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Ticketmaster

Ticketmaster

8800 Sunset Boulevard
Los Angeles, California 90069
U.S.A.
Telephone: (213) 639-6100
Fax: (213) 386-1244
Web site: http://www.ticketmaster.com

Wholly Owned Subsidiary of IAC/Interactive Corporation
Incorporated:
1982
Employees: NA
Sales: $743 million (2003)
NAIC: 561599 All Other Travel Arrangement and Reservation Services

Ticketmaster is the world's largest ticket distribution company in the United States, completely dominating its market niche. The company distributes tickets for more than 10,000 clients whose events range from professional wrestling matches and rock concerts to Broadway shows and operas. Tickets are sold at roughly 3,300 outlets worldwide, as well as through 19 telephone call centers and through the ticketmaster.com web site. The company's ReserveAmerica subsidiary manages campsite reservations across North America. Ticketmaster also owns several regional ticketing service companies and TicketWeb, a provider of ticketing software and services. Ticketmaster is itself a subsidiary of IAC/InterActive Corporation, the media vehicle of entrepreneur Barry Diller.

Early Years

Ticketmaster was started by two Arizona State University students who were looking for a solution to a problem they encountered when buying concert tickets. At the time, the buyer of a ticket was forced to select from the seats that had been allotted to the particular vendor from whom he or she was purchasing the ticket. If the vendor was nearly sold out, the buyer might be forced to buy bad seats even though better seats were available through other ticket sellers. Melees occasionally erupted when ticket buyers, after standing in line for hours at one place, found that the vendor was sold out or that better seats were available elsewhere. The system also was inefficient for promoters and owners of venues, who often had difficulty selling all of their tickets, despite unmet demand.

In 1978, the two budding entrepreneurs developed a solution to the problem. They created an innovative computer program that networked several computers in such a way that a person buying an event ticket at a box office could quickly select from the total reserve of seats available. Thus efficient computerized ticket vending was born, and Ticketmasterthe company that sprouted from student innovationbecame one of several small vendors in the late 1970s and early 1980s that pioneered the industry. When it was starting out, in fact, Ticketmaster was just one of many small ticket-vending companies competing for a small share of the industry; the business had come to be dominated by ticket distribution giant Ticketron. Nevertheless, Ticketmaster, with its unique computer-based vending system, managed to increase its ticket sales to about $1 million annually by 1981. That amount was still less than 1 percent of the business controlled by Ticketron, however.

Ticketmaster's fate was changed in 1982, when Chicago investor Jay Pritzker purchased it. Pritzker, the wealthy owner of the Hyatt Hotel chain, paid $4 million for the entire company. He immediately brought in Fred Rosen as chief executive to manage the operation. Rosen, an attorney and former stand-up comic, brought energy and vision to the enterprise. He believed that the future of the ticket industry was in concert sales, rather than sporting events, in part because sporting event-goers often were able to circumvent service fees charged by ticket sellers by purchasing season tickets. But his feeling also arose from his observations about the dynamics of the concert industry. Indeed, if concert fans wanted to see a show badly enough, they would buy on impulse and would be willing to pay higher prices for tickets. Furthermore, the long lines that formed at box offices for rock concerts indicated a great need for Ticketmaster's computerized service.

Aside from new computer and information technologies, other forces were at work in the ticket industry in the early 1980s that boded well for an innovator like Ticketmaster. In fact, the rock concert industry, among other entertainment businesses, was becoming much more complicated. Prior to the 1970s, bands were paid a lump sumusually in cash just a few minutes before they went on stageby the promoter of the concert. The promoter would agree beforehand to pay the band, say, $20,000, and any money left over would be used to pay the promoter's expenses and profit.

In the 1970s, however, bands started demanding more. They started charging minimum appearance fees, for example, and wanted a cut of the money generated from concessions and parking. The demands, in part, were the result of a feeling by top bands that promoters were taking advantage of them. But the increased cost of traveling and putting on a show also contributed to the bands' desire for better compensation; fans came to expect much more in the way of expensive sound systems and special effects, for example.

One result of the new demands was that, after a concert, the band's manager and the promoter typically negotiated, or argued, about exactly how much the promoter and other involved parties would be paid. The new system increased the bargaining power of the bands, eventually boosting their take to 75 percent or more of the gross receipts. Meanwhile, the promotion industry was pinched. Many promoters saw their profit margins deteriorate to as little as 1 percent, despite the fact that they were still bearing much of the risk of a failed concert. To get the big name bands, however, promoters had to be willing to accept that risk and honor many of the group's requirements.

A New Strategy in the Late 1970s and 1980s

That was the environment still evolving when Rosen took the helm at the fledgling Ticketmaster. Realizing the folly of trying to compete with the mammoth Ticketron using conventional industry tactics, he devised a strategy that exploited the frustrations of the promoters. He effectively offered to limit inside chargesthe money taken from promoters and facility ownersthus reducing the promoter's risk. He would accomplish this by raising service charges on individual ticket sales and giving promoters a percentage of the proceeds. In return, the promoters agreed to give Ticketmaster the exclusive rights to ticketing for their shows. To boost service fees, Rosen implemented new sales techniques, particularly telephone sales service, which gave customers an alternative to standing in line. For the convenience, Ticketmaster was able to charge as much as a 30 percent premium, or higher in some instances.

Many promoters gave exclusive rights to Ticketmaster. Indeed, aside from guaranteed fees, the promoters benefited from Ticketmaster's state-of-the-art ticketing system. The company's computers could sell 25,000 tickets in just a few minutes, if necessary, which substantially reduced the promoter's advertising and related costs and improved customer satisfaction with the overall event. The arrangement worked so well that Ticketmaster eventually was able to secure long-term contracts with several major promoters for handling ticketing for all of their events. Promoters also viewed Ticketmaster as a preferable alternative to the giant Ticketron, which many promoters believed had become arrogant and sloppy.

Despite steady gains, Ticketmaster lost money in the late 1970s and early 1980s as it scrambled to implement its expensive strategy. By the mid-1980s, though, the company was posting profits. To boost sales and market share, Ticketmaster began buying out smaller competitors in an effort to broaden its reach into major cities. It acquired Datatix/Select-A-Seat in Denver, for example, and SEATS in Atlanta. As it bought up more companies and drove others out of business, the number of competitors in the industry declined. At the same time, Ticketron's supremacy was rapidly waning. Aside from complacency, part of Ticketron's problem was that it lacked the investment capital afforded by Ticketmaster's deep-pocketed owner. Its ticketing systems soon became obsolete in comparison with those in use at Ticketmaster.

