August 16, 2022

Can Ticketmaster’s Builder Now Unseat It?

Music, you see, isn’t his thing. Money is.

Mr. Rosen, 67, is the godfather of the $18-billion-a-year tickets business. Go to almost any big-name concert — or to a Dodgers game or to a Broadway show — and the odds are that you will pay dearly for his legacy.

Those you’ve-got-to-be-joking prices are, in good part, Mr. Rosen’s handiwork. Starting in 1982, he built Ticketmaster into the tickets giant that drives many people nuts. Even before the company merged with Live Nation Entertainment last year, fans and even some performers, like Pearl Jam, complained that it was a near-monopoly. Despite the protests and a nail-biting antitrust investigation, the Justice Department disagreed and approved the merger.

So it might come as a surprise that Mr. Rosen, of all people, wants to challenge this behemoth, which sells tickets for more than 80 percent of the major concert venues. Mr. Rosen walked away from Ticketmaster 13 years ago, after a love-hate relationship with one boss, Paul Allen, and then a battle of wills with another, Barry Diller. But now Mr. Rosen is back and is hoping to reinvent the global ticketing business again.

Just don’t expect cheaper seats for Lady Gaga, the Strokes or the Yankees.

Mr. Rosen wants to cut out the middleman — that is, Ticketmaster — by putting ticketing back in the hands of arenas, concert halls and clubs. Last year, he signed on as a partner at a start-up called Outbox Enterprises, which helps venues use their own Web sites to sell tickets, merchandise and services directly.

For all its success, he says, Ticketmaster seems outdated: “Did I really think the model that I created 30 years ago would last for 30 years? Nothing lasts for 30 years,” Mr. Rosen said.

Representatives of Live Nation and Ticketmaster declined to comment.

Industry analysts say Outbox looks like a long shot. Ticketmaster sold 25.1 million tickets to concerts globally in 2010, more than double its closest rival, the Anschutz Entertainment Group, which sold 12.5 million, according to Pollstar.

Despite the David-versus-Goliath odds, former business partners, analysts and even Mr. Rosen’s harshest critics aren’t betting against him. They say they believe that if anyone can challenge Ticketmaster, it just might be the man who built it.

“If any start-up has a chance, it would be his,” said David C. Joyce, a media analyst at the brokerage firm Miller Tabak Company. “But it’s going to take years.”

THE YEAR was 1982. “Eye of the Tiger,” that “Rocky III” anthem, topped the Billboard charts — and Fred Rosen joined Ticketmaster.

Mr. Rosen shook up the ticketing industry by allying himself with venues and promoters. They were his customers — not the fans, and not the performers. He rolled out a centralized distribution system that let people buy tickets over the phone, through retail outlets and, later, online, saving them the trouble of having to line up at a box office.

He bet that arena owners and promoters would sign up in droves if they were offered a percentage of every ticket that was sold using a “convenience” or “service” charge, and he was right.

He secured exclusive contracts that made Ticketmaster the only game in town for tickets at many arenas and concert halls. Today, Ticketmaster accounts for roughly 70 percent of all tickets sold for American arenas, music clubs and professional sporting events, excluding all-season sports tickets, according to John Tinker, an analyst at the Maxim Group.

But now as then, Ticketmaster earns nothing from a ticket’s face value. That goes to the venue, the promoter and the talent. Instead, Ticketmaster makes its money from fees — lots of them. There is the service fee — basically a charge for using Ticketmaster. Then there is the processing charge, for handling the order. And the delivery charge, for mailing or e-mailing the tickets. There’s also a building facility charge, but this generally goes to the venue.

These fees add 15 percent to 20 percent, on average, to the cost of a ticket — sometimes more. Ticketmaster gives a cut of the fees to venues and promoters to keep them sweet.

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