Ticketmaster is the dominant primary ticket outlet and distribution platform for live entertainment events in the United States. With exclusive partnerships in place with many major venues and artists, Ticketmaster sells tickets for the vast majority of large concerts, sports games, and theater shows across the country. This dominant market position has led many to accuse Ticketmaster of being a monopoly in the ticket sales industry.
In this article, we’ll examine the evidence and arguments on both sides of the debate over whether Ticketmaster constitutes an illegal monopoly. We’ll look at Ticketmaster’s market share, their business practices, and pricing power. We’ll also analyze the competitive landscape, barriers to entry, and antitrust regulations related to monopolies. By the end, you should have a clear understanding of Ticketmaster’s market power and whether it fits the definition of an unacceptable monopoly in the live event ticketing industry.
What is a Monopoly?
In economic terms, a monopoly refers to a company that has gained enough market power to effectively eliminate competition in an industry and set prices higher than they would be in a competitive market. Legally, monopolies can form through exclusionary tactics or anti-competitive mergers and acquisitions. In the United States, monopolies are generally prohibited under antitrust laws such as the Sherman Act and the Clayton Act.
For a company to be considered an illegal monopoly, it must meet two criteria:
1. It must possess substantial market power, typically defined as controlling at least 50-70% of sales within a product or geographic market.
2. It must have gained this market power in an uncompetitive manner, through improper exclusion of competitors or other anti-competitive practices.
Simply having a dominant market share alone does not make a company a monopoly. The market power must also have been acquired through unacceptable means, rather than simply by offering an innovative or competitively priced product.
Let’s examine Ticketmaster’s position in the market to determine whether it meets these criteria for an illegal monopoly.
Ticketmaster’s Market Share
Ticketmaster is the unquestioned market leader in primary ticket sales for live entertainment events in the United States and many other countries. The company sells tickets for concerts, sports games, theater shows, and other events at hundreds of major venues across North America.
Some key facts about Ticketmaster’s market share:
– Ticketmaster handles ticket sales at over 200 of the major arenas, stadiums, amphitheaters, music clubs, and theaters in the United States. This includes around 70 of the busiest concert venues in the country.
– For major concert tours, Ticketmaster sells primary tickets at 80-90% of venues on the tour route. This can rise to 95-100% for the biggest global tours.
– In professional sports, Ticketmaster has ticket deals with over 60 professional teams in MLB, NBA, NHL, and NFL. This includes about 75% of teams in the four major leagues.
– Ticketmaster estimated it sold 500 million tickets globally in 2019 across 30,000 events. Total gross transaction value was $35 billion.
Exact market share percentages are hard to pin down. However, most industry estimates suggest Ticketmaster accounts for 60-80% of primary ticket sales for live entertainment events in America.
This overwhelming market share across live events, sports, and music makes a strong case that Ticketmaster holds substantial monopoly power in the primary ticket sales market. It dwarfs its closest competitors like AXS, Altitude Tickets, Tickets.com, and Ticketfly.
Ticketmaster’s Business Practices
Beyond just market share, Ticketmaster is also accused of various anti-competitive business practices that improperly exclude competitors, exploit clients, and ultimately harm consumers. Key criticisms of their business tactics include:
– Exclusive deals – Ticketmaster frequently signs long-term exclusive contracts with venues and promoters to be their sole primary ticketing service. This locks out competitors from a huge portion of major live events.
– Captive clientele – Ticketmaster’s exclusive deals force fans to use their platform if they want to purchase the most popular tickets. Consumers have limited alternatives for big concerts and games.
– Bundling – Ticketmaster bundles its primary ticket sales with a number of related services for venues like box office software, fan data analytics, marketing tools, etc. Some argue these bundles serve to discourage venues from using other primary ticket services.
– Service fees – Ticketmaster tacks on substantial convenience and processing fees to every ticket purchase. These fees often represent 25-40% of ticket face value. Critics argue these fees far exceed Ticketmaster’s costs and amount to an abuse of their market power.
– Resale platforms – Ticketmaster owns several ticket resale exchanges like TicketsNow and TicketExchange. This empowers Ticketmaster to profit from inflated resale ticket prices. Some also accuse the company of diverting tickets directly to resale sites instead of public sale.
– Anti-competitive mergers – Ticketmaster has maintained its dominance in part by acquiring smaller competing ticketing companies like Ticketweb and Paciolan Systems. This strategy excludes future competition through mergers rather than competitive prowess.
