This comes on the heels of some high-profile controversies over ticket prices and sales. In 2022, fans of Bruce Springsteen were up in arms over \u201cplatinum\u201d tickets for the Boss\u2019s tour that sold for as much as USD $5,000<\/a>.<\/p>\n And in November, Ticketmaster\u2019s sales system appeared to crash<\/a> under the weight of enormous demand for tickets to Taylor Swift\u2019s The Eras tour.<\/p>\n In a new \u2013 and very wide-ranging \u2013 interview on the Bob Lefsetz Podcast<\/a>, Michael Rapino, CEO and President of Ticketmaster parent Live Nation Entertainment, addressed all of these issues and more.<\/p>\n Rapino has been CEO\/Prez of Live Nation since 2005, and steered the company through its much-debated merger with Ticketmaster in 2010.<\/p>\n More recently, he skilfully guided Live Nation through the uncertainty of the pandemic years (see 2020 and 2021 below), while delivering all-time-record annual revenues and ticket sales in FY 2022 ($16.68bn in revenue; over 550m tickets<\/a>).<\/p>\n (Rapino was well rewarded for this performance: he earned USD $139 million<\/a> from Live Nation in 2022, including $116.7 million in stock awards.)<\/p>\n Rapino’s appearance on the Lefsetz podcast was a chance to make a positive public case for his company more forcefully \u2013 something he says he neglected to do in the past.<\/p>\n MBW listened in; here are five things we learned…<\/p>\n According to US Senator Amy Klobuchar, who sits on the Senate Committee for Consumer Protection, Ticketmaster controls about 70%<\/strong> of the music ticket market in the US.<\/p>\n “In truth, there is no other choice. It is a monopoly,” she told the media<\/a>.<\/p>\n However, Michael Rapino argues the idea that Ticketmaster (under Live Nation’s ownership) is a monopoly is based on a misconception of what the company does, and how the live music business operates.<\/p>\n Venues themselves determine who sells tickets for them, and artists, through their agents, set the price of tickets, Rapino explained on the Bob Lefsetz Podcast.<\/p>\n \u201cIn the simplest context, a venue, wherever you are, decides who is going to be their ticketing company,\u201d Rapino said.<\/p>\n He said there is \u201cirony\u201d in the idea that Ticketmaster controls the prices for large-scale shows, because \u201cgenerally that venue [owner] is a billionaire that is building a billion-dollar-plus arena or stadium.\u201d<\/p>\n The arena puts out a request for proposals, and ticketing companies such as Ticketmaster, AEG and SeatGeek put in proposals.<\/p>\n \u201cYou wouldn’t find a monopoly in history that has a 10%, 11% margin. Monopoly means you have enough pricing power to have a very high margin return… [this] is a low margin business at the core.\u201d<\/p>\n Michael Rapino, Live Nation<\/span><\/p><\/blockquote>\n Ultimately, in Rapino\u2019s view, it\u2019s the venues that really have pricing power.<\/p>\n \u201cAlthough it doesn\u2019t seem like it on Twitter at times, it\u2019s a competitive process. \u2026 We just lost the stadium in Washington<\/a> to SeatGeek. So what [venues] ask for, someone will pay.\u201d<\/p>\n In most cases, the ticket seller takes a 20%<\/strong> cut of the ticket price, with the rest going to the venue and the artist. That percentage can increase to 25%<\/strong> or 30%<\/strong> on higher-end seats, Rapino explained.<\/p>\n For Rapino, the smoking-gun evidence that ticket-selling isn\u2019t a monopolized business is the profit margins. He says his company\u2019s overall profit margin is around 10%<\/strong> or 11%<\/strong>, with margins from ticket sales typically in the 2%<\/strong> to 4%<\/strong> range. LN’s sponsorships business, he says, sees much higher margins of around 35%<\/strong>.<\/p>\n \u201cYou wouldn’t find a monopoly in history that has a 10%, 11% margin,\u201d he told Bob Lefsetz. \u201cMonopoly means you have enough pricing power to have a very high margin return. So\u2026 [this] is a low-margin business at the core.