In January 2022, Live Nation Entertainment, the parent company of Ticketmaster, was hit with a lawsuit alleging that it has abused its market power in the live event ticketing industry. The lawsuit accuses Ticketmaster of monopolistic practices that allow it to charge higher fees to customers.
The lawsuit was filed by more than two dozen consumers and is seeking class action status to represent all Ticketmaster customers from 2011 to the present. The plaintiffs allege that Ticketmaster’s dominant position in ticketing and concert promotion has allowed it to steadily increase its fees over the past decade.
Some key questions around this lawsuit include:
What are the main allegations against Ticketmaster in the lawsuit?
The lawsuit makes two main allegations against Ticketmaster:
1. Ticketmaster has abused its monopoly power in live event ticketing. As the dominant player, Ticketmaster faces little competition and can charge customers higher fees.
2. Ticketmaster ties its ticket selling platform to its concert promotion business. This forces venues to use Ticketmaster or risk losing out on Live Nation promoted shows.
In summary, the lawsuit argues that Ticketmaster uses anti-competitive practices to charge customers excessive fees and limit consumer choice.
Why has Ticketmaster been able to dominate the primary ticket market?
Ticketmaster has maintained an over 80% market share in primary ticket sales for major concerts and shows. Experts point to several factors that have enabled its dominance:
– Early mover advantage – Ticketmaster was one of the first companies to provide ticketing services and has long-standing relationships with venues and promoters.
– Mergers and acquisitions – Ticketmaster has acquired competitors like Ticketron and consolidated its position. Its 2010 merger with Live Nation brought together ticketing and concert promotion.
– Exclusive deals – Ticketmaster’s deals with venues effectively lock out competitors. For example, its recent renewal with MSG ties the iconic New York City venue to Ticketmaster for another 10 years.
– Product integration – Ticketmaster provides venues with its full suite of hardware, software, and services making it harder for venues to switch.
– Brand recognition and scale – Ticketmaster has become synonymous with ticket buying. Its large user base and sales volume provide advantages for marketing and negotiating deals.
What does the lawsuit aim to prove in court?
To win in court, the lawsuit will try to prove:
– Ticketmaster has monopoly power in the market – This will involve defining the relevant market and showing Ticketmaster’s high market share.
– Ticketmaster engaged in anti-competitive practices – Such as locking venues into exclusive contracts, acquiring competitors, and restricting third-party ticket resales.
– Customers were harmed – Customers were forced to pay higher fees and had limited ticket purchasing options due to Ticketmaster’s actions.
– Customers are entitled to compensation – If monopoly power, anti-competitive practices, and consumer harm are proven, the plaintiffs will seek damages on behalf of all Ticketmaster customers.
Proving these points in court with economic data and client testimonies will be critical for the lawsuit to prevail.
How Much Are Ticketmaster’s Fees?
Ticketmaster has long faced scrutiny for its add-on fees which can add up to more than 25% to the face value of tickets. Here are some key details about Ticketmaster’s fees:
Service fees
This is Ticketmaster’s main fee charged per ticket issued. It ranges from around $10 to $25 for regular tickets. For higher demand events and tickets it can be as high as $40.
Order processing fees
This fee is charged once per order rather than per ticket. It is typically around $5 to $10 per order.
Other fees
Ticketmaster also charges various small fees that pad the total cost:
– Facility charge – This goes to the venue owner, usually a few dollars.
– Charity fee – Ticketmaster often adds an optional donation to charity.
– Convenience fee – For paying via credit card or mobile delivery of tickets.
How the fees add up
To see how the fees can multiply the ticket face value, consider a hypothetical order:
– 2 tickets at $50 each, so $100 total face value
– $20 service fee per ticket = $40
– $10 order processing fee
– $2 facility charge per ticket = $4
– $5 convenience fee
– Total fees = $49
So the actual total for 2 $50 tickets is $149, almost a 50% premium over face value!
Dynamic and undisclosed fees
Ticketmaster has been criticized for not disclosing full fees upfront. Its “Official Platinum” tickets obscure final costs. Fees are also dynamic, increasing for higher demand events and sections. This lack of transparency frustrates many customers.
Is Ticketmaster a Monopoly?
Ticketmaster’s market share
Ticketmaster sells over $30 billion in tickets annually and its parent company Live Nation has estimated it has 80% market share in major concert venue ticketing.
Some key measures of its dominance:
– Live Nation promotes over 40,000 events annually that require Ticketmaster ticketing.
– Ticketmaster has exclusive ticketing deals with 135 major U.S. venues.
– Over 200 artists are tied to Live Nation for tour promotion and Ticketing.
So by any measure, Ticketmaster has a strong majority hold on primary ticket sales.
Lack of competition
While there are some small niche competitors, no single company has been able to challenge Ticketmaster’s position. Its closest competitor SeatGeek has under 5% market share. Other players like AXS and Stubhub focus on secondary ticket resales.
Venues are also locked into long-term exclusive contracts with Ticketmaster. This makes it extremely difficult for any rival to make headway.