By the late 1980s, Ticketmaster had become a top player in the ticketing business and Ticketron was scurrying to duplicate Rosen's successful revenue-sharing strategy. But it was too late; Ticketmaster had mastered the recipe and was rapidly increasing the number and size of its contracts. In fact, Ticketmaster's relationship with, and control over, its promoters had evolved to the point where Ticketmaster was deeply entwined in the promotion business. That involvement was evidenced by a relationship in Seattle that finally ended in a lawsuit. In 1989, Ticketmaster made a loan and credit line guarantee valued at $500,000 to two of the area's top promoters. The promoters used the money to start a new operation promoting concerts in The George, a facility in central Washington. In that same year, one of the promoters launched another venture, PowerStation, to sell tickets in competition with Ticketmaster. Enraged Ticketmaster executives responded by withholding cash from the promoter's ticket sales through Ticketmaster. The promoter sued and finally settled with Ticketmaster out of court, but the PowerStation was shuttered and both promoters left the concert business.

Market Dominance in the Early 1990s

By the end of the 1980s, Ticketmaster was selling more than $500,000 worth of tickets annually. Ticketron was still considered an industry power, but its status was diminished and its long-term prospects were dismal. The only other competition consisted of a smattering of local and regional companies struggling to combat Ticketmaster. Ticketmaster finally delivered the crowning blow to Ticketron in 1991, when it purchased some of the company's assets and effectively rendered the company no more than a lesson in corporate history. Questions were raised about whether or not the buyout would give Ticketmaster a monopoly on the industry, but the U.S. Department of Justice approved the deal. With Ticketron out of its way, Ticketmaster was virtually dominant and its sales began rising rapidly toward the $1 billion mark.

Company Perspectives:

Our mission: for clientsto provide the best systems, services, and tools for the optimal sale of tickets to the widest possible audience; for consumersto provide convenient, secure, and fair access to the best possible ticket offered by our clients.

Because it had so much control in the ticket industry, Ticketmaster came under fire from numerous critics following the demise of Ticketron. Some fans complained that Ticketmaster was raising its fees, reflecting a monopoly on the industry. Similarly, some promoters argued that Ticketmaster wielded too much power and that it was willing to abuse that power to get its way. Finally, some rock bands complained that Ticketmaster was gouging their profits with excessive fees, knowing that the bands had nowhere else to turn. Ticketmaster countered, citing rising operating costs and relatively modest overall company profits. Still, criticism continued.

Band discontent with Ticketmaster's tactics culminated in one of the most visible disputes with Ticketmaster on record: a complaint filed with the Justice Department by the popular rock band Pearl Jam alleged that Ticketmaster engaged in monopolistic practices. Pearl Jam wanted Ticketmaster to drop its service fees to $1.80 per ticket, but the company refused to drop below $2.50. Pearl Jam rejected the offer and threatened to work without Ticketmaster. The band planned to find venues, such as fairgrounds and racetracks, that were not subject to Ticketmaster's exclusive contracts. Their efforts eventually failed and their concert tour fell apart. It was then that the band filed the complaint, and the Justice Department launched an investigation.

Ticketmaster argued that from about $1 billion worth of tickets sold in 1993, it generated revenues of $191 million in 1993, only $7 million of which was earned as net profit. That amounted to less than ten cents in profit per ticket. Critics complained that Ticketmaster was simply concealing the profitability of the business, but Rosen and his fellow executives were adamant that the industry was still competitive. "Fifteen years ago, there was another company everybody said had a monopolyTicketron," said Larry Solters, Ticketmaster spokesperson, in the July 31, 1994, News & Observer. He added, "Ticketmaster did ticketing better. And I wouldn't be surprised if somebody else comes up with a better system someday. There are a million ideas out there. It's not that tough."

After posting record sales and profits in 1993, Ticketmaster's fate was changed again when Paul Allen beat out several big media players in a bid to purchase controlling interest in the company. The 40-year-old Allen, who had gained fame as the cofounder of Microsoft, paid an estimated $300 million for his stake. Following his departure from the software giant, he had assembled an interesting portfolio of investments, many of which were related to the emerging information highway. He also owned the Portland Trailblazers basketball team and a charitable foundation, among other interests. Allen retained Rosen as CEO, but he had new plans for the company. In fact, he wanted to increase its sales threefold to fivefold within five years and expand into different distribution avenues.

Ticketmaster sold a whopping 52 million tickets to entertainment and sporting events in 1994 and captured about $200 million in revenues. Having nearly cornered the ticket market, it was setting its sights on several other media-related ventures. The company already was distributing a regional monthly events guide to about 600,000 customers, and it planned to use that as a base for creation of a new entertainment magazine. Ticketmaster also was working on a new online service, hoping to position itself as a one-stop shopping center for entertainment and event needs.

The company launched its new magazine, Live!, in February 1996. Critics saw the publication as a thinly veiled attempt to brighten Ticketmaster's tarnished image. The magazine field was definitely a difficult one to break into, and Live! lost money from the start, costing its owners $11 million in the first two years. Other ventures introduced during 1996 included a hotel and airline reservation service, Ticketmaster Travel and Ticketmaster Online. The latter was an instant success, topping $3 million a month in revenues within a short time.

1996 Public Offering

The biggest story for Ticketmaster in 1996 was its decision to go public. Paul Allen kept his stake, retaining control of 54 percent of the company after the initial public offering (IPO). The initial offering price had been considered high by many analysts, and it soon fell off. Within a year it recovered, however, rising to nearly double the original figure.

On April 28, 1997, Ticketmaster filed suit against Microsoft over that company's practice of deep linking from its web site to an inner page of Ticketmaster's site, bypassing the company's home page and its logo and advertising content. To some users, it could appear that the Ticketmaster page was generated by Microsoft, rather than Ticketmaster. The suit was later settled out of court, with Microsoft agreeing to link only to Ticketmaster's home page. The year also saw the company's online ticket service merge with CitySearch's entertainment guide web site, and new investments in Australian and French ticketing companies. A joint venture with Jack Nicklaus's Golden Bear Golf to market golfing reservations was launched as well.

