Ticket Battle Shakes Music Biz

With Live Nation and Ticketmaster each wielding increasing power over every aspect of the music industry, the first big change that fans are likely to notice will be a cutback on service charges. "The current model is broken — pretending a ticket is $75 when the fan understands the ticket is $100," Live Nation's Hubbard says. "Now there are no rules. For those artists who want to try something new and different, we're ready to try it."

The first to execute Live Nation's post-service-charge vision, though, was Ticketmaster's Azoff. In early November, he announced his biggest client, the Eagles, would tour in early 2009 with no service charges whatsoever. Although Ticketmaster owned a minority stake in Azoff's company before buying it, he criticizes the service-charge system as well. "If I'm a consumer and I add up the add-ons and it's $18.50, I'd go, 'I fucking hate Ticketmaster,' " he says. "Out of $18.50 in service charges, the building might have been getting more money than the act knew about."

Service charges are unlikely to disappear completely. "Most of the arenas where the real A-plus acts play have long-term contracts with Ticketmaster," says Randy Phillips, CEO of Live Nation's top competitor, AEG Live. "Even on a Live Nation tour, those acts are still subject to Ticketmaster deals."

Many in the business interpreted Live Nation's move as a declaration of war, but Azoff and Rapino have publicly adopted a conciliatory tone. Says Azoff, "We've done lots of business with Live Nation and will continue to do lots of business with Live Nation."

Both Live Nation and Ticketmaster stocks have taken a beating during the recent financial crisis. Although Live Nation's revenues climbed in the third quarter, Wall Street analysts have said they doubt the company will sell as many tickets in 2009 as it has in recent years. And Ticketmaster recently reported concert-ticket sales have dropped seven percent since July.

"What I'm seeing out on the road is that there's price resistance," says Weezer tour manager Stuart Ross, whose band dropped some seats to $10 on its fall tour. Does that mean most prices will go down? Not likely: A recent Live Nation report notes that revenue increased in part due to "higher ticket prices." "In a competitive world, artists usually make out very well," says Peter Katsis, senior vice president of music for the Firm, which manages Korn and Jane's Addiction. "I just don't know if it's going to translate to an advantage for consumers."