The Confluence of Live and Recorded Music
Early in 2010, Ticketmaster, one of the largest ticket distribution companies merged with Live Nation, a top venue and concert promotion company. The merger caused antitrust concerns, and the Department of Justice gave its approval only on certain terms. Ticketmaster had to first divest itself of its ticketing subsidiary Paciolan, which Comcast Spectator bought, and secondly, it had to license its proprietary ticketing software to the Anschutz Entertainment Group. Antitrust concerns, of course, are based on competition being beneficial. But now, the new merged entity, known as Live Nation Entertainment, is proceeding with another controversial acquisition.
In September 2011, Live Nation Entertainment, described as the “world’s biggest ticketing, concerts promotions and artist management firm” formed a joint venture with another artist management group inside Universal (UMG). A joint venture does not raise antitrust concerns as a merger does. However, many observers are worried that this alliance will be bad for artists by reducing their leverage to choose a management firm.
UMG is the world’s largest music content company with market leading positions in recorded music, music publishing, and merchandising. In 2007, it acquired the British Sanctuary Group, a promotion company, and thus began its endeavor in the artist management business (Sanctuary’s artist management firm was key to the deal). As Live Nation already represented nearly four-tenths of all music concerts in North America before the merger with Ticketmaster, there is much concern about its joint venture with UMG.
The joint venture will be “aimed at strengthening artists and their brands through a variety of worldwide sponsorships, strategic marketing campaigns and brand extension opportunities.” Live Nation has put its Front Line Management Group division, with a 51% control stake in the deal, in charge. In return, Universal is getting the expertise of Live Nation Chairman Irving Azoff, who will likely better promote Universal’s emerging bands. For Azoff, the joint venture opens up new avenues for a better synergy between artists and their management, and the setup is more attuned to react to and exploit innovations in the industry. Whereas this could be true for top level artists with leverage on their management, it is less certain that benefits will accrue to lesser-known talent that does not already have a seat a the table.
Additionally, the joint venture seeks to bundle concert tickets with recorded music sales using Live Nation’s Ticketmaster operations. (Bundling products definitely raises antitrust issues if a customer wishes to purchase one product and is forced to tie in an additional item as a condition of the sale; there is no problem if the buyer can get the original item without purchasing the tie-in).
If this powerful alliance can have its way just on the bundling count, the terms of trade of the music industry might change forever. After all, it was not long ago when recorded music and live music were regarded as separate businesses. The A&R head and the Business Affairs manager of a label were always different in kind to a concert promoter and a booking agent. Moreover, their respective revenue sources, i.e. receipts from a recorded medium and ticket grosses from a live musical experience, were very different. In short, the joint venture between Live Nation and UMG is perhaps the best exemplar so far of the confluence of recorded and live music. It is symptomatic of the bigger long-term realignment we are witnessing in this industry.
By Nadirah Vincent