Case Analysis: Pearl Jam Vs. Ticketmaster
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I. Major Issue and Key Players
A. Major Issue
The major dilemma of the case revolved around the conflicting business objectives of Ticketmaster Corporation and the Pearl Jam band that eventually led to a very messy and complicated dispute. Pearl Jam legally filed a complaint against the leading ticket distribution company in regards to antitrust law violations criticizing the companys monopoly over ticket sales and impartial use of power and influence in enforcing exclusive contracts with venue owners and promoters. Ticketmaster defensively argued otherwise clearly justifying each allegation with sufficient evidence. Conflict further escalated affecting the business performance of both parties as each strongly pushed efforts to win the legal battle.
B. Ticketmaster Corporation
Ticketmaster functioned as an agent that offered ticketing services to organizations that host events. Customers interested in buying tickets were provided a hassle-free purchase via phone or through several outlet locations of Ticketmaster. In return, the company earned revenue through convenience charges shouldered by the ticket buyers. Early on, Ticketmaster was barely surviving and faced competition with Ticketron. Unlike Ticketmaster that offered services, Ticketron focused on selling computer hardware to organizers but later faced bankruptcy and turned over to Ticketmaster most of its contracts. The Pritzker family used to own Ticketmaster but later sold most of its shares to billionaire Paul Allen. In the 1980s under a new leadership (Rosen), the company grew rapidly becoming the market leader with 4,200 employees and serving 40 states. It held exclusive contracts with 2/3 of the nations major promoters and venue owners.
C. Frederic D. Rosen
Rosen was the CEO responsible for the success of Ticketmaster. He was the brains behind Ticketmasters transition to providing ticketing services to venue owners with the use of new generation microcomputers. He pushed for the companys massive computer software restructuring and centralized telephone system. Rosen was relentless and won exclusive contracts from venue owners in which Ticketmaster will provide ticketing to their various events plus offering upfront rebate of shares from service charges. His strong business acumen and strategic expertise led Ticketmaster to be the market leader in its industry. Rosen also held some shares with the company.
D. Pearl Jam Rock Band
Pearl Jam was a Seattle based rock band formed in 1990 which included members Stone Gossard (guitarist), Jeff Ament (bassist), David Abbruzzese (percussionist), Mike McCready (guitarist) and Eddie Vedder in lead vocals. The band was tagged as the “hottest rock act of the decade” with their unique talent and ability to switchover to alternative forms of music that attracted huge crowds of teenage fans. The band members had a deep and personal connection with their fans and advocated various causes in which they would organize benefit concerts. Pearl Jam members were not too concerned with business dealings and lacked the drive for commercial success. In 1996, an unofficial report estimated that the band earned $75M on record sales alone.
II. Analysis
Ticketmasters transition into a service company instead of a computer hardware provider was a smart business decision that ensured long-term success for the company. Rosens efforts in winning exclusive contracts with major promoters and venue owners gave the company access to various resources making them the dominant choice for ticketing services of several acts. Ticketmaster adopted a specialized computer system that worked to their advantage and fostered an organized flow from the beginning stages of an event and even after. Cost to organizers dropped as the company took responsibility in handling ticket sales and charging buyers a fee padded on to the ticket price for the technology used. The company was effective in its service delivery and quite stable as it started to expand through the years. Management was focused on implementing goals and employed best practices throughout its operations.
Meanwhile, Pearl Jams success took off in the early 90s when the band exploded into the mainstream. They had exceptional talent but also exhibited a strong unique personality. The band had a totally different outlook in doing things in which they were very vocal that money never played a huge factor in their affairs. Pearl Jam was fond of free concerts and hosting benefit events for charity in which they aim to give back to their supporters especially the youth.
Initial conflict with Pearl Jam and Ticketmaster began in 1992. The band had to transact business with the ticket giant to organize the venues for their planned concerts. It was fairly obvious in the beginning of the case that both parties had totally different objectives. Ticketmaster was a strong business entity who in the long term wanted to maximize profits and cover costs while Pearl Jam was the socially influential entertainer wanting ticket prices to be affordable for their major target market. Problems started to pour in as issues regarding service charges, disclosure agreements and other demands were not met and both clearly did not identify with one another.
However, Ticketmaster had the access to several resources to realize the concerts Pearl Jam wanted to stage and the band had no choice but to work with them mostly because of circumstances. The two-year on and off disagreements continued and increasingly grew worse over time. Pearl Jam exerted efforts to work independently and coordinate all concert logistics themselves to avoid dealing with Ticketmaster. They failed due to the lack of assistance and experience but mostly due to exclusive contracts the ticket giant held with venue owners and promoters. On the other hand, Ticketmaster was aware of what the band was trying to pull and as a defense mechanism, reminded their promoters and venue management of their exclusive agreements. Pearl Jam came to a realization and drafted a proposal sent through promoters to Ticketmaster stating the bands preferred ticket and service prices. With no intermediaries, Ticketmaster informally rejected the proposal.
What started out as a simple procedural business transaction turned into an ugly legal battle that went public between Ticketmaster and Pearl Jam. The situation turned messy as desired outcomes were not achieved by both parties. The deterioration of Ticketmaster and Pearl Jams relationship stemmed from the lack of trust, transparency and failure to establish clear