Key Dates:

1978:
Ticketmaster is founded by two Arizona State University students.
1982:
Jay Pritzker purchases the company, beginning a period of growth.
1991:
Main rival Ticketron is acquired, giving the company market dominance.
1996:
Ticketmaster goes public, launches online, travel, and magazine ventures.
1997:
Online service is merged with CitySearch; Barry Diller acquires 47 percent of the company.
1998:
Diller's USA Networks acquires the remainder of Ticketmaster; the online operations are spun off.
1999:
The U.S. Supreme Court refuses to review an antitrust lawsuit appeal in a victory for the company.
2000:
The company acquires Admission Network and ETM Entertainment Network.
2001:
The company buys back a controlling stake in Ticketmaster Online-Citysearch, and the merged companies begin to operate as Ticketmaster Corporation.
2003:
Diller's USA Networks changes its name to IAC/Interactive Corporation.
2005:
The company forms a new unit called TicketmasterArts, dedicated specifically to ticketing and fundraising for arts organizations.

In May 1997 Barry Diller's HSN, Inc. (later to be known as USA Networks, Inc.) announced plans to buy out Allen's stake in Ticketmaster. The following year the company became a subsidiary of USA Networks when the remainder of its stock was acquired. After the acquisition, Fred Rosen stepped down as CEO, allegedly due to clashes with Diller. He was replaced by Terry Barnes. At about this time Diller acquired City Search, Inc., merged it with Ticketmaster's online operation to form Ticketmaster Online-CitySearch, Inc., and spun it off as a public company, retaining 60 percent ownership. This resulted in two Ticketmasters, the one representing the traditional part of the business and the awkwardly named Ticketmaster Online-CitySearch as its own Internet-only company. This was at a time when Internet stocks were the high fliers on Wall Street, and many companies split off their online divisions as separate companies. For example, bookseller Barnes and Noble made a freestanding unit out of its online seller barnesandnoble.com. So this seemed a sensible business strategy with many imitators in the late 1990s.

In December 1997 a contract was signed with event promotion giant SFX Entertainment that guaranteed Ticketmaster exclusive ticketing rights for seven years. Diller and SFX Chairman Robert F.X. Sillerman had earlier engaged in a very public battle of words, but were able to bury the hatchet when it came time to do business.

A lawsuit over Ticketmaster's alleged monopoly on ticket distribution reached the Supreme Court in 1999. The court let a prior ruling, which was in Ticketmaster's favor, stand. Also during the year, an attempt to merge Ticketmaster Online-CitySearch with Lycos and USA Networks failed when Lycos shareholders rebelled.

In late 1999 and early 2000, Ticketmaster acquired several more of its competitors. These included Alabama-based TicketLink, multilingual ticketer Admission Network, Inc. of Canada, and ETM Entertainment Network, Inc., which had contracts with the Los Angeles Dodgers and New York Mets, among others. The company also sued Tickets.com, in conjunction with Ticketmaster Online-CitySearch, over alleged deceptive practices involving its web site. The appeal of buying tickets online was growing steadily, with 40 percent of some events' seats selling over the Internet. As a result, Ticketmaster's telephone operators were taking fewer orders, and the company shut down several of its call centers. Tickets purchased online were still mailed to customers, but new technology was being tested that would allow them to be printed at home, further streamlining the process.

Reunited Company in the 2000s

When Barry Diller took over Ticketmaster in 1997, he had moved quickly to capitalize on what looked like the most vital part of the company by spinning off the online ticketing business as Ticketmaster Online-Citysearch. The new Internet company's stock had initially gone way up, and shortly after the IPO, Ticketmaster Online-Citysearch was worth as much as $3.4 billion. The soaring stock price allowed Diller to make several acquisitions, trading the stock for small ticket companies such as 2b Technologies, a museum ticketing firm, and a Microsoft subsidiary called Sidewalk that made city guides. These acquisitions may have cost the company too dearly. And there were other problems as well. Although Ticketmaster was ostensibly a separate operation from Ticketmaster Online-Citysearch, the companies still overlapped in many ways. For example, Ticketmaster's telephone call centers were staffed with Ticketmaster employees, but these employees were at times asked to do things that specifically benefited Ticketmaster Online-Citysearch. Communication between the two companies was apparently rocky. John Pleasants, who was CEO of the online company, claimed in an interview with Fortune magazine (March 5, 2001) that "There was an issue every day," meaning conflict between the two firms was ongoing.

By the end of 2000, when the high-tech market had crashed, Ticketmaster Online-Citysearch's stock had gone from a high of more than $80 to less than $12 a share. The company had lost some $337 million over two years. In November 2000, Barry Diller agreed to buy back a controlling stake in Ticketmaster Online-Citysearch. A few months later, he announced that the two companies would once again operate as one. Diller became cochairman of the new combined Ticketmaster Corporation, with Ticketmaster CEO Terry Barnes sharing the post. The new company was to have more than 12 million customers and sell some 80 million tickets a year.

Barry Diller remained extremely active in the Internet world, buying the Internet travel firm Expedia for $4.6 billion in 2003 and Hotels.com later that year. In June 2003, Diller's USA Networks changed its name to IAC/Interactive Corporation. Ticketmaster was part of a media empire that also contained the home shopping channel HSN and the web-based mortgage lending company LendingTree. Ticketmaster was not a fast-growing company, but it did remain profitable after its merger with its online sister, and it made some acquisitions and changes in its way of doing business. In 2003, the company experimented with auctioning off event tickets. Many concert tickets were already auctioned off electronically in the secondary market, selling on eBay sometimes for much much more than the original price. Ticketmaster, which sold close to 100 million tickets overall in 2002, was looking at so-called "dynamic pricing" as a way to ease problems caused by unscrupulous "scalpers" (secondary market sellers) and to sell difficult seats such as ones in the back of an auditorium, that often went empty. Ticketmaster also moved into new international markets in the early 2000s, expanding into Sweden, Norway, Denmark, and Finland. Ticketmaster also operated in Scotland, Wales, Ireland, England, and The Netherlands. The company also formed a new unit in 2005 called TicketmasterArts, dedicated specifically to ticketing and fundraising for arts organizations. The new division worked with venues like the Kennedy Theater and the North Carolina BTI Center for the Performing Arts.

In 2005, Ticketmaster's parent corporation, IAC/Interactive, went through another upheaval, splitting off its travel division Expedia and some other Internet travel companies into a new entity. Ticketmaster remained part of the main company IAC/Interactive, along with HSN, LendingTree, and the Internet search engine Ask Jeeves. While the parent company did not break out financial results for the subsidiaries, Ticketmaster was considered a stable and profitable company in IAC's mix. The parent company had projected 2005 sales of $5.7 billion.

