If you want to go to a rock concert, the Fourth of July fireworks show, a sports event or even your kid's annual dance recital at the local performing arts center, you'll more than likely get your tickets through Ticketmaster Inc.

The West Hollywood company, a division of Barry Diller's IAC/InterActiveCorp is still the heavyweight champion of seating in the entertainment industry. But it's facing challenges on several fronts.

Discounters such as Goldstar Events Inc. are popping up. Organizations such as Major League Baseball are setting up their own online ticketing. And it is facing the loss of its contract with Beverly Hills-based event producer Live Nation Inc. its largest client.

"We are seeing, for the first time over the past couple of years, hints at an attack on Ticketmaster's economic model," said Sumit Desai, an analyst who covers IAC for Morningstar Inc. "They have been pretty much the default for promoters and venues, but we're slowly seeing attacks on that StubHub, RazorGator and now other sites."

Ticketmaster has long been a star for IAC. The conglomerate owns about 65 brands including HSN, Match.com and LendingTree. In 2006, Ticketmaster did $1.1 billion in revenue, of which $835 million was domestic business. The total represents about 19 percent of IAC's $5.9 billion revenue last year.

Ticketmaster's second-quarter results were cause for concern. Operating income fell 22 percent to $59 million from $76 million for the same quarter the previous year, while revenue was slightly higher than the same quarter in 2006.

"While we expected this quarter to be difficult, we did not anticipate the softness in domestic ticketing volumes which impacted Ticketmaster," Diller said in a statement after the earnings were released. "We are not satisfied with these results whether driven by market conditions or our own hand and are taking every appropriate action."

Among the actions: expansion in the international market, including moves into China and Eastern Europe.

Ticketmaster built its stranglehold on major concerts and other live events by locking up exclusive rights with venues and promoters to sell tickets. Its partners got a percentage of its often hefty ticketing fees, and it established a huge network of retail points of sale and phone banks nearly 3,500 retail outlets and about 20 call centers.

Tough act

A recent low point for the company was the memo in which Ticketmaster disclosed it was unlikely to negotiate a new long-term agreement with Live Nation, which, with its House of Blues subsidiary, generated close to 20 percent of Ticketmaster's sales last year.

Neither company would comment on the matter, but a decision not to renew the contract would certainly be a blow to Ticketmaster.

Ticketmaster has exclusive rights through next year to sell tickets to nearly all of the 29,000 events Live Nation produces annually. The House of Blues contract lasts until 2009.

But the loss was foreshadowed. Last year, Michael Rapino, Live Nation's chief executive, said he planned to bolster the company's Web site in a bid to increase ticketing and concessions revenues. Also, Live Nation last year bought a majority stake in Musictoday, which operates fan clubs and Web sites for hundreds of music acts. The purchase was seen as a sign the events promotion giant intended to take ticketing operations in house.

Some analysts weren't overly concerned with the likely loss of the Live Nation contract. A big part of the expected departure stems from the fact that Live Nation wants customer data, an increasingly valuable commodity for sales and marketing.

"It's definitely a material loss, but the show goes on," said Jeff Shelton, an analyst with Natixis Bleichroeder Inc. (Natixis owns IAC/Interactive stock.) "Live Nation wants the relationship with the customer; they want to sell incremental merchandise, T-shirts or track information so they can sell tickets to other shows."

Major League Baseball, another longtime customer, has been slowly muscling in on ticketing turf, too, with the acquisition of rival Tickets.com in 2005. Pro baseball sells around 80 million to 90 million game tickets a year, and Ticketmaster is still responsible for a good portion of those, with about 11 contracts still in place with league teams.

"For us, it's about getting the fans into the ballparks as quickly, easily and efficiently as possible," said Matthew Gould, a Major League Baseball spokesman. "We want things to be identical and consistent and to keep fans comfortable with the process. That was the purpose behind the (Tickets.com) acquisition."

Web challengers

Technology is playing a role in the company's changing fortunes, as Web sites emerge in resale and discount markets. While they won't replace the ticketing giant, they are stealing food from its plate.

"The popularization and widespread use of the Internet and e-commerce has made it far easier to replicate Ticketmaster's services," said Jim McCarthy, who founded Pasadena-based Goldstar Events, a Web site that specializes in discount ticket sales. "The simple ability to sell tickets, which they brought to the world in the 1980s and 1990s, has changed."

Ticketmaster spokesman Joe Freeman said: "We've always said this is an extremely competitive industry, and with rise of the Internet things are becoming more competitive. We welcome that; not having upstarts and meaningful competition would be a bad thing because we need the competition to get better and stay on top."

Meanwhile, online re-sale outlets like RazorGator Inc., StubHub Inc. and TicketLiquidator.com are part of a secondary market that has become a large and legitimate arena for people to trade or sell tickets. Ticketmaster is still trying to quash the resale competition with legal action.

Ticketmaster filed suit in Los Angeles in April against StubHub and its new parent company eBay for allegedly violating contracts with several arenas. Earlier this month Ticketmaster won an injunction against a company called RMG Technologies for mass ticket purchases made by resellers using RMG software.

"Often when a ticket ends up in a resale market, it's because it was priced below its true market value," said Ticketmaster spokeswoman Bonnie Poindexter. "When tickets aren't priced at true market value when they initially go on sale, there is money left on the table for resellers."

Resellers have countered that consumer demand for certain shows, not artificial price inflation, drives up prices on the resale market.

Meanwhile, concert attendance is down. According to data from industry tracker Pollstar, the number of tickets sold for the 100 biggest tours dipped 3.5 percent to 36.3 million, though average ticket prices increased to about $58 in the first half of 2006.

The changes have helped speed the rise of a new breed discount ticket seller and event promoters or auctions companies like McCarthy's Goldstar.

As attendance has fallen, venues are turning to discounters to fill seats, especially at larger venues that may have trouble selling out a show in a soft market.

"We couldn't have existed 10 years ago," said McCarthy. "But people now do their research and a lot of shopping online and that makes for great direct marketing opportunities for companies like us."

He founded the company in 2002 with partners. Goldstar works with about 150 venues and attractions in the Los Angeles area, including the Wiltern, Universal Studios and the El Capitan Theatre, in addition to sports teams such as the NHL's Mighty Ducks and the Los Angeles Kings, as well as MLB's Angels. There are tickets for about 100 events listed on Goldstar's free, membership-based site at any given time.

Foreign affairs

For its part, Ticketmaster also has been expanding into new territories, like China, Europe and Eastern Europe, and is making headway in the secondary ticketing arena through what it calls a "customer service channel" as well.

"Obviously as technology advances and others are able to do what they do, they're in a position to lose business," said Shelton of Natixis. "You see some customers leave every year but they sign others, and a lot of their growth is coming from the international side."

The company launched Ticket Exchange in 2002 for sports ticket holders and expanded the scope of the site to include all types of events in 2005.

Analysts said Ticketmaster can go on despite its challenges.

"Most customers can look at whether they can do (ticketing) on their own and save some cash," said Desai of Morningstar. "But you can't say their stranglehold on the industry is over yet."

But Goldstar's McCarthy is emboldened.

"Every day that it's not 1989 is a bad day at Ticketmaster," McCarthy said. "Being the first one there may have mattered for a time, but it's not about the simple ability to sell a ticket anymore. It's about being able to adapt and market additional services to people, too."

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