High barriers to entry
New entrants face steep challenges given Ticketmaster’s entrenched advantages:
– Huge upfront investments in hardware/software needed
– Difficulty signing venues due to Ticketmaster’s existing exclusive deals
– Need for broad inventory supply and distribution channel access
– Significant marketing costs to build consumer awareness from scratch
These factors make it almost impossible for competitors to gain meaningful scale versus Ticketmaster’s multi-billion dollar ticketing empire.
Monopoly power conclusion
While Ticketmaster doesn’t have 100% market share, its industry position since the 2010 Live Nation merger looks extremely monopolistic. Lack of viable competition, barriers to entry, and massive scale advantage point to Ticketmaster possessing clear monopoly power.
Ticketmaster’s Ties to Live Nation
A key part of the lawsuit alleges that Ticketmaster’s 2010 merger with Live Nation has contributed to its monopolistic practices. Here is an overview of how the merge strengthened Ticketmaster’s position:
Vertical integration
Pre-merger, Live Nation was the largest concert and event promoter while Ticketmaster led ticketing services. By merging they integrated two layers of the live events business:
| Company | Position pre-merger |
|---|---|
| Live Nation | #1 Concert Promoter |
| Ticketmaster | #1 Primary Ticketing |
This vertical integration reduced competition and increased Ticketmaster’s control over the industry’s value chain.
Exclusive dealing
After the merger, venues were often required to use Ticketmaster for any Live Nation promoted events. This meant losing out on major concerts if they did not renew Ticketmaster ticketing contracts.
Ticketmaster also bundled its various services into exclusive deals making it harder for venues to use other vendors.
Data sharing
The merged entity could share consumer data across promotion, ticketing, and other services. This enhanced Ticketmaster’s ability to leverage data for targeted advertising and service pricing.
Conflicts of interest
As both the dominant ticketing vendor and a leading promoter, some critics alleged Live Nation-Ticketmaster has incentives to divert profits between business units in anti-competitive ways.
The 2021 renewal of Live Nation’s antitrust consent decree with the DOJ aims to better monitor such potential abuses of market power.
Could Ticketmaster Be Broken Up or Regulated?
Break up Ticketmaster and Live Nation?
One option is reversing the 2010 merger of Ticketmaster and Live Nation. This would split the dominant player into separately owned promotion and ticketing companies.
However, experts debate whether this would significantly improve competition. Live Nation could still potentially favor Ticketmaster for its ticketing.
Divesting other parts of the business like Ticketmaster’s resale market might be more viable. This could introduce platforms willing to undercut Ticketmaster’s fees.
More scrutiny of acquisitions and deals
In its 2021 renewal of Live Nation’s consent decree, the DOJ stipulated much stricter oversight of the company’s mergers, acquisitions, and exclusionary practices.
This aims to prevent further enhancement of Ticketmaster’s market power through deals like venue contract renewals.
Capping of fees and prices
Regulators could consider enacting fee caps in the primary ticket market to improve price competition versus Ticketmaster’s unchecked fees.
However, Ticketmaster argues caps would simply lead to higher initial ticket face prices rather than actually reducing costs for consumers.
Limiting vertical integration
New regulations could restrict partnerships between ticket sellers and event promoters to prevent conflicts of interest.
This would provide more opportunities for independent ticketing platforms to work directly with venues, artists, and promoters.
Interoperability mandates
Rules could require Ticketmaster’s ticketing systems to be compatible with independent resale markets. This would introduce more third-party competition and lower barriers to entry.
However, Ticketmaster claims this would encourage mass ticket scalping and illegitimate resales which would negatively impact consumers.
What are the Chances the Lawsuit Succeeds?
Highly uncertain outcome
Legal experts believe the plaintiffs face an uphill battle to prove Ticketmaster’s monopoly power has directly harmed consumers.
Ticketmaster can argue that exclusive deals are nothing new in entertainment industries. It can also claim that its scale helps venues maximize ticket sales.
Difficult to prove antitrust violations
Courts have set high bars for proving monopolistic behavior under federal antitrust laws. Large market share alone is generally insufficient grounds if achieved through competitive means.
Plaintiffs must convincingly demonstrate specific abuses of monopoly power. Simply charging high fees may not suffice if those fees are disclosed and consumers still willingly purchase tickets.
Challenge to define relevant market
Ticketmaster will likely argue the market should encompass all live entertainment and events, rather than just ticketing services.
This broader market definition makes its share seem reduced, since consumers have other entertainment options besides major concerts.
Live Nation deal renewals complicate argument
Many venues have willingly renewed deals with Live Nation-Ticketmaster even after the DOJ’s antitrust interventions.
This undercuts claims their exclusive ticketing agreements are anti-competitive or forced contracts.
Unclear path to concrete damages
Even if plaintiffs can substantiate antitrust violations, calculating monetary damages across all Ticketmaster customers is complex. This uncertainty may lead to settling for limited compensation rather than huge payouts.
Conclusion
This lawsuit faces notable challenges in proving Ticketmaster’s dominant position constitutes an illegal monopoly under antitrust law. However, the action represents wider consumer frustrations with Ticketmaster’s fees and industry control.
Even if the lawsuit fails, the outcry puts pressure on regulators to enhance oversight of Ticketmaster and improve competition in ticketing markets. This could eventually lead to reforms limiting Ticketmaster’s power and introducing more consumer-friendly alternatives over the long-term.