Principal Competitors

Tickets.com; TicketCity.com

Further Reading

Andrew, Paul, "Paul Allen's Ticket to Future," Seattle Times, November 23, 1993, p. E1.

Balzer, Stephanie, "That's the Ticket," Business JournalServing Phoenix & The Valley of the Sun, August 25, 2000, p. 1.

Corr, O. Casey, "Big-Ticket Troubles: Concert Industry Rolls in Money, But Where Is It All Going," Seattle Times, August 21, 1994, p. A1.

Francis, Mike, "Paul Allen Slowly, Surely Steps into Public Light," Oregonian, August 14, 1994, p. F1.

Gaulin, Jacqueline, "Consumer Groups Go After Ticketmaster," Washington Times, March 22, 1995, p. B7.

Helm, Leslie, "Ticketmaster IPO Set at $14.50 a Share," Los Angeles Times, November 19, 1996, p. D2.

Menconi, David, "Ticketmaster's Money TreeA Giant with It Made in the Shade," News & Observer (Raleigh, N.C.), July 31, 1994, p. G1.

Philips, Chuck, "Ticketmaster Cleared; Justice Department Drops Antitrust Probe," Washington Post, July 6, 1995, p. C2.

Reilly, Patrick M., "Ticketmaster Gears Up to Launch a New Entertainment Magazine," Wall Street Journal, October 25, 1995, p. B5.

"Rosen Reflects on Ticketmaster," Amusement Business, May 25, 1998, p. 1.

Saylor, Mark, "Ticketmaster's Tough CEO Ready for the Next Act," Los Angeles Times, November 30, 1997, p. D1.

Shapiro, Eben, and Bruce Orwall, "Roadshow Spurs Battle of SFX, Ticketmaster," Asian Wall Street Journal, August 4, 1998, p. 13.

Sloan, Allan, "Scalped at Ticketmaster? Paul Allen Leaves Investors in the Lurch," Newsweek, June 16, 1997, p. 76.

Spring, Greg, "Ticketmaster Sets Sights on New Ventures," Los Angeles Business Journal, February 13, 1995, p. 6.

Stooksbury Guier, Cindy, "Ticketmaster Changed the Face of Live Entertainment," Amusement Business, July 27, 1998, p. A10.

                                              Dave Mote

                   updates: Frank Uhle, A. Woodward

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Mote, Dave; Uhle, Frank; Woodward, A.. "Ticketmaster." International Directory of Company Histories. 2006. Encyclopedia.com. 23 Jul. 2016 <http://www.encyclopedia.com>.

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Ticketmaster Group, Inc.

Ticketmaster Group, Inc.

3701 Wilshire Boulevard
Los Angeles, California 90010
U.S.A.
Telephone: (213) 639-6100
Fax: (213) 386-1244
Web site: http://www.ticketmaster.com

Wholly Owned Subsidiary of USA Networks, Inc.
Incorporated:
1982 as Ticketmaster Corporation
Employees: 6,355
Sales: $341 million (1998)
NAIC: 561599 All Other Travel Arrangement and Reservation Services

Ticketmaster Group, Inc. is the largest ticket distribution company in the United States, completely dominating its market niche. The company distributes tickets for more than 4,000 clients whose events range from professional wrestling matches and rock concerts to Broadway shows and operas. Tickets are sold at more than 3,400 outlets nationwide, over the telephone, and through the Ticketmaster Online-CitySearch web site, which is run by a publicly traded affiliate of the company. Ticketmaster also has been branching out into international markets, making moves into Australia, Europe, and Latin America. Barry Dillers USA Networks, Inc. owns 100 percent of the company.

Early Years

Ticketmaster was started by two Arizona State University students who were looking for a solution to a problem they encountered when buying concert tickets. At the time, the buyer of a ticket was forced to select from the seats that had been allotted to the particular vendor from whom he or she was purchasing the ticket. If the vendor was nearly sold out, the buyer might be forced to buy bad seats even though better seats were available through other ticket sellers. Melees occasionally erupted when ticket buyers, after standing in line for hours at one place, found that the vendor was sold out or that better seats were available elsewhere. The system also was inefficient for promoters and owners of venues, who often had difficulty selling all of their tickets, despite unmet demand.

In 1978, the two budding entrepreneurs developed a solution to the problem. They created an innovative computer program that networked several computers in such a way that a person buying an event ticket at a box office could quickly select from the total reserve of seats available. Thus efficient computerized ticket vending was born, and Ticketmasterthe company that sprouted from student innovationbecame one of several small vendors in the late 1970s and early 1980s that pioneered the industry. When it was starting out, in fact, Ticketmaster was just one of many small ticket-vending companies competing for a small share of the industry; the business had come to be dominated by ticket distribution giant Ticketron. Nevertheless, Ticketmaster, with its unique computer-based vending system, managed to increase its ticket sales to about $1 million annually by 1981. That amount was still less than one percent of the business controlled by Ticketron, however.

Ticketmasters fate was changed in 1982, when Chicago investor Jay Pritzker purchased it. Pritzker, the wealthy owner of the Hyatt Hotel chain, paid $4 million for the entire company. He immediately brought in Fred Rosen as chief executive to manage the operation. Rosen, an attorney and former stand-up comic, brought energy and vision to the enterprise. He believed that the future of the ticket industry was in concert sales, rather than sporting events, in part because sporting event-goers often were able to circumvent service fees charged by ticket sellers by purchasing season tickets. But his feeling also arose from his observations about the dynamics of the concert industry. Indeed, if concert fans wanted to see a show badly enough, they would buy on impulse and would be willing to pay higher prices for tickets. Furthermore, the giant lines that formed at box offices for rock concerts indicated a great need for Ticketmasters computerized service.

Aside from new computer and information technologies, other forces were at work in the ticket industry in the early 1980s that boded well for an innovator like Ticketmaster. In fact, the rock concert industry, among other entertainment businesses, was becoming much more complicated. Prior to the 1970s, bands were paid a lump sumusually in cash just a few minutes before they went on stageby the promoter of the concert. The promoter would agree beforehand to pay the band, say, $20,000, and any money left over would be used to pay the promoters expenses and profit.

