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Shopping for live performance tickets is a drag, as Taylor Swift followers know all too effectively.
When tickets first went on sale for her extremely anticipated Eras Tour in November 2022, followers agonized over hours-long queues and frozen screens earlier than Ticketmaster’s web site finally crashed. Many failed to acquire tickets, which had been finally bought on the secondary marketplace for as a lot as $11,000.
Within the wake of that fiasco, the Division of Justice opened an investigation of Ticketmaster’s mum or dad firm, Reside Nation Leisure. On Thursday, it filed a lawsuit in search of to interrupt up Reside Nation, accusing it of working an unlawful monopoly by anticompetitive habits that has harmed everybody from shoppers to venues to artists.
“It’s time to break it up,” Lawyer Common Merrick Garland mentioned in a press convention Thursday.
The lawsuit claims that Reside Nation controls about 60 p.c of the marketplace for live performance promotions and manages greater than 400 artists. By means of Ticketmaster, it additionally controls about 70 p.c of the marketplace for ticketing and stay occasions and greater than 80 p.c of main live performance major ticketing.
“Artists and followers in addition to the numerous individuals and different companies that assist them undergo from the lack of dynamism and development that competitors would inevitably usher in,” the criticism in New York federal courtroom states.
Reside Nation countered in an announcement that the lawsuit will not truly do something to “remedy the problems followers care about regarding ticket costs, service charges, and entry to in-demand exhibits.”
“Calling Ticketmaster a monopoly could also be a PR win for the DOJ within the brief time period, however it should lose in courtroom as a result of it ignores the essential economics of stay leisure, corresponding to the truth that the majority of service charges go to venues, and that competitors has steadily eroded Ticketmaster’s market share and revenue margin,” the corporate mentioned.
It is not the primary time that Reside Nation Leisure has come beneath authorities scrutiny.
The DOJ allowed Ticketmaster and Reside Nation, a venue operator and occasions promoter, to merge and turn out to be Reside Nation Leisure as a part of a 2010 settlement. Nevertheless it required Ticketmaster to undertake measures to enhance competitors, together with divesting from one in all its ticketing subsidiaries and licensing its ticketing software program. The DOJ additionally prohibited Reside Nation Leisure from “retaliating in opposition to any venue proprietor that chooses to make use of one other firm’s ticketing companies or one other firm’s promotional companies.”
In 2019, the DOJ accused the corporate of violating that requirement and appointed an exterior monitor to maintain monitor of its ongoing compliance.
Critics have argued within the years since, nonetheless, that the provisions within the 2010 settlement by no means truly stimulated competitors within the ticketing market and that Reside Nation Leisure needs to be damaged up.
“The Justice Division ought to have by no means cleared the [Live Nation-Ticketmaster] merger, as a result of as a vertically built-in monopoly, they’ve each curiosity in encouraging costs and costs to go up, and there’s no [one] ready to self-discipline the trade, both through the use of an alternate promoter or ticketing agent,” mentioned Tim Wu, a key architect of the Biden administration’s antitrust insurance policies and a professor at Columbia Regulation, earlier than the lawsuit was filed.
What are the antitrust considerations surrounding Reside Nation Leisure?
The DOJ should present that Reside Nation Leisure has engaged in anti-competitive habits that has stifled competitors and damage shoppers by excessively elevating costs or providing merchandise of inferior high quality.
Within the criticism, it lays out how Reside Nation allegedly did so:
- By partnering with the venue administration agency Oak View Group to affect venues to signal long-term agreements to make use of Ticketmaster as their sole ticket vendor.
- By buying potential opponents and threatening to retaliate financially in opposition to them or venues that work with them.
- By stopping artists from utilizing Reside Nation venues until they join the corporate’s promotion companies.
Some consultants, like Fiona Scott Morton, a professor at Yale Faculty of Administration and former chief economist on the DOJ’s antitrust division, assume the federal government might have a powerful case.
