UK's richest man backs music minnow merger to annoy Ticketzilla

Two former MySpace featurettes which became companies — Songkick, which alerts you to acts playing near you, and CrowdSurge which handles merchandise and ticket sales — have agreed to merge.

They will "do business under the globally recognized Songkick brand, bringing together over 500 of the world’s biggest artists with a usership of 10 million monthly fans, ticketing a combined 10,000 events worldwide each year", said Matt Jones, Songkick's co-CEO.

After MySpace was acquired for big bucks, it decayed, then became a showbiz portal, and stopped being useful. However, the "missing features" spawned hundreds of business opportunities.

This latest move seems like a tacit acknowledgment that neither has much of a business as they stand alone, or at least not when venue and ticket monopoly LiveNation wields so much power.

Well, at least someone's keeping the faith, with billionaire émigré Len Blavatnik, Britain's richest man with a net worth of over £13bn, throwing $16m at the venture via his fund Access Industries.

"Concert attendance rates are stagnant, with the same 40-50 per cent of tickets left unsold today as when I started CrowdSurge," writes Jones. So on paper, it looks ripe for, er, well, 'disruption'.

The problem the combined venture faces is the vast power wielded by LiveNation, a vertical integration of music venues and ticketing companies (* there are more sides to the business than those two, but they're the most important).

LiveNation hosts over half a dozen of the UK's biggest festivals, and shares the cream of London's most lucrative music venues with AEG.

LiveNation's ownership of TicketMaster gives it a powerful control over pricing. So the live music market is far more concentrated, and far more ruthless, than the recorded music business that armchair whiners bang on about.

For your recorded output you can change majors, go indie, or go DIY, with a wide range of B2B suppliers happy to work with you. When you reach a certain scale (larger than a pub) and want to play live, you're going to bump into AEG or LiveNation fairly quickly.

Since the supply of physical live venues operates to bricks and mortar constrains, the answer is build more venues. But building a network of venues to rival AEG and LiveNation would quickly deplete even Blavatnik's fortune.

Their best hope lies in competition watchdogs taking an interest in the vertical integration of venue, promotion, and ticketing. It hasn't happened yet, and despite private lawsuits, the live music barons rule the roost. ®

Bootnote

*The link provides an excellent explanation of how the fives sides of LiveNation's business work, and leverage its scale. If you're looking to knock the incumbent off its perch, that's a must-read.