In the 1970s, however, bands started demanding more. They started charging minimum appearance fees, for example, and wanted a cut of the money generated from concessions and parking. The demands, in part, were the result of a feeling by top bands that promoters were taking advantage of them. But the increased cost of traveling and putting on a show also contributed the bands desire for better compensation; fans came to expect much more in the way of expensive sound systems and special effects, for example.

One result of the new demands was that, after a concert, the bands manager and the promoter typically negotiated, or argued, about exactly how much the promoter and other involved parties would be paid. The new system increased the bargaining power of the bands, eventually boosting their take to 75 percent or more of the gross receipts. Meanwhile, the promotion industry was pinched. Many promoters saw their profit margins deteriorate to as little as one percent, despite the fact that they were still bearing much of the risk of a failed concert. To get the big name bands, however, promoters had to be willing to accept that risk and honor many of the groups requirements.

A New Strategy in the Late 1970s and the 1980s

That was the environment still evolving when Rosen took the helm at the fledgling Ticketmaster. Realizing the folly of trying to compete with the mammoth Ticketron using conventional industry tactics, he devised a strategy that exploited the frustrations of the promoters. He effectively offered to limit inside chargesthe money taken from promoters and facility ownersthus reducing the promoters risk. He would accomplish this by raising service charges on individual ticket sales and giving promoters a percentage of the proceeds. In return, the promoters agreed to give Ticketmaster the exclusive rights to ticketing for their shows. To boost service fees, Rosen implemented new sales techniques, particularly telephone sales service, which gave customers an alternative to standing in line. For the convenience, Ticketmaster was able to charge as much as a 30 percent premium, or higher in some instances.

Many promoters gave exclusive rights to Ticketmaster. Indeed, aside from guaranteed fees, the promoters benefited from Ticketmasters state-of-the-art ticketing system. The companys computers could sell 25,000 tickets in just a few minutes, if necessary, which substantially reduced the promoters advertising and related costs and improved customer satisfaction with the overall event. The arrangement worked so well that Ticketmaster eventually was able to secure long-term contracts with several major promoters for handling ticketing for all of their events. Promoters also viewed Ticketmaster as preferable alternative to the giant Ticketron, which many promoters believed had become arrogant and sloppy.

Despite steady gains, Ticketmaster lost money in the late 1970s and early 1980s as it scrambled to implement its expensive strategy. By the mid-1980s, though, the company was posting profits. To boost sales and market share, Ticketmaster began buying out smaller competitors in an effort to broaden its reach into major cities. It acquired Datatix/Select-A-Seat in Denver, for example, and SEATS in Atlanta. As it bought up more companies and drove others out of business, the number of competitors in the industry declined. At the same time, Ticketrons supremacy was rapidly waning. Aside from complacency, part of Ticketrons problem was that it lacked the investment capital afforded by Ticketmasters deep-pocketed owner. Its ticketing systems soon became obsolete in comparison with those in use at Ticketmaster.

By the late 1980s, Ticketmaster had become a top player in the ticketing business and Ticketron was scurrying to duplicate Rosens successful revenue-sharing strategy. But it was too late; Ticketmaster had mastered the recipe and was rapidly increasing the number and size of its contracts. In fact, Ticketmasters relationship with, and control over, its promoters had evolved to the point where Ticketmaster was deeply entwined in the promotion business. That involvement was evidenced by a relationship in Seattle that finally ended in a lawsuit. In 1989, Ticketmaster made a loan and credit line guarantee valued at $500,000 to two of the areas top promoters. The promoters used the money to start a new operation promoting conceits in The George, a facility in central Washington. In that same year, one of the promoters launched another venture, PowerStation, to sell tickets in competition with Ticketmaster. Enraged Ticketmaster executives responded by withholding cash from the promoters ticket sales through Ticketmaster. The promoter sued and finally settled with Ticketmaster out of court, but the PowerStation was shuttered and both promoters left the concert business.

Key Dates:

1978:
Ticketmaster is founded by two Arizona State University students.
1982:
Jay Pritzker purchases company, beginning a period of growth.
1991:
Main rival Ticketron is acquired, giving the company market dominance.
1996:
Ticketmaster goes public, launches online, travel, and magazine ventures.
1997:
Online service merged with CitySearch; Barry Diller acquires 47 percent of company.
1998:
Dillers USA Networks acquires remainder of Ticketmaster; spins off online operations.
1999:
U.S. Supreme Court refuses to review antitrust law-suit appeal in a victory for company.
2000:
Acquisition of Admission Network and ETM Entertainment Network.

Market Dominance in the Early 1990s

By the end of the 1980s, Ticketmaster was selling more than $500,000 worth of tickets annually. Ticketron was still considered an industry power, but its status was diminished and its long-term prospects were dismal. The only other competition consisted of a smattering of local and regional companies struggling to combat Ticketmaster. Ticketmaster finally delivered the crowning blow to Ticketron in 1991, when it purchased some of the companys assets and effectively rendered the company no more than a lesson in corporate history. Questions were raised about whether or not the buyout would give Ticketmaster a monopoly on the industry, but the U.S. Department of Justice approved the deal. With Ticketron out of its way, Ticketmaster was virtually dominant and its sales began rising rapidly toward the $1 billion mark.

Because it had so much control in the ticket industry, Ticketmaster came under fire from numerous critics following the demise of Ticketron. Some fans complained that Ticketmaster was raising its fees, reflecting a monopoly on the industry. Similarly, some promoters argued that Ticketmaster wielded too much power and that it was willing to abuse that power to get its way. Finally, some rock bands complained that Ticketmaster was gouging their profits with excessive fees, knowing that the bands had nowhere else to turn. Ticketmaster countered, citing rising operating costs and relatively modest overall company profits. Still, criticism continued.

Band discontent with Ticketmasters tactics culminated in one of the most visible disputes with Ticketmaster on record: a complaint filed with the Justice Department by the popular rock band Pearl Jam, alleging that Ticketmaster engaged in monopolistic practices. Pearl Jam wanted Ticketmaster to drop its service fees to $1.80 per ticket, but the company refused to drop below $2.50. Pearl Jam rejected the offer and threatened to work without Ticketmaster. The band planned to find venues, such as fairgrounds and racetracks, that were not subject to Ticketmasters exclusive contracts. Their efforts eventually failed and their concert tour fell apart. It was then that the band filed the complaint, and the Justice Department launched an investigation.