“If we’ve acquired a well-defined market and Ticketmaster has a 70 p.c share, it appears very probably that they’ve market energy in the way in which that we normally imply it in an antitrust context, and so they’re going to have the ability to elevate costs or decrease high quality or in any other case limit choices for shoppers to worse phrases than they’d get in a aggressive market,” she mentioned earlier than the lawsuit was filed.
On the very least, there may be an incestuousness to how Reside Nation promoters — staff who set up stay occasions — advise artists on ticket pricing on websites like Ticketmaster and negotiate with venues, together with the 78 p.c of prime arenas nationwide operated by Reside Nation. These venues then give Ticketmaster a minimize of the service charges. And that ought to elevate alarm bells, Scott Morton mentioned.
The corporate has already sought to preempt a few of these potential accusations. In a March weblog put up, Reside Nation Leisure’s govt vice chairman of company and regulatory affairs, Dan Wall, argued that neither Ticketmaster nor Reside Nation is accountable for excessive ticket costs.
Wall writes that tickets bought on Ticketmaster are “truly priced by artists and groups,” not Ticketmaster itself. However artists’ groups might embrace Reside Nation promoters.
Wall additionally refutes the concept service prices, which go to venues and ticketing corporations like Ticketmaster, are only a sneaky approach for Ticketmaster to lift costs.
Service charges fluctuate by venue and occasion, however common about 27 p.c of the value of a ticket, in line with a 2018 Authorities Accountability Workplace report. As a part of his struggle in opposition to “junk charges,” President Joe Biden has criticized ticket retailers for failing to reveal these charges upfront. On Ticketmaster, charges are solely seen at checkout.
Wall argues that “Ticketmaster doesn’t set service prices, venues do.” However that oversimplifies what is occurring behind the scenes.
When negotiating contracts with ticketing corporations, venues suggest a service price. Ticketing corporations, together with Ticketmaster, then construction their bids for the contract — which features a minimize of the service price — primarily based on that proposed price. Nevertheless, the service price proposed “will depend on everyone’s outdoors possibility in a bargaining sport,” Scott Morton mentioned. And for venues, there usually are not many outdoors choices in a market the place Ticketmaster controls a big majority of ticket gross sales.
In that sense, venues would possibly need to cost greater service charges in order that Ticketmaster, the biggest ticket vendor by far, will get an even bigger minimize and due to this fact bid on a contract.
“Ticketmaster is pointing on the simple energy of others to obscure its personal monopolistic function in facilitating the extraordinary development in each charges and in addition, to some extent, ticket costs,” Wu mentioned. Reside Nation Leisure has sought to painting itself “as a passive, nearly disinterested participant after they have been doing all that they’ll to encourage the expansion of costs and costs and whereas discouraging competitors,” he added.
Wu pointed to Songkick for example. Within the 2010s, the corporate tried to pioneer a direct gross sales mannequin from artists to followers, “solely to seek out artists who labored with it dealing with threats and retaliation from Ticketmaster/LiveNation,” he mentioned.
In his assertion, Wall additionally argues that neither Ticketmaster nor Reside Nation is making sufficient cash to recommend that they’re abusing their market energy. Ticketmaster makes about 5 to 7 p.c of the typical ticket value from these service charges, which he says is effectively beneath different digital distribution platforms like Airbnb and StubHub, and Reside Nation is taking in about 2 p.c of live performance revenues.
However at query is whether or not Ticketmaster ought to even be making that a lot, and whether or not any antitrust motion could make the ticket-buying expertise higher for shoppers. The solutions to each stay to be seen.
“That is simply making an attempt to make use of numbers to distract us from what’s actually essential,” Scott Morton mentioned. “It’s not likely so essential how massive Ticketmaster’s revenues are compared to another arbitrary quantity — like how a lot individuals spend on live shows in America or how a lot they spend in another massive markets — however reasonably, what that income could be in an surroundings with extra strong competitors.”
Replace, Could 23, 2:50 pm: This story, initially printed April 16, has been up to date with extra data from the DOJ’s lawsuit filed Could 23.
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