The Biden administration, along with a bipartisan group of attorneys general from 30 states, filed a lawsuit against Ticketmaster parent company Live Nation on Thursday. The lawsuit seeks to break up what the government claims is an illegal monopoly. The primary reaction from everyone, well, just about everyone, was: “Finally.”
The entertainment giant, widely disliked by music and sports fans, was created by the vertical integration of promoter Live Nation and ticket seller Ticketmaster. The combined company controls most of the most profitable music venues in the United States, accounting for about 70% of ticket sales at large venues, and also promotes shows and manages artists.. Customer anger toward the company has been growing steadily for years, reaching a new peak when the company’s control of ticket sales for Taylor Swift’s “Erasure” tour led to massive systems outages and price gouging. Since then, the term “Ticketmaster” has become shorthand for how companies with monopoly control over market segments are making Americans’ lives worse.
The American live music industry is broken because Live Nation Ticketmaster is running an illegal monopoly.”
The Obama administration approved the merger of Live Nation and Ticketmaster in 2010, but with conditions that the companies not use their size to squeeze competitors, such as not using rival ticket sellers to book their artists at venues. Regulators were very keen on the deal, predicting that it would lower both ticket prices and service fees.
This turned out to be disastrously naive.
As anyone who’s attended a concert or sporting event in the past decade can attest, junk fees have skyrocketed. The American Economic Liberties Project (disclosure: I serve as editor-in-chief) concluded that a combination of handling fees, processing fees, facility fees, etc. can make up 78% of the cost of a ticket. In other countries where venues have access to multiple ticket sellers, competitive pressures have led to significantly lower fees.
The company’s treatment of competitors got so bad that the Trump administration, not known for regulating corporations, stepped in in 2019 and extended a consent agreement with other ticketing services that prohibited the company from engaging in anticompetitive practices such as barring talent from concert venues.
Ordinary artists have also complained that the company has used its size and power to eat into the money they make from touring. Those complaints go back decades, long before the merger: In 1994, Pearl Jam accused Ticketmaster of pressuring promoters not to book tickets for the band after they complained about its pricing.
“Live Nation Ticketmaster’s illegal monopoly is disrupting America’s live music industry,” Jonathan Cantor, director of the Justice Department’s antitrust division, said in a news release announcing the case. It’s impossible to say no to Ticketmaster, especially if you want to see a live show. They stick their greedy nose into so many parts of the process that it’s nearly impossible to avoid them. No wonder CNBC’s Jim Cramer, no staunch trustbuster, said Thursday that he’s been recommending the company’s stock for a long time because “it’s the world’s greatest rip-off.” (Cramer quickly added, “I suspect it’s a rip-off.”)
The rule of law matters, even when we’re debating something as frivolous and discretionary as concert tickets.
Live Nation Ticketmaster, naturally, denies it all and says it will fight the Biden administration in court. The company says that rising fees and ticket prices are partly due to artist greed, and that if scalping is so rampant, it’s because the public demands it. There’s some truth to the idea that the most popular artists are likely using Ticketmaster as a convenient excuse to charge higher fees, but that’s no defense against the broader issue of whether the company is using its power to thwart rivals and take advantage of the public.
The company’s few defenders seem half-hearted at best: On both the left and the right, their complaint seems to boil down to this: Shouldn’t the Biden administration take this more seriously? That reaction misunderstands the situation. First, the rule of law matters, even when we’re discussing frivolous, discretionary matters like concert tickets. Second, many Americans are right to think that no one in government listens to, much less tries to address, their political and economic concerns. This is the sentiment that got Donald Trump elected to the White House in 2016 and is likely to do so again this year.
Ever-growing monopolies are a big part of the problem. The Biden administration, to its credit and the ire of both Wall Street and Silicon Valley, is pursuing antitrust cases with more vigor than in decades. The Federal Trade Commission recently filed suit against the proposed merger of grocery store giants Kroger and Albertsons, arguing that it would raise grocery prices and harm workers. The Department of Justice has filed antitrust lawsuits against Google and Apple, and has already blocked the proposed merger of JetBlue and Spirit in court.
When a company becomes dominant in a market, costs skyrocket and the quality of the service provided declines. Even for the apolitical, Live Nation Ticketmaster has become a symbol of how big and increasingly unaccountable corporations are not only exploiting us financially but also undermining our lives. Combined with our post-COVID party-hardened lives, the issue has become a political bombshell. Live Nation Ticketmaster executives should have remembered the basic business maxim that pigs get fed and pigs get slaughtered.
