By Tim Ingham, Music Business Worldwide | Live Nation landed in hot water earlier this month when the company was linked with the shady practice of placing primary tickets for large shows directly onto secondary ‘resale’ platforms.
Billboard obtained a secretly-recorded call from 2017, on which Live Nation’s President of US Concerts, Bob Roux, is heard entertaining a request from a member of Metallica’s team to bypass the primary market with a portion of tickets – a move which would rob fans of the chance to buy those same tickets at face value.
Live Nation was candid in its confirmation of the story, acknowledging that it had once worked with an independent consultant for Metallica on a “strategy that used the secondary market as a sales distribution channel for select high-end tickets”. LN pointed out that between 2016 and 2017 “about a dozen artists out of the thousands we work with asked us to do this”.
This wasn’t a new revelation: back in February 2012, UK TV show Dispatches investigated the very same practice in the live music industry.
After the show aired, Live Nation’s then-COO for International, Paul Latham, told me: “Live Nation has never listed tickets in the secondary market without the participation of the artists or management. Indeed, when we have, the allocation is not more than 3% of the total available tickets for sale.”
Latham was admitting to the fact that Live Nation had circumvented the primary ticket market on occasion – but stating that it had only ever done so when the impetus had come from an artist’s camp. That impetus, in every case (including Metallica’s), is always caused by the same issue: artists and/or their managers knowing that their tickets could fetch a higher price than they are publicly willing to sell them for.
Bypassing the primary market in this way represents a deception of fans, who are told tickets are selling for one price when, behind the scenes, a tranche of them are not. On the other hand, it is a grubby strategy to tackle a grubby problem: the amount of value being “captured” by profiteering ticket resellers on secondary sites like Viagogo – none of which is returned to the artist or the music industry.
It is ironic timing for the Metallica story to come to light this month, because just last week – as part of its stellar Q2 earnings – Live Nation revealed exactly how successful it’s becoming in eradicating elements of the secondary market altogether.
Live Nation has been operating dynamic pricing for some time, via the ‘Platinum’ initiative of subsidiary Ticketmaster.
‘Platinum’ enables Live Nation to sell tickets to certain segments of any show at a higher price than the rest of the room/amphitheater/stadium. Ticket prices can respond to market demand in real time, much like they do when you’re buying a seat on a passenger airplane.
These higher prices quash two controversial elements of the secondary market: (i) the appeal for artists to dabble in dodgy ticket ‘resale’ of primary tickets; and (ii) the commercial opportunity for professional ‘scalpers’ to buy and sell tickets online.
In the past 18 months, especially, ‘Platinum’ pricing is having a hugely positive impact on Live Nation’s commercial performance – and, you’d therefore have to assume, a materially negative impact on secondary ticketing as a whole.
Speaking on an earnings call last Thursday (July 25), Live Nation CEO, Michael Rapino, said: “Globally, we continue to work with artists to enable them to capture the value from their shows. Through optimized pricing and Ticketmaster tools such as Platinum, we have delivered over $500 million in incremental value to artists since the start of 2018.”
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[Thank you to Alex Teitz, http://www.femmusic.com, for contributing this article.]