– Lobbying – Ticketmaster spends millions on state and federal lobbying to influence ticketing-related regulations in their favor. For example, they successfully lobbied states to prohibit event venues from selling tickets directly without a ticket services company.
Overall, Ticketmaster is portrayed by critics as a company that exploits its market power at every turn to squash competition, strongarm clients, and extract maximum fees from consumers, all contributing to higher ticket prices.
Ticketmaster’s Pricing Power
Perhaps the most compelling evidence that Ticketmaster holds monopoly power is their ability to impose pricing and fees significantly above competitive levels.
Economic theory predicts that monopolists will use their market dominance to raise prices, boost profits, and exploit captive consumers that have no equivalent alternatives. Many observers argue that Ticketmaster’s fees demonstrate this monopoly pricing power in action.
Some key examples:
– Across the board, Ticketmaster adds 25-40% to every ticket’s face value in the form of convenience and order processing fees. These can add $10-$20 or more to each ticket.
– Dynamic pricing – For high demand events, Ticketmaster utilizes “dynamic pricing” algorithms to adjust prices upwards based on demand. This leads to certain tickets being sold at 2-3X or more above face value.
– Speculative ticketing – Investigative reporting has revealed instances of Ticketmaster parterning with scalpers to sell large ticket blocks at inflated prices on secondary markets.
– Fees on the secondary market – Ticketmaster also runs its own resale exchanges where they collect fees on ticket resales, profiting twice from each ticket sold. Resale platforms charge transaction fees of up to 25%.
– Service fees do not reflect costs – Ticketmaster claims their fees cover costs for online ticket sales, credit card processing, customer support, etc. However, critics argue their 15-20% cut far exceeds the actual costs for providing these services.
– Captive pricing – Alternative primary ticketing platforms like AXS typically charge lower fees in the 10-15% range. The fact that Ticketmaster can get away with charging almost double suggests they are exploiting consumers’ lack of choice.
– No free market restraint – In a functioning free market, inflated pricing should open the door to competitors offering superior value. The fact that Ticketmaster’s fees continue rising unimpeded indicates they face no effective competition.
This array of evidence suggests Ticketmaster is unchecked by competitive pressure and able to leverage its dominance to impose exceptional fees that would not fly in a healthy competitive market.
The Competitive Landscape
To fully evaluate claims of monopoly power, it is important to assess whether viable competition exists that could potentially restrain Ticketmaster if their actions became truly exploitative. While no companies come close to Ticketmaster’s scale, there are smaller competitors trying to chip away at their market stranglehold.
Major current competitors in primary ticket sales include:
– AXS – AEG’s ticketing platform used by its collection of sports teams, venues, and touring artists. Significant platform but has limited market share outside AEG ecosystem.
– Altitude Tickets – Colorado-based ticketing company with deals in 2-3 dozen venues nationwide plus some music festivals and theaters. Small player compared to Ticketmaster.
– Tickets.com – Provides primary ticketing services for some small music clubs, theaters, minor league sports, and college events. Lacks foothold in major venues and tours.
– Ticketfly – Focuses on smaller music venues. Was acquired by Eventbrite in 2017. Minimal presence in arenas, stadiums, and major concert tours.
– TicketSauce – Newer startup aiming to provide a low-fee alternative to Ticketmaster for venues and promoters. Only a minor player so far.
– Entrypoint – Another relatively new startup ticketing platform vying for indie venue and promoter business. Not yet made a dent in Ticketmaster’s market share.
– Bandsintown, Eventbrite – Primarily for free events and smaller DIY concerts and performances. Not positioned for large paid events.
– Independent webstores – Some venues, festivals, and artists sell directly through independent platforms like Frontgate or Veritix. But most lack resources to build full-scale primary sales portals.
As this breakdown illustrates, while there are certainly competitors attempting to take on Ticketmaster, none come remotely close to challenging their dominant status in selling tickets to premium major concerts, pro sports, and big theater and comedy shows.
Most direct challengers so far remain stuck in niche roles – independents clubs, colleges, small music festivals, minor league sports, etc. Cracking Ticketmaster’s hold on premium inventory has proved extremely challenging due to their entrenched venue deals and fan loyalty networks.
