Music industry tectonic shift: Ticketmaster and LiveNation to merge

The big record labels are not only being pummeled by the digital music distribution model, but the looming threat of the even bigger "mega label." The merger of Live Nation with Ticketmaster could create the biggest mega label yet.

Live Nation is a promotion company which goes a step further than others because it acquires venues and signs artists. In 2006 it purchased House of Blues, and in 2007 debuted the Unified Rights Model, which controls recording, merchandising, fan sites, ticketing, broadcasting, sponsorship and marketing rights of its artists. Conceivably, an artist can be "signed" to Live Nation, and never play a single show outside of a venue owned or sanctioned by the company. Live Nation calls this its "global concert pipe," and a "vertically-integrated concert platform."

Last year, we began to see multi-platinum artists abandoning their record labels in favor of the Live Nation Mega label.

Today, it announced its approximately $2.5 billion merger with Ticketmaster, which has frequently been criticized for having a monopoly on national event ticket sales itself. Currently, in Canada there is a class-action suit against Ticketmaster alleging the company's forced sale of more expensive tickets, while cheaper ones were held back from the public.

Buying tickets through the Ticketmaster Web site already adds a "convenience charge," a "building facility charge," and a "print your own ticket" charge to purchases. With all options, these charges can add as much as 45% to the cost of a standard ticket.

Upon its expected completion in the second half of 2009, the overlap in the two companies (a.k.a. "synergies") is expected to save $40 million in operating expenses. There was no word from either company what sort of employee cutbacks would emerge. However, the completion of this merger would almost certainly result in a ticketing monopoly, so the Federal Trade Commission has been asked by none other than "The Boss" himself to investigate this affair.