Billboard just published an insane expose revealing how Live Nation officials worked with longtime Metallica associate Tony DiCioccio to sell 88,000 tickets for the band's blockbuster world tour directly to Tony who would then resell it on the secondary market with the entities splitting profits made on the tickets.
DiCioccio allegedly got the idea after the band's 2016 concert at U.S. Bank Stadium in Minneapolis had over 10,000 tickets sold on the secondary market without the band's participation, because the band priced tickets "too low" out of fear from backlash of fans. It should be pointed out that Metallica's tour in 2017 made insane cash and was the ninth highest grossing tour that year.
Billboard learned of a phone call between Live Nation executives, DiCioccio, and ticket broker Vaughn Millette, who was the one who (legally) recorded the call and made Billboard aware of the story. According to Billboard:
"Ticketmaster will not do it," [Live Nation president of U.S. concerts Bob] Roux can be heard saying on the 11-minute call that Billboard reviewed in full, explaining that the plan to put the tickets on sites billed for resellers had to be concealed. He suggested that "either a Live Nation employee or a venue box office basically take these and sell them into a singular account," the way tickets are typically allocated to fan clubs or sponsors. Once the tickets were placed there, they would be listed and sold on secondary-market sites.
"When this happens, 4,600 tickets into a single account," said Roux on the call, "there may be some eyebrows that get raised."
Live Nation told Billboard that artists rarely seek its help to sell their own tickets on the secondary market anymore, suggesting how fast the business is evolving as artists test its new tools to capture some of the profits that were going to resellers. "Since then, requests like these have declined virtually to zero as tools like dynamic pricing, platinum seats and VIP packages have proven to be more effective at recapturing value previously lost to the secondary market," the company said. It's now "standard practice is to use Ticketmaster's Platinum, VIP and other tools to help tours price closer to true market value," but noted that "in this situation, a consultant for the band opted to use the secondary market to try to capture that value," a plan that would potentially have benefited Live Nation as well.
Billboard reports that although there have been antitrust cases brought up, this action is legal. Metallica's reps claim the individual members of the band had no knowledge of this happening, while a former manager of the band pointed out that DiCioccio, an employee of Metallica, is basically considered the unofficial fifth member of the band.
One source told Billboard that the split of revenue for the resold tickets would be "Metallica would get 40% of the resale revenue, Live Nation 40%, DiCioccio 12% and Millette 8%."
As for how the tickets would be sold:
Roux and Millette outlined how they would sell up to 4,400 tickets per show for 20 concerts on the tour: Millette would be given access to 2,640 premium tickets as well as 1,780 "troubled" seats that seemed harder for Live Nation to move. Also known as distressed inventory, troubled seats are usually far from the stage, often on the upper levels of stadiums, sometimes with obstructed views. They were likely bundled with better tickets as a way to make sure they were sold.
In total, Millette spent over six months trying to sell the tickets and ultimately lost money, sources say, even though the tour grossed $111 million in 2017, according to Billboard Boxscore, the ninth-highest-grossing tour that year. At one point, some of the resale tickets had to be discounted: Out of 1 million tickets for the stadium tour, about 10,000, or 1%, were sold for $10 below face value, discounted to $39 from $49, a source says.
The article goes on to point out that Milette kept more than his share to overcompensate for the undersold tickets. Also, it seems this practice is ultimately a bit outdated as ultimately Live Nation created their own secondary market:
Today, Live Nation still sees the secondary market as a huge opportunity that some analysts have estimated at over $10 billion, but the company is encouraging artists to use other means to maximize their revenue, which have proved far more effective. More than 500 tours by acts including Taylor Swift, Madonna and Dead & Company are now offering higher-priced Ticketmaster Platinum tickets — a 30% increase over 2018 — and such tools have returned $600 million to artists on shows during the past two years, according to its financial filings. Front-of-house pricing is up 30% over the past two years at Live Nation arenas and amphitheaters, the company reported in the first quarter, noting that even with the higher prices it wasn't experiencing any decline in demand.
Either way, this seems like a bit of a PR blow to Metallica, who are still reeling from criticisms over their debacle with Napster (of which we sort of ended up agreeing with Lars).
Still, those live shows were awesome.
