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Live Nation Vs. Ticketmaster: High Stakes In Concert Ticket Battle

CNBC.com

Concert promoter Live Nation is preparing to go from being Ticketmaster's biggest partner to its biggest rival, and it just scored a big coup; a deal that will jump start LiveNation's ticket business.

This news sent LYV stock soaring today, while TKTMstock plummeted.

Live Nation signed a deal with SMG, one of the country's largest venue operators, which manages 200 venues including Chicago's Soldier Field and the Los Angeles Forum. Over the course of the five-year deal which starts in late 2009, Live Nation will sell an estimated 25 million to 30 million SMG tickets, which is expected to generate up to $60 million dollars in ticketing fees.

This is Live Nation's first big venue contract-- giving it access to its first bunch of tickets beyond its own. Right now Live Nation is Ticketmaster's largest partner, and under contract with the ticket behemoth until January. Live Nation currently generates 17 percent of Ticketmaster's revenue, $1.24 billion last year. Revenue that will be building Live Nation's new business come 2009.

This positive news is a shift for Live Nation, which has been attacked for making pricey "360" deals with stars including Madonna, Jay-Z, and Shakira. In these "360" deals Live Nation pays the performers big checks in exchange to exclusively handle all of their music recording, marketing, and touring. If any of these stars implode, or lose their twinkle, it won't be good for Live Nation.

    • Live Nation signs ticketing deal with SMG

In the next year we'll see Ticketmaster's business model put to the test. It relies on long-term contracts with venues and those fees it collects with each ticket sale. Until now it's had a virtual monopoly. Based on the fact that SMG is going with Live Nation, it looks like the marketplace is ready for a second player. Ticketmaster spun off from parent IAC/InteractiveCorp just last month, and since then its stock has taken quite a fall, down more than 20 percent.

The company is under the magnifying glass since it's newly become independent. We'll see how Ticketmaster counters this--they could offer SMG a lofty counter offer---and how the stock fares over the next few months as they lose a key partner and gain a new competitor.

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Questions? Comments? MediaMoney@cnbc.com

  • Working from Los Angeles, Boorstin is CNBC's media and entertainment reporter and editor of CNBC.com's Media Money section.