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 ticket markets.
“I just want to dispel this notion that this is not a monopoly, and then we can move on to solutions,” Sen. Amy Klobuchar, D-Minn., said during the hearing, which was held Tuesday.
Live Nation Entertainment consists of Live Nation, an event organizer and venue operator, and Ticketmaster, a ticketing giant. The two companies merged in 2010 and now control around 70% of the live event ticket and venue 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 Queen of Hearts for the first time since 2018 and the website crashed. Long waiting lines and frozen screens sparked outrage among fans, accusing Ticketmaster of ruining their chances of seeing the pop star.
“As a major player, we have an obligation to do better,” Joe Berchtold, president and chief financial officer of Live Nation Entertainment, said during Tuesday’s hearing.
This isn’t the first time consumers have called for the breakup of Ticketmaster and Live Nation. This is reportedly not the first time the Justice Department has looked into alleged wrongdoing by the company.
When the merger of Live Nation and Ticketmaster was approved in 2010, it was subject to a consent decree. Among other things, the purpose of this agreement was to prohibit Live Nation from retaliating against a venue for using a ticket seller other than Ticketmaster. Following an investigation in 2019, the Justice Department took its most significant antitrust enforcement action in 20 years when it alleged that Live Nation Entertainment violated the order. The company settled with the government.
“The Department of Justice raised six issues in 2019 that led to our decision with them to extend the consent decree. We did not think it worthwhile to be seen as advocating the retaliation or threat theories. This is not our business practice. versus our primary focus on aligning with artists. The idea that we would ever put our interests before theirs. So we’re comfortable extending the consent decree,” Berchtold said during Tuesday’s hearing. “It is absolutely our policy not to pressure, threaten or retaliate against venues by using content as part of the ticket discussion,” he added .
In November 2022, The New York Times reported that the DOJ was again investigating the company.
Although Live Nation Entertainment may have a monopoly over the industry, the monopoly itself is not illegal in the United States. A monopoly occurs when one company holds exclusive ownership or control of an industry.
“If we make monopolies illegal based on pricing above cost and generating monopoly profits for a firm, the concern would be that it would potentially stifle risk-taking and entrepreneurial activity,” said Diana Moss, president of the American Antitrust Institute.
Abuse of a monopoly is another matter. It is illegal for a business to establish or maintain a monopoly through misconduct and to prevent others from entering the market.
Clyde Lawrence, a singer-songwriter with the New York-based band Lawrence, testified during Tuesday’s hearing. The band regularly interacts with Live Nation Entertainment. Often this is their promoter, venue operator and ticket seller.
“In a world where promoter and venue are not connected, we can trust that the promoter will strive 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 negotiated positions are essentially Live Nation negotiating to pay itself,” Lawrence said.
The band told CNBC that if they want to play a venue of a certain size in a certain city, they sometimes have no choice but to use Live Nation due to the lack of competition in some regions. Then if they want to use another ticket seller other than Ticketmaster they say that’s not an option.
“Ticketmaster created these exclusive contracts, once you sign that contract, a group has no right to come in and say, ‘we want to sell our tickets with X, Y, Z platform,'” said Jordan Cohen, one of the eight-member group.
They even have a song with the lyrics, “Live Nation is a monopoly.” “Because of Live Nation’s control of the industry, we have virtually no negotiating leverage,” Lawrence said.
While the company has some competition, experts say no other firm currently stands a chance.
“There’s really no one that has been able to achieve the kind of scale that Live Nation has. The closest comparison is Anschutz Entertainment Group with its own kind of in-house ticketing platform. But they made a statement that speaks to Ticketmaster’s market power, which is that they used Ticketmaster to force Taylor Swift tickets,” said Barton Crockett, managing director and senior equity analyst at Rosenblatt Securities.
This is a business that many people have looked into. They’ve talked about wanting to get into it, but nobody’s been able to grab enough market share to be a really significant player,” he added.
Live Nation declined CNBC’s request for an interview or comment, but said in a statement on its website that it opposes the company’s policy of threatening venues if they don’t use Ticketmaster and that it is not retaliating 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 may hold.