Concert Giant Sees Cutting Prices as Ticket to Success

At issue: control over the spiraling cost of show admissions that are turning off many music fans.

On one side is Live Nation Inc. Chief Executive Michael Rapino, who has vowed to drive down prices that last year soared to an average of $57 per ticket for the most popular shows. On the other side is Ticketmaster, which dominates music ticket sales through its thousands of outlets and Internet sites.

"Seventy percent of people didn't go to a concert last year, and even the average concert fan only attends about two shows a year," Rapino said. "We can grow this industry by lowering prices."

So far, Wall Street is showing faith in Rapino's strategy. In the nine months since its spinoff from radio giant Clear Channel Communications Inc., Live Nation's stock has doubled.

But to make good on his promise, Rapino must wrest power from Ticketmaster, a near-monopoly that built its empire locking up exclusive rights to sell admissions to major concerts and other live events. Last year, Ticketmaster reaped nearly $1 billion in fees and surcharges. Rapino began renegotiations with the company this month.

For some fans, those charges are boosting already expensive ticket prices by one-third or more. Los Angeles rock fan Eugene Kang bought six passes last month to see the Killers at the Wiltern LG theater, forking over $210 for the tickets and $90 more in fees, he said.

Ticketmaster, based in West Hollywood, has exclusive rights through 2008 to sell tickets to most of the 29,000 events Live Nation produces every year. If Rapino doesn't cut a new deal, Live Nation could rely on its in-house online ticketing system, the third-largest in America.

Ticketmaster executives wouldn't comment on the company's relationship with Beverly Hills-based Live Nation, but the stakes for the ticketing company are high. Owned by Barry Diller's IAC/InterActiveCorp., Ticketmaster stands to lose more than $130 million a year -- or about 14% of its revenue -- if it doesn't sign a new deal, analysts say.

"It would be a huge deal if Live Nation left Ticketmaster," said Safa Rashtchy, an analyst with Piper Jaffray & Co. "If it happened, it could be the beginning of something very concerning to IAC's investors."