Digital Noise: Music and Tech

In its typical stately and slightly behind fashion, The New Yorker magazine this week published a piece (subscription required) about big changes in the live music industry. The article used as its grounding point a recent dispute between Bruce Springsteen and Ticketmaster over scalping and ticket withholding by artists, but the larger point was that the concert industry may be following the recording industry down the tubes--a prediction I made more than a year ago. The article has reams of supporting statistics and quotes, but the simple point is that the big acts aren't selling as many tickets as they used to, and some industry insiders are worried that there are no young bands today who will be able to fill stadiums in 20 years.

iLike Local Concerts has a wealth of information about local shows, plus crisp little images for each one.

But I was struck most by the optimism of Irving Azoff, who's currently the CEO of Ticketmaster Entertainment, but who's better known as a long-time big shot in music management--he handled The Eagles, among many other acts. As he put it: "The performer on stage receiving the adulation of the fans--there's nothing like it, and that's never going away."

He's absolutely right, but I still think the days of paying more than a hundred bucks for the right to be herded into a stadium where they charge $8 for a beer and the ushers don't allow dancing and the other "fans" yell if you stand up and the sound sucks and the performers can't play their instruments and they look like tiny ants--that is, the big stadium concert experience--is becoming a relic like corded telephones and huge microwave ovens. It's too expensive, it's not fun enough, and there are far more opportunities for collective entertainment today than when I was a teenager back in the dark (pre-online) ages. Where are kids going to spend their allowance--on Xbox Live for $50 a year, or the latest enormo-tour for $50 (or more) an hour?

That's bad news for Ticketmaster, but good news for smaller venues. The only trouble with these smaller shows is that you might not hear about them unless you've got a good local weekly paper and are willing to scan the club listings regularly. That's where a new crop of Web and mobile applications come into play. I'm still enjoying iConcertCal for iPhone, which I've only had for a week, but has already guided me to one amazing band (Garaj Mahal) I had no idea was in town until I opened the app.

Today, Seattle social-music company iLike upped the ante with a update to iLike Local Concerts, a very attractive iPhone app that was originally released in May. It downloads and caches a bunch of local concert information on first connection to reduce wait times in the future, and features a slick user interface with images for each listed artist. The updated version, which should be in the iTunes store shortly, will match iConcertCal's ability to build a list of favorite artists based on your iTunes library, and will add notifications when one of your favorites announces a show in your town. Best of all, while iConcertCal costs $2.99, iLike Local Concerts is free.

Live music's far from dead. You just have to know where to look.

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A year and a half after I first blogged about ticket brokers and the free market, the rest of the world is finally catching on to the fact that scalping isn't going away.

A lot has happened in the intervening time--Live Nation emerged as a competitor to Ticketmaster, then agreed to merge with Ticketmaster, and The Wall Street Journal has published a couple of articles exposing the fact that artists and managers often team up with ticket sellers (like Ticketmaster) and brokers (like Ticketmaster subsidiary TicketExchange) to sell their own allotments of tickets for several times their face value.

Eventually, concert tickets will be sold through a dynamic pricing model, just like items in a bazaar.

(Credit: Photo by Babak Gholizadeh, via Wikipedia)

Nine Inch Nails' Trent Reznor on Sunday posted a fascinating take on the whole practice of scalping. As he points out, Ticketmaster or Live Nation could have stopped the practice of scalping eons ago--all they'd had to do is print the purchaser's name on the ticket and require a photo ID matching the ticket to get in, as they do with airline tickets. (And hey, some concerts--like the Police tour--have seats that cost more than the average airline ticket.) The reason they don't is because Ticketmaster benefits from the scalper's market through its TicketExchange subsidiary.

More fascinating, however, is Trent's account of how he wrestled with the temptation to sell the band's allotment of tickets--10 percent, in NIN's case--for more than face value. As he rightly points out, as long as there are people willing to pay $1,000 for front-row seats, either the band has to charge that amount and be criticized for looking greedy, or a second market is going to thrive.

In the end, NIN decided to charge only face value for its allotment of presale fan club seats and to put antiscalping provisions in place: buyers' names will be printed on the ticket, and buyers will have to go through a special entrance where IDs will be checked. He believes that forgoing short-term gain in the interest of long-term fan relationships is the right thing to do.

I agree with his prediction of the future: eventually, the Ticketmaster-Live Nation merged company will move to dynamic pricing for all tickets, similar to how airlines price tickets today. If it's a hot ticket, prices could skyrocket even higher than scalpers' prices today. Then again, if tickets aren't selling, there might be a last-minute fire sale--good for fans.

