The Universal-Live Nation Deal: What It Means, and What It Probably Doesn't
The Universal-Live Nation Deal: What It Means, and What It Probably Doesn't

The news of the new relationship between UMG and Live Nation and its Ticketmaster and Front Line divisions raises a lot of questions -- only some of which have relatively straightforward answers. Given the immense size and reach of the two companies, it's easy to have snap reactions like "So does this mean all Universal artists will be managed by Front Line or have their merch handled by Live Nation?" "Will all artists with Live Nation deals be going through Universal?"

Well, no.

Many wonder whether the deal could potentially be expanded to include a merger with UMG's Bravado -- the only merchandising firm that competes on a level with Live Nation Merchandise -- and whether UMG might partner with Live Nation to release albums under Live Nation's multi-rights deals with artists such as Madonna.

At present, it seems that neither is the case and the venture is more of a management/ticketing play than anything else, designed to build up UMG's current management division while extending those management operations to an entity -- Front Line -- outside the immediate UMG family.

The UMG-affiliated management companies will keep their names and do business independently, as is typically the case with firms brought into the Front Line fold. It also seems doubtful that Live Nation Merchandise will merge with UMG's Bravado, which are the two largest artist merchandise firms in the business. However, it is possible that the two companies could combine such back-room operations as manufacturing and distribution at some point, and Ticketmaster could form a ticketing deal with Bravado down the road. Live Nation and Bravado would still compete for artists' merch rights.

Live Nation Touts Success With New Ticketing Strategies

What does seem likely is that the deal will lead to more bundling of tickets, merch and UMG content, which completely fits the Live Nation Entertainment model. For example, an artist could bundle a new CD with a ticketing pre-sale or VIP opportunity or even a ticket. More likely, as the value in music shifts more toward the live side, is that the CD would be an add-on value to fans buying a ticket. All of this could take place at artist websites, which not only are a priority for Live Nation Merchandise and LN's Music Today direct-to-fan operation, but also for UMG's Bravado merchandising division. For Live Nation's Ticketmaster, which is facing competition on all fronts, the alliance with a partner the size and scope of UMG becomes a critical strategic move as it seeks to align with non-traditional ticketing partners.

Irving Azoff Talks Ticketmaster's Future

Also, it seems there is no exclusivity attached to the new UMG/Live Nation partnership, so conceivably Live Nation could broker similar partnerships with other labels if it so desires. What is unclear is if the exclusivity works both ways: Could UMG also form a ticketing partnership with a Ticketmaster rival, including AEG's rapidly expanding Outbox ticketing operation? That's doubtful -- but possible.

AEG's Leiweke And Outbox's Rosen Talk to .Biz About Competing With The Ticketmaster Juggernaut

Some might assume that the new affiliation between Live Nation and UMG might give the latter the inside track for album distribution on Live Nation's multi-rights deals with artists, specifically Madonna. But Live Nation CEO Irving Azoff, who declined to discuss specifics of the deal on the record, did tell this: "If we do get a label partner on Madonna, that decision will be made by Madonna and Guy Oseary, her manager."