Ticketmaster ups presence in direct-to-fan arena

03/26/2007 3:24 AM, Reuters
Ray Waddell

Ticketmaster's purchase of a majority stake in echomusic, a Nashville-based Web entertainment marketing company, gives the ticketing giant an important new presence in the critical direct-to-fan space.

The move, announced last week, is the latest tremor in what could be a seismic shift in the concert industry as Ticketmaster's contract with concert promoter Live Nation expires at the end of this year. Live Nation last year purchased MusicToday, far and away the industry leader in the direct-to-fan realm.

Now Ticketmaster has upped the ante in what is clearly becoming a more fan-centric concert and ticketing business. "The holy grail of any business is really customization, personalization and scale," Ticketmaster CEO Sean Moriarty says. "And echo and Ticketmaster is just that."

The fan club ticketing business seems to be the key component in the deal. Historically fiercely protective of its clients' inventory and how many tickets are sold through fan clubs, Ticketmaster now has a significantly higher stake in this market. This should provide flexibility in what has been a hard and fast "10% or less per show" rule regarding tickets allotted for fan clubs and excluded from public sale. With a vested interest in this allotment, Ticketmaster and its clients would likely be more open to superserving this segment when appropriate.

The 10% rule for fan clubs has become somewhat of an industry standard. And it's a standard that echomusic -- whose clients include Kelly Clarkson, Keith Urban, Rascal Flatts, Casting Crowns, the Academy of Country Music and the Gospel Music Channel -- has worked within.

"Previously, we built our own ticketing engine and took advantage of the current business model, which is basically 10% of the house can be sold direct," echomusic partner Mark Montgomery says. "As we've gotten further into that world we understood that scale is really important, so part of the attraction for this relationship (with Ticketmaster) is their ticketing platform."

Asked if the 10% standard would be a more flexible number now within the echomusic relationship, Moriarty says, "No percentage rule is going to work for any and all," and adds that most fan clubs utilize less than 10% of the house. "The fact of the matter is over the past several years more fan club tickets have been going through Ticketmaster distribution because people recognize it's more effective, efficient and better for the consumer," he says.

The opportunity here is to provide fans with a less cluttered ticket marketplace, Moriarty says. "In my mind, it is too hard and too confusing for fans today to buy tickets because there are too many different programs," he says.

"People want choice, but they also want clarity," Moriarty adds. "And in many cases they value clarity more."

And the industry trend, in Moriarty's view, supports this thinking. "In general, the industry is pushing toward one-stop shopping because of the complexity of breaking your business up into difference pieces with different vendors," he says. "To me that means that we've got to be the best damn one-stop shop that we can be."

Moriarty says extending the Ticketmaster platform in this direction has been a goal for some time and Ticketmaster has in fact been "opportunistically" involved with such fan-centric projects as VIP packages, fan clubs and custom-created tour promotions with acts ranging from Bon Jovi to U2.

The market goes way beyond just fan club ticketing, Moriarty says. "When you look at the Ticketmaster business and our role as a service provider, to the extent that this (echomusic) platform can do all of those things that our clients would like to have done between the artist and the fan -- fan club interactions, ticket sales, merchandise sales, custom marketing campaigns, e-mail campaigns -- we felt that echo had built something truly unique and special."

The Ticketmaster/echo deal takes such ever-evolving ticketing trends as dynamic pricing, presales and ticket reselling into the direct-to-fan space. Of the three, Moriarty views reselling as the most compelling in the short term.

"I firmly believe that resale is going to be an option available to every ticket buyer the first time that they purchase, and it's going to be something that they expect whether they're buying from a team, Ticketmaster or an artist fan club powered by echo and Ticketmaster," he says.

Despite MusicToday's dominance in the direct-to-fan space in recent years, Montgomery points out that echomusic -- with service encompassing everything from Dierks Bentley's album packaging to Keith Urban's post-rehab Web site communication to his fans -- is different. Echomusic "is really morphing into a marketing/branding/new model distribution business," he says. "We really believe there is a fundamental change afoot in that space."

Bottom line, the deal gives Ticketmaster a key foothold in this segment and gives echomusic a wealth of technical intelligence and massive infrastructure it lacked. Of course, the elephant in the room remains the upcoming showdown between Ticketmaster and Live Nation, which produces close to 30,000 events annually and generates millions in Ticketmaster service fees.

Through the MusicToday acquisition and its own in-house Next Ticketing, Live Nation seems to be setting itself up to be in the ticketing game or to at least leverage a more favorable deal with Ticketmaster. Most observers believe that however this shakes out will have a huge impact on the industry.

Asked if Live Nation's MusicToday deal added a sense of urgency to Ticketmaster's entree into the direct-to-fan space, Moriarty says, "No, not at all. This is something that we contemplated well before that, and our focus is genuinely extending our platform so that we can offer the best possible service to our clients. It really was internally driven and based on our own focus."

Reuters/Billboard