Live Nation Seals Ticketing Deal With SMG
Live Nation has cut an important deal with Philadelphia-based facility operator SMG for venues across North America that will provide a big boost to the launch of its ticketing service at third-partyLive Nation has cut an important deal with Philadelphia-based facility operator SMG for venues across North America that will provide a big boost to the launch of its ticketing service at third-party venues.
The alliance allows Live Nation to enter into an exclusive agreement to sell tickets at North American facilities controlled by SMG. The first tickets will transition to Live Nation Ticketing in late 2009 and are expected to ramp up to an estimated 5 million tickets annually by 2011 as SMG's current ticketing contracts, most of which are with Ticketmaster, expire.
Live Nation says the total tickets included in the deal amount to approximately 25 million over the term of the deal.
In January 2009, Live Nation Ticketing will launch as a full service, in-house ticketing company to manage Live Nation's ticketing gateway, LiveNation.com, and as a ticketing alternative for venues outside its own large venue network. The new ticketing platform will allow Live Nation to control customer data, create enhanced ticket-based concert products and capitalize on expanded distribution channels and sponsorship opportunities.
When contracts allow, Live Nation will be the exclusive ticketer for all events at North American SMG buildings, not just Live Nation events. "There are some venues where SMG does not control the ticketing ... and in those cases we'll be working really closely with the venues to demonstrate the overall proposition that is the foundation of this deal: we're a vertically integrated music company that brings great content plus great distribution plus great marketing as a single-source provider to venues," Nathan Hubbard, CEO of Live Nation Ticketing, tells Billboard.
"Only a small fraction of our agreements require competitive bidding," SMG executive VP of sports and entertainment Mike Evans tells Billboard. "The majority of our clients rely on us to manage their venues in a way that maximizes their financial returns, and that includes ticketing. But it's also booking, content, and providing a high degree of service. The bottom line is we control the majority of what our ticketing agreements are."
The Live Nation Ticketing business model has not been revealed, and Hubbard wasn't ready to explain it today, "but I am certainly ready to say that this is a very profitable arrangement for all of SMG's clients," he says. The Ticketmaster model is primarily based on rebates on ticket sales that go back to the building, based on service charges.
Certainly Live Nation can leverage its status as the world's largest promoter and live music content provider to promote their ticketing services, but ultimately they have to be a ticketing company and everything that entails. "We feel like [Live Nation] will give us the best tools to continuing servicing our clients both with our clients and Live Nation's customers and other promoters' customers," says Evans. "This not only is going to increase our ability to get Live Nation events, but it also gives us flexibility to work with other promoters while giving our venues a state-of-the-art ticketing system."
In its very first year of operation, Live Nation Ticketing expects to handle more than 10 million tickets for Live Nation venues alone. These numbers are expected to grow annually to approximately 13 million by 2010 as tickets from Live Nation's House of Blues venues become available to the company.
The incremental tickets included in the SMG deal represent an estimated 25% annual increase in the 13 million tickets Live Nation Ticketing already expects to service from Live Nation venues across North America.