Ticketmaster argued that from about $1 billion worth of tickets sold in 1993, it generated revenues of $191 million in 1993, only $7 million of which was earned as net profit. That amounted to less than ten cents in profit per ticket. Critics complained that Ticketmaster was simply concealing the profit-ability of the business, but Rosen and his fellow executives were adamant that the industry was still competitive. Fifteen years ago, there was another company everybody said had a monopolyTicketron, said Larry Solters, Ticketmaster spokesperson, in the July 31,1994 News & Observer. He added, Ticketmaster did ticketing better. And I wouldnt be surprised if somebody else comes up with a better system someday. There are a million ideas out there. Its not that tough.

After posting record sales and profits in 1993, Ticketmasters fate was changed again when Paul Allen beat out several big media players in a bid to purchase controlling interest in the company. The 40-year-old Allen, who had gained fame as the cofounder of Microsoft, paid an estimated $300 million for his stake. Following his departure from the software giant, he had assembled an interesting portfolio of investments, many of which were related to the emerging information highway. He also owned the Portland Trailblazers basketball team and a charitable foundation, among other interests. Allen retained Rosen as CEO, but he had new plans for the company. In fact, he wanted to increase its sales threefold to fivefold within five years and expand into different distribution avenues.

Ticketmaster sold a whopping 52 million tickets to entertainment and sporting events in 1994 and captured about $200 million in revenues. Having nearly cornered the ticket market, it was setting its sights on several other media-related ventures. The company already was distributing a regional monthly events guide to about 600,000 customers, and it planned to use that as a base for creation of a new entertainment magazine. Ticketmaster also was working on a new online service, hoping to position itself as a one-stop shopping center for entertainment and event needs.

The company launched its new magazine, Live!, in February of 1996. Critics saw the publication as a thinly veiled attempt to brighten Ticketmasters tarnished image. The magazine field was definitely a difficult one to break into, and Live! lost money from the start, costing its owners $11 million in the first two years. Other ventures introduced during 1996 included a hotel and airline reservation service, Ticketmaster Travel and Ticketmaster Online. The latter was an instant success, topping $3 million a month in revenues within a short time.

1996 IPO and Bright Prospects for the 21st Century

The biggest story for Ticketmaster in 1996 was its decision to go public. Paul Allen kept his stake, retaining control of 54 percent of the company after the IPO. The initial offering price had been considered high by many analysts, and it soon fell off. Within a year it recovered, however, rising to nearly double the original figure.

On April 28, 1997, Ticketmaster filed suit against Microsoft over that companys practice of deep linking from its web site to an inner page of Ticketmasters site, bypassing the companys home page and its logo and advertising content. To some users, it could appear that the Ticketmaster page was generated by Microsoft, rather than Ticketmaster. The suit was later settled out of court, with Microsoft agreeing to link only to Ticketmasters home page. The year also saw the companys online ticket service merge with CitySearchs entertainment guide web site, and new investments in Australian and French ticketing companies. A joint venture with Jack Nicklauss Golden Bear Golf to market golfing reservations was launched as well.

In May of 1997 Barry Dillers HSN, Inc. (soon to be known as USA Networks, Inc.) announced plans to buy out Allens stake in Ticketmaster. The following year the company became a subsidiary of USA Networks when the remainder of its stock was acquired. After the acquisition, Fred Rosen stepped down as CEO, allegedly due to clashes with Diller. He was replaced by Terry Barnes. At about this time Diller acquired City Search, Inc., merged it with Ticketmasters online operation to form Ticketmaster Online-City Search, Inc., and spun it off as a public company, retaining 60 percent ownership. In December a contract was signed with event promotion giant SFX Entertainment that guaranteed Ticketmaster exclusive ticketing rights for seven years. Diller and SFX Chairman Robert F.X. Sillerman had earlier engaged in a very public battle of words, but were able to bury the hatchet when it came time to do business.

A lawsuit over Ticketmasters alleged monopoly on ticket distribution reached the Supreme Court in 1999. The court let a prior ruling, which was in Ticketmasters favor, stand. Also during the year, an attempt to merge Ticketmaster Online-CitySearch with Lycos and USA Networks failed when Lycos shareholders rebelled.

In late 1999 and early 2000, Ticketmaster acquired several more of its competitors. These included Alabama-based TicketLink, multilingual ticketer Admission Network, Inc. of Canada, and ETM Entertainment Network, Inc., which had contracts with the Los Angeles Dodgers and New York Mets, among others. The company also sued Tickets.com, in conjunction with Ticketmaster Online-CitySearch, over alleged deceptive practices involving its web site. The appeal of buying tickets online was growing steadily, with 40 percent of some events seats selling over the Internet. As a result, Ticketmasters telephone operators were taking fewer orders, and the company shut down several of its call centers. Tickets purchased on-line were still mailed to customers, but new technology was being tested that would allow them to be printed at home, further streamlining the process.

At the start of a new century, Ticketmasters dominance of the ticket distribution business in the United States looked unassailable. With its exclusive agreement to sell tickets for SFX Entertainment events, its successful co-venture with Ticketmaster Online-CitySearch, and the favorable resolution of antitrust allegations, the companys future seemed bright.

Principal Subsidiaries

Ticketmaster Ventures, Inc.; Ticketmaster Corp.; TMC Realty Holdings, Inc.; Ticketmaster Publications, Inc.; Ticketmaster Travel Corp.; TM/Video International, Inc.; Ticketmaster Advertising, Inc.; TMC Consultants, Inc.; Ticketmaster Tell Ltd.; Ticketmaster-Direct, Inc.; Cinema Acquisition Corp.; Ticketmaster Cinema Group, Ltd.; TM Movie Tix Holdings, Inc.; TM Marketing, Inc.; Ticketmaster Merchandising Corp.; Ticketmaster-Golf, Inc.; MFG Management Corp.; TM Flowers; TM National Flora LLC.

Principal Competitors

LM Loyalty Management; Neighborhood Box Office; NEXT Ticketing; Prologue Systems; Tickets.com, Inc.

Further Reading

Andrew, Paul, Paul Allens Ticket to Future, Seattle Times, November 23, 1993, p. E1.

Balzer, Stephanie, Thats the Ticket, Business JournalServing Phoenix & The Valley of the Sun, August 25, 2000, p. 1.

Corr, O. Casey, Big-Ticket Troubles: Concert Industry Rolls in Money, But Where Is It All Going, Seattle Times, August 21, 1994, p. A1.