\u201d<\/p>\n One major issue driving negative perceptions of the ticketing business are the additional fees added at checkout, which can often drive up the price of a ticket well beyond the initial price shown to ticket-buyers.<\/p>\n Often there will be a facility fee \u2013 an additional source of revenue for the venue \u2013 a credit card fee that may appear as part of a processing fee, and a service fee. In all, it can make a significant difference in the ticket price.<\/p>\n Live Nation\u2019s most recent controversy over fees came earlier this year, when The Cure went on tour, making a point of limiting ticket prices, with the lowest tickets selling at around $20<\/strong>.<\/p>\n But then Cure fans went online, sharing screencaps of their Ticketmaster shopping baskets showing service fees, facility charges and processing fees that in some cases were higher than the $20 ticket itself, more than doubling the price. Cure frontman Robert Smith said he was \u201csickened<\/a>\u201d by the practice.<\/p>\n \u201cTicketmaster\u2019s job has been to take that punch in the head for the industry. That\u2019s been part of why they hire you. There\u2019s no glory in being the ticketing company.\u201d<\/p>\n Michael Rapino, Live Nation<\/span><\/p><\/blockquote>\n Tickemaster responded by offering partial refunds<\/a> on the fees.<\/p>\n \u201cWe went to the venues and said we\u2019re going to reduce [the fees] by $10 and if you don\u2019t want to join us, we\u2019ll eat the difference,\u201d Rapino said. \u201cAbout half the venues said \u2018Alright we\u2019ll join you on that,\u2019 and the others said \u2018Good luck, eat it.\u2019\u201d<\/p>\n Rapino explained it like this: \u201cThe challenge in our industry is we have kept \u2026 the distribution cost outside of the price. Generally, when you buy something at Walmart or Target, it\u2019s all built in [to the price]. In our business, for many reasons, it has stayed outside. We don\u2019t think they\u2019re junk fees, they\u2019re not beautiful add-ons to make a ton of money.\u201d<\/p>\n And Rapino says he would be happy to see the industry move to an \u201call-in\u201d ticket pricing model, where fees will be included in the advertised price.<\/p>\n \u201cWe\u2019re happy [that] Pearl Jam announced it today on their world tour,\u201d he said, referring to the 90s alt-rock band\u2019s announcement that it will have \u201call-in\u201d ticket pricing<\/a> for their shows.<\/p>\n \u201cWe\u2019re talking to others,\u201d Rapino added. \u201cWe would go all-in pricing tomorrow. We would love the industry to do it.\u201d<\/p>\n But Rapino sees a lot of resistance to it in the industry. He says ticket sellers are worried about losing their competitive edge in marketing if they\u2019re the first out of the gate to offer all-in ticket prices.<\/p>\n \u201cIf it\u2019s a $46<\/strong> ticket and $73<\/strong> at checkout, you\u2019re going to win [by advertising the ticket at] $43<\/strong> on Google search every time.\u201d<\/p>\n He noted that StubHub tried all-in ticket pricing several years ago, \u201cand they ended up pulling out of it and said their business went down 15%<\/strong> or 20%<\/strong>. I think that scared people. \u2026 to date we probably all have been scared. You\u2019re going to [have to] do it on your own. The artists aren\u2019t going to give you a break.\u201d<\/p>\n He adds that even if moving to all-in pricing isn\u2019t \u201crational,\u201d with the fans frustrated as they are, \u201cwe\u2019ve got to build some trust back.\u201d<\/p>\n Rapino said: \u201cWe haven\u2019t done a good job as an industry, and especially on my front as Live Nation\/Ticketmaster, explaining out loud what happens with the ticket fees, how they\u2019re set. There hasn\u2019t been a big motive, historically, for me to \u2026 say the venue, my client, is taking most of the money, or the artist is setting the ticket price.