Company Town : Pearl Jam Signs On With Irvine Firm to Sell Tickets

Can a small, upstart Irvine company enter the tough ticket-selling business and expect to challenge Ticketmaster, the world’s largest ticket-distribution firm and dominator of the concert industry for most of a decade?

At first glance, the answer would seem self-evident. But ETM Entertainment Network of Irvine has a rare advantage in this David vs. Goliath battle. They have been hired by Pearl Jam, the nation’s best-selling rock band as part of the group’s crusade to reform ticket selling in the concert industry.

The computerized touch-tone phone system designed by ETM will be used to sell tickets to Pearl Jam’s unconventional summer tour.

If successful, the Seattle band’s approach could provide other acts with an alternative in the mainstream concert circuit. Pearl Jam’s latest move is being closely monitored by representatives for a number of stars, including Stone Temple Pilots, U2 and Nine Inch Nails.

“This is like watching the GIs trying to plant the flag on Iwo Jima,” said Stone Temple Pilots manager Steve Stewart. “It’s nearly impossible for a band to mount a national tour in 1995 without using Ticketmaster or the promoters and venue operators it has tied to exclusive contracts. If Pearl Jam pulls this thing off, it could kick the door open for us and a bunch of other bands to follow.”

The Seattle quintet chose ETM, after studying several alternative systems, primarily because of its pricing, ease of use and state-of-the-art technology.

ETM will tack a $2 service charge plus an additional 45-cent handling fee on Pearl Jam tickets with a face value of $18. (By comparison, Ticketmaster charged a $5.50 service fee plus a $1.55 processing fee to fans who ordered $18.50 tickets by phone for rock singer Danzig’s March 25 show at the Universal Amphitheater.)

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Under ETM’s automated system, fans can order tickets by dialing an 800 number and using a credit card or sending a check or money order to ETM, which will then mail tickets to their home. Ticketmaster employs operators to answer phones and sell tickets.

By the end of the summer, ETM founders Peter Schniedermeier and David Cooper said, consumers will be able to purchase tickets through hundreds of free-standing interactive kiosks with touch-screen monitors that display seating charts. In addition, concert-goers will be able to reserve seats through the Internet.

“Our goal is to deliver better service to consumers at a lower cost,” said Schniedermeier, who has worked in the ticket business since 1969. “This technology has existed since 1985 and is already being implemented in . . . other industries. All we’re doing is helping the live entertainment ticketing business to play catch-up.”

The concert industry is a billion-dollar business in the United States, and Schniedermeier said he expects to raise $100 million from institutional investors--high-tech and communication companies--to back his entry into the market. Cooper, a software specialist who worked with Ticketmaster in the late 1980s, declined to name the investors.

Pearl Jam manager Kelly Curtis said no one in the band nor any of its representatives--including Sony Corp., the Japanese conglomerate that releases Pearl Jam’s music--has any financial stake in ETM’s automated ticketing service.

Ticketmaster, which has been tangling with Pearl Jam over service fees for the past year, welcomed ETM into the marketplace.

“If they want to compete, we wish them well,” a spokesman for the Los Angeles-based ticket giant said. “That’s what America is all about.”

ETM has been conducting private discussions with major promoters and venue operators since December and is seeking to sell tickets to sports events, state fairs and performing arts centers.

The firm’s computer system offers advertisers an opportunity to promote products at its kiosks, and part of the ticket-selling process will record demographic information about customers. Each ticket can be printed with a bar code as well as the consumer’s name, which Curtis believes will help artists combat counterfeiting and scalping.

Gary Bongiovanni, editor of Pollstar, the nation’s leading concert trade journal, was skeptical about ETM’s ability to compete with Ticketmaster.

“There is a chance that a system like this could develop over time and eventually become an effective competitor against Ticketmaster, but it would be impossible for such a change to occur overnight,” Bongiovanni said. “It will be very difficult for ETM to gain a foothold in the industry as long as Ticketmaster has most of the nation’s major venues and promoters signed to exclusive contracts.”

Ticketmaster pays a portion of the service fees it collects to maintain exclusive contracts with the owners of the venues and promotion firms. Those arrangements are being scrutinized by the Justice Department as part of a federal investigation into alleged anti-competitive practices in the ticket-distribution business.

The governmental probe was launched last May after members of Pearl Jam filed a civil complaint with the Justice Department. The results of the probe are expected to be revealed by June.

In an apparent attempt to defuse the feud with Pearl Jam, Ticketmaster approached the owners of several venues last month and encouraged them to exploit an option in their exclusive contracts that would allow them to book the popular group. But the band decided to book its tour at facilities not associated with Ticketmaster.

Insiders suggested that Ticketmaster’s falling-out with Pearl Jam has caused its management to become more receptive to lowering service fees for new acts such as as Green Day, Offspring and Rancid.

* JAMMIN’ AGAIN

Pearl Jam’s return to the stage in June will be a 14-show national trek. F1