4000 touring artists performing at more than 200 venues across
40 countries. 98 million fans buying 500 million tickets to
40,000 concerts each year. That's Live Nation Entertainment
composed of Live Nation, a live entertainment promoter and venue
operator, and Ticketmaster a ticketing platform. The two
companies merged in 2010. That merger was illegal, and it
should have been blocked by the government. The company controls
an estimated 70% of the ticketing and live event venues
market. That might sound wild, but a monopoly in itself is not
illegal in the U.S. Ticketmaster's position with
over 80% of the ticketing market. It's not terribly
different than Google with nearly 90% of search volumes in
this country. When the Live Nation and Ticketmaster merger
was approved back in 2010. It was under the condition of a
consent decree, among other things forbidding Live Nation
from retaliating against a venue for using a ticket or other than
Ticketmaster. After an investigation in 2019 the
Justice Department alleged Live Nation had repeatedly violated
this provision of its decree. Fast forward to 2022 it's Deja
Vu. A reckoning for Ticketmaster. It's now facing an
antitrust investigation the company canceled its public sale
for Taylor Swift's upcoming tour. As the leading player we
have an obligation to do better. I just want to dispel this
notion that this is not a monopoly. There is no
opportunities for us to say okay, we see you live nation we
see your offer. We would like to see what what this show would
look like if we worked with someone else. There is no
someone else, whatever they say just kind of is the word of God.
In January 2022, a class action lawsuit was filed against Live
Nation entertainment claiming the company has created a
barrier to entry in the primary and secondary ticketing markets.
The case is ongoing. And then this...
When Taylor Swift fans excited to see the queen of heartbreak
songs back on tour for the first time since 2018 logged onto
Ticketmaster on November 2022 to grab their front row seats,
chaos erupted. Ticketmaster is facing mounting scrutiny here
after millions of fans waited hours only to run into glitches
and error messages on the website. First of all the Live
Nation team is sympathetic that the long wait times and fans who
couldn't get what they wanted. Reality it's a function of the
massive demand that Taylor Swift has. The site was supposed to be
opened up for 1.5 million verified Taylor Swift Fans. We
had 14 million people hit the site including bots, another
story which are not supposed to be there. 2 million tickets were
sold and the general public sale was canceled. In December 2022
the house and energy commerce committee wrote a letter to Live
Nation CEO Michael Rapino asking him to provide a briefing on the
ticketing process for the Swift tour. It also requested the
company provide insight into a number of claims. Interestingly,
AEG our competitor who is the promoter for Taylor Swift chose
to use us because we are though in reality, the largest and most
effective ticket seller in the world. AEG Presents claimed
working with Ticketmaster was its only option, saying quote
Ticketmaster's exclusive deals with the vast majority of venues
on the Era's tour required us to ticket through their system. We
didn't have a choice. We worry about monopolists in the
antitrust world when they engage in conduct that is really
designed to force out smaller rivals to limit competition.
Only a few months prior in August 2022 tickets to see Bruce
Springsteen caused a similar uproar. If I pay $5,000 to see
Bruce Springsteen he better sit on my lap and play an acoustic
set of Nebraska. In 2017 Ticketmaster started asking
consumers to register as verified fans in an attempt to
keep out scalpers and bots. But in the case of Swift and
Springsteen sales, this doesn't appear to have worked - marked
up tickets popped up on the secondary market within hours.
The ticket also faced criticism concerning its official platinum
feature for premium seats, using something called dynamic
pricing, essentially pricing tickets based on demand, and
also revolving barcodes preventing fans from reselling
their ticket. In a statement Live Nation said it takes its
responsibilities under the antitrust law seriously and does
not engage in behaviors that could justify litigation.
As a promoter and venue operator Live Nation handles production,
organization and marketing of live entertainment events.
While the company holds the majority of market share, it
does have some competition, AEG Eventbrite, IMG, ASM Global,
Madison Square Garden Entertainment Corporation and
Jam Productions to name a few. The company owns more than 200
venues around the world.
Unknown: Ticketmaster is as the name holds a ticketing platform.
On this side, there's AXS owned by AEG and Songkick owned by
Warner Music Group. There's also SeatGeek, e tickets, ticket
tailor, brown paper tickets, ticket space and other smaller
companies. There are ticket errs, who sell directly from the
venues and those in resale like StubHub and vivid seats,
Ticketmaster, does both. There's really no one that's been able
to get the type of scale that Live Nation has the closest
comparable is Anschutz Entertainment Group with their
own kind of internal ticketing platform. But you know, they
made a statement that speaks to the market power of
Ticketmaster, which is that they used Ticketmaster to ticket
Taylor Swift. In 1996 Jam produced 100 concerts in arenas
in 2011 one year after the merger that decreased to 46
concerts, and in 2022, we only produced 14 arena concerts. Live
Nation went after the arena business, and they succeeded in
driving us and other independent promoters out of that sector
through injuries last year from the top.
