Dwell Nation’s management staff has noticed a noticeable distinction between sports activities followers and music followers in relation to shopping for tickets, and CEO Michael Rapino neatly summed this up on the corporate’s Q3 earnings name.
“We’re all the time a little bit amused that sports activities is type of a badge of honor – how costly these tickets [are] – however music, which is priced a lot decrease than sports activities, appears to get extra of the emotional response,” Rapino informed analysts on Monday (November 11).
That value differential has existed for a while. Courtside tickets for an L.A. Lakers sport run between $200 and $600 every, whereas about three-quarters of the live performance tickets offered by Ticketmaster go for beneath $100, based on a remark Rapino made at a Goldman Sachs convention earlier this 12 months.
But it has usually been music audiences which have complained about costs, with Ticketmaster feeling the blowback, as within the case of high-priced tickets for Bruce Springsteen’s 2023 tour, or, extra lately, complaints about surging ticket costs for Oasis’ 2025 UK tour.
Followers angered at seeing Oasis tickets rise in value in actual time – the results of Ticketmaster’s “dynamic pricing” mannequin, which reacts to demand – criticized the ticketing firm on-line, triggering an investigation into dynamic pricing by the UK’s Competitors and Markets Authority.
“We’re all the time a little bit amused that sports activities is type of a badge of honor – how costly these tickets [are] – however music, which is priced a lot decrease than sports activities, appears to get extra of the emotional response.”
Michael Rapino, Dwell Nation
Evidently stung by the criticism, Oasis introduced they’d not use dynamic pricing in gross sales for the North American leg of their tour.
Dwell Nation has argued prior to now that dynamic pricing is a means of chopping into the secondary ticket market (i.e., scalpers and resellers) who revenue from excessive demand for exhibits with out really investing something into making these exhibits occur.
Rapino has beforehand argued that dynamic pricing permits artists to seize extra of the earnings from followers who’re keen to pay somewhat than having that cash go to secondary sellers.
On the earnings name Monday, Rapino reiterated Dwell Nation’s hopes for stricter regulation of the secondary ticket market, particularly as a result of “America appears to be a market the place secondary is free to run.”
Rapino stated he’d wish to see stronger regulation cracking down on the bots utilized by resellers to purchase massive numbers of tickets out from beneath common shoppers, in addition to speculative promoting – the observe of secondary sellers providing tickets they themselves have but to buy.
“We hope, over time, higher rules get put in place to assist the patron,” Rapino stated.
Rapino’s feedback got here because the firm reported stronger-than-expected earnings for the quarter ended September 30, coming at USD $1.66 per share, versus Wall Avenue estimates of $1.59.
Nevertheless, the corporate’s income took a success throughout the quarter, sliding 6% YoY to $7.65 billion. That was largely attributable to weak point in stadiums this summer season, a difficulty that Dwell Nation had flagged in earlier earnings calls. The corporate says it’s on observe for one more sturdy stadium 12 months in 2025, which Dwell Nation expects shall be extra like 2023, the 12 months of blockbuster excursions from Taylor Swift, Bruce Springsteen, and others.
Listed below are three different issues we realized on Dwell Nation’s newest earnings name:
1. Dwell Nation is ‘hopeful’ about its antitrust combat beneath a Trump administration
Dwell Nation is “hopeful” that the incoming Trump administration will go simpler on the corporate in its ongoing combat towards a authorities antitrust lawsuit.
The US Division of Justice sued Dwell Nation this previous Might, alleging “monopolization and different illegal conduct that thwarts competitors in markets throughout the dwell leisure business.” The DoJ is searching for a break-up of Dwell Nation and its ticketing division, Ticketmaster. The attorneys normal of 39 US states and the District of Columbia have joined the lawsuit.
Requested by an analyst whether or not a Donald Trump presidency “goes to be an excellent factor for you,” Dwell Nation President and Chief Monetary Officer Joe Berchtold stated the corporate is “hesitant” to say a lot on the difficulty, on condition that “it’s nonetheless very early within the transition course of.”
All the identical, the corporate is “hopeful that we’ll see a return to the extra conventional antitrust method the place the companies have usually tried to search out methods to resolve issues they see with focused cures that reduce authorities intervention within the market.”
“Focused cures” are usually options to anti-competitive practices that fall wanting breaking apart a enterprise. One such focused treatment was put in place in 2010 as a situation for presidency approval of Dwell Nation’s acquisition of Ticketmaster.
It prohibited Dwell Nation from doing issues similar to “retaliating” towards live performance venues for utilizing different ticketing corporations, or threatening venues. That settlement was supposed to finish in 2020, however was prolonged for one more 5 years after the DoJ concluded that Dwell Nation had violated some facets of the settlement.