If you're sick of paying exorbitant prices for big-concert arena tickets, I promise you that there are plenty of small bands playing in your town tonight that you'd enjoy, that would love to have you there, and that won't charge you more than $30 for the privilege. You might not get to hear your favorite song, but you'll actually see and hear the band up close, and you won't have to deal with that "down in front" guy who always seems to sit behind you.

After a couple weeks of rumors reported by The Wall Street Journal and other outlets, it's finally happened: concert promoter and venue owner Live Nation and the nation's largest ticket seller, Ticketmaster, have merged in a deal worth approximately $2.5 billion.

Why is this important? Because the combined companies are, in my opinion, dangerously close to building a vertical monopoly. The new company, Live Nation Entertainment, will own concert venues, the ticketing system for those venues, and exclusive rights to certain major acts that play those venues. In other words, if you thought concert prices were high now, just wait a couple years.

Some background, if you haven't been following along: Live Nation was spun off from radio-advertising giant Clear Channel back in 2005. Its main business at that time was concert promotion and ownership of concert venues--particularly large amphitheaters.

It's hard to get an idea of the company's scope, as it doesn't disclose exactly how many concert venues it owns in its financial statements, but in the last three months of 2008, it produced almost 5,700 events with attendance of over 18 million. Of those events, 600 were produced by Live Nation in Live Nation-owned or operated venues in North America.

Under the leadership of CEO Michael Rapino, Live Nation diversified and began signing a new type of business deal known as a "360 deal" with major artists like Madonna and U2.

In a traditional old-fashioned music business deal, the record company controls recording and distribution. In a 360 deal, a single company handles all aspects of an artist's career--recordings, concerts, and merchandise.

Ticketmaster, meanwhile, is the same company concertgoers have known and loved (or loathed) since the 1980s, though it's changed hands a few times, and was most recently spun off from Barry Diller's InterActiveCorp into an independent company.

Earlier this year, Live Nation and Ticketmaster severed their ticketing relationship--instead of using Ticketmaster, Live Nation would create its own ticketing system and sell tickets for its own venues and the shows it promoted. For a brief shining moment, it looked like there'd be new competition in the concert industry, perhaps leading to lower prices.

But Live Nation apparently had problems handling demand for recent concerts. Meanwhile, Ticketmaster was up to the same tricks that have given it such a sterling reputation among fans--Bruce Springsteen recently criticized the company for guiding concertgoers straight to the TicketsNow auction site (also owned by Ticketmaster) after tickets from the regular site sold out in a few minutes. Of course, the auction-site tickets were much more expensive. (The practice has drawn a class action lawsuit in Canada.)

Now it appears that the Live Nation-Ticketmaster spat was just gamesmanship, part of the negotiation process. So forget about competition--rock concerts are a private party for the rich, and the rest of us will be left to watch the DVD after the tour ends. That's going to be the new norm, not the exception. It's a shame--going to big concerts was a rite of passage back when I was a kid--but the spirit of rock and roll lives on in small clubs, garages, and laptop battles.

Music forums were abuzz all weekend about Live Nation's inability to handle the millions of simultaneous online requests for Phish tickets. The fabled jam band is reuniting for a summer tour after several years off, and is playing some Live Nation-owned venues, which means that tickets for those shows were available only through Live Nation. Unfortunately, Live Nation (a spin-off of Clear Channel) is relatively new at ticketing and its Web ticketing service couldn't handle the strain. The worst: apparently some would-be purchasers were offered seats, only to have the system break down when they tried to complete their purchase.

Error--tickets not found.

(Credit: Phish Dry Goods)

Maybe they should have tried the phone.

While I've never bought a ticket from Live Nation, I've turned to phone orders with Ticketmaster twice in the last year--for Bruce Springsteen and Sigur Ros--when the Web site was slow or offered only undesirable tickets. Each time, I got a much better seat than I could have gotten online. I imagine Ticketmaster allocates a certain number of seats at each purchase level for phone, and the lines aren't nearly as busy as the Web site, meaning the decent seats last longer.

How much does that ticket cost? In a few years, it might depend on when you buy it.

(Credit: Ticketmaster)

Prices for airline tickets are one of life's great mysteries. A travel agent tried to explain it to me once, and without getting too detailed, it's a combination of segmentation, demand-based pricing, and ensuring that seats are filled. Segmentation's the reason why last-minute tickets cost so much--most vacationers plan far in advance, and business travelers are much more likely to accept high prices. Demand-based pricing is why it's way more expensive to take the same trip over Thanksgiving than over the second weekend in November, and why prices can fluctuate from moment to moment--as one "class" of seats is filled, the airline figures out that shows high demand for that route on that date. The need to have seats filled is why you can sometimes score amazingly cheap seats on long flights overseas if you commit to a non-refundable ticket early enough.

