Ticket Battle Shakes Music Biz

When Live Nation, the world's biggest concert promoter, announced that it would begin selling its own tickets starting in January, it seemed like the beginning of the end for Ticketmaster. Instead, the move has triggered a war that is reshaping the entire music industry, with the two companies battling for a piece of every dollar fans spend on music, from concerts and merchandise to albums and digital downloads. "It's a seismic shift, in terms of what's occurring with the retail of tickets," says Jim Guerinot, manager of Nine Inch Nails and Gwen Stefani. "But it's far bigger than that. It's going to develop into a seismic shift in the selling of music."

From 2000 to 2007, CD sales plunged 36 percent, forcing record labels to lay off thousands. But concert revenues soared, from $1.7 billion to $3.9 billion — shifting power to touring artists, their managers and concert promoters. Live Nation CEO Michael Rapino used this clout to entice Madonna, Jay-Z and Nickelback to drop their labels and sign multimillion-dollar deals with Live Nation for touring, albums and merchandise.

At the same time, Rapino made the move to jettison Ticketmaster, whose technology and infrastructure Live Nation had relied on to sell 24 million tickets a year. The benefits Live Nation will accrue by selling tickets from its own Website are clear: The company can eliminate Ticketmaster's much-derided service charges, and make its site a one-stop music shop for artists it works with — selling tickets, albums, merchandise and more. "We took ticketing in-house to be able to say to the artist, 'We're now the pipeline to help you take whatever product you want to the fans,'" says Nathan Hubbard, CEO of Live Nation's new ticketing division.

Ticketmaster, faced with the loss of 17 percent of its business, made a dramatic move: On October 23rd, the company announced that it had purchased a controlling interest in Irving Azoff's Front Line Management — which represents nearly 200 major acts, including top touring artists from the Eagles and Jimmy Buffett to Christina Aguilera and Guns n' Roses — and installed Azoff as CEO of the combined company. "That was a sophisticated move," says Jonny Podell, an agent who represents Peter Gabriel and the Allman Brothers Band. "Whichever side gets Azoff has a lot of juice. He's going to come in like, 'You want to play my act, Ticketmaster's going to sell the tickets.' Azoff has this one line, 'Game's on!' He likes this shit."

Not surprisingly, selling tickets is just one business the newly christened Ticketmaster Entertainment Inc. plans to pursue. Azoff suggests that Ticketmaster could use its Website, from which some 141 million fans bought tickets last year, to sell digital downloads, CDs and merchandise. The company will also sell tickets in new ways; it recently announced a plan for fans to buy tickets directly from their BlackBerrys by the end of this year. "I have a blank canvas and a lot of paint," Azoff tells Rolling Stone. "We're not going to only sell tickets — we're going to market artists' careers."