Could a company be more reviled by consumers than Ticketmaster, the firm that invented the 40% surcharge for lousy concert seats? It's conceivable, if it sold melamine-tainted milk or manufactured red-light cameras. Still, public sentiment shouldn't decide whether Ticketmaster, the dominant provider of ticketing services, should be allowed to merge with Live Nation, one of the world's largest concert promoters. Instead, we hope antitrust attorneys at the Justice Department will focus on the deal's potential impact on event promoters, venues and artists, all of which could be hit harder by the merger than the ticket-buying public.
The combination might actually help consumers by uniting two of the key middlemen involved in live events, reducing inefficiencies and potentially lowering the ticket surcharges that fatten profit margins. The merged companies would be involved in virtually every aspect of the music industry, giving them more freedom to experiment with new business models that combine concerts, recordings, memorabilia and merchandise. And clearly, the music industry is badly in need of new business models.
On the other hand, Ticketmaster's dominance in ticketing services (it sells tickets for an estimated 80% of major U.S. venues) and Live Nation's leadership in live events (it owns or manages more than 100 clubs, amphitheaters and arenas) would give the combined companies more power to squeeze out competitors. Consider the problems faced by other promoters. Many, if not most, of their shows are ticketed through Ticketmaster. The merger would give Live Nation access to that data -- an unfair insight into their rivals' business. Also, with a large stable of artists under contract, the merged companies would have more leverage in negotiations with unaffiliated concert halls. And independent artists may feel more pressure to choose Live Nation as a promoter or manager to gain access to its venues and ticketing services.
Finally, the deal would end Live Nation's nascent effort to compete with Ticketmaster as a ticket seller. Although its initial forays weren’t impressive -- a performance that may have motivated the talks with Ticketmaster -- Live Nation's heft makes it uniquely capable of supporting a new entry in the ticketing business. Ticketmaster argues that most sales today are online, which makes it easier for new ticketing services to launch and win customers. Even so, the Justice Department should consider whether the deal can move forward without giving the merged companies access to too much of their competitors' data, too much leverage over venues and artists, and too much power to keep small ticketing rivals from becoming large ones.