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What an unpopular melody. A mooted merger between Ticketmaster and concert producer Live Nation has yet to be confirmed. The idea, though, has prompted anguished howls from around the music industry. Even Bruce Springsteen is in on the act. His objection mainly concerns the ability of the combined company to direct fans to its resale sites (with higher prices) rather than offering tickets at face value – a charge already levelled at Ticketmaster.
Nobody likes paying over the odds. And, given the general outrage, an antitrust investigation beckons, should a deal progress. There would be two broad issues. The first, concerning horizontal concentration within specific markets, is somewhat incidental. The two largely operate in separate domains. True, Ticketmaster dominates ticketing in areas such as concerts and has proved adept at defending that position. Live Nation only in January took its own ticketing inhouse, having also threatened to create more competition by courting third parties. Consumers may feel aggrieved by ticket charges – but ultimately a deal would merely reinstate the competitive landscape of last year.
The second issue (concerning vertical integration) is more knotty. A merger would combine artist management (through Ticketmaster’s Front Line acquisition last year) with concert production, venues and primary and secondary ticketing. With interests from singer to stage, the company could squeeze competitors in each area, for example, a non-Ticketmaster venue seeking to attract the top talent, a process known as foreclosure. This kind of competitive threat was largely brushed aside in the name of efficiency under the Bush administration.
That Thomas Weisel Partners estimates the deal’s cost savings at just 1 per cent of operating expenses reflects that vertical restraints, rather than a classic horizontal monopoly, is likely to be the hot topic. A high-profile clampdown on ticketing power by authorities may prove popular. Even more tempting, perhaps, is the opportunity to reverse the prevailing competitive wisdom of the past eight years.