A new report from Billboard examines a 2017 phone call between a Live Nation executive and a promoter working on behalf of Metallica in which the two parties discuss how to covertly release a large chunk of tickets directly to secondary market ticketing sites without first giving fans the opportunity to purchase them through official channels at face value.

According to the Billboard report, Live Nation president of U.S. concerts Bob Roux spoke to the promoter about why the move had to be executed in secret and how they could still pull it off. As Roux explained in the recorded call, “Ticketmaster will not do it… either a Live Nation employee or a venue box office [would] basically take these and sell them into a singular account,” as is done for corporate sponsors and fan clubs. “When this happens, 4,600 tickets into a single account,” Roux explained on the call, “There may be some eyebrows that get raised.”

After Live Nation outbid AEG Presents to promote Metallica’s 2017 North American tour by offering the band 95% of gross revenue, Roux reportedly entered into a separate discussion with the Metallica “ticketing consultant,” Tony DiCioccio, about the straight-to-resale deal.

As Billboard explains,

Such arrangements may be legal but are rarely discussed openly, given concerns about how fans will perceive them. …

According to Live Nation, DiCioccio realized how much money could be made on the resale market after the band’s 2016 concert for the opening of U.S. Bank Stadium in Minneapolis, where over 10,000 tickets were sold “on the secondary market without the band’s participation,” in part because the group initially priced the tickets too low — management was nervous that high-priced tickets would anger fans, according to one of the concert’s promoters.

“After seeing the volume of secondary transactions for that show and the benefit being captured by brokers,” Live Nation said in its statement, “the independent consultant [DiCioccio] worked with Live Nation on a unique distribution strategy that used the secondary market as a sales distribution channel for select high-end tickets.

According to a source familiar with the deal cited in Billboard‘s report, “the parties agreed that Metallica would get 40% of the resale revenue, Live Nation 40%, DiCioccio 12% and [Vaughan] Millette [the other former Live Nation exec on the call who is responsible for sharing the recording of the call] 8%, though another source said Live Nation’s share was lower.”

While this practice is becoming increasingly common for professional sports teams, it is still widely derided by fans in the live music world. “Sports teams are corporate by their very nature,” Barry Kahn, chief executive of the Austin-based firm Qcue, which helps teams and tours dynamically price their tickets, told Billboard. Attitudes about resale in music are different because “people go to shows and engage as much for the association as the sound. And how an artist prices and sell their tickets influences that brand.”

Kahn also noted that he does not think bands should be punished for using different channels, including the secondary market, to sell tickets. Rather, he said that “the issue is the transparency. If they get caught doing something they have said is wrong, then they are deceiving their fans.”

This is not the first time scandalous ticketing practices such as this have come to light in recent years. In late 2018, CBC News and The Toronto Star broke new investigative reports which detailed Ticketmaster‘s TradeDesk, their hush-hush new platform which aids scalpers in selling tickets on the secondary market while turning a blind eye to their violations of Ticketmaster purchasing rules. The news quickly went viral, prompting widespread outrage from Ticketmaster’s customers.

This report on TradeDesk was the subject of a letter sent by Senators Jerry Moran (R-Kan.) and Richard Blumenthal (D-Conn.) to the ticketing/promotion giant in the wake of the scandal. Ticketmaster president Jared Smith issued a response: “Ticketmaster does not have, and has never had, any product or program that allows ticket scalpers, or anyone else, to buy tickets ahead of fans.”

However, in light of this recorded phone call surfacing this week, Live Nation (which owns Ticketmaster) issued a response to Billboard about the practice. As the Billboard report notes,

In a rare acknowledgment of an industry tactic little known to the public, Live Nation now tells Billboard that the company has facilitated the quiet transfer of concert tickets directly into the hands of resellers through the years, though only at the request of the artists involved — who control where the tickets are initially sold.

Between 2016 and 2017, “about a dozen artists out of the thousands we work with asked us to do this,” the company said in a statement to Billboard. 

Live Nation told Billboard that artists rarely seek its help to sell their own tickets on the secondary market anymore, suggesting how fast the business is evolving as artists test its new tools to capture some of the profits that were going to resellers. “Since then, requests like these have declined virtually to zero as tools like dynamic pricing, platinum seats and VIP packages have proven to be more effective at recapturing value previously lost to the secondary market,” the company said. It’s now “standard practice is to use Ticketmaster’s Platinum, VIP and other tools to help tours price closer to true market value,” but noted that “in this situation, a consultant for the band opted to use the secondary market to try to capture that value,” a plan that would potentially have benefited Live Nation as well.

Live Nation also told Billboard that it “does not distribute tickets on any platform without an artist’s explicit approval,” though some artists delegate such decisions to their managers or agents.

You can read the full Billboard report here.

[H/T Billboard]