Ticketmaster Lawsuit: Will Concert Ticket Prices Drop?

Purchasing concert tickets is tough, as Taylor Swift fans know all too well.

When tickets for the Eras Tour first went on sale in November 2022, fans endured long lines and frozen screens before the Ticketmaster website eventually crashed. Many failed to purchase tickets, which were eventually sold on the secondary market for up to $1,000 $11,000.

Ticketmaster's failure to adequately prepare for the onslaught of demand by not investing in the customer purchasing experience may constitute an abuse of its market power, some economists say. pointed out. Ticket manager Regulations About 70 percent of the ticket market is live events and More than 80 percent off initial tickets for major concerts.

The Justice Department opened an investigation into Ticketmaster's parent company, Live Nation Entertainment, shortly after the Eras tour failed. It appears that this investigation has come to a close, and now the government appears ready to file a lawsuit against the company for its alleged anticompetitive behavior. The Wall Street Journal mentioned The Justice Department's antitrust lawsuit could be filed as early as next month.

The exact lines of the lawsuit are not yet known. But Live Nation Entertainment has come under government scrutiny in the past.

The Department of Justice allowed Ticketmaster and Live Nation, venue operators and event promoters, to merge and become Live Nation Entertainment as part of 2010 settlement. But it has asked Ticketmaster to take measures to improve competition, including divesting from one of its ticket companies and licensing its ticketing software. The Justice Department also prohibited Live Nation Entertainment from “retaliating against any venue owner who chooses to use another company's ticketing services or another company's promotional services.”

In 2019, the Ministry of Justice Accused The Company has committed violations of this condition and has appointed an external monitor to track its ongoing compliance.

However, critics have argued in the years since that the provisions in the 2010 settlement It didn't really stimulate competition In the ticket market and Live Nation Entertainment It must be disassembled.

“The Department of Justice should never have acquitted [Live Nation-Ticketmaster] Merger, because as a vertically integrated monopoly, they have every interest in encouraging prices and fees to go up, and there isn't [one] said Tim Wu, A Principal architect of the Biden administration's antitrust policies and a professor at Columbia Law School.

What are the antitrust concerns surrounding Live Nation Entertainment?

Regardless of how the Justice Department frames its lawsuit, it will have to prove that Live Nation Entertainment has engaged in anticompetitive conduct that stifles competition and harms consumers by excessively raising prices or offering lower-quality products.

Some experts, such as Fiona Scott Morton, a professor at Yale School of Management and former chief economist in the Justice Department's antitrust division, believe the government may have a strong case.

“If we had a well-defined market and Ticketmaster had a 70 percent share, they would very likely have market power in the way that we normally mean in an antitrust context, and they would be able to raise prices or reduce quality or restrict the choices available to consumers,” she said. “On terms worse than they would get in a competitive market.”

To say the least, there is incest in how Live Nation promoters — the employees who organize live events — advise artists on ticket prices on sites like Ticketmaster and negotiate with venues, including 78 percent of the best arenas nationwide Run by Live Nation. These venues then give Ticketmaster a portion of the service fee. That should set off alarm bells, Scott Morton said.

The company has already sought to preempt some of these potential accusations. in Blog post Last month, Dan Wall, executive vice president of corporate and regulatory affairs at Live Nation Entertainment, argued that neither Ticketmaster nor Live Nation was responsible for rising ticket prices.

Wall wrote that tickets sold on Ticketmaster “are actually priced by the artists and bands,” not Ticketmaster itself. But artist teams may include Live Nation promoters.

Wall also refutes the idea that service fees, which go to venues and ticket companies like Ticketmaster, are just a sneaky way for Ticketmaster to raise prices.

Service fees vary by venue and event, but average about 27 percent of the ticket price, according to the 2018 Government Accountability Office. a report. As part of his fight against “junk fees,” President Joe Biden has criticized ticket dealers for failing to disclose these fees up front. On Ticketmaster, fees are only visible at checkout.

“Ticketmaster doesn't set the service fees, the venues do,” says Wall. But this oversimplifies what happens behind the scenes.

When negotiating contracts with ticket companies, venues propose a service fee. Ticketing companies, including Ticketmaster, then structure their offers for the contract — which includes a portion of the service fee — based on those proposed fees. However, Scott Morton said the proposed service fee “relies on everyone's outside choice in the bargaining game.” As for venues, there aren't a lot of outside options in the market as Ticketmaster controls a large majority of ticket sales.

In this sense, venues may want to charge higher service fees so that Ticketmaster, by far the largest ticket seller, gets a larger share and thus bids on the contract.

“Ticketmaster signals the undeniable power of others to mask its monopolistic role in facilitating extraordinary growth in both fees and also, to some extent, ticket prices,” Wu said. He added that Live Nation Entertainment sought to portray itself “as a passive and almost uninterested player when they were doing everything they could to encourage the growth of rates and fees while simultaneously discouraging competition.”

Wu pointed out Song Cake For example. In the 2000s, the company tried to pioneer the direct artist-to-fan selling model, “only to find artists who worked with it facing threats and retaliation from Ticketmaster/LiveNation,” he said.

In his statement, Wall also argued that neither Ticketmaster nor Live Nation makes enough money to suggest they are abusing their market power. Ticketmaster makes about 5 to 7 percent of the average ticket price from this service fee, which it says is much lower than other digital distribution platforms like Airbnb and StubHub, and Live Nation gets about 2 percent of concert revenue.

But the question is whether Ticketmaster should make that much, and whether any antitrust action could make the ticket-buying experience better for consumers. The answers to both remain to be seen.

“This is just an attempt to use numbers to distract us from what's really important,” Scott Morton said. “It's not really important how big Ticketmaster's revenue is compared to some other arbitrary number — like how much people spend on concerts in America or how much they spend in some other big market — but rather, what those revenues are in an environment with stronger competition.”