Michael Rapino addresses ticketing controversies

Live Nation CEO and president Michael Rapino has addressed the ongoing controversies and debate about ticketing in the US. As lawmakers in the US attempt to clamp down on ticket sellers, Rapino appeared on The Bob Lefsetz Podcast last week to defend the “widely misunderstood” ticketing industry.

Rapino’s appearance on the podcast comes on the heels of high-profile furores over ticket prices and on-sales for artists including Bruce Springsteen, Taylor Swift and The Cure.

In March, The Cure opted out of Ticketmaster’s platinum and dynamic pricing ticket options in order to keep costs low for fans, but the associated fees in some cases exceeded the cost of the [$20] tickets themselves. Ticketmaster responded by offering partial refunds on the fees, a move which Rapino shed light on.

“The challenge in our industry is we have kept … the distribution cost outside of the price”

“We went to the venues and said we’re going to reduce [the fees] by $10 and if you don’t want to join us, we’ll eat the difference,” he said. “About half the venues said ‘Alright we’ll join you on that,’ and the others said, ‘Good luck, eat it.’”

“The challenge in our industry is we have kept … the distribution cost outside of the price. Generally, when you buy something at Walmart or Target, it’s all built in [to the price]. In our business, for many reasons, it has stayed outside. We don’t think they’re junk fees, they’re not beautiful add-ons to make a ton of money.”

The Live Nation CEO said he would love the industry to get on board with an “all-in” ticket pricing model, but that there is a lot of resistance across the business with ticket sellers worried about losing their competitive edge by being the first to market all-in ticket prices.

“If it’s a $46 ticket and $73 at checkout, you’re going to win [by advertising the ticket at] $43 dollars on Google search every time,” he said.

“Ticketmaster’s job has been to take that punch in the head for the industry”

Rapino noted that StubHub tried all-in pricing several years ago, “and they ended up pulling out of it and said their business went down 15% or 20%. I think that scared people. … to date we probably all have been scared. You’re going to [have to] do it on your own. The artists aren’t going to give you a break.”

He added that even if moving to all-in pricing isn’t “rational,” with the fans frustrated as they are, “we’ve got to build some trust back.”

“We haven’t done a good job as an industry, and especially on my front as Live Nation/Ticketmaster, explaining out loud what happens with the ticket fees, how they’re set,” he said. “There hasn’t been a big motive, historically, for me to … say the venue, my client, is taking most of the money, or the artist is setting the ticket price.

“Ticketmaster’s job has been to take that punch in the head for the industry. That’s been part of why they hire you. There’s no glory in being the ticketing company.”

Regarding the $20 ticket price for The Cure’s arena tour, Rapino said acts don’t need to “underprice themselves”.

“You don’t have to underprice yourself — low to middle-income [people] will make their way to that arena for that special night”

“I think with pricing of concerts in general, there’s this fine line. [Artists] want to make [the concert] accessible but there’s a price to it,” he argued.

“This is a business where we can charge a bit more. I’m not saying excessively, but it’s a great two-hour performance of a lifetime, that happens once every three, four years in that market. You don’t have to underprice yourself — low to middle-income [people] will make their way to that arena for that special night.”

Rapino defended dynamic pricing during the podcast interview, arguing that many businesses, including airlines and hotels, have long used it.

“We started Pricemaster [Ticketmaster’s dynamic pricing app] years ago to say to artists that a Friday night in New York should not be the same as a Tuesday in Cleveland.”

Rapino argued that on shows with a high demand for tickets sold at a capped price, the scalpers are currently ending up with the profit that should be retained by the primary market. Artists themselves should learn to price their tickets “closer to market,” he said.

“They [the bots] tried to break the doors down. The reality is we stopped them”

Referring to the controversy over dynamic pricing for Bruce Springsteen’s tour, where tickets reached more than $5,000 via Ticketmaster’s market-based platinum pricing mode, he said, “Only about 1% of the seats were over $1,000″.

On Springsteen’s previous tour, “the tickets went right to the scalper and resold for $2,000. So this time we said, ‘Bruce, you should actually get that money. But let’s make sure we keep the rest of the house cheap.”

However, the LN CEO said the business should be cautious about the definition of platinum. “We better make sure it’s [actually] a platinum seat. And if we’re going to [use dynamic pricing], we better put better rules in place [about] when we change ticket pricing. … So, as an industry, we’re learning how to price dynamic tickets to demand. We’re slowly putting better rules in place to do it smartly.”

Regarding the frenzy around Taylor Swift’s Eras Tour on sale, Rapino said he finds it perplexing Ticketmaster was blamed for struggling to cope with the traffic after being swamped by bot attacks and likened it to blaming Prada for someone trying to break into the Prada store in Beverly Hills to steal high-end purses. If people saw videos of this hypothetical robbery, “they’d say: ‘What’s going on with the Beverly Hills Police Department, we’ve got to staff up.’”

“They don’t blame the product,” Rapino argued. “So what happened with Taylor Swift was the Prada story. They [the bots] tried to break the doors down. The reality is we stopped them. We had to slow the system, but we kept them out. They didn’t steal one bag, and at the end of the day we ended up delivering 2 million tickets to Taylor Swift fans.”

“We’re proud at the end of the day that the purse didn’t get stolen. We were able to verify [buyers’ identities] and make sure the tickets got into the hands of fans.”

Get more stories like this in your inbox by signing up for IQ Index, IQ’s free email digest of essential live music industry news.