Eagles Pinch Scalpers With Live Nation Price Hikes on SeatsBy Adam Satariano
Feb. 24 (Bloomberg) -- The Eagles were the first band to charge $100 for a concert ticket 16 years ago. Now the group with the all-time best-selling album is raising prices on prime seats, making the cheap ones cheaper and squeezing scalpers.
The band?s April 27 show in Sacramento, California, uses Live Nation Entertainment Inc.?s ?dynamic? ticketing service that mimics airlines? approach -- a first for a major group. By setting 10 prices based on anticipated demand, instead of the usual two to four, the Eagles are selling seats closer to what they fetch on resale sites such as EBay Inc.?s StubHub.
The aim is to make tickets affordable for more fans and to fill seats, according to Marc Robbins, who helped design the system for the Eagles? manager, Live Nation?s Front Line. The result lifts food and merchandise sales while slicing into the markup of scalpers who profit from tickets initially priced too low in the $4.4 billion worldwide concert market.
?The idea is to shift the economic value from the brokers, who get the difference between the face value and the resale value, to the primary market where it can go to the artists, promoters and venue operators,? said Brett Harriss, an analyst with Gabelli & Co. in Rye, New York, which owns the shares.
Concerts are increasingly important for the music industry. Worldwide ticket sales more than doubled in 2009 from $1.7 billion in 2000, while compact disc sales fell 65 percent, according to Billboard magazine. The average ticket price rose 54 percent to $62.57 from 2000 to 2009, according to Pollstar, which tracks the concert business.
More Clout
The Eagles test highlights ticketing changes made possible by Live Nation?s merger last month with Ticketmaster Entertainment, a deal opposed by consumer groups. As the world?s largest concert promoter, venue operator, ticket seller and manager of artists, the Beverly Hills, California-based company has more leverage to make changes that drive revenue and profit.
Dynamic pricing has been tried by professional baseball teams including the San Francisco Giants. It uses technology to continually adjust ticket prices for some seats based on demand.
At the 17,000-seat Arco Arena, the Eagles are testing a limited version that set prices in advance. Aisle seats are worth more than those in the middle of a row, for example. In some systems, changes can be made in real time.
The band and show organizers are keeping total ticket revenue comparable to other stops on the tour, said Robbins. Eagles tickets priced as high as $250 are being used to reduce others to as little as $32, the lowest for the band since 1980.
Industry?s ?Gain?
Tickets went on sale Feb. 8 and more than half sold for less than $52, the lowest price on other stops, according to Robbins. He declined to say how many seats were involved in the public sale and said the system needs additional testing.
The $32 seats in Sacramento use a paperless system that limits ticket transfers and further shuts out resellers.
?We?re pricing the tickets, not just at what the market will bear, but according to people?s budgets,? Robbins said. Demand will determine the revenue at future concerts using dynamic pricing, according to Robbins.
Getting more people in the door addresses a longstanding problem in the live concert business: empty seats. Live Nation CEO Michael Rapino told Congress last year 40 percent of seats go unsold. Ancillary sales average $12 to $14 per concertgoer, Rapino said then. More ticket sales also add to commissions.
?If you can put somebody in there for $20 where it would have been empty, it?s a gain for the industry,? said Harriss.
?Maximum? Prices
As with other shows, some seats are separately sold to fans paying as much as $995 for a VIP package that includes a ticket in the first four rows, a pre-show party and other perks, according to Live Nation?s I Love All Access, which organizes the packages.
The band and concert organizers also experimented by auctioning 50 seats, with $360 the highest winning bid, according to Robbins.
?The ultimate goal is to price the tickets at the maximum amount of what the consumers will pay,? said Don Vaccaro, chief executive officer of TicketNetwork, a Vernon, Connecticut-based resale Web site with 240 employees and sales above $120 million.
Forty percent of concert tickets sell for less than face value on resale sites, Vaccaro said.
Glenn Lehrman, a spokesman for San Francisco-based StubHub, said ticket sales are ?extremely volatile? and the secondary market is necessary to capture fluctuations after the original sale. On the company?s Web site, two tickets for the Sacramento show are being sold for $1,500 each.
Stubhub provides a Web-based platform, collecting fees from transactions, and doesn?t own the tickets. A 2008 study by Forrester Research Inc. said the U.S. resale market will reach $4.5 billion by 2012.
First to $100
Live Nation fell 7 cents to $12.54 yesterday in New York Stock Exchange composite trading. The shares gained 48 percent in 2009. This month, Live Nation announced an agreement to sell tickets in 500 Wal-Mart Stores Inc. outlets.
In 1994, the Eagles became the first rock band to charge more than $100 for a concert ticket, according to Gary Bongiovanni, editor-in-chief of Pollstar. ?Their Greatest Hits (1971-1975)? has sold more than 29 million copies and is tied with Michael Jackson?s ?Thriller? as all-time best-seller, according to the Recording Industry Association of America.
Eagles shows over the past decade have averaged $1.8 million in ticket revenue, according to Pollstar. The 14-date tour runs from April 16 to May 18.
Live Nation also owns TicketsNow, a resale Web site used by brokers. The company last week settled a complaint brought by U.S. regulators, agreeing to pay refunds to Ticketmaster customers who sought seats to Bruce Springsteen shows and were routed to the TicketsNow site, where prices were higher.
The Eagles event may presage future changes. Technical advances allow prices for live entertainment to be adjusted in real-time, said Barry Kahn, CEO of Qcue Inc., an Austin, Texas- based ticketing company that works with baseball?s Giants.
?Tickets in the concert industry have been very poorly priced, and there is no better evidence than seeing what tickets get sold for on the secondary market,? said Kahn.
