The controversy over live performance ticket pricing appears to don’t have any finish, and Ticketmaster – the dominant ticket vendor in North America – is taking the brunt of the storm.

The US Division of Justice is as soon as once more investigating the corporate over alleged anti-competitive practices, and a congressional committee has taken up the trigger, ostensibly on the facet of shoppers who’re complaining about what some see as more and more unreasonable costs.

This comes on the heels of some high-profile controversies over ticket costs and gross sales. In 2022, followers of Bruce Springsteen have been up in arms over “platinum” tickets for the Boss’s tour that offered for as a lot as USD $5,000.

And in November, Ticketmaster’s gross sales system appeared to crash underneath the burden of huge demand for tickets to Taylor Swift’s The Eras tour.

In a brand new – and really wide-ranging – interview on the Bob Lefsetz Podcast, Michael Rapino, CEO and President of Ticketmaster dad or mum Stay Nation Leisure, addressed all of those points and extra.

Rapino has been CEO/Prez of Stay Nation since 2005, and steered the corporate by way of its much-debated merger with Ticketmaster in 2010.

Extra just lately, he skilfully guided Stay Nation by way of the uncertainty of the pandemic years (see 2020 and 2021 beneath), whereas delivering all-time-record annual revenues and ticket gross sales in FY 2022 ($16.68bn in income; over 550m tickets).

(Rapino was effectively rewarded for this efficiency: he earned USD $139 million from Stay Nation in 2022, together with $116.7 million in inventory awards.)

Rapino’s look on the Lefsetz podcast was an opportunity to make a constructive public case for his firm extra forcefully – one thing he says he uncared for to do prior to now.

MBW listened in; listed here are 5 issues we realized…

1) LIVE NATION/TICKETMASTER ISN’T A MONOPOLY, says Rapino, AND THE PROFIT MARGINS ARE THE PROOF

In accordance with US Senator Amy Klobuchar, who sits on the Senate Committee for Shopper Safety, Ticketmaster controls about 70% of the music ticket market within the US.

“In fact, there isn’t a different alternative. It’s a monopoly,” she informed the media.

Nonetheless, Michael Rapino argues the concept that Ticketmaster (underneath Stay Nation’s possession) is a monopoly is predicated on a false impression of what the corporate does, and the way the dwell music enterprise operates.

Venues themselves decide who sells tickets for them, and artists, by way of their brokers, set the value of tickets, Rapino defined on the Bob Lefsetz Podcast.

“Within the easiest context, a venue, wherever you’re, decides who’s going to be their ticketing firm,” Rapino stated.

He stated there’s “irony” in the concept that Ticketmaster controls the costs for large-scale reveals, as a result of “typically that venue [owner] is a billionaire that’s constructing a billion-dollar-plus area or stadium.”

The sector places out a request for proposals, and ticketing corporations reminiscent of Ticketmaster, AEG and SeatGeek put in proposals.

“You wouldn’t discover a monopoly in historical past that has a ten%, 11% margin. Monopoly means you’ve got sufficient pricing energy to have a really excessive margin return… [this] is a low margin enterprise on the core.”

Michael Rapino, Stay Nation

In the end, in Rapino’s view, it’s the venues that basically have pricing energy.

“Though it doesn’t appear to be it on Twitter at instances, it’s a aggressive course of. … We simply misplaced the stadium in Washington to SeatGeek. So what [venues] ask for, somebody pays.”

Generally, the ticket vendor takes a 20% reduce of the ticket value, with the remaining going to the venue and the artist. That share can enhance to 25% or 30% on higher-end seats, Rapino defined.

For Rapino, the smoking-gun proof that ticket-selling isn’t a monopolized enterprise is the revenue margins. He says his firm’s total revenue margin is round 10% or 11%, with margins from ticket gross sales usually within the 2% to 4% vary. LN’s sponsorships enterprise, he says, sees a lot larger margins of round 35%.

“You wouldn’t discover a monopoly in historical past that has a ten%, 11% margin,” he informed Bob Lefsetz. “Monopoly means you’ve got sufficient pricing energy to have a really excessive margin return. So… [this] is a low-margin enterprise on the core.”

2) ‘ALL-IN’ TICKET PRICING COULD BUILD BACK TRUST WITH THE FANS

One main situation driving adverse perceptions of the ticketing enterprise are the extra charges added at checkout, which might usually drive up the value of a ticket effectively past the preliminary value proven to ticket-buyers.

Usually there can be a facility payment – an extra income for the venue – a bank card payment that will seem as a part of a processing payment, and a service payment. In all, it may well make a big distinction within the ticket value.

Stay Nation’s most up-to-date controversy over charges got here earlier this yr, when The Remedy went on tour, making some extent of limiting ticket costs, with the bottom tickets promoting at round $20.

