With little leverage besides its huge customer base, the online retail behemoth is finding that disrupting the U.S. ticketing market won’t be as easy as throwing its weight around.
Two years ago, Amazon set out to shake up one of the few businesses it had yet to disrupt: the concert-ticket industry.
After first testing its proprietary ticketing technology in Europe -- a more open market where customers could buy seats directly through Amazon due to the continent's lack of exclusive ticket-venue -contracts -- the e-retailer easily sold shows for Elton John and theatrical performances like Wicked and The Book of Mormon. Encouraged, it began to hire a U.S. ticketing team in late 2016, with its sights set extraordinarily high.
"Our vision goes beyond selling tickets as we aim to disrupt the entire live-entertainment experience, including what happens before, during and after the show," read a job posting for the team led by Amazon vp Ian Freed, a 10-year Amazon veteran and CEO Jeff Bezos’ former technical assistant. "The ticket business is ripe for innovation and improvement, as much of the industry has not fundamentally changed since the 1970s."
But the U.S. ticket market has proven to be a much larger headache than in Europe, and nine months after entering talks to become a distributor for Live Nation's Ticketmaster -- which controls 80 percent of the major concerts in the United States -- Amazon has found itself without much leverage. It's unfamiliar territory for the Seattle behemoth, which has upended industries from books to groceries and is making waves in the recorded-music market with its voice-activated Echo speakers and an on-demand music service that Echo users can subscribe to for just $3.99 a month.
Amazon's potential entry into ticketing could be groundbreaking. The company has discussed a pricing model that could slash typical service fees in exchange for an annual membership fee, sources tell Billboard, a move that could impact promoters, venues and artists who rely on such charges and rebates as an important revenue stream.
Building a service to compete with Ticketmaster was never really in the cards. A source at Amazon says the company's North American ticketing team -- including former Warner Music Group executive Lawrence Peryer, former Hard Rock International director Matthew Watts and former MTV attorney Cindy Charles -- realized early on that they would have to work with Ticketmaster to build a distribution system that tied into its API, since Ticketmaster is spending about $4 billion this year to secure its exclusive relationships with artists and venues.
"This has always been about doing deals with all [ticketing] platforms to pull inventory and help content owners allocate tickets," says one source familiar with Amazon's efforts. "It's not about building a box-office software suite."
Still, even a simple ticket distribution deal could help Amazon grow its money-making Prime program by offering members access to sought-after shows along with free shipping and the other perks Prime members get for $99 a year.
But Live Nation isn't a company Amazon can simply out-price or beat through efficiency; in 2016, its Ticketmaster unit generated $28 billion in sales globally (up 11 percent over the prior year), delivering 480 million tickets in 28 countries through an intricate web of exclusive deals with venues and artists it manages and promotes.
The companies also have fundamentally different needs. Amazon wants to shop tickets to the best shows to its customers, while Live Nation wants help hawking tickets to shows that don’t sell out immediately, incrementally moving the needle on the estimated 40-50 percent of industry inventory that goes otherwise unsold. But sources tell Billboard that Amazon is reluctant to share purchasing data and contact information about its estimated 85 million Prime subscribers, who outnumber the 71 million fans that attended Live Nation events worldwide in 2016.
Withholding such data could be a deal-breaker for Live Nation, sources say, and talks between the two companies have stalled recently. Meanwhile, top executives Geraldine Wilson, Amazon UK's GM of tickets, and Jason Carter, Amazon Prime live events director, both left the company within the last three months.
"If Amazon thinks it can go directly to venues and divert tickets [from Ticketmaster] to a Live Nation show, they're going to quickly learn that's not going to happen," says a source familiar with the talks. "Live Nation will just take its toys and go somewhere else."
But Amazon is an attractive option if they can find a viable way in. With its year-old music streaming service and online CD store, Amazon could also potentially help acts shop their music, merchandise and concert tickets more efficiently to a wider potential fan base all in one place.
"We see a trend towards an open, non-exclusive market on the horizon," says Dan DeMato, president of industry consulting firm FutureTix. "There is a movement that is in its infancy that questions why a venue would want its tickets to be sold via one exclusive channel. Amazon has the consumer following and data to be a perfect tool to sell live entertainment admissions.”
During negotiations, Live Nation has pushed Amazon to simply sponsor concerts for Prime members, as other major corporations do -- Citi, for example, hosted a Metallica show for its credit-card card holders in February -- or to unload tickets like discounters Costco or Groupon do. But so far, Amazon isn’t interested.
"There's a bit of technology arrogance," says one concert industry source. "The attitude is, 'You should want to sell your tickets on Amazon because we're really good at selling things.'"
Still, Amazon’s path into ticketing is not impossible. But Macquarie analyst Amy Yong says that if Amazon is going to make headway it needs to demonstrate an advantage beyond its large user numbers.
“If Amazon wants to come into the market, then they will have to negotiate directly with artists, venues and sports teams,” she says. “Beyond that, I’m not sure what they could add to an already-frictionless experience."