It is not often you see Telstra getting shoved around by a more dominant market player but when it comes to its live music business it is at the mercy of powerful venue operator AEG Ogden.
AEG Ogden has amassed the management rights for six of the nine big capital city concert venues in Australia. Its monopoly over entertainment centres in Sydney, Brisbane and Perth means a music promoter lining up a concert tour has to play ball.
It is a problem for Telstra too, whose partnerships with Amalgamated Holdings and Ticketek in its movies and sports programs are chugging along quite nicely. In live music though, the telco is caught in the crossfire between AEG Ogden and brash new promoter BangTango.
Last week, only weeks before their Australian tour was scheduled to start, rappers Pitbull and Ke$ha were told the tour was cancelled.
“Regrettably the promoter is cancelling the Australian tour. Refunds will be available at point of purchase. We hope to return to Australia in the not too distant future,” Pitbull told his Facebook fans. Promoter Paul Dainty confirmed the cancellation but offered no reason.
Although ticket sales for the rap duo were said to be lacklustre, industry sources say Telstra was going to sponsor the tour and “it fell over due to the dispute between AEG Ogden and BangTango”.
In effect, AEG Ogden turned down Telstra’s offer to sponsor the tour, spurning its channel for ticket distribution in the process.
At issue was the proportion of tickets that would be available for presale to Telstra customers and the web platform that would be used to sell those tickets. BangTango manages Telstra’s music sponsorship program.
As a result of AEG Ogden’s turning down the sponsorship, BangTango complained to the Australian Competition and Consumer Commission. The commission is understood to be investigating the venue operator’s conduct and has contacted concert promoters and other ticket resellers such as Showbiz and Pinpoint.
The dispute between appears to be still afoot. There are no new events on sale on Telstra’s Thanks Music web page. All of which begs the question of why Telstra backed BangTango to run its music program in the first place instead of Ticketek.
Ticketek has long enjoyed a tight relationship with AEG Ogden. The second player in the market, Ticketmaster, says the relationship is too tight.
Since its launch in April, BangTango has caused a big stir in the industry, including the mayhem of the Bon Jovi launch during which its website crashed for three hours.
In an industry reluctant to embrace new entrants, Telstra might have avoided the fallout if it had gone with Ticketek and Ogden.
Incidentally Ticketek also appears to have retained the rights to the MCG contract which is good news for the coming Nine Entertainment float. One interesting angle for the float is that AEG Ogden’s 50 per cent parent is the global facilities juggernaut AEG, which has spent recent years vertically integrating in entertainment, including ticket sales.
Meanwhile, the dispute between BangTango and AEG Ogden might have cost Pitbull and Ke$ha fans the opportunity to see them. Telstra could have spruced up the economics of the tour through its sponsorship program. Paul Dainty also loses out.