However then Remedy followers went on-line, sharing screencaps of their Ticketmaster buying baskets displaying service charges, facility costs and processing charges that in some instances have been larger than the $20 ticket itself, greater than doubling the value. Remedy frontman Robert Smith stated he was “sickened” by the observe.

“Ticketmaster’s job has been to take that punch within the head for the business. That’s been a part of why they rent you. There’s no glory in being the ticketing firm.”

Michael Rapino, Stay Nation

Tickemaster responded by providing partial refunds on the charges.

“We went to the venues and stated we’re going to scale back [the fees] by $10 and in case you don’t wish to be a part of us, we’ll eat the distinction,” Rapino stated. “About half the venues stated ‘Alright we’ll be a part of you on that,’ and the others stated ‘Good luck, eat it.’”

Rapino defined it like this: “The problem in our business is now we have saved … the distribution value outdoors of the value. Usually, if you purchase one thing at Walmart or Goal, it’s all in-built [to the price]. In our enterprise, for a lot of causes, it has stayed outdoors. We don’t assume they’re junk charges, they’re not lovely add-ons to make a ton of cash.”

And Rapino says he could be completely happy to see the business to an “all-in” ticket pricing mannequin, the place charges can be included within the marketed value.

“We’re completely happy [that] Pearl Jam introduced it immediately on their world tour,” he stated, referring to the 90s alt-rock band’s announcement that it may have “all-in” ticket pricing for his or her reveals.

“We’re speaking to others,” Rapino added. “We might go all-in pricing tomorrow. We might love the business to do it.”

However Rapino sees plenty of resistance to it within the business. He says ticket sellers are frightened about shedding their aggressive edge in advertising in the event that they’re the primary out of the gate to supply all-in ticket costs.

“If it’s a $46 ticket and $73 at checkout, you’re going to win [by advertising the ticket at] $43 {dollars} on Google search each time.”

He famous that StubHub tried all-in ticket pricing a number of years in the past, “and so they ended up pulling out of it and stated their enterprise went down 15% or 20%. I feel that scared folks. … thus far we in all probability all have been scared. You’re going to [have to] do it by yourself. The artists aren’t going to provide you a break.”

He provides that even when shifting to all-in pricing isn’t “rational,” with the followers annoyed as they’re, “we’ve bought to construct some belief again.”

Rapino stated: “We haven’t carried out job as an business, and particularly on my entrance as Stay Nation/Ticketmasater, explaining out loud what occurs with the ticket charges, how they’re set. There hasn’t been an enormous motive, traditionally, for me to … say the venue, my shopper, is taking a lot of the cash, or the artist is setting the ticket value.

“Ticketmaster’s job has been to take that punch within the head for the business. That’s been a part of why they rent you. There’s no glory in being the ticketing firm.”

3) DYNAMIC PRICING HAS BEEN A PR HEADACHE, BUT THE INDUSTRY IS LEARNING TO DO IT BETTER

The arrival of “dynamic pricing” – ticket costs rising or falling in real-time in response to demand – has confirmed to be one other PR headache for ticket sellers.

The controversy over Bruce Springsteen tickets in 2022 was an ideal instance, with “platinum” tickets – these for significantly fascinating areas within the area – rising to as a lot as $5,000 per individual.

But it’s a observe that Rapino defends, arguing that many companies, together with airways and motels, have lengthy practiced dynamic pricing.

“Most dynamic merchandise aren’t charging the identical value on the final day,” he famous.

About 5 to eight years in the past, ticket sellers “began saying the scaling shouldn’t be the identical” for each present in each venue, Rapino defined.

“We began Pricemaster [Ticketmaster’s dynamic pricing app] years in the past to say to artists {that a} Friday night time in New York shouldn’t be the identical as a Tuesday in Cleveland.”

“As an business, we’re studying methods to value dynamic tickets to demand. We’re slowly placing higher guidelines in place to do it neatly.”

Michael Rapino, Stay Nation

In Rapino’s view, there’s a superb cause for dynamic pricing, which is that, when there’s excessive demand for a specific present, however that present value is capped, it’s the scalpers who find yourself with the revenue. Artists themselves ought to be taught to cost their tickets “nearer to market,” Rapino asserts.

Relating to the controversy over the Springsteen tour, “solely about 1% of the seats have been over $1,000,” Rapino stated. In his view, all of the dynamic pricing did was switch the income from scalpers to the venue and Springsteen himself.

In Springsteen’s earlier tour, “the tickets went proper to the scalper and resold for $2,000. So this time we stated, ‘Bruce, it’s best to really get that cash. However let’s be sure we hold the remainder of the home low cost.”

