(Adds executive quotes, details, share move)
NEW YORK, Jan 11 (Reuters) - Concert promoter Live Nation Inc (LYV.N) said on Friday it will launch its own ticketing business next year after it ends a relationship with Ticketmaster, the dominant box office service.
The announcement is part of a strategy shift by Live Nation to provide a complete pipeline of marketing, ticketing and merchandising services for artists and events, creating new competition for Ticketmaster and music labels alike.
It will sell tickets for its own concerts and for third-party events. “We will have a fully operational new ticketing company and reach a new milestone in this journey,” Live Nation Chief Executive Michael Rapino said on a conference call. “We expect to sell more than 20 million tickets annually.”
Live Nation estimates the new business will add at least $17 million in operating income in 2010, and that contribution could even double as the company cultivates sponsorships and other opportunities.
The company recently lured pop star Madonna from her long-term music label, Warner Music Group Corp WMG.N, in a deal estimated at $120 million over 10 years.
Live Nation has signed a 10-year agreement to license ticketing software and services from Germany’s CTS Eventim AG (EVDG.DE).
Live Nation executives said the company will spend about $20 million in 2008 to buy new computers, servers and other equipment ahead of the launch of its ticketing unit.
It expects to increase revenue by using data it gathers on ticket buyers to better promote events and new artists.
“We spend close to $100 million a year marketing concerts around the world,” Rapino said. “We believe over time we will shift a lot of our print and radio advertising to a much more efficient, direct consumer model.”
It will also cultivate sponsorships from advertisers, such as allowing a retail chain be the exclusive source for buying tickets to a particular show.
Asked whether Live Nation could move into selling tickets for sports events, a key business for Ticketmaster, Rapino indicated it was possible, based on the company’s existing relationships to venue operators.
“We believe that our customer, the venue operator who we have a very long and local relationship with ... when we’re in business with them, we will be in business with their full ticketing platform,” he said.
Ticketmaster is part of IAC/InterActiveCorp IACI.O and is due to be spun off as an independent company later this year.
Live Nation shares rose 17 cents to $13.53 on the New York Stock Exchange, while IAC/InterActiveCorp fell 27 cents to $23.75 on Nasdaq. (Reporting by Michele Gershberg; editing by Jeffrey Benkoe)