Emily Lorsch: These are some of the members of the band Lawrence
based in New York City. While on tour Lawrence interacts with
Live Nation Entertainment regularly. It's often their
promoter, venue, owner, and ticketer. If you say okay, we
want to be in this market. So we have to use Live Nation, what
does it look like if you then don't want to use Ticketmaster?
That's not an option, not an option. Ticketmaster have
created these exclusive contracts. Once you sign that
contract. A band is not allowed to come in and say we want to
sell our tickets with XYZ platform. They even have a song
with this lyric flat out calling out Live Nation. Live Nation is
a monopoly.
In the 1990s Pearl Jam at the height of their fame was so
frustrated by Ticketmaster service fees and power over the
industry that they attempted to only play at venues that used
other ticketing services. That meant they didn't play at some
of the larger venues that they would have. In 1998 they went
back to playing mostly venues that use Ticketmaster. On
January 13 2023, Barclay's Center announced its return to
Ticketmaster as its ticketer after making a switch to
SeatGeek a competitor in 2021. It's a business that a lot of
people have looked at. They've spoken about wanting to get into
it. And no one's really been able to grow enough market share
to really be a meaningful player.
We think using Ticketmaster's platform, our concert platform,
we can become the Zappos or Amazon of the concert business
versus what we are today. That's a clip from 2010 months before
the merger. Even then Ticketmaster controlled more
than 80% of the ticketing market. Whether or not Live
Nation Entertainment is a monopoly that's sparked some
debate. In simple terms, a monopoly is when a company holds
exclusive possession or control. To be clear, a monopoly isn't
illegal. A lack of choice is really a major hallmark of a
monopoly. Diana Moss, president of the American Antitrust
Institute has been following the two companies since prior to the
merger. If we made monopolies illegal on the basis of pricing
above cost and generating monopoly profits for a firm the
concern would be that that would potentially stifle risk taking
and entrepreneurial activity. What is illegal is abusing a
monopoly position, a business that establishes or maintains
its monopoly through improper conduct and doesn't allow for
others to enter the market. We saw an ideology develop that
that really was supercharged by the notion that vertical mergers
are good that they're beneficial because firms can coordinate
better between different levels in the supply chain. In the case
of Live Nation and Ticketmaster, for example, all of the concert
promotion and venue operation could beneficially coordinate
with the ticketing platforms. We saw it also with mergers like
Comcast, NBCU, and Google's acquisition of ITA the travel
pricing software system. As a result, these types of mergers
have been blocked in federal court. Instead, if there's been
competition concerns, the court imposed remedies to restrict the
ability to squeeze out competition like the consent
decree and Live Nation and Ticketmaster's case. Live Nation
Ticketmaster is really the poster child for this type of
vertical merger being approved with very ineffective remedies.
And now the damage from that is very obvious. In 2019 the
Justice Department made its most significant enforcement action
of an antitrust decree in 20 years. The DOJ alleged Live
Nation Entertainment violated the 2010 decree and the company
settled with the government. Live Nation has agreed in
principle to a settlement with the Department of Justice over
an investigation into whether Live Nation was forcing venues
to use its Ticketmaster company to sell tickets to Live Nation
events. They had six concert venues anonymously on
Unknown: record talking about how Live Nation Ticketmaster,
harassed them or threatened them. Absolutely acknowledged,
Senator, that the Department of Justice alleged six issues in
2019 which led to our decision with them to extend the consent
decree. We did not feel it made sense to be seen as defending
the theories of retaliation or threats. It's not our business
practice. It goes against our fundamental focus on alignment
with the artists. It is absolutely our policy to not
pressure threaten or retaliate against venues by using content
as part of a ticketing discussion. Whether it's said or
not, it's implied that if I don't use Ticketmaster, I am not
gonna get all the shows that I would like to have. Live Nation
Entertainment declined CNBC's request for an interview.
Emily Lorsch: There's always the top end ticket that gets the
press, but a ticket a ticket and a concert ticket is still really
affordable average ticket price is $35. You can't have a dinner
for that you certainly can't go to a Laker's game. The average
ticket price has gone up significantly in the past 26
years. According to Pollstar, a data analytics company.
Ticketmaster is charging these significant often over 40% fees.
