Last years big drop in attendance prompted numerous cancellations and… (Kevin Winter, Getty Images )
Reporting from Los Angeles and Chicago — Hoping to boost concert attendance in a hobbled economy, Ticketmaster parent Live Nation Entertainment Inc., is joining with the popular online deals site Groupon to launch a discount ticket site for live events.
Dubbed GrouponLive, the service, expected to launch in June, is aimed at easing both the perennial problem of filling empty seats at concerts and sporting events, including last year's big drop in attendance that prompted numerous cancellations and left promoters with a hefty number of unsold tickets toward the end of summer.
Some bands, including top acts such as the Jonas Brothers and Rihanna, were forced to cancel tour dates. Industrywide, as many as 40% of seats for live events were estimated to have gone unsold. Gross receipts for the industry fell 7.6%.
GrouponLive, a joint venture between the Beverly Hills live-event giant and the Chicago-based online promotions company, hopes to attract bigger crowds by offering discounts to events for which demand may be soft. For Groupon, the deal bolsters the start-up's growing entertainment ambitions, broadening its reach beyond spas and restaurants for which it's already well-known.
"It's the equivalent of the bakery giving half-off on muffins at the end of the day," said Sucharita Mulpuru, a ticket industry analyst at Forrester Research, which estimated that the market for selling live-event tickets online will grow to $8.5 billion in 2015 from $6.2 billion this year.
As with Groupon's main service, which reaches 60 million subscribers, people can sign up to be notified via email of discounted concerts in their city.
"A show might sell out in Los Angeles, but not in Phoenix, for example," said Michael Rapino, chief executive of Live Nation. "Finding ways to deliver the message to local email in-boxes is the way of the future."
The real beneficiaries are the millions of music fans who are likely to see lower ticket prices than they've seen in years. Promoters are already trying to keep a lid on prices and are adding more star power to their tours.
Live Nation's new venture is both novel and risky in that the sporting and concerts industries historically are loath to offer discounts for fear of alienating avid fans who wait in line and pay full price for their tickets.
"Discounting is dangerous because it can cannibalize full-price sales, which is the lifeblood of the business," said Adam Kanner, chief executive of ScoreBig Inc., a Hollywood-based online ticketing service that lets consumers bid what they want to pay, in much the same way that Priceline.com lets consumers name their own price for car rentals and hotel rooms. "When you start trading dollars for pennies, it becomes a race to the bottom. So it has to be done very carefully."
Rapino argued that GrouponLive would not so much cannibalize full-price ticket sales as it would attract new customers.
"There will be consumers who will wake up each morning and go to GrouponLive who otherwise wouldn't have heard of the event," Rapino said. "This incremental sale from new consumers will outweigh any cannibalization that could occur. This is about volume. The more tickets we sell, the more everybody makes."
For Live Nation, which also operates dozens of amphitheaters and arenas worldwide, it's more than just the price of admission that rides on ticket sales, said Gary Bongiovanni, publisher of Pollstar, which tracks the live events business. "When the event is at one of Live Nation's venues, it also means the $10 parking fee, the $5 beer, and so on," he said.
Groupon and Live Nation began working together last year, partnering on a number of one-off concert deals as they negotiated a longer-term arrangement that resulted in GrouponLive. These shows included Rascal Flatts and Kenny Rogers concerts in Phoenix, and Mary J. Blige and Snoop Dogg performances in Los Angeles.
"We've got a big desire to bring phenomenal local deals in the events space to our consumers, and Live Nation and Ticketmaster have a desire to provide their clients — their venues — with a program to really take advantage of the flash sale, group deal space," said Greg Rudin, GrouponLive's general manager. "We know we want to do this for the long haul."
Elsewhere in the entertainment category, Groupon has partnered with the Joffrey Ballet in Chicago for a three-show package and with movie studio Lionsgate for tickets to see its recently released movie "The Lincoln Lawyer."
Rudin declined to quantify what percentage of Groupon's deals are for live entertainment events, but said "it is absolutely a big and growing category for us, and one where we really saw tremendous demand in regards to the live-events deals we've done in the past."