<\/p>\n \u201cTicketmaster\u2019s job has been to take that punch in the head for the industry. That\u2019s been part of why they hire you. There\u2019s no glory in being the ticketing company.\u201d<\/p>\n The arrival of \u201cdynamic pricing\u201d \u2013 ticket prices rising or falling in real-time in response to demand \u2013 has proven to be another PR headache for ticket sellers.<\/p>\n The controversy over Bruce Springsteen tickets<\/a> in 2022 was a perfect example, with \u201cplatinum\u201d tickets \u2013 those for particularly desirable locations in the arena \u2013 rising to as much as $5,000<\/strong> per person.<\/p>\n Yet it\u2019s a practice that Rapino defends, arguing that many businesses, including airlines and hotels, have long practiced dynamic pricing.<\/p>\n \u201cMost dynamic products aren\u2019t charging the same price on the last day,\u201d he noted.<\/p>\n About five to eight years ago, ticket sellers \u201cstarted saying the scaling shouldn\u2019t be the same\u201d for every show in every venue, Rapino explained.<\/p>\n \u201cWe started Pricemaster [Ticketmaster\u2019s dynamic pricing app] years ago to say to artists that a Friday night in New York should not be the same as a Tuesday in Cleveland.\u201d<\/p>\n “As an industry, we\u2019re learning how to price dynamic tickets to demand. We\u2019re slowly putting better rules in place to do it smartly.\u201d<\/p>\n Michael Rapino, Live Nation<\/span><\/p><\/blockquote>\n In Rapino\u2019s view, there is a very good reason for dynamic pricing, which is that, when there is high demand for a particular show, but that show price is capped, it\u2019s the scalpers who end up with the profit. Artists themselves should learn to price their tickets \u201ccloser to market,\u201d Rapino asserts.<\/p>\n Regarding the controversy over the Springsteen tour, \u201conly about 1% o<\/strong>f the seats were over $1,000<\/strong>,\u201d Rapino said. In his view, all the dynamic pricing did was transfer the profits from scalpers to the venue and Springsteen himself.<\/p>\n In Springsteen\u2019s previous tour, \u201cthe tickets went right to the scalper and resold for $2,000<\/strong>. So this time we said, \u2018Bruce, you should actually get that money. But let\u2019s make sure we keep the rest of the house cheap.\u201d<\/p>\n Still, Rapino admits the industry may have gone overboard with dynamic pricing coming out of the pandemic, as the concert business boomed and demand soared.<\/p>\n \u201cWe increased more of the allocation [to dynamic pricing]. The drug got a little more sexy. We started putting more of the allocation to increase the gross.\u201d<\/p>\n He added: \u201cI think we\u2019re learning now. We\u2019ve got to watch \u2026 the definition of ‘platinum’. We better make sure it\u2019s [actually] a platinum seat. And if we\u2019re going to [use dynamic pricing], we better put better rules in place [about] when we change ticket pricing. \u2026 So, as an industry, we\u2019re learning how to price dynamic tickets to demand. We\u2019re slowly putting better rules in place to do it smartly.\u201d<\/p>\n In the digital age, scalping has changed completely. Long gone are the days when individuals showed up at the box office early to buy tickets, then sold them outside the venue door.<\/p>\n Today, scalping is a big business carried out by bots that buy large chunks of tickets and resell them on the secondary market with large mark-ups.<\/p>\n And in Rapino\u2019s view, Live Nation is the only entity in the US market \u2013 including the government \u2013 that\u2019s trying to do something about it. In fact, the Taylor Swift controversy happened precisely because of efforts to stop bots from buying out the house, Rapino said.<\/p>\n They tried to break the doors down. The reality is we stopped them. We had to slow the system, but we kept them out… at the end of the day we ended up delivering 2 million tickets to Taylor Swift fans.