The Music Industry Kissed a Toad

Katy Perry may have kissed a girl but the music industry just kissed a toad and there’s no handsome prince in sight.

But who is the Toad?

Live Nation?


Or Bob Sillerman?

By now you know that Live Nation is merging with Ticketmaster.

Here's the deal summed up in a nutshell according to The Wall Street Journal:

Based on present valuations, the new company, to be called Live Nation Entertainment Inc., would have a stock-market value of $816 million and combined debt of $1.67 billion, the companies said. Their combined annual revenue would be about $6 billion.
No cash is to change hands in the deal, in which Live Nation is the acquiring party. Ticketmaster shareholders are to receive 1.38 shares of Live Nation Entertainment stock for every share of Ticketmaster they own".

Ticketmaster is the hated wolf that bites off the lion’s share of concertgoers’ ticket money thus pissing off its young customer base.

Who are they kidding?

When The Boss lays into the proposed merger, it’s got to be bad, right?

Springsteen is hot under the collar because his fans complained about being commandeered away from the Ticketmaster site to that is a reseller subsidiary of – you guessed it, Ticketmaster. And was selling Bruce’s concerts for inflated prices such as $5,350 plus $817.45 in service fees (according to a recent Wall Street Journal article).

And the original ticket was priced at $95!

Plus, there were unsold cheaper seats still available for sale.

Irving Azoff took over Ticketmaster last Fall and he is trying to make nice to Springsteen but there is little evidence that it is working.

The new entity Live Nation Entertainment would be the Evil Empire of the music business if the Justice Department approves the merger. One thing Springsteen is hoping for is that the DOJ will make public some of Ticketmaster’s sales polices.

What a fitting end to the record industry which it is because the record labels should have been in Live Nation’s business. Instead they got stuck selling plastic jewel cases that happened to have CDs in them. That business is over.

Radio’s own bon vivant entrepreneur Robert F.X. Sillerman (known as Bob to Cousin Brucie) started this fire.

While radio was consolidating, Sillerman did what he does best – bought concert and promotion companies and convinced the hicks at Clear Channel in San Antonio that they needed to buy his company – at inflated prices.

They did – and Sillerman cashed the check. Meanwhile, Clear Channel not only got stuck with 1,100 radio stations it couldn’t run, but a concert division that clearly had no synergy with radio.

They pawned it off to Live Nation.

Live Nation has its own problems. The only way it will look good for its shareholders is to find another source of revenue. And, you guessed it – that source is controlling the sale of tickets.

Live Nation formed its own lesser version of competition to Ticketmaster but nothing succeeds like a monopoly thus the proposed merger.

Times have changed.

Radio doesn't make the hits and music is stolen online.

Artists who make "radio hits" are not the ones filling up concert venues these days. Merchandising, promotion, concert management – and ripping off consumers on ticket prices is the business Live Nation can soon monopolize.

Wall Street will love it – so that should make you suspicious right there.

The last gasp of breath for the record industry was to be the 360 deals it was foisting upon its new artists. Not very convincing since the labels do not have the core skills to handle all aspects of marketing, promotion, sales, touring and you name it for their artists.

What we have is what we have too much of in America these days – one company anointed by the government to screw the consumer (otherwise called a merger).

Nothing could be worse for the record labels than Live Nation and Ticketmaster becoming one.

The labels died years ago and rigor mortis has already set in. They have no digital strategy. They are a joke. Warner was touting a one percent increase in digital revenue recently although their CD sales continue to decline in the U.S. and their legal digital sales are not making up for the steep decline in CD revenue losses.

The next generation has it right.

They don’t suffer fools lightly and there are fools all over the music business.

You can’t blame them for turning to the free market to get music variety across more genres than radio had been able to deliver over the past 20 years of tight playlists.

You can’t blame them for assuming the role of record promotion by using social networking to spread the word on music which is hot – or more accurately, cool. After all radio doesn’t do it.

You can’t blame them for embracing their iPods and loading it full of music – mostly stolen – because labels failed to grasp the importance of music discovery on the Internet – allowing them one last chance to reinvent the music business.

Now, the last thing that young (and even older) consumers still have to pay for – concerts – will likely be in the hands of one monopoly. That means a $50 ticket will continue to be closer to $100 when parking, ticket and facility fees are added on.

I have every faith in the next generation that they will do what their government will probably not do by scrutinizing Ticketmaster’s pricing practices.

They will reluctantly abandon the Live Nation experience.

They will find something else – or start something more workable.

All this leads me to ask the question, what would god do?

Steve Jobs would make a nice profit, alright, but the way he’d get folks to continue to buy his concert tickets is to create a new, cool and addictive experience.

As long as corporate America gets to make all the rules, the consumer will get screwed.

David Ogilvy said that, “I always said that mega-mergers were for megalomaniacs."

That is, one obsessed with the exercise of power.

The real road to riches is an obsession with happy consumers and the music/media business is strewn with examples of megalomaniacs.

Kiss the toad all you want, but you'll never make a handsome prince out of Live Nation, Ticketmaster or Bob Sillerman.

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