Barriers to Entry
The lack of major competitive threats to Ticketmaster’s market share stems largely from the formidable barriers to entry that make the primary ticket sales business so hard to disrupt. Key obstacles for prospective competitors include:
– Exclusive contracts – Ticketmaster’s long-term exclusive deals with major venues and promoters make their premium inventory unavailable. New entrants have to build client bases from scratch.
– Capital requirements – Developing enterprise-grade primary ticketing software and sales operations requires huge upfront development costs typically funded by major investments.
– No consumer price sensitivity – Fans have shown little inclination to choose tickets from unfamiliar vendors due to fees or prices. Consumers gravitate to trusted brands like Ticketmaster out of habit.
– Brand equity – Ticketmaster has built powerful brand equity over decades in ticketing. Their brand is synonymous with buying tickets for most consumers. New brands lack awareness and trust.
– Data and scale – Ticketmaster’s enormous sales volume gives them unmatched data and scale advantages in areas like dynamic pricing algorithms and sales forecasting.
– Vertical integration – Ticketmaster’s breadth across primary sales, secondary markets, venue software, fan analytics, etc creates a closed ecosystem difficult for others to replicate.
– Venue deals – Landing exclusive venue deals requires proven technology + nationwide sales infrastructure to service big stadiums and arenas. Major hurdles for upstarts.
– Promoter deals – Similarly, promoters want proven ticketing partners capable of handling large-scale tour sales across hundreds of markets. High barrier for unproven platforms.
Overall, these barriers make primary ticket sales a classic industry where the “rich get richer.” Once a platform like Ticketmaster achieves dominant scale and exclusive deals, new entrants face complex challenges getting a foothold. You need massive capital, technological expertise, industry leverage, and patience.
Antitrust Oversight of Ticketmaster
Ticketmaster’s market share and business practices have not gone unnoticed by antitrust regulators. However, thus far the company has fended off serious antitrust challenges and retained its market dominance. Key episodes include:
1995 – The Pearl Jam saga – In the mid-90s, Ticketmaster’s exorbitant fees became a national controversy when the band Pearl Jam protested the company’s practices. The DOJ conducted an antitrust investigation but ultimately declined to pursue enforcement action.
2010 – Merger with LiveNation approved – Ticketmaster and LiveNation, the world’s largest concert promoter, proposed merging into a vertically integrated entertainment giant. The deal raised major monopoly concerns but was ultimately approved after certain divestitures and conditions. Critics argue the merger only strengthened Ticketmaster’s power.
2016 – Class action lawsuit settlement – Ticketmaster settled a lengthy class action lawsuit accusing them of deceiving consumers about order processing fees. The $400 million settlement provided credits and discounts to Ticketmaster customers. It did not materially impact their market position.
2022 – DOJ inquiry – The DOJ is currently said to be engaging in new inquiries into Ticketmaster’s practices and market power. But no major action has yet been taken. Some expect the Biden administration may more aggressively scrutinize Ticketmaster.
Despite repeating controversies, Ticketmaster has managed to evade any major antitrust crackdown thus far. Their market share remains higher than ever after 30+ years dominating the primary event ticketing sector in North America and abroad. However, there are signs that political and consumer frustration may be coming to a head that could renew antitrust pressures.
Conclusion
In conclusion, while the debate continues around Ticketmaster’s business practices, the preponderance of evidence suggests they do possess monopoly power in major segments of the live event ticketing market in the U.S. and globally. Their dominant market share, array of exclusive deals, ability to impose exceptional fees, and the high barriers protecting their position all point to a company with little practical competitive constraint on its conduct.
Antitrust authorities have shown a renewed interest in reassessing past leniency shown toward dominant digital platforms. Ticketmaster’s position in ticketing appears ripe for revisiting under modern antitrust standards. If found to have unfairly excluded competition or exploited consumers, Ticketmaster could potentially face major injunctive action, forced divestitures, or other remedies designed to open up market access and restore price competition.
Of course, Ticketmaster does face increasing innovator competition from new aspirants aiming to leverage technology to offer fans and venues lower fees and more choices. Some observers argue the market could self-correct through this natural competitive process without need for antitrust action. However, so far most insurgent ticketing platforms have struggled to loosen Ticketmaster’s grip on premium ticketing inventory.
Ultimately, whether authorities take fresh action or leave Ticketmaster’s status quo intact, the coming years seem likely to bring increasing scrutiny of their dominant market standing. Policymakers will continue facing pressure to ensure major entertainment ticket sales operate as a fair, transparent, and competitive marketplace.