So leave it to every music fan's favorite corporate entity, Ticketmaster, to bring the clarity of airline-style pricing to the world of concert ticketing! According to an SxSW blog post by L.A. Times reporter Todd Marten, Ticketmaster CEO Sean Moriarty said the company is considering demand-based pricing for concerts and expects to have it in place within five years.

If you think about it, concert tickets and airline tickets are very similar--both are strictly limited in quantity and time-dependent. I can imagine Ticketmaster segmenting audiences--the business person who wants to take a client to a hot show will pay more for a last-minute ticket than the casual music listener who buys tickets a few days after they go on sale, but less than a hardcore fan who buys tickets the instant they go on sale. Fans will eventually figure out how to game the system, but in the meantime, this kind of pricing should help Ticketmaster and the entities it represents (promoters, artists, and everybody else in the concert chain) maximize revenue from ticket sales. Overall, I would expect prices to go up, not down. But as I've said before, you can't blame Ticketmaster for the dark side of supply and demand.

A quick follow-up to last week's post about ticket brokers. Tuesday, a federal judge issued an injunction against RMG Technologies, barring the company from "creating, trafficking in, facilitating the use of or using computer programs or other automatic devices to circumvent" the system that Ticketmaster uses to control online ticket purchases.

According to testimony from former broker Chris Kovach, he had used RMG's software to buy hundreds of tickets at a time through Ticketmaster's site before human fans had a chance to do so, then turned around and sold these tickets through brokerages like StubHub. The judge in the case agreed that Ticketmaster had a reasonable chance of proving that RMG violated Ticketmaster copyrights, the Digital Millennium Copyright Act, and the Ticketmaster site's terms of use.

This is a win for consumers, but I don't believe this is the end of this issue. Recall what happened with file-trading networks: as soon as the crackdown began in the U.S, they moved overseas. It might be trickier with ticket brokers, as they have to ship a physical object--a concert ticket--back into the United States, where it could theoretically be seized at the border. But I suspect as long as people are willing to pay above face-value for concert tickets, brokers will use every available method to snap up the good seats as soon as they go on sale.

Both the New York Times and Wall Street Journal posted stories this weekend about ticket brokers.

Ticketmaster has sued a Pittsburgh-based company, RMG Technologies, for providing software that allegedly enables brokers to bypass Ticketmaster's online security provisions and snap up all the good tickets minutes after they go on sale. Brokers then turn around and sell these tickets for a hefty profit on sites like StubHub or Craigslist. Both stories quote Chris Kovach, a former broker who was originally named in Ticketmaster's suit, but settled with the company. He claims that he used RMG's software to buy hundreds of sets of tickets at a time.

This has been going on for years, and the Ticketmaster suit was filed back in April, but the press didn't get really angry until the brokers snapped up tickets for tween sensation Hannah Montana. ("I know I promised we'd go to the show, but daddy didn't expect to pay $1,000 for four tickets.")

I get annoyed at these guys as well, but that's the free market at work. Example: I have a friend who goes to maybe one concert a year. He doesn't go to club shows and hasn't bought a CD in 20 years, but once in a while an old band he likes comes through town, and he refuses to settle for anything less than floor seats. If they're marked up one or two hundred dollars, so be it--he'd rather blow his entire music budget on a once-in-a-lifetime concert experience. He won't pay even $30 to sit at the back of the arena.

As long as there's demand for $200, $300, or $1,000 tickets, then the real problem seems to be underpricing by artists and promoters. Ticketmaster certainly thinks so: the company has its own auction site, TicketExchange, and I suspect its suit against the brokers is driven by competitive concerns more than a desire to help the consumer.

If you object--don't buy. You can always hope that they release more tickets the day of the show, or that the brokers misjudged and that there'll be plenty of scalpers with cheap seats outside on the night of the show. (Happens to me all the time: most recently on Saturday at the "sold out" Widespread Panic show in Seattle.)

Or here's an idea: if you really like music and live in a decent-sized city, I can guarantee you there's at least one act playing tonight who you'd thoroughly enjoy, who'd be happy to have you in the audience, and and who won't charge you more than $30 (probably much less) for the privilege. OK, you might not have heard them before, but go with an open mind, bring a date, have a cocktail, and remember what the experience of live music's about--it's not about seeing your middle-aged heroes on a 100-foot television screen and listening to your neighbors scream "down in front."