Promoted from the diaries by streiff. Promotion does not imply endorsement.
In 2010, the Obama Administration’s Justice Department approved the merger of Live Nation and Ticketmaster. Since then, not surprisingly, the combined company has grown more powerful than ever. A marriage between the world’s biggest owner of venues with the world’s largest ticketing giant didn’t seem to worry officials despite a massive chorus of opposition by concerned lawmakers, music artists, smaller competitors, ticket resellers, former officials, and consumer advocates. In fact the DOJ was convinced that despite the increased power and leverage the company would gain, that there was potential for prices to come down. A decade later and history proves the DOJ got it wrong. The company’s grip on the market has only intensified.
There remains essentially only one major game in town when it comes to ticketing for sports and music, and ticket prices are higher than ever. Live Nation/Ticketmaster controls all of the drivers that affect the availability and pricing of tickets. While the company will conveniently say it’s just a hired agent acting at the direction of so-called “content rights holders,” the reality is much of the company’s profits come from fees and revenue sharing agreements therefore monopolizing the market where tickets are first sold (the primary market) and resold (the secondary market) is what it’s all about. The company that controls the supply, controls the market.
Today Live Nation/Ticketmaster enjoys even greater control of venues and ticketing to live events. The DOJ estimated that Ticketmaster held more than 80 percent of market share in 2008, and it is still the market leader in 2018. It has also spread deeply into the secondary market where tickets are resold – a market with prices that have been traditionally driven by supply and demand and what consumers are willing (or not willing) to pay. While Ticketmaster remains #1 in the primary market, according to Moody’s Investors Service it now holds the second-largest market share in the secondary resale market (behind StubHub). No wonder Live Nation CEO, Michael Rapino, was one of the highest paid CEOs last year, taking home $70 million.
The ability for one company to continue to grow increasingly powerful and capable of controlling so many levers throughout the industry, including the ability to arbitrarily constrain the supply of tickets thus raising prices as it wishes for fans, needs to be stopped. The company claims practices like paperless tickets and slow ticketing (where it drips tickets on to the market bit by bit to create the illusion of scarcity) are to stop scalpers. But ticket scalping, be it by a large company or a questionable fellow pacing in front of the venue, won’t go anywhere. When the supply is further choked, it will just become more expensive to buy tickets on the secondary market. This, in turn, creates a ripe environment for scammers to offer too-good-to-be-true tickets when legitimate resellers are driven out of the market. And besides, pointing blame at scalping is nothing but deflection. Ticket resale isn’t the problem. The root of the deepest problems in the ticketing system boils down to supply. For the most part, ticket supply in the U.S. (and globally) is controlled by one Goliath company created by the Live Nation/Ticketmaster merger.
The New York Times reported in April that the Trump Department of Justice is investigating Live Nation/Ticketmaster, in light of complaints that the company is harming rivals in a clear abuse of its monopoly position. Competitor AEG provided the DOJ with documents outlining its argument that venues were punished by Live Nation by not being given access to shows because of business decisions in choosing a ticketing agent other than Ticketmaster. The problem for Live Nation/Ticketmaster is that the merging companies agreed in a DOJ consent decree in 2010 specifically to an anti-retaliation provision. This behavior alleged by AEG is therefore more than mischievous. It could be a direct violation of the agreement, landing the company in hot water.
“The consent decree was supposed to prevent Live Nation from using its strength in live entertainment to foreclose competition in ticketing. But it is now widely seen as the poster child for the problems that arise when enforcers adopt these temporary fixes to limit the anticompetitive effects of deeply problematic vertical mergers.”
– Beau Buffier, Chief, Antitrust Bureau, Office of New York Attorney General
U.S. Rep. Bill Pascrell Jr. (D-NJ) has a long record of warning against the monopolistic abuse of Ticketmaster. He penned an op-ed recently titled “Everyone’s fears about the Live Nation / Ticketmaster merger have come true.” He writes, “there is no question that Live Nation is exploiting the system to its advantage. The company has sway over nearly every facet of the live-event business: recording, record sales, licensing, talent management, venue ownership, ticketing services and even concessions.” He concludes with “regulation alone won’t solve the Live Nation problem. The company should be broken up.”
Fortunately, President Trump has a new DOJ Antitrust Boss at the agency, Makan Delrahim. And already Mr. Delrahim has created a new Office of Consent Decree Enforcement. Hopefully with a new, tougher President in the White House, with a new, tougher chief in the DOJ’s Antitrust division, the ticket system and fans will have a fighting chance. Otherwise, the tentacles of Ticketmaster will continue to grow stronger, and deeper into the wallets of everyday, hard-working fans of live events. The DOJ should sue Live Nation/Ticketmaster, bust up the company, and help provide a much-needed reset to the system.