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Ticketmaster lawsuit: Will live performance ticket costs drop?


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 finally crashed. Many failed to obtain tickets, which have been finally bought 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 % of the marketplace for ticketing and stay occasions and greater than 80 % of main live performance main ticketing.

The Division of Justice opened an investigation of Ticketmaster’s dad or mum 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 Road Journal reported that the DOJ’s antitrust lawsuit might be filed as early as subsequent month.

The precise contours of the lawsuit are usually not but identified. However Dwell Nation Leisure has come below authorities scrutiny up to now.

The DOJ allowed Ticketmaster and Dwell Nation, a venue operator and occasions promoter, to merge and turn out to be Dwell Nation Leisure as a part of a 2010 settlement. Nevertheless it required Ticketmaster to undertake measures to enhance competitors, together with divesting from considered 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 companies or one other firm’s promotional companies.”

In 2019, the DOJ accused the corporate of violating that requirement and appointed an exterior monitor to maintain observe of its ongoing compliance.

Critics have argued within the years since, nevertheless, that the provisions within the 2010 settlement by no means truly stimulated competitors within the ticketing market and that Dwell Nation Leisure must 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] ready to self-discipline the trade, both by utilizing an alternate promoter or ticketing agent,” stated Tim Wu, a key architect of the Biden administration’s antitrust insurance policies and a professor at Columbia Regulation.

What are the antitrust considerations surrounding Dwell Nation Leisure?

No matter how the DOJ frames its lawsuit, it should present that Dwell Nation Leisure has engaged in anti-competitive conduct that has stifled competitors and damage 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 robust case.

“If we’ve obtained a well-defined market and Ticketmaster has a 70 % share, it appears very probably that they’ve market energy in the best way that we often imply it in an antitrust context, they usually’re going to have the ability to elevate 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 stated.

On the very least, there may be an incestuousness to how Dwell Nation promoters — workers who set up stay occasions — advise artists on ticket pricing on websites like Ticketmaster and negotiate with venues, together with the 78 % of high arenas nationwide operated by Dwell Nation. These venues then give Ticketmaster a reduce of the service charges. And that ought to elevate alarm bells, Scott Morton stated.

The corporate has already sought to preempt a few of these potential accusations. In a weblog submit final month, Dwell Nation Leisure’s govt vice chairman of company and regulatory affairs, Dan Wall, argued that neither Ticketmaster nor Dwell Nation is liable for excessive ticket costs.

Wall writes that tickets bought on Ticketmaster are “truly priced by artists and groups,” not Ticketmaster itself. However artists’ groups might embrace Dwell Nation promoters.

Wall additionally refutes the concept that service costs, which go to venues and ticketing firms like Ticketmaster, are only a sneaky approach for Ticketmaster to lift costs.

Service charges differ by venue and occasion, however common about 27 % of the worth of a ticket, in accordance with a 2018 Authorities Accountability Workplace report. As a part of his combat 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 costs, venues do.” However that oversimplifies what is occurring behind the scenes.

When negotiating contracts with ticketing firms, venues suggest a service payment. Ticketing firms, together with Ticketmaster, then construction their bids for the contract — which features a reduce of the service payment — based mostly on that proposed payment. Nevertheless, the service payment proposed “is dependent upon everyone’s exterior possibility in a bargaining sport,” Scott Morton stated. And for venues, there are usually not many exterior choices in a market the place Ticketmaster controls a big majority of ticket gross sales.

In that sense, venues would possibly wish to cost increased service charges in order that Ticketmaster, the biggest ticket vendor by far, will get a much bigger reduce 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 development in each charges and likewise, to some extent, ticket costs,” Wu stated. 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 seek out artists who labored with it dealing with threats and retaliation from Ticketmaster/LiveNation,” he stated.

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 % of the typical ticket value from these service charges, which he says is properly beneath different digital distribution platforms like Airbnb and StubHub, and Dwell Nation is taking in about 2 % 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 making an attempt to make use of numbers to distract us from what’s actually essential,” Scott Morton stated. “It’s probably not so essential how huge Ticketmaster’s revenues are compared to another arbitrary quantity — like how a lot individuals spend on concert events in America or how a lot they spend in another massive markets — however relatively, what that income could be in an surroundings with extra sturdy competitors.”

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