Ticketing Industry News: Room for More?

Room For More?

AudienceView makes a case to end exclusive deals

Venues Today
By Dave Brooks

Is neutrality an option in 2009?

Live Nation is close to launching its new ticketing platform, a much-anticipated move that has it severing ties with Ticketmaster. Using a system powered by German-based CTS Eventim, the new platform is being rolled out this month and has already gained headlines following a major deal with venue operator SMG.

The Live Nation ticketing formula seems simple. The world’s largest concert promoter can now tie its ticketing system to its concert series, giving it leverage over buildings in highly competitive markets which rely on Live Nation content. Want a concert for your building? Then agree to use the ticketing platform, at least for individual Live Nation concerts seems to be the theory.

It’s a proposition that is both simple and terrifying to primary ticketing giant Ticketmaster, which has staked its decades old business model on signing long-term exclusive contracts with venues. Well aware that Ticketmaster is entrenching itself to fight against per-event Live Nation ticketing contracts, one Canadian company is touting its long-established policy to not require contract exclusivity. Kevin Kimsa, CEO of Toronto-based AudienceView, said his venues are free to use whatever ticketing system they like when they sign an AudienceView contract.

“It’s become attractive because Live Nation and Ticketmaster are no longer working in partnership,” said Kimsa, whose six-year-old company represents 120 venues and 80 clients including the Toronto Blue Jays and Churchill Downs, Louisville, Ky.

“Venues are asking themselves, ‘If I go with Ticketmaster, am I limiting myself with regards to what Live Nation content exists for me in my future?’” Kimsa said. “We’re just taking advantage of the fact that we don’t hurt anybody in the middle. We’re a neutral play for organizations.”

Is this the death of the exclusive ticketing contract? Not likely. Ticketmaster’s Mike McGee said non-exclusive contracts are akin to “telling your girlfriend that you want to take someone else on a date,” during a panel at the Sport, Entertainment and Venues Tomorrow Conference in Columbia, S.C. Fred Maglione of the New Era Tickets told an audience at the Arena Managers Conference in Kansas City that “ticketing companies need to stand up against these type of contracts because they threaten the millions of dollars we invest to enable a venue.”

Not to be outdone, Ticketmaster has its own ace in the hole — Irving Azoff. The artist management megastar recently sold a $123-million stake in his Front Line Management firm to Ticketmaster prompting a name change to Ticketmaster Entertainment and the installation of Azoff as CEO. Now both Ticketmaster and Live Nation have tickets, software and performers. Is AudienceView’s strategy going to be essential for smaller ticketing firms hoping compete?

“You wonder if building managers are going to come together and say, “We have a promoter who wants to do our tickets. They have all the functionality that you currently have and there’s nothing you can do they can’t do, so we’re going to have them handle the tickets for this current event,” said Jack Lucas of Spokane, Wash.-based TicketsWest, powered by Ticketmaster. “Or, are the building managers going to come to me and say, “You know Jack, we don’t want to lose the show; you’re going have to work with these guys.”

So while Kimsa’s business model allows for non-exclusivity for new ticketing contracts, many are wondering how building managers are going to make exceptions for Live Nation concerts using existing Ticketmaster contracts.

“It really depends on what position you’re into to negotiate,” said John Fuhrmann of the Neal Blaisdell Center in Honolulu. Top buildings in must-play markets will be less susceptible to pressure from Live Nation or Ticketmaster, “but if you’re in the situation to fight hard for a concert — which the majority of buildings are — then there’s a good chance you’ll be calling your ticketing company and trying to find a way to make the two work together.”

And when venues’ ticketing contracts do come up for renewal, will they be rushing to sign non-exclusive deals with companies like AudienceView?

“I think many are going to resist going in that direction because they all know that, in the case of TicketsWest, we bring some stability and fiduciary responsibility,” said Lucas. “That’s especially important to municipally-owned facilities.”

Lucas said cancelled shows are a major concern for publicly-owned facilities. If a 10,000-ticket concert gets cancelled, it’s the fiduciary duty of the contracted ticketing company to have the available capital on hand to issue refunds.

“When you have non-exclusive deals, typically a lot of that fiduciary responsibility flies out the door and there’s real potential to get people in a lot of trouble,” Lucas said.

And without an exclusive ticketing agreement, facilities should not expect a lot of upfront cash or investment, said Derek Palmer, chief commercial officer at Tickets.com

“It’s very contrary to what traditional ticketing relationships are right now. Ticketing companies pay a lot of money for that exclusivity, whether it’s signing bonuses, hardware or investing in suites and tickets,” Palmer said. “An organization would have to be interested in walking away from a lot of upfront capital from a ticketing company to be able to do that.”

But Kimsa questions how much infrastructure investment is really required to get a ticketing system running.

“To be honest with you, the cost of infrastructure isn’t that much,” Kimsa said. “Ticketmaster may lead you to believe that’s the case because it is opportunistic. An exclusive five-or-seven year term deal was necessary back in the 80s or early 90s when it did require a lot of hardware, a lot of infrastructure, and a lot of call center technology but, in today’s world, the need for infrastructure isn’t really that great.”

It’s an assertion that is not agreed upon by a majority of Kimsa’s ticketing contemporaries, many of whom contend that the high cost of infrastructure, upfront capital and implementation make ticketing a very low-margin business. At the end of the day, Palmer said few ticketing companies will allow their ticketing contracts to be ignored but there is always one incentive that will get any businessperson’s attention — cold hard cash.

“If an organization came to us wanting to use another ticketing system and we could work out a deal where we could still make a fair margin, then they could have the freedom to sell tickets to whomever they want,” Palmer said. “Ultimately it is about the money.”

Kimsa said his firm wouldn’t require a quid pro quo — in fact part of his formula is tied to a trend nearly all other ticketing companies have tackled: Venue-branded ticketing services. As Tickets.com, New Era and other ticketing companies allow their venue clients to sell tickets on private label platforms, venues will be hesitant to exercise their non-exclusive options for Live Nation shows as they invest more and more marketing capital into their own ticketing platforms.

“And if they choose not to use their AudienceView-based system, they’ll also forgo control over their marketing, service fees and data collection,” Kimsa said. “So even if we offer our clients the option to use the Live Nation platform, many will want to keep as many events as possible on their own ticketing brand.”

Interviewed for this article: Kevin Kimsa, (416) 356-4121; Jack Lucas, (509) 459-6100; Derek Palmer, (714) 327-5400