In the weeks and months leading up to the Songkick lawsuit, Ticketmaster was getting close to radically changing its ticketing allocation policy for fan club companies, loosening the requirements it placed on artists seeking to sell tickets directly to fans.
Internal emails obtained by Amplify as part of Ticketmaster’s ongoing federal lawsuit with Songkick shows senior Live Nation and Ticketmaster officials were raising major alarm bells about the loss of market share to upstart fan club ticketing companies and were worried about a possible disruption to the venue exclusivity system the company has had in place for decades.
The issue seemed close to boiling over in September 2015 after a series of incidents — a manager and agent revolt, the merger of Crowdsurge and Songkick and a demand for fan club tickets by superstar Adele — pushed Ticketmaster towards a compromise plan that would allow some third-parties to provide fan club services, while containing the continued growth of Songkick.
Whether or not that plan was pushed through remains unclear — on the eve of Christmas 2015, attorneys for Songkick filed a federal lawsuit against Ticketmaster alleging unfair business practices, anti-competitive behavior and eventually computer hacking and unauthorized access claims.
While the suit has led to two high-level dismissals at Ticketmaster — Zeeshan Zaidi and Stephen Mead – the fan club ticketing landscape has already shifted significantly in the space. Songkick — Ticketmaster’s largest competitor at the time — has sold off most of its assets to investor Warner Music Group and ceased ticketing operations.
More importantly, Ticketmaster’s new technology initiatives have largely made the fan club question irrelevant. The deployment of the Verified Fan program, coupled with the advent of digital tickets, has propelled Ticketmaster technology past some of the fan club ticketing issues that popped in the months leading up to the Songkick lawsuit. If anything, the emails give us a glimpse into the mindset of key Ticketmaster and Live Nation executives in 2015. After significant pushback from artists like the Alabama Shakes and Adele over fees and ticket allocations, the company was close to a significant alteration of its fan club policy. Here’s what we know so far:
Alabama Shakes and Adele Ratchet up Pressure on TM Policies
Ticketmaster’s fees structures have long been criticized by fans, but they’ve also been the target of artists who worry that fees are making concert tickets unaffordable. That issue popped up in early 2016 for a series of Alabama Shakes concerts in the Southeast including a headlining show at Live Nation’s Ascend Amphitheater in Nashville.
On Jan. 19 2016, the band’s booking agent Matt Hickey with High Road Touring sent an email to Live Nation promoter Brian Traeger over concerns about the fee structure for an April 21 concert. After making an adjustment, Hickey complained the fee structure — a $14.75 fee (41%) on a $36 ticket and a $15.25 fee (33%) on a $46 ticket — was “hard to stomach” and warned “I don’t know how long this kind of business can continue to just roll.”
The email exchange raised concerns that high ticketing fees could push more acts toward fan club ticketers like Songkick — even Live Nation CEO Michael Rapino seemed surprised by the fee structure, writing in a follow up email on Hickey that “he is not wrong — charging $14.75 for a $36 ticket is not defendable when we own the amp.”
Months earlier, Live Nation was preparing for a similar fight over tickets to Adele’s hugely successful World Tour. Booking agent Kirk Sommer with WME routed the tour on an aggressive market-by-market basis and was pressuring TM buildings on the tour to hand over a large chunk of tickets to sell through Crowdsurge, a demand than angered Rapino.
“So we give them 95/5 (split) and big guarantee and they give tickets to Crowdsurge for free,” Rapino wrote back to a TM employee in a terse exchange.
After some back and forth, Ticketmaster President Jared Smith told Rapino the company planned to hold the line at the typical 8% ticket allotment and require Crowdsurge to pay Ticketmaster for taking tickets off the manifold.
“Might be the perfect one to take the stand on,” Smith wrote, advising he would tell Sommer “we paid you lots for the dates + we had already paid the venues for ticketing,” noting TM was “happy to let you use Crowdsurge for your 8% but you/they need to use our API and pay us for that.”
In August 2015, officials with Ticketmaster and Live Nation acknowledged that enforcing the company’s fan club rules would be both laborious and difficult with few tangible benefits for the ticketing giant.
In an Aug. 18, 2015 email to TM President Smith, Zaidi explained that TM’s 8 percent allocation system to fan clubs were “attracting lots of players into the game,” with investor money pouring in to companies like Crowdsurge, who Zaidi thought was exploiting a loophole to get into the ticketing business.
“We are cracking down and winning,” Zaidi said of TM’s policy to deny ticket allocations to bands that didn’t meet TM’s fan club policy.
“But it is only a matter of time before we start losing shows over it,” he wrote. “It is also only a matter of time before all providers start doing ‘compliant’ fan clubs and we give up more and more tickets which we don’t monetize.”
Instead of fighting the fan club ticketing companies, Zaidi wanted to see Ticketmaster engage with them and make money on each transaction. Zaidi wanted to “eliminate ‘Bona Fide Fan Club’ requirements,” according to a July 31, 2015 email.
His plan? “Anyone can do an off-platform presale marketed in any way to anybody” he said, explaining that he wanted to create a certified “Approved Presale Ticketer” list published by TM in order to get tickets from TM venues.
Ticketmaster would maintain the 8% threshold and “require third party ticketers to pay fees to TM for every presale ticket sold.” Ticketmaster would handle issuing the rebates back to venues and participating fan club tickets would have to agree to Ticketmaster’s terms (“no negotiation, take it or leave it,” Zaidi writes) and sign a non-disparagement agreement. Venues would only give tickets to approved fan club companies, and companies that violated the rules would be removed from the list.
“We shouldn’t have to compete against third parties — we have the rights,” Zaidi wrote. “We should charge all third parties and let them compete amongst themselves for the business.”
Meanwhile, Ticketmaster would develop its own presale platform and work on slowly convincing artists to keep their presales on the Ticketmaster platform. After all — the company had already spent hundreds of millions to lock up exclusive rights and was not going to passively hand them over to companies it felt were taking advantage of presale rules.
“Why are we spending most of our time/energy fighting third parties when we have all the rights?” Zaidi wrote, quoting Live Nation VP Ryan McElrath — ”The Ticketmaster Fan Club Policy is like a guy telling his wife he wants an open relationship and then hiring a private investigator to follow her around.”
He also acknowledged that firms like Crowdsurge had done a good job of shaping the conversation with the artist community, convincing managers to “feel entitled to off-platform presale(s).”
“Even agents on our side are exhausted and frustrated,” because they are forced to “spend all their time dealing with this,” Zaidi writes.
Did Ticketmaster eventually change its stance on fan club ticketing and allow more companies to sell through third party companies? We reached out to a representative at Ticketmaster for answer and we’re told the company would not be commenting at this time.