Francis, Mike, Paul Allen Slowly, Surely Steps into Public Light, Oregonian, August 14, 1994, p. F1.

Gaulin, Jacqueline, Consumer Groups Go After Ticketmaster, Washington Times, March 22, 1995, p. B7.

Helm, Leslie, Ticketmaster IPO Set at $14.50 a Share, Los Angeles Times, November 19, 1996, p. D2.

Menconi, David, Ticketmasters Money TreeA Giant With It Made in the Shade, News & Observer (Raleigh, N.C.), July 31, 1994, p. G1.

Philips, Chuck, Ticketmaster Cleared; Justice Department Drops Antitrust Probe, Washington Post, July 6, 1995, p. C2.

Reilly, Patrick M., Ticketmaster Gears Up to Launch a New Entertainment Magazine, Wall Street Journal, October 25, 1995, p, B5.

Rosen Reflects on Ticketmaster, Amusement Business, May 25, 1998, p. 1.

Saylor, Mark, Ticketmasters Tough CEO Ready for the Next Act, Los Angeles Times, November 30, 1997, p. D1.

Shapiro, Eben, and Bruce Orwall, Roadshow Spurs Battle of SFX, Ticketmaster, Asian Wall Street Journal, August 4, 1998, p. 13.

Sloan, Allan, Scalped at Ticketmaster? Paul Allen Leaves Investors in the Lurch, Newsweek, June 16, 1997, p. 76.

Spring, Greg, Ticketmaster Sets Sights on New Ventures, Los Angeles Business Journal, February 13, 1995, p. 6.

Stooksbury Guier, Cindy, Ticketmaster Changed the Face of Live Entertainment, Amusement Business, July 27, 1998, p. A10.

Dave Mote
updated by Frank Uhle

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Ticketmaster

TICKETMASTER

Those who attend major sporting events, plays, and concerts likely obtain their tickets through Los Angeles-based Ticketmaster, which sells tickets at physical locations, through call centers, and via ticketmaster.com. The world's leading ticket company, Ticketmaster sold more than 83 million tickets worldwide (totaling $3.2 billion) for its clients in 2000. Formerly known as Ticketmaster Corp., the company became known as Ticketmaster when it merged with Ticketmaster Online-CitySearch in 2001which until that time had served as Ticketmaster Corp.'s exclusive agent for online sales. USA Networks Inc. holds a majority stake in Ticketmaster, which is a part of the TV network's interactive group.

Tickets aren't Ticketmaster's only game. In addition to its subsidiary TicketWeb, a provider of Internet-based box office services and software, the company also operates several other enterprises. These include Match.com, an online matchmaking service; Citysearch.com, which provides people with details about hundreds of different cities; Evite.com, an event planning, hosting, and management site for individuals and businesses; LiveDaily, a news and information hub for music fans; TM VISTA, a provider of event solutions for organizations; and ReserveAmerica, a provider of campground management and camping reservation solutions.

EARLY E-COMMERCE EFFORTS, 1994-1997

Founded by Fredric Rosen, Ticketmaster arguably is an e-commerce pioneer. In November of 1993 Microsoft co-founder Paul Allen paid more than $300 million for an 80 percent stake in the company when he saw its e-commerce potential. In the July 11, 1994 issue of Fortune, he explained: "Ticketing just naturally seemed like something you'll want to do in this wired world." The company's e-commerce initiatives took shape in 1995, when the World Wide Web was still catching on with consumers. That year, ticketmaster.com began operation and Citysearch, which would later merge with Ticketmaster, was founded. By the end of 1996, Citysearch launched its Web site and Ticketmaster.com was doing online transactions throughout the United States.

By 1997, Ticketmaster was investing heavily in its e-commerce initiatives, even though they were not generating significant incremental returns. According to InformationWeek, in September 1997 the company's projected monthly Web sales were $4 million. However, they represented approximately two percent of Ticketmaster's revenue, which at the time was more than $2 billion. In May 1997, Home Shopping Network and Silver King Broadcasting, owned by USA Networks Chairman Barry Diller, agreed to acquire Ticketmaster. A main reason for the acquisition was the role Ticketmaster could play as television evolved into an interactive medium between marketers and consumers.

GROWTH AND EXPANSION, 1998 TO PRESENT

In 1998, e-commerce was catching on with consumers, especially in the area of online ticket sales. Consequently, Ticketmaster's online business began to take off. In June, Computerworld reported that the company reached $20 million in online sales (500,000 tickets) during the first quarter, up from $5.3 million the previous year. The company also began expanding its e-commerce operations on the international front. Already the leading provider of tickets in the United Kingdom, Ticketmaster enhanced its position there by offering online sales in mid-1998. By the year's end, Ticketmaster Online-CitySearch Inc., which was handling the e-commerce side of the ticket company's business, reported revenues of approximately $40 million, a 159 percent increase from the previous year.

Many developments unfolded at Ticketmaster Online-CitySearch in 1999. USA Networks, which then had become the company's majority stakeholder, began the year by announcing that it would merge Ticketmaster Online-CitySearch, Home Shopping Network, and Internet Shopping Network/First Auction with Lycos. However, the agreement eventually was terminated. Instead, Ticketmaster Online-CitySearch and Lycos ended up forming a relationship that allowed the two companies to benefit from cross-promotional opportunities. Ticketmaster Online-CitySearch also saw online ticket sales surge to $60 million during the first quarter, an increase of 275 percent from the same period the previous year.

In 1999, Ticketmaster Online-CitySearch ventured into the business of online matchmaking and auction services by acquiring CityAuction Inc., a "person-to-person online auction community;" online dating and matchmaking service Match.com; and auction/matchmaking service provider One & Only Network. Ticketmaster Online-CitySearch then formed a partnership with USA Networks Inc.'s Internet Shopping Network (ISN). The joint venture allowed consumers to access the person-to-person auction services of CityAuction or the business-to-consumer auction services of ISN's First Auction from either Web site. Finally, in September Ticketmaster Online-CitySearch partnered with Excite@ Home, FairMarket Inc., and Microsoft Corp. to develop an online auction network capable of reaching more than 70 percent of all Internet users.

