Why Live Nation Shouldn't Merge With Ticketmaster

I got an interesting email last night from Michael Hershfield, the CEO of ticket site LiveStub, about the proposed Ticketmaster/Live Nation tie-up. If this deal goes ahead, then it seems we might be moving, without even realizing it, to a world of much higher ticket prices, says Hershfield:

This deal would mean that Live Nation would have direct access to Ticketmaster's ticketing solution, including its resale marketplace TicketsNow. Live Nation could potentially harness Ticketsnow and begin to offer performers the opportunity to list tickets on the resale system without ever listing in the primary market.

Hershfield calls this "the dirty secret of this deal" -- a way to give performers and management a way to directly benefit from secondary-market ticket revenues.

In a world where bands increasingly make most if not all of their money from touring rather than music sales, I'm not in principle averse to a system which funnels the money people pay for their tickets to the band rather than to scalpers and resellers. But any such system really should be transparent. If a ticket has a certain face value, it should have been sold, at some point, for that face value.

This is a known issue with Ticketmaster, which forces concertgoers to pay a significant premium to face value for "convenience" and "handling" charges and whatnot, often when they have no other way of buying tickets.

But if Live Nation Ticketmaster simply decides to sell most of the tickets to any given concert on TicketsNow, with just a token few being sold directly, then the concept of face value will lose the last vestiges of meaning that it still has.

This is not necessarily the main reason why the merger will attract anti-trust scrutiny: the main reason is that they're both monopolies already. As the NYT says,

In the more narrow view of just concerts, Ticketmaster's market share was closer to 70 percent, according to Scott W. Devitt, an analyst at Stifel Nicolaus. Mr. Devitt estimates that Live Nation, as a promoter of concerts, is three times the size of its next nearest competitor, the Anschutz Entertainment Group.

With Live Nation increasingly moving into recording deals, a Live Nation-Ticketmaster merger would create a soup-to-nuts music powerhouse with huge amounts of monopoly power: having two monopolies puts you in a much stronger position than having just one. So although I can see why the companies are attracted to the concept, I can't see how it's going to be able to survive antitrust scrutiny.