A decade ago, the Department of Justice approved the merger of Ticketmaster and Live Nation — combining the biggest concert promoter, a major venue operator and artist manager, and the largest ticket provider under one roof. The anticompetitive implications of this deal were enormous. The combined company would be able to use its relationships with artists to require that independent venues use Ticketmaster, for instance. At the time of the merger, Ticketmaster controlled around 80% of the ticketing marketplace. The conditions the DOJ put on the deal were designed to promote competition in this market. They didn’t work: Ticketmaster remains dominant, and it is using control over its platform and its top-to-bottom control over concerts and other live events to increase its dominance — for example, by making it impossible for ticket buyers to give away or sell their tickets (at least not without jumping through hoops).
The DOJ recognizes that the consent decree it put in place 10 years ago didn’t work. That’s why instead of just letting it expire, it has asked the judge overseeing the case for an extension. Unfortunately, the extension it has asked for does not go far enough, and does not take into account the wide variety of anticompetitive conduct that the company (today known as Live Nation Entertainment, with Ticketmaster as a subsidiary) engages in.
It is hard to list in a brief blog post all the the ways that Live Nation / Ticketmaster harm competition, leading to higher prices for consumers. But I can try to hit some highlights:
Leveraging Live Nation
The most straightforward way that the company behaves anticompetitively is by leveraging one part of its business to benefit another. For example, Live Nation, in its role as concert promoter, has refused to bring artists to venues that don’t use Ticketmaster. This doesn’t just harm consumers, who might save money at shows where they don’t have to pay the Ticketmaster premium. It harms artists, too, as third-party ticket services might take a smaller cut of sales, and blacklisted venues might offer better terms.
Restrictions on resale
Ticket scalping can be a real problem, and the economics of ticketing have some unusual characteristics. Tickets to sporting events are sold before it’s even known how relevant the game will be to a team’s postseason chances. And artists might want to find ways to make low-cost tickets available to hardcore fans who might be younger or just not have the disposable income to spend on what tickets would go for if they were all just auctioned off to the highest bidder. So artists might be willing to forgo ticket revenue in the short term, if it builds up their fanbase in the long term, and creates goodwill. Obviously, then, artists don’t want to sell tickets that are intended for a high school kid working a weekend job to someone who’s just going to flip them to a stockbroker at five times the cost.
But considerations like this don’t justify the wholesale crackdown on all reselling (well, not all reselling, as I’ll get to) that Ticketmaster has rolled out. It has been using a system called “SafeTix,” for example, that makes transferring tickets all but impossible, since the “ticket” is tied to a smartphone app. In general, instead of viewing a ticket as the right for its bearer to attend an event — how tickets have traditionally been conceived — Ticketmaster increasingly ties them to the buyer. This makes all kinds of traditional activities — ticket giveaways, gifts, and yes, selling tickets to events you can no longer attend — difficult or impossible.
Ticketmaster’s real motivation does not appear to be cracking down on real instances of resale abuse, which have long been a problem in the industry. That’s because instead of working with ticket resale marketplaces like StubHub and Vivid Seats, it has rolled out its own “secondary market,” where many of the behaviors it restricts others from doing in the name of “trust” and preventing fraud are allowed — provided it gets a cut. In addition to harming consumers by reducing competition around things like transaction fees, this structure creates a perverse incentive: Ticketmaster and concert promoters can sell tickets in the first instance at low prices, and use that to show their community-spiritedness, yet take a piece of the action when some of those tickets are resold at closer to their market prices on the secondary market platform they control.
Holdbacks are a practice where only a portion of tickets to an event are actually put on sale on the first day of availability. Similar to resale restrictions, this is justified as a way to keep tickets available for “real fans.” As with resale issues, there’s nothing wrong with Ticketmaster selling affordable tickets, and taking steps to prevent real abuse. But at some concerts, as much as 40% to 50% of tickets might be held back. This is less about helping fans, than creating a feeling of artificial scarcity that allows tickets to be sold for more up front, and in fact creating demand on the secondary market — which Ticketmaster then profits from again, due to its control of the platform and the resale restrictions it has put in place. Ticketmaster has shown itself to be very adept at finding ways to benefit from its market power while trying to present itself as a champion of the little guy.
Most of Ticketmaster’s schemes require electronic tickets tied to particular buyers. Often the only way to buy tickets to a venue is to hand over personal data to Ticketmaster, subject to whatever terms it wants to impose. (If you don’t want Ticketmaster to market to you or do whatever its small print allows it to do, you can just not go see your favorite artist any more, I suppose.)
What Should Be Done
As I wrote above, the DOJ is in fact trying to renew the current consent decree. This shows that the agency recognizes that Ticketmaster continues to engage in anticompetitive behavior. But merely extending the current decree with some minor changes is not enough in the digital age where the cost of exclusion for consumers from Ticketmaster’s platform is extremely high for even average music fans. The DOJ should strengthen the consent decree so that it fully prevents the leveraging, holdbacks, and use restrictions it imposes that harm consumers, drive up prices, and limit competition.
Additionally, as Public Knowledge has written before, Congress has a role. As a start, it can pass the BOSS Act, which brings transparency to the marketplace and ends some of the most egregious practices in ticketing.
Stronger antitrust, regulatory, and legislative actions may be required down the line. Ticketmaster has shown that its market power is robust, and it is expert at finding ways to preserve and extend it. Consumers should remain wary of the way this company stands in the way of artists and fans.
Image credit: Flickr user mightnightglory