Also in 1999, Ticketmaster Online-CitySearch acquired the entertainment city guide section of MSN Sidewalk from Microsoft. Sidewalk included other services besides city guidesincluding yellow pages and buyer's guidesthat weren't part of the deal. By November, Ticketmaster Online-CitySearch and Microsoft offered arts and entertainment information about approximately 3,000 U.S. locations via a new MSN Local Channel, and through the MSN Entertainment Channel and Microsoft WebTV Network. Ticketmaster Online-CitySearch also gained a direct link on MSN.com for ticket sales, and saw its Match.com subsidiary become MSN's featured personals service. Ending the year on a high note, USA Networks invested an additional $40 million in Ticketmaster Online-CitySearch, giving the company more capital for development and expansion. During the fourth quarter, overall revenue soared 168 percent over the previous year, and online ticket revenue jumped 262 percent. Annual revenues reached $105 million.

During 2000, Ticketmaster Online-CitySearch unveiled an electronic ticket service which allowed customers to buy and print Ticketmaster tickets from the comfort of their own homes. In addition to forging strategic and content-based agreements with several other companiesincluding ARTISTdirect Inc., Ask Jeeves, Yahoo!, and weather.comthe company also made several acquisitions. It acquired ticketing and visitor management firm 2b Technology Inc. in February; TicketWeb Inc. in May; and Essential Data Control Systems' Fan Loyalty System (a loyalty/incentive program for sports fans) in July. Finally, near the end of the year Ticketmaster Online-CitySearch announced that it would acquire Ticketmaster Corp. and change its formal name to Ticketmaster. The merger, which became official in January 2001, combined the offline ticketing and reservation operations of Ticketmaster Corp. with the other firm's broad e-commerce offerings. At the time, the company indicated that "The new Ticketmaster will have a customer database of over 20 million, including more than 12 million active customers, processing over 80 million tickets annually, through 3,430 ticketing outlets, 16 call centers, in more than 80 cities and via eight primary websites."

It also was in 2000 that Ticketmaster Online-CitySearch moved into the mobile and wireless arena. In February, the company announced that it had formed a dedicated wireless group and a new strategic partner affiliate program that allowed wireless content providers to provider subscribers with Ticketmaster Online-CitySearch's content, including local information, reservation and ticket capabilities, and personals. Ticketmaster Online-CitySearch's Local Intelligence service provided users with recommendations, as well as the ability to make reservations at restaurants and buy tickets from their mobile devices. As part of its wireless strategy, Ticketmaster Online-CitySearch made several moves to bolster its position in this area, including alliances and arrangements with companies like Phone.com, NeoPoint Inc., Verizon Wireless, Nextel Communications, and Sprint. It also made its content and services available to MSN Mobile and AT&T Digital PocketNet customers.

Ticketmaster Online-CitySearch made several developments on the international front during 2000 by extending offerings to Japan, Iceland, and Brazil. The firm's reach also had become very pervasive. By covering more than 2000 ZIP codes, Ticketmaster Online-CitySearch's local information offerings reached more than 90 percent of the U.S. adult online population, according to Media Metrix's Measures Report, released in February. Financially, Ticketmaster Online-CitySearch saw its revenues increase approximately 110 percent in 2000, reaching $220.6 million.

In 2001, Ticketmaster Online-CitySearch's acquisition of Ticketmaster Corp. became official. Growth and expansion continued to occur. That January, the newly named Ticketmaster announced that it would acquire ReserveAmerica Holdings Inc., which at the time was the nation's leading campsite reservation company, allowing customers to make reservations at more than 150,000 campsites in 43 states. The acquisition allowed Ticktmaster to expand its reservation capabilities outside of the ticket business. Ticketmaster announced two more acquisitions during the spring. In March, it announced the acquisition of Evite.com, an online activity center where people planned a wide range of events from baby showers to weekend getaways. The acquisition extended Ticketmaster's capabilities by making its offerings more comprehensive. In addition to offering people the ability to buy tickets, make reservations, and find out more about cities via CitySearch, Ticketmaster customers were now able to plan their events in those cities.

The company also continued to expand internationally in 2001. In March, Ticketmaster subsidiary Match.com and MSN.co.uk, then the most visited Web site in the United Kingdom, formed an alliance that resulted in Match.com being featured as the main personals service on MSN.co.uk's Love and Relationship channel. In April, Ticketmaster announced that it would acquire Towne Ticket Centre. Based in Kelowna, British Columbia, the acquisition expanded Ticketmaster's presence in that Canadian province. The firm extended its reach in Norway as well by announcing the acquisition of Billettservice AS, the country's leading ticket company, in October.

Besides acquisitions, Ticketmaster continued to form strategic alliances with other companies, including ones between FlipDog.com and Citysearch, and Network Communications Inc. However, one of the leading alliances it formed in 2001 was with America Online (AOL). As part of the deal, Ticketmaster agreed to offer the ticket and movie information of AOL Moviefone on its local city guides. In return, it was able to distribute its tickets through AOL. Ticketmaster also was able to have Match.com offered on Netscape.com, CompuServe, AOL.com, and AOL, and have the site included as the main personals service on Love@AOL.

In the area of services, Citysearch began providing users with automobile pricing information from Edmunds.com Inc. Additionally, Ticketmaster saw the use of its "Print My Own" technology, which allowed users to print bar-coded tickets from their home or office computer upon purchase, begin to take off. The technology was adopted by several leading organizations during 2001 including the Rose Garden, Orlando Magic, Seattle Mariners, National Car Rental Center, and the Utah Starzz. Midway through 2001, Ticketmaster also re-launched its Match.com subsidiary with an upgrade that made it easier to use. The re-launch was made in June, due to strong growth; Jupiter Media Metrix had rated the site as the leading online dating and personals site that April. Despite the challenges faced by many dot.coms, the pervasiveness of Ticketmaster, as well as the scope of the services it offered, seemed to position it well for success in the early 2000s.

FURTHER READING:

Biotano, Margaret. "Barry Diller's Dot-Com Nuptials." Fortune, March 5, 2001.

"Company Information." Los Angeles, California: Ticketmaster. November 15, 2001. Available from www.ticketmaster.com.

Kirkpatrick, David. "Over the Horizon with Paul Allen." Fortune, July 11, 1994.

"Ticketmaster." Hoover's Online, November 19, 2001. Available from www.hoovers.com.

"Ticketmaster Online-Citysearch to Acquire Ticketmaster Corporation." Los Angeles, California: Ticketmaster. November 21, 2000. Available from www.ticketmaster.com.

SEE ALSO: Travelocity.com

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