Ticketmaster says fees are determined in collaboration with
clients like the music venues and promoters, they share a
portion of the fees the company collects, the only caveat that's
often Live Nation. Sometimes depending on state laws, these
fees are not even known until you've already waited in the
online queue chosen the seats you want maybe even been told a
few times after clicking on seats, that those seats are no
longer available. That's when you're hit with the fee. If that
service fee makes your ticket more expensive than what you're
planning on spending, the alternative is starting all over
again, risking there won't be any seats left. So it would be
nice to see someone come in and say, whoa, whoa, whoa 40% on top
of a ticket is just criminal. Lawrence says for their shows,
it looks something like this: a $30 ticket plus a likely 40% or
$12 service fee means Lawrence fans would be paying $42 per
ticket. Lawrence doesn't know what the service fee will be in
advance, and none of it goes to them. The rest depends on the
deal with the promoter and the cost the artists has. Lawrence
is very do it yourself or DIY. So their costs are lower than
for others. But from that $42 You spent on a ticket to see
them play, they usually get 10 to $15, after covering their
costs about five to $8 get divided among the eight band
members. For your band to make six bucks out of a $42 ticket
price. Yeah, that doesn't feel doesn't strike me as artists
first. I would agree with that. Some of these numbers just seem
silly. Like there's literally a charge of $267 for towels. I
don't know because I haven't bought towels in a while but
like you could buy, like many towels to keep this is that
they're not giving us towels. At the end of every concert
Lawrence and other artists get a settlement sheet from the
promoter, or in this case, Live Nation. They say often this is
what it looks like with a facility fee already deducted
from the ticket price right at the top. The first thing we ask
is what is that covering? And they say oh, it's just various
venue expenses. It's really expensive to run a venue. Oh,
okay, cool. But then you look at the expense breakdown. And we're
actually being charged as an expense for all the costs that
it takes to run a venue, rent, staffing, bar, hospitality
production team, all of the things that you can say it takes
to run a venue you're charging us for and then charging a
facility fee on top of that. To bypass those fees, Lawrence has
created their own ticketing site. They say many artists
don't even know that venue ticketing contracts often allow
artists to sell up to 10% of tickets themselves. I think it's
totally reasonable to up that number closer to 30 40 50.
Obviously 100%. If you're buying a ticket to a show, Ticketmaster
is owning that data, I as an artist don't ever know the names
of people, the emails of people that are coming to my shows.
It's unclear what will happen next for Live Nation
Entertainment. While some are calling for the company's break
up, monopolization cases are hard to bring to court and even
harder to win. It's a two part requirement. One is to show that
a firm has monopoly power in a market. And then the second is
to show that the firm engaged in conduct that was designed to
maintain that monopoly to strengthen it to leverage it to
another market. And over time, the courts have set up
enormously high barriers to plaintiffs in an in this case a
government plaintiff to make those two showings. The last
time we saw a breakup remedy in this country was back in 1984
with AT&T. It's like climbing Mount Everest, the antitrust
equivalent of Mount Everest. This is going to take a very
committed department of
Justice, the hope would be they would carry out an investigation
and do that expeditiously and that they would file a complaint
in federal court. And we could we could advance this issue
finally and get some relief. There is a real opportunity here
for competition advocacy groups to really communicate the
importance of competition to lawmakers to consumers and to
smaller businesses. And I think we'll see if this is a
galvanizing event. In July 2021, President Biden signed an
executive order aimed at cracking down on
anti-competitive practices by big tech, labor and other
sectors. Rather than competing for consumers they are consuming
their competitors. More than a year later, he pledged to tackle
surprise fees. Each year, these junk fees in addition, that
companies charge cost America's 10s of billions of dollars.
Let's just say that the DOJ makes it to the top of Mount
Everest and Ticketmaster and Live Nation are broken up, then
what will happen? Will other companies enter the market? And
if things do turn in that direction, it certainly won't be
a quick fix. We saw this back in Microsoft that the trial went on
for a long time. And when they got to the question of remedy,
right, that was yet another long conversation. Microsoft and the
government eventually settled out of court for a lesser
remedy. Moss believes the country's antitrust laws should
be modernized - something the federal trade commission and
Department of Justice antitrust division are working on -
kicking off a process to rewrite merger guidelines in January
2022. Senator Klobuchar, also hoping to bring change - her
bipartisan legislation was passed by the House of
Representatives in September 2022. Her bill would provide the
necessary clarification and modifications to make it easier
for the government to bring monopolization cases and to
prevail in those cases when they are litigated in federal court.
She says it would bring stronger enforcement of US merger law as
well. Meanwhile, Lawrence is talking about a bill of their
own - a Bill of Rights for artists, a handful of proposed
changes that they believe would make the industry more fair
things like permitting artists to sell more tickets directly to
fans, transparency around ticket fees, allowing artists to
perform at venues owned by Live Nation without having to use a
particular promoter or ticketer and crackdowns on Live Nation
venue purchases in regions with little competition so that
artists have a choice while on tour. It doesn't mean the end of
Live Nation, it just means a fairer system. There is a lot of
value that they provide, not only to us, but to the majority
of artists. Genuinely like we're really thankful for what they
do. All we're trying to do is kind of carve away at some of
the injustices that are happening you know in the system
right now.