Anyone heard of Live Nation (NYSE: LYV)? It only happens to be a real player in this industry. Live Nation recently announced its global ticketing initiative, which is set to debut next January. Live Nation is partnering with European firm CTS Eventim, which will provide the back-end technology and other related services for LYV's ticketing business.
So, what does this new business mean to a company that is a mover and shaker in the the promotion and production of live music shows, theatrical performances, and specialized motor sports events?
Let's check out what the company has to say about it. Some parsing from the conference call (from SeekingAlpha):
Mark Wienkas – The Goldman Sachs Group, Inc.
The question on pricing is just what happens in general. The general concert industry pricing trends and then the implications or impact of Live Nation controlling the ticketing domestically at least and all the pricing with respect to the transition toward dynamic pricing what do you think happens to [inaudible] as you move from the three-tier pricing model to more dynamic pricing?
Michael Rapino, CEO Live Nation
We believe that is the great opportunity of the industry. The very unsophisticated model of the industry to date is very clear on why Stub Hubs and secondary markets have exploded. In an efficient market in any other industry in the world, you would not be having this type of action happening where people are making more money selling your product day two than they are at the retail strategy. We know on eBay (NASDAQ: EBAY) that we would be one of the very few items out of their entire roster where our product is sold the next day for a higher value than it was at retail....
We now believe that dynamic pricing will help drive the overall revenue up for us and our profit up for us as we get to participate in the secondary market or as most people believe over time the secondary and the primary merge and we become a much more efficient ticket selling company, as in the airlines or hotel rooms or other models that have assets that are depreciable at the end of the night.
We now start thinking about our inventory in those terms, having all the levers to adjust daily, hourly, now we really become somebody that is driving our inventory based on consumer instant information and provide opportunity to price the product and sell through every ticket to the last minute of the show.
________________________________When Madonna signed a huge deal with Live Nation to promote pretty much every aspect of her career, her manager put it beautifully, "In the past, people would tour to promote their albums; today they put out albums to promote their tours."
So, a platform to control promotion and real-time ticketing with dynamic pricing for some of the world's best music groups, sports teams, and events? Pretty interesting stuff.
I'm doing more work on this puppy.
Zack Miller is the Managing Editor of IsraelNewsletter.com and a former equity analyst for a leading multinational hedge fund.
