Ticketmaster: Goodbye Live Nation
Ticketmaster has been negotiating a contract renewal with its largest client, Live Nation, for the past year as their existing multi-year deal draws closer to its 2008 expiration date.
Those talks have apparently reached an impasse and Ticketmaster has decided to end negotiations and focus its energy on its 9,000 other clients worldwide.
"While it has been our sincere desire to create a new long-term partnership, we now believe it is doubtful we will extend our agreement when it expires at the end of 2008," TM said in an internal memo. "Live Nation has been a valued client for a very long time and we believe we’ve taken every reasonable step possible to facilitate a renewal, but they seem intent on a direction for their business that leaves us no viable way to work together."
Although LN has never stated it plans to launch its own ticketing operation, all circumstantial evidence points in that direction. Part of the story Live Nation has been spinning for Wall Street is a promise of increased earnings by either getting a better deal from TM or taking its future ticketing in-house.
The company has hired ticketing software executives and is trying to establish its Web site as a concert hub in what looks to be a move toward an eventual one-stop shop. There are also other ticketing companies vying for LN’s hand in marriage.
Ticketmaster, on the other hand, is the only ticketing company known to have the experience and existing infrastructure to support the needs of a client as massive as Live Nation.
Whether LN will be able to shift to an internal ticketing system of equivalent ability by the end of next year is a big question. It is also uncertain if another company can seamlessly step into TM’s shoes without substantial growing pains.
Live Nation does show signs it has the programming capability (its House of Blues unit has a TM contract through 2009). LN recently introduced an Internet widget that operates seamlessly and directs users to its Web site and ticketing info for any Live Nation-promoted artist. It may not be as complicated a software program as AutoCad (or even TicketExhange), but it could be a sign that more in-house software is on the way.
Likewise, the company owns fan portal MusicToday, so it has a foundation to build upon. What it does not have is the ability to work with alternative ticketing system Paciolan – the ticketing company is being purchased by Ticketmaster, so Live Nation would just be walking into the same building through a different door.
When word of the split got out, Wall Street had more sympathy for Live Nation than Ticketmaster. It only took hours for the "internal memo" to reach stock traders and they chose to put money into LN rather than Ticketmaster parent company IAC.
"Live Nation holds the cards," Piper Jaffrey analyst Aaron Fessler told Forbes.com. "It is by far the largest concert operator in the United States, there is nothing Ticketmaster could do to replace it."
Then again, is there anything to replace Ticketmaster? Sometimes fruitful negotiations don’t start until the fat lady stops singing or at least takes a break. Big names would be involved in any talks, namely Barry Diller who has years of playing negotiation hardball.
Diller’s IAC owns a majority stake in the world’s largest and most powerful artist management company in Irving Azoff and Howard Kaufman’s Front Line Management. It also would not be hard to imagine Ticketmaster shifting gears into the concert promotion business and taking Live Nation head-on as both a ticketing company and rival concert promoter.
Then again, maybe no speculation is necessary. Sometimes companies just don’t get along anymore and it’s time to call off the marriage.