Shopping for live performance tickets is a drag, as Taylor Swift followers know all too properly.
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 in the end crashed. Many failed to obtain tickets, which had been in the end offered on the secondary marketplace for as a lot as $11,000.
Ticketmaster’s failure to adequately put together for that onslaught of demand by underinvesting within the buyer buy expertise may need constituted an abuse of its market energy, some economists identified. Ticketmaster controls about 70 p.c of the marketplace for ticketing and reside occasions and greater than 80 p.c of main live performance main ticketing.
The Division of Justice opened an investigation of Ticketmaster’s guardian firm, Dwell Nation Leisure, shortly after the Eras tour fiasco. That investigation seems near its conclusion, and now, the federal government appears ready to take the corporate to court docket over alleged anticompetitive conduct. The Wall Avenue Journal reported that the DOJ’s antitrust lawsuit could possibly be filed as early as subsequent month.
The precise contours of the lawsuit aren’t but identified. However Dwell Nation Leisure has come beneath authorities scrutiny up to now.
The DOJ allowed Ticketmaster and Dwell Nation, a venue operator and occasions promoter, to merge and change into Dwell Nation Leisure as a part of a 2010 settlement. Nevertheless it required Ticketmaster to undertake measures to enhance competitors, together with divesting from certainly one of its ticketing subsidiaries and licensing its ticketing software program. The DOJ additionally prohibited Dwell Nation Leisure from “retaliating in opposition to any venue proprietor that chooses to make use of one other firm’s ticketing providers or one other firm’s promotional providers.”
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, nevertheless, that the provisions within the 2010 settlement by no means really stimulated competitors within the ticketing market and that Dwell Nation Leisure ought 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 charges to go up, and there’s no [one] able to self-discipline the trade, both through the use of another promoter or ticketing agent,” mentioned Tim Wu, a key architect of the Biden administration’s antitrust insurance policies and a professor at Columbia Legislation.
What are the antitrust considerations surrounding Dwell Nation Leisure?
No matter how the DOJ frames its lawsuit, it must present that Dwell Nation Leisure has engaged in anti-competitive conduct that has stifled competitors and harm shoppers by excessively elevating costs or providing merchandise of inferior high quality.
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 obtained a well-defined market and Ticketmaster has a 70 p.c share, it appears very possible that they’ve market energy in the best way that we normally imply it in an antitrust context, they usually’re going to have the ability to increase costs or decrease high quality or in any other case prohibit choices for shoppers to worse phrases than they might get in a aggressive market,” she mentioned.
On the very least, there may be an incestuousness to how Dwell Nation promoters — workers who arrange reside occasions — advise artists on ticket pricing on websites like Ticketmaster and negotiate with venues, together with the 78 p.c of high arenas nationwide operated by Dwell Nation. These venues then give Ticketmaster a lower of the service charges. And that ought to increase alarm bells, Scott Morton mentioned.
The corporate has already sought to preempt a few of these potential accusations. In a weblog put up final month, Dwell Nation Leisure’s govt vice chairman of company and regulatory affairs, Dan Wall, argued that neither Ticketmaster nor Dwell Nation is chargeable for excessive ticket costs.
Wall writes that tickets offered on Ticketmaster are “really priced by artists and groups,” not Ticketmaster itself. However artists’ groups might embrace Dwell Nation promoters.
Wall additionally refutes the concept service expenses, which go to venues and ticketing corporations like Ticketmaster, are only a sneaky manner for Ticketmaster to lift costs.
Service charges differ by venue and occasion, however common about 27 p.c of the value of a ticket, based on 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 expenses, 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 lower of the service price — primarily based on that proposed price. Nonetheless, the service price proposed “is determined by everyone’s exterior choice in a bargaining sport,” Scott Morton mentioned. And for venues, there aren’t many exterior choices in a market the place Ticketmaster controls a big majority of ticket gross sales.
In that sense, venues would possibly need to cost increased service charges in order that Ticketmaster, the biggest ticket vendor by far, will get an even bigger lower and subsequently bid on a contract.
“Ticketmaster is pointing on the plain energy of others to obscure its personal monopolistic function in facilitating the extraordinary progress in each charges and in addition, to some extent, ticket costs,” Wu mentioned. Dwell Nation Leisure has sought to painting itself “as a passive, nearly disinterested participant once they have been doing all that they will to encourage the expansion of costs and charges and whereas discouraging competitors,” he added.
Wu pointed to Songkick for instance. Within the 2010s, the corporate tried to pioneer a direct gross sales mannequin from artists to followers, “solely to search 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 Dwell 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 properly under different digital distribution platforms like Airbnb and StubHub, and Dwell 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 attempting to make use of numbers to distract us from what’s actually vital,” Scott Morton mentioned. “It’s not likely so vital how large Ticketmaster’s revenues are compared to another arbitrary quantity — like how a lot folks spend on concert events in America or how a lot they spend in another giant markets — however relatively, what that income could be in an surroundings with extra sturdy competitors.”
