Live Nation under fire for helping artists put tickets on the resale market

Consumer

AUSTIN (KXAN/ NBC News) — Have you ever tried to buy concert tickets the exact moment they went on sale and they’re instantly sold out?

A new report highlights that entertainment companies have the power to sell tickets directly to the resale market before your average consumer has a chance to purchase them at face value.

Friday, Billboard released an exclusive report on a secretly recorded phone call between Live Nation and an event promoter for the band Metallica.

The company agreed to put 88,000 tickets directly on the resale sites, so people never got a chance to buy them at face value.

“It also shows the extent to which the rise of online ticket sites has put pressure on artists and promoters to capture more of the profits resellers are making — and how Live Nation is uniquely positioned to help solve the problem, as the owner of the world’s biggest ticketing platform that even its rivals use,” the Billboard article noted.

Live Nation told Billboard that they have been transferring concert tickets directly into the hands of resellers for years — but only when the artists they are working with request it. The company also told Billboard that in 2016 and 2017, about a dozen artists of the thousands they worked with asked for tickets to be directly given to resellers. However, Live Nation told Billboard that since that time, “requests like these have declined virtually to zero as tools like dynamic pricing, platinum seats, and VIP packages have proven to be more effective at recapturing value previously lost to the secondary market.”

The Billboard article detailed how a consultant for the band Metallica opted to use the resale market to recapture some of the profits that might go to resellers. The article described how Live Nation executives tried to keep this secondary sale of all these tickets secret. A representative for Metallica told Billboard that the band members were not aware of the deal the promoter had made.

Live Nation also told NBC News they put concert tickets directly on secondary markets, like Stubhub, without ever selling them on the primary market place. Live Nation told NBC they did this because bands know face value is often lower than market value, and which is why many work with secondary markets to recapture some money.

Live Nation and Ticketmaster merged in 2010 to create Live Nation Entertainment. In 2014 Live Nation also acquired a controlling interest in C3 Presents, the company behind popular music festivals including Austin City Limits Music Festival.

“It happens across the board”

Barry Kahn was interviewed in the Billboard article, he is the CEO of Austin-based Qcue. His company specializes in ticket sales and price optimization, working with more than 60 companies worldwide ranging from live performances to the San Francisco Giants.

“It happens across the board,” he said of companies opting to sell a portion of their tickets directly through secondary sites.

“There’s never going to be a point where 100% of tickets are sold on Ticketmaster, so as an organization, you kind of need to have tickets in all of these places,” he explained.

The hurdle, Kahn said, is the perception of selling tickets on the secondary market. He explained that the public reacts with more opposition when music events sell tickets directly to resale sites than when sports teams do the same thing.

“Money is very much a part of sports, you talk about salary caps, you look at contract negotiations, the money is very front and center,” Kahn said. “And so I think when you get into the money in terms of things like ticket prices, it seems natural that that kind of passes through to the fans.”

In the music realm, Kahn said that fans have a much more emotional reaction when they see tickets being sold on the secondary market.

Additionally, Kahn noted that in the music realm — unlike in the sports world– there are three parties in almost every deal: the venue, the artist, and the promoter. That can create more confusion about what portion of the profits will be going to each of those parties.

“Not knowing what happens behind the scenes of this Live Nation-Metallica deal is — is this how is this being reported internally? Is everyone sharing in this? Is this money that is being taken away from the artist?” Kahn wondered.

He explained that using the secondary market for ticket sales is just part of doing business for many of the organizations that put on live events.

“It happens across the board,” Kahn said.

“A lot of artists will intentionally undercharge for tickets, knowing that’s not the right price, knowing those tickets are actually going to get bought and resold, because they [would] get a bad response from fans if they’re charging too much,” he added, noting that charging tickets at a certain price can discourage resales and therein give more control to venues and artists over what amount fans actually pay to attend.

Kahn sees these resale sites as more of a distribution channel for tickets, the same way someone who is looking into buying a flight might consider looking on a site like Kayak or Priceline rather than a legacy brand like United Airlines.

But he acknowledged, there are times when these secondary sites can be used to mark up prices.

“I think the key is transparency, if you go out there and say, ‘Hey, this is my face value of tickets, this is the only place you can buy them’ and then funnel them elsewhere, yes, there’s a transparency problem,” Kahn said. “If you were to come out and say, ‘Hey look, we’re gonna sell tickets on all these channels, we’re going to be consistent about prices across all these channels’ I don’t think there’s anything wrong with it,” Kahn said.

He noted that recently the NFL reached a deal to make StubHub the “NFL Authorized Ticket Resale Marketplace” a move which he says received “no public outcry.”

Does this impact the music scene in Austin?

Kahn explained that these ticket resale trends seen on a national level go on in Austin as well. But he noted that smaller clubs and venues like Austin has may be less likely to strike these kinds of ticket resale deals.

However, he noted that smaller artists and venues may have more to gain from using the secondary market to list their tickets. Kahn explained that when groups like Metallica go on tour, people are going to look for and purchase those tickets regardless of where they’re sold.

But for artists with less notoriety, he said, “having your ticket show up on StubHub, SeatGeek, all these other places, is actually going to get you more sales, it’s actually like getting free marketing in a way.”

Rick Carney, an Austin Music Commissioner agrees that it is a “somewhat common practice” for musical artists to sell a portion of their tickets directly to resale sites. Carney is a musician and a manager of music education for the School of Rock.

“Obviously, the way that was handled with Metallica is not necessarily above board,” Carney said.

“The problem to me is when tickets aren’t sold to the regular channels where fans can get the first crack at them, obviously that is going to elevate the price for the average fan,” he said. “What this seems like to me is sort of shortchanging that system and trying to get a little bit higher price out of the average fan without getting them the benefits of the VIP experience.”

He hopes that people selling tickets in the future make a point of being more upfront about the added cost– and either tie that added cost to a better fan experience or explain to fans why they are seeing a higher cost.

He doesn’t know any particular instances of Austin artists or Austin music venues having a portion of their tickets sold directly on the retail market.

But he is aware that artists in Austin are looking to find new ways to make up costs.

“When I toured in a lot of the ’90s our costs weren’t so high and we could make it up by selling records,” Carney said.

But since that time, he explained that artists make less money off of their album sales.

“Now, artists are much more pressed to make income from the live performances,” Carney said.

“Austin is unique in that we are the live music capital of the world and that we’ve shown we do support our artists, so hopefully artists don’t see the need to do that stuff in town,” he added. “But I could totally see the need to make up their loss in revenue they usually would have made from album sales.”

Austin-area venues

For this report, KXAN reached out to the Frank Erwin Center, Austin City Limits Music Festival, ACL Live at the Moody Theater, the Austin 360 Amphitheater, and the H-E-B Center.

A spokesperson for the ACL Festival noted that performers at ACL Fest do not dictate where tickets are sold for the festival.

“We encourage fans to always purchase tickets directly through the festival website,” the spokesperson said.

“Once ticket options have sold out for either weekend, we direct our fans, through the festival website ticket page, to Ticketmaster Verified Resale, where they can buy resale tickets that are verified by Ticketmaster,” she added. “This option also offers fans an opportunity to resell their tickets safely if they can no longer attend.”

ACL Live at the Moody Theater noted that they are independently owned and operated and not a Live Nation venue. They partner with the company Ticketfly as their exclusive ticket provider.

KXAN is awaiting responses from the other venues and is also awaiting a response from Live Nation.

Copyright 2019 Nexstar Broadcasting, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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