Belfast Telegraph

Curtain may come down on Ticketmaster's biggest deal

By Nic Fildes

Ticketmaster, the world's largest online ticket agent, has suffered a blow after the collapse of talks about renewing a deal with its largest customer, Live Nation - owner of the Brixton Academy and the Shepherd's Bush Empire venues in London.

Ticketmaster, which has dominated the market for over a decade, has come under pressure as its largest customers - the owners of concert venues and sports arenas - have looked to take a larger slice of the profit made on ticket sales by launching their own direct sales services. The Major League Baseball Association bought in 2005, while Live Nation has snapped up MusicToday, a fan-club website operator which could be used to sell tickets directly to fans. Ticketmaster is also under pressure from a rash of online start-ups willing to sign more flexible deals with venue owners.

Live Nation, the world's largest venue operator, has been in talks with Ticketmaster about renewing its long-term contract for over a year. The contract expires at the end of next year and negotiations over a new deal have hit an impasse. While Live Nation is keen to drive more direct sales through its own websites, Ticketmaster has refused to budge. The company, owned by Barry Diller's IAC/InterActiveCorp, argues that its relationship with ticket buyers, its trusted brand and its database of buying patterns puts it in a strong negotiating position.

Ticketmaster has issued an internal memo stating that it is "doubtful we will extend our agreement". The memo, signed by Sean Moriarty, chief executive of the company, and Terry Barnes, its chairman, continued: " We are now conducting our business with the clear understanding that our partnership with Live Nation is more than likely coming to an end."

Live Nation accounted for nearly 20 per cent of Ticketmaster's $1bn sales in 2006. In the UK, some industry experts said Live Nation, which operates under the Carling Academy brand, accounts for more than half of Ticketmaster's sales. Given its reliance on Live Nation, observers interpreted the move as a negotiating tactic. "I expect that they'll play a game of threat and counter-threat until December next year, but they'll probably agree a new deal at the last minute," one venue owner said.

Although live music is becoming an increasingly lucrative venture for music companies and artists dealing with declining recorded music sales, the margins made on ticket sales are relatively thin. Live Nation reported sales of over $1bn in the three months to the end of June, but recorded a net profit of less than $10m. In the UK, Ticketmaster takes around £1 in profit on every concert ticket it sells and £2 on each festival ticket, a margin that venue owners are increasingly reluctant to give away.

Joe Cohen, founder and chief executive of the online ticket agency Seatwave, said: "The ticketing industry is clearly changing and fragmenting as the technology needed to sell thousands of tickets becomes more readily available. Ticketmaster no longer brings that much to the table, but it still negotiates as if it were a monopoly in an industry with very high barriers to entry."

Seatwave is a secondary ticket agency which allows fans to sell on tickets they have purchased. Since its launch in February, it has become a top-five ticketing site in the UK.

Belfast Telegraph