\u201d<\/p>\n Michael Rapino, Live Nation<\/span><\/p><\/blockquote>\n \u201cIf you go on the dark web, you can buy a whole bunch of software to try to hack the latest on-sell,\u201d he said.\u00a0 \u201cIt\u2019s a very organized and [also] unorganized under-web of the $5 billion people are trying to access,\u201d he added, referring to his estimate of what the secondary ticket market is worth.<\/p>\n With respect to bots, \u201cit\u2019s an arms race, it\u2019s an impossible mission right now,\u201d Rapino said.<\/p>\n He finds it perplexing that Ticketmaster was blamed for the Taylor Swift situation, likening it to blaming Prada for someone trying to break into the Prada store in Beverly Hills to steal high-end purses.<\/p>\n If people saw videos of this hypothetical break-in at said Prada store, suggested Rapino, they’d say: “What\u2019s going on with the Beverly Hills Police Department, we\u2019ve got to staff up.”<\/p>\n “They don’t blame the product,\u201d Rapino quipped. \u201cSo what happened with Taylor Swift was the Prada story.<\/p>\n “They [the bots] tried to break the doors down. The reality is we stopped them. We had to slow the system, but we kept them out. They didn\u2019t steal one bag, and at the end of the day we ended up delivering 2 million tickets to Taylor Swift fans.\u201d<\/p>\n He added: \u201cWe\u2019re proud at the end of the day that the purse didn\u2019t get stolen. We were able to verify [buyers\u2019 identities] and make sure the tickets got into the hands of fans.\u201d<\/p>\n When asked where the future opportunities are for Live Nation, Rapino stressed two areas: Developing markets, particularly Latin America, and a focus on high-end, premium experiences for music fans.<\/p>\n “This is an industry that \u2026 still doesn\u2019t do a great job experientially,\u201d he said. \u201cA lot of great venues will be built, [there will be] better experiences, higher-end premium experiences.\u201d<\/p>\n But Rapino saves his enthusiasm for Live Nation\u2019s prospects for further international expansion.<\/p>\n \u201cWe like international. You\u2019re going to see a lot of expansion in South America, Asia, you\u2019re going to see us expanding,\u201d Rapino said, noting Live Nation’s 2021 purchase, for over $400 million, of a majority stake<\/a> in Mexico-based promoter OCESA.<\/p>\n \u201cWe can see 150 million to 175 million [fans coming to Live Nation-promoted shows annually] over the next five years.”<\/p>\n Michael Rapino<\/span><\/p><\/blockquote>\n In these markets, you often have \u201ccrappy arenas,\u201d Rapino said, not mincing words.<\/p>\n \u201cThere\u2019s maybe a festival, maybe a crappy ticketing system, no sponsors, so you kind of professionalize these businesses when you roll in. We just launched Ticketmaster Brazil. We\u2019re going to build an arena and a club there, we brought Lollapalooza there,\u201d he said, adding that Live Nation brought Lollapalooza to India as well.<\/p>\n Live Nation-promoted shows brought in 50 million fans just four or five years ago, and in 2022, that rose to 125 million, said Rapino.<\/p>\n \u201cWe can see 150 million to 175 million over the next five years,\u201d Rapino added.<\/p>\n \u201cThe pie gets bigger globally, and we can get bigger before even taking more market share.\u201d<\/p>\n
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\n1) LIVE NATION\/TICKETMASTER ISN\u2019T A MONOPOLY, says Rapino, AND THE PROFIT MARGINS ARE THE PROOF<\/strong><\/h6>\n
\n2) ‘ALL-IN’ TICKET PRICING COULD BUILD BACK TRUST WITH THE FANS<\/strong><\/h6>\n
\n3) DYNAMIC PRICING HAS BEEN A PR HEADACHE, BUT THE INDUSTRY IS LEARNING TO DO IT BETTER<\/strong><\/h6>\n
\n4) THE TAYLOR SWIFT\/Ticketmaster INCIDENT WAS ACTUALLY A VICTORY AGAINST BOTS<\/strong><\/h6>\n
\n5) DEVELOPING MARKETS AND NEW UPSCALE EXPERIENCES ARE TWO AREAS OF OPPORTUNITY for Live Nation in the years ahead<\/strong><\/h6>\n
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