This 12 months’s lawsuit goes a lot additional, asking a federal courtroom to order Dwell Nation to divest itself of Ticketmaster, a transfer that Dwell Nation strongly opposed even earlier than the lawsuit was filed. The corporate has repeatedly argued that the issues shoppers and policymakers are annoyed with are out of the arms of Ticketmaster. Amongst different issues, the corporate has stated that costs are set by artists and sports activities groups, and never Ticketmaster.
The lawsuit “blames Dwell Nation and Ticketmaster for prime service expenses, however ignores that Ticketmaster retains solely a modest portion of these charges. In reality, main ticketing is likely one of the least costly digital distributions within the economic system,” Dwell Nation stated in a response to the lawsuit.
On the corporate’s Q3 earnings name on Monday (November 11), Berchtold stated the lawsuit displays a “far more interventionist philosophy in the present day than you’d anticipate of a Republican administration.”
He added that Dwell Nation shall be able to “have interaction” with the brand new administration as quickly because the administration itself is prepared.
“They should get via the appointments and get issues settled on their finish, however we’d definitely be hopeful that we may begin participating with them early subsequent 12 months,” Berchtold stated.
2. Dwell Nation predicts 20% of live performance capability will ultimately go to superfans
Many music corporations in the present day are speaking the discuss in relation to higher monetization of superfans, however Dwell Nation argues that it has been strolling the stroll for a very long time.
“We’ve been promoting to the tremendous fan for fairly some time,” Rapino stated, noting that at Dwell Nation this section of shoppers who’re keen to pay for a greater expertise are known as “the premium fan.”
“That’s type of been an ongoing ability set we’ve had perpetually,” Rapino stated.
And he believes there’s far more that may be finished to develop superfans’ market share of dwell occasions. He famous that lots of the renovations of Dwell Nation-owned venues embody a rise within the share of VIP seats. Rapino thinks he can develop the premium section of live performance tickets to 20% of all gross sales.
“We all the time promote out of the bins, promote out of the premium stock first. We by no means have an issue promoting that,” he stated.
“That may be a huge a part of our CapEx and our [refurbishing of venues] in addition to our new buildings after we’re constructing them. We’re beginning with this mandate that they will need to have a sure larger share of premium seats and lounges and experiences. So these venues begin with a a lot better return.”
3. ‘Ticketmaster is a expertise firm’
One of many arguments the US Division of Justice is making in its antitrust case towards Dwell Nation/Ticketmaster is that the tie-up of those two corporations means “music followers in america are disadvantaged of ticketing innovation and compelled to make use of outdated expertise whereas paying extra for tickets than followers in different nations.”
Dwell Nation couldn’t see it extra in a different way. In reality, the corporate’s management has argued that Ticketmaster grew to become the dominant participant in ticketing by growing higher applied sciences than the competitors. Due to that expertise, Ticketmaster is ready to “promote tickets at a quantity that others have been unable to deal with,” Rapino stated on the earnings name.
He might have been referring to the current ticket gross sales for Oasis’ world tour subsequent 12 months, which Rapino described final month as “the largest on-sale in historical past” with “probably the most demand in historical past.”
“Ticketmaster is a expertise firm. So [we’re] going to proceed to be growing merchandise on each an enterprise and a market foundation.”
Michael Rapino, Dwell Nation
At a current Bloomberg convention, Rapino stated the on-sale of Oasis tickets was hit by “multi billions” of bots making an attempt to seize tickets for the secondary market.
“We have now the perfect platform on this planet. It’s very exhausting when you may have 10 billion bots hitting your system at [the start of sales] to steal your tickets… I’m so completely happy the system didn’t go down. We stopped them. We obtained it finished.”
On the earnings name Monday, Rapino stated investments into Ticketmaster’s expertise – each on the again finish and on the consumer-facing aspect – will proceed.
“We spend tens of thousands and thousands of {dollars} in capital on Ticketmaster,” he stated. “We proceed to innovate the merchandise that we provide – on the enterprise aspect – to our venues, to promoters, others who use the platform… that’s included quite a bit round pricing expertise to assist all people perceive the market worth of the content material they’re delivering.
“Definitely additionally it’s on the advertising and marketing aspect, growing nice advertising and marketing science capabilities to assist individuals market their exhibits, huge investments over the previous couple of years on persevering with to reinforce our potential to deal with that prime demand on sale.”
He added: “Ticketmaster is a expertise firm. So [we’re] going to proceed to be growing merchandise on each an enterprise and a market foundation.”Music Enterprise Worldwide
