ARE TWO AREAS OF OPPORTUNITY for Reside Nation within the years forward
When requested the place the long run alternatives are for Reside Nation, Rapino harassed two areas: Creating markets, significantly Latin America, and a deal with high-end, premium experiences for music followers.
“That is an business that … nonetheless doesn’t do an amazing job experientially,” he mentioned. “Numerous nice venues might be constructed, [there will be] higher experiences, higher-end premium experiences.”
However Rapino saves his enthusiasm for Reside Nation’s prospects for additional worldwide growth.
“We like worldwide. You’re going to see a variety of growth in South America, Asia, you’re going to see us increasing,” Rapino mentioned, noting Reside Nation’s 2021 buy, for over $400 million, of a majority stake in Mexico-based promoter OCESA.
“We will see 150 million to 175 million [fans coming to Live Nation-promoted shows annually] over the subsequent 5 years.”
Michael Rapino
In these markets, you usually have “crappy arenas,” Rapino mentioned, not mincing phrases.
“There’s perhaps a pageant, perhaps a crappy ticketing system, no sponsors, so that you type of professionalize these companies if you roll in. We simply launched Ticketmaster Brazil. We’re going to construct an enviornment and a membership there, we introduced Lollapalooza there,” he mentioned, including that Reside Nation introduced Lollapalooza to India as properly.
Reside Nation-promoted exhibits introduced in 50 million followers simply 4 or 5 years in the past, and in 2022, that rose to 125 million, mentioned Rapino.
“We will see 150 million to 175 million over the subsequent 5 years,” Rapino added.
“The pie will get larger globally, and we will get larger earlier than even taking extra market share.”
You’ll be able to hearken to Michael Rapino’s full interview on the Bob Lefsetz podcast via right here.Music Enterprise Worldwide