The Senate Judiciary Committee held a hearing this week titled, “That’s the Ticket: Promoting Competition and Protecting Consumers in Live Entertainment,” which focused on the state of Live Nation Entertainment and the lack of competition in the primary and secondary ticketing markets.
“I just want to dispel this notion that this is not a monopoly and then we can go from there about solutions,” Sen. Amy Klobuchar, D-Minn., said at the hearing, which was held Tuesday.
Live Nation Entertainment is composed of Live Nation, an events promoter and venue operator, and Ticketmaster, a ticket sales giant. The two companies merged in 2010 and now control an estimated 70% of the ticketing and live event venues market.
It’s no secret that Taylor Swift fans were outraged in November 2022 when millions flocked to Ticketmaster.com to grab tickets to see the heartbreak queen for the first time since 2018 and the website crashed. The long wait lines and frozen screens sparked an uproar with fans, blaming Ticketmaster for ruining their chances to see the pop star.
“As the leading player, we have an obligation to do better,” said Joe Berchtold, Live Nation Entertainment president and chief financial officer, at the hearing Tuesday.
This is not the first time consumers have called for the breakup of Ticketmaster and Live Nation. It’s also not the first time the Department of Justice has been reportedly looking into alleged misconduct by the company.
When the Live Nation and Ticketmaster merger was approved in 2010, it was under the condition of a consent decree. Among other things, the purpose of that agreement was to forbid Live Nation from retaliating against a venue for using a ticketer other than Ticketmaster. After an investigation, in 2019 the DOJ made its most significant enforcement action of an antitrust decree in 20 years when it alleged Live Nation Entertainment violated that decree. The company settled with the government.
“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. The idea that we would ever put our interests ahead of theirs. So we are comfortable extending the consent decree,” said Berchtold during Tuesday’s hearing. “It is absolutely our policy to not pressure, threaten or retaliate against venues by using content as part of the ticketing discussion,” he added.
In November 2022, The New York Times reported the DOJ is once again investigating the company.
While Live Nation Entertainment arguably has a monopoly on the industry, a monopoly in itself is not illegal in the United States. A monopoly occurs when a company holds exclusive possession or control of an industry.
“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,” said Diana Moss, president of the American Antitrust Institute.
Abuse of a monopoly position is another matter. It’s illegal for a business to establish or maintain a monopoly through improper conduct and not allow for others to enter the market.
Clyde Lawrence, a singer-songwriter in the New York City-based band Lawrence, testified during Tuesday’s hearing. The band regularly interacts with Live Nation Entertainment. It’s often their promoter, venue operator and ticketer.
“In a world where the promoter and the venue are not affiliated with each other, we can trust that the promoter will look to get the best deal from the venue; however, in this case the promoter and the venue are part of the same corporate entity so the line items are essentially Live Nation negotiating to pay itself,” Lawrence said.
The band told CNBC if they want to play a certain size venue in a particular city, they are sometimes left no choice other than to use Live Nation because of the lack of competition in some regions. Then if they would like to use another ticketer other than Ticketmaster, they say that is not an option.
“Ticketmaster has 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 X, Y, Z platform,'” said Jordan Cohen, one of the band’s eight members.
They even have a song with the lyric, “Live Nation is a monopoly.” “Due to Live Nation’s control across the industry, we have practically no leverage in negotiating,” Lawrence said.
While the company does have some competition, experts say no other firm currently stands a chance.
“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 they made a statement that speaks to the market power of Ticketmaster, which is that they used Ticketmaster to ticket Taylor Swift,” said Barton Crockett, managing director and senior equity analyst at Rosenblatt Securities.
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 grab enough market share to really be a meaningful player,” he added.
Live Nation declined CNBC’s request for an interview or comment but in a statement on its website said that it’s against company policy to threaten venues if they do not use Ticketmaster and that it does not retaliate for a lost ticketing deal.
It’s unclear what’s next for Live Nation Entertainment.
Watch this video to learn more about how the company got to where it is today and what the future might hold.
Source: Business - cnbc.com