Nonetheless, Rapino admits the business might have gone overboard with dynamic pricing popping out of the pandemic, because the live performance enterprise boomed and demand soared.

“We elevated extra of the allocation [to dynamic pricing]. The drug bought somewhat extra attractive. We began placing extra of the allocation to extend the gross.”

He added: “I feel we’re studying now. We’ve bought to observe … the definition of ‘platinum’. We higher be sure it’s [actually] a platinum seat. And if we’re going to [use dynamic pricing], we higher put higher guidelines in place [about] after we change ticket pricing. … So, as an business, we’re studying methods to value dynamic tickets to demand. We’re slowly placing higher guidelines in place to do it neatly.”

4) THE TAYLOR SWIFT/Ticketmaster INCIDENT WAS ACTUALLY A VICTORY AGAINST BOTS

Within the digital age, scalping has modified utterly. Lengthy gone are the times when people confirmed up on the field workplace early to purchase tickets, then offered them outdoors the venue door.

In the present day, scalping is an enormous enterprise carried out by bots that purchase giant chunks of tickets and resell them on the secondary market with giant mark-ups.

And in Rapino’s view, Stay Nation is the one entity within the US market – together with the federal government – that’s attempting to do one thing about it. The truth is, the Taylor Swift controversy occurred exactly due to efforts to cease bots from shopping for out the home, Rapino stated.

They tried to interrupt the doorways down. The fact is we stopped them. We needed to gradual the system, however we saved them out… on the finish of the day we ended up delivering 2 million tickets to Taylor Swift followers.”

Michael Rapino, Stay Nation

“In the event you go on the darkish internet, you should buy an entire bunch of software program to attempt to hack the newest on-sell,” he stated.  “It’s a really organized and [also] unorganized under-web of the $5 billion individuals are attempting to entry,” he added, referring to his estimate of what the secondary ticket market is price.

With respect to bots, “it’s an arms race, it’s an unimaginable mission proper now,” Rapino stated.

He finds it perplexing that Ticketmaster was blamed for the Taylor Swift scenario, likening it to blaming Prada for somebody attempting to interrupt into the Prada retailer in Beverly Hills to steal high-end purses.

If folks noticed movies of this hypothetical break-in at stated Prada retailer, steered Rapino, they’d say: “What’s happening with the Beverly Hills Police Division, we’ve bought to workers up.”

“They don’t blame the product,” Rapino quipped. “So what occurred with Taylor Swift was the Prada story.

“They [the bots] tried to interrupt the doorways down. The fact is we stopped them. We needed to gradual the system, however we saved them out. They didn’t steal one bag, and on the finish of the day we ended up delivering 2 million tickets to Taylor Swift followers.”

He added: “We’re proud on the finish of the day that the purse didn’t get stolen. We have been in a position to confirm [buyers’ identities] and ensure the tickets bought into the arms of followers.”

5) DEVELOPING MARKETS AND NEW UPSCALE EXPERIENCES ARE TWO AREAS OF OPPORTUNITY for Stay Nation within the years forward

When requested the place the long run alternatives are for Stay Nation, Rapino careworn two areas: Creating markets, significantly Latin America, and a concentrate on high-end, premium experiences for music followers.

“That is an business that … nonetheless doesn’t do an incredible job experientially,” he stated. “A number of nice venues can be constructed, [there will be] higher experiences, higher-end premium experiences.”

However Rapino saves his enthusiasm for Stay Nation’s prospects for additional worldwide enlargement.

“We like worldwide. You’re going to see plenty of enlargement in South America, Asia, you’re going to see us increasing,” Rapino stated, noting Stay Nation’s 2021 buy, for over $400 million, of a majority stake in Mexico-based promoter OCESA.

“We are able to see 150 million to 175 million [fans coming to Live Nation-promoted shows annually] over the subsequent 5 years.”

Michael Rapino

In these markets, you usually have “crappy arenas,” Rapino stated, not mincing phrases.

“There’s possibly a pageant, possibly a crappy ticketing system, no sponsors, so that you sort of professionalize these companies if you roll in. We simply launched Ticketmaster Brazil. We’re going to construct an area and a membership there, we introduced Lollapalooza there,” he stated, including that Stay Nation introduced Lollapalooza to India as effectively.

Stay Nation-promoted reveals introduced in 50 million followers simply 4 or 5 years in the past, and in 2022, that rose to 125 million, stated Rapino.

“We are able to see 150 million to 175 million over the subsequent 5 years,” Rapino added.

“The pie will get larger globally, and we will get larger earlier than even taking extra market share.”

You may hearken to Michael Rapino’s full interview on the Bob Lefsetz podcast by way of right here.Music Enterprise Worldwide