By Steve Provizer
How do you spell a monopoly that is killing the live music industry? The merger between Live Nation Entertainment and Ticketmaster. Just ask Swift-World.
It may be an overstatement to say that a decision made by the Obama Justice Department put a stake in the heart of America’s musical life. However, a growing number of people believe that, at the very least, giving the nod to the 2010 merger between Live Nation and Ticketmaster drove a nail into its coffin.
By the early 2000s, event promoter Live Nation and ticket purveyor Ticketmaster were the twin 900-pound gorillas of the live music industry. In 2007, the two companies held more than 80 percent of market share. At that point, Live Nation announced that it wanted to start its own ticketing outfit. Cooler heads prevailed and discussions with putative competitor Ticketmaster resulted in a decision to merge and create a new company. How do you spell monopoly? Live Nation Entertainment, Inc. (which I’ll refer to as LNE).
The merger was reviewed in 2010 by Christine Varney, President Obama’s top antitrust attorney in the Department of Justice. She said the merger “raised meaningful concerns … but not antitrust concerns” and issued a Consent Decree. There are two kinds of remedies built into Consent Decrees: structural remedies and conduct-regulation remedies (i.e., how a company wields its power). Structural remedies can be enforced and have teeth. Not so conduct-regulations, which are much harder to define and enforce. In giving its consent, the DOJ slapped on a few restrictions that were a mix of conduct and structural restrictions. LNE had to promise they wouldn’t use their venue power over events and venues to grow their ticket dominance (love the word “promise”). The structural element was that Ticketmaster had to sell off part of its holdings to smaller companies, which the company did.
Cory Doctorow, in a video made for The Classroom for a More Perfect Union, says these remedies “made barely a dent.” LNT has grown even larger, acquiring other ticket companies, promoters, and festivals, including Lollapalooza and Bonnaroo. Doctorow characterizes LNT as a “ticketing cartel”: the megacompany that now owns more than 70 percent of the ticketing and live event venues market. That dominance, he argues, has created a “culture of fear.” Among the interviewees for the video, no one in the live music industry would dare to speak out against LNT.
Anyone who has bought a ticket to a major event has probably recoiled from the dizzying lineup of processing, facility, and promoting fees. LNT not only encourages but incentivizes resellers to gouge fans. And why not? LNT collects a second fee from resellers. Worse, LNT has introduced an innovation that is sweeping the retail world: “dynamic pricing.” This strategy for pushing prices ever upward led to $4,000 tickets to see Bruce Springsteen. There is a difference between dynamic pricing in selling tickets and competing Uber drivers: there is a ready-made, empowered industry of resellers ready to scarf the best seats.
If there is no significant governmental push back against LNT’s monopolization, there’s nothing to stop the cultural sector from going the way of the media, meat-packing, publishing companies, nursing homes, and high-tech. The Biden administration is paying lip service to taking a stance against monopolies. In 2021, five members of the United States House of Representatives signed a letter urging Biden to launch an investigation into the merger, which they insist removed much needed competition from the live music ecosystem.
On October 19, a coalition of advocacy organizations, led by the American Economic Liberties Project, urged the Department of Justice to undo the merger. And it is advocating for much more aggressive antitrust enforcement. They charge that “Live Nation essentially uses its concert promotion services to bully venues away from using the few competitors that Ticketmaster still has.… If a venue opts not to use those services, Live Nation retaliates by effectively boycotting the venue. Because Live Nation controls so much of the market for concert promotion, being able to book performers who contract with Live Nation can make or break a venue’s ability to survive.”
LNT CEO Michael Rapino will make $30 million in 2022 if “performance metrics” are met. It would be nice to keep LNT from meeting the bloated profit that comes from cornering the market, but with no competition …
Is Ticketmaster’s screwup in the Taylor Swift ticket debacle symptomatic of the overpowering status in the industry of the business’s owner, Live Nation Entertainment, Inc.? Both the Department of Justice and I want to know.
As I argue above, when the Justice Department approved the merger of Ticketmaster and Live Nation Entertainment, Inc. in 2010, it set a few limits, a mix of conduct restrictions and structural remedies. Its structural remedies can be legally enforced. Not so its conduct regulations. The structural element was that Ticketmaster had to sell off part of its holdings to smaller companies, which it did. The conduct restriction was that LNE had to promise its wouldn’t use its ramped-up economic clout over events and venues to grow its ticket dominance. I suppose the DOJ saw “promise” the way courts see pornography: you know it when you see it. But guess what — in late 2019, the Justice Department found that LNE had repeatedly violated this provision of its decree. It then extended the agreement to 2025, which is a touch absurd, given that the government had never enforced it in the first place.
Apparently, the demand for tickets to the Taylor Swift tour completely overwhelmed the Ticketmaster system. According to the New York Times, Ticketmaster received 3.5 billion system requests for tickets. On the face of it, it may not seem that any computer-based system could be expected to handle that demand. On the other hand, because of the dominant position of LNE, every venue Swift performs in is controlled by one organization: LNE. It is reasonable to argue that were there a number of separate companies handling ticketing for separate events the process could have proceeded without breaking down.
BTW, this doesn’t even address the double-dipping and unscrupulous charging that LNE indulges in as business as usual. It would take someone with more systems analysis skill than I have to suss out how those tactics impacted the Swift situation. But, for this layman, they don’t pass the smell test.
Nobody goes toe to toe with Swift-World, even the biggest music biz monopolies, and comes out unbloodied. If this is what it takes to loosen the iron grip of LNE on the live music industry, I can only say thanks, Taylor — my daughter was right about you all along.
There is a Move On petition to break up Ticketmaster.
Steve Provizer writes on a range of subjects, most often the arts. He is a musician and blogs about jazz here.
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