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| Rapino said Live Nation had to re-energize Ticketmaster post-merger |
Live Nation President & CEO
MICHAEL RAPINO recently appeared on a RE/CODE podcast to discuss the sale of tickets and escalating prices. He said, “We never build venues, we don’t buy venues, we don’t use our capital to be in the real estate development business like AEG.” However, he noted the company will “make decisions if there’s an opportunist time to manage a building that is a better economics than supplying someone else’s building.” Rapino: “The more content you have or the more shows you have, the more opportunities you have.” Re/Code's Peter Kafka said, “It’s more important for you to control the content than the venue.” Kafka later brought up Ticketmaster, saying it is the "thing everyone loves to complain about.” He said the “major complaint is, ‘I can’t buy the ticket,’ or, ‘I can buy the ticket but I’m paying a giant markup.’ It seems like it’s a broken process and you guys have been dealing with this every year.” Rapino said, “What we loved about Ticketmaster when we merged, it still was the market leader by far … and for many, many years Ticketmaster would be the bad guy. Ticketmaster charges $10 service fee. The little dirty secret is 70% of that is going to the venue. The venue is then paying the promoter a rebate, and the promoter with his rebate is able to pay the artists a lot of money. But the reality is Ticketmaster is the one who has to take the punch in the chin for the exclusivity.” Rapino said when Live Nation acquired Ticketmaster, it "had to really re-energize that business.” Rapino: “We fired probably 500 employees. We had to turn the DNA over.”
THE $8B QUESTION: Rapino said the ticket industry is the "only industry in the world where the primary value the minute you sell it has more value." He speculated Live Nation is leaving $8B on the table, but he said when that happens, there are "really good people trying to figure out how to maximize that." The challenge now is when there is a ticket sale, 90% of buyers "are going to be bots.” Rapino: “You’re fighting computers from Asia, Eastern Europe, you name it, who are trying to get a hold of that ticket because they know that that ticket is worth four times more the second it sold. Now every day we have better and better technology, but it’s an arms race. We’re the best in the world at it, Ticketmaster, with our technology security department, but it’s $8 billion.” Kafka said, “You can make it harder for a bot to buy it, but the bot is still going to be (there).” Rapino: “We can have the best technology, we can try to stop it, we can try to isolate it. But you can’t ever fix this when you leave that much money off the table.” He said the “good news" is that sports will "always be first because they can control it more." The NFL is usually the property to "lead the way," and Live Nation established a ticket exchange with them. Nearly 100% of tickets "were being traded on StubHub" initially, but Rapino said, "As of last year, I think the numbers are closer to about 85% were controlled by the exchange.” Rapino: “Then the NBA, the NHL and now slowly artists are seeing that … (and) the sports world will participate on all levels.” It is “harder for a single brand,” like BRUCE SPRINGSTEEN or DRAKE "to say, ‘I’m going to scalp my tickets.” Rapino: “Our No. 1 motive is to get the $8 billion in the gross for the content, not to be on the sidelines making a service fee on a secondary ticket.” The “fundamental strategy we have to come to terms with from a DNA perspective is we have to shift from B-to-B business to a B-to-C” (“Re/Code Media with Peter Kafka,” RECODE.net, 5/26).
