Ticketmaster, the largest primary ticket outlet in the United States, is currently under investigation by the Department of Justice for potential antitrust violations. The DOJ is looking into whether Ticketmaster has abused its dominant position in the ticket sales market to stifle competition.
When did the investigation start?
The Department of Justice investigation into Ticketmaster was first reported in August 2022. It came after years of complaints from concert venues, artists, and fans about Ticketmaster’s high fees and other controversial business practices.
Complaints against Ticketmaster
For many years, Ticketmaster has faced accusations of monopolistic behavior and taking advantage of its position as the primary ticket seller for most major concerts and events in the US. Specific complaints have included:
- Excessive fees – Ticketmaster adds on multiple fees to each ticket often totaling 25-30% of the base ticket price.
- No competition – Ticketmaster has exclusive ticketing deals with many venues and promoters, making them the only primary ticket option.
- Predatory lock-in deals – Ticketmaster requires venues to use them exclusively or threaten to not sell any of their tickets.
- Deceptive fee hiding – Critics claim Ticketmaster hides the full costs of fees making prices look lower upfront.
These types of complaints and allegations of monopolistic practices are what triggered the DOJ to open a formal investigation into Ticketmaster.
What are the antitrust concerns with Ticketmaster?
The core antitrust issues with Ticketmaster center around its dominance of primary event ticket sales and allegations of monopolistic behavior and consumer harm that stem from its position. Key areas the DOJ is investigating include:
Exclusive contracts
Ticketmaster frequently signs exclusive contracts with venues and promoters requiring them to make Ticketmaster their sole primary ticketing service. This locks out competitors and makes Ticketmaster the only option for fans to purchase tickets.
No competition
With so many exclusive deals, Ticketmaster effectively faces no competition from other ticket sellers for major concerts and shows. This lack of competition allows them to charge high fees without risk of losing business.
Abuse of market position
As the dominant ticketing company, DOJ is investigating whether Ticketmaster abuses that status in anti-competitive ways beyond just exclusive deals, such as intimidating venues who partner with competitors.
Predatory prices
Some economic experts argue Ticketmaster’s fees are so high and divorced from the costs of providing ticketing services that they constitute illegal predatory pricing intended to squeeze profits out of a captive market.
What evidence is being used in the DOJ investigation?
The DOJ has not publicly commented on specifics of evidence being examined in its Ticketmaster antitrust investigation. However, some key evidence likely includes:
- Contract terms – Examining terms Ticketmaster uses in contracts with venues and promoters for potential antitrust violations.
- Internal communications – Reviewing internal emails and communications that may reveal anti-competitive intent.
- Pricing data – Analyzing Ticketmaster’s detailed pricing data to identify unreasonably high fees.
- Testimony – Interviewing venues, promoters, and even artists locked into Ticketmaster deals to get their perspectives.
The DOJ has broad authority to request documents, communications, pricing data, and testimony as part of an antitrust probe. This inside information will supplement external analysis of Ticketmaster’s practices and market position.
What are examples of Ticketmaster’s anti-competitive practices?
Some examples of the types of anti-competitive business practices at Ticketmaster that have led to this DOJ investigation include:
Venue lock-in
Ticketmaster frequently negotiates exclusive ticketing deals with venues that force them to only use Ticketmaster and shut out competitors. This gives Ticketmaster monopolistic control over ticketing for those venues.
Punitive clauses
If a venue breaks an exclusive Ticketmaster deal, Ticketmaster can add clauses that prevent them selling tickets through any other vendor even after the deal ends. This further locks in their monopoly power.
Limits on ticket resales
Ticketmaster tries to block ticket resales on the open market by prohibiting transfer of its tickets. This locks fans into Ticketmaster’s higher prices.
Predatory pricing
Economists argue Ticketmaster’s fees, which can exceed 75% of the ticket face value, far exceed the actual cost of providing ticketing services. This constitutes illegal predatory monopoly pricing.
Retaliation
There are reports of Ticketmaster retaliating against venues who partner with competitors by refusing to list their events or making tickets harder to buy. This intimidates venues from breaking their exclusive deals.
What are the impacts of Ticketmaster’s practices?
Ticketmaster’s alleged anti-competitive practices have wide-ranging impacts that hurt venues, artists, competitors, and fans including:
Higher prices for fans
Ticketmaster’s excessive fees mean higher prices for fans trying to purchase tickets, especially compared to an open market. Their monopoly position allows them to overcharge with no consequences.
Loss of competition
Smaller ticketing companies cannot fairly compete if Ticketmaster uses exclusive deals and retaliation to block them from venue partnerships. Lack of competition harms innovation.
Loss of control for venues & artists
Venues and artists have less control over how tickets are sold and priced if locked into Ticketmaster’s mandated deals. Their businesses suffer from Ticketmaster’s inflated prices.
Reduced resale options
Ticketmaster limits how fans can resell tickets, forcing them to use Ticketmaster’s inflated pricing instead of open resale markets. This extractive policy hurts consumers.
What outcomes could result from the DOJ investigation?
There are a few potential outcomes that may result from the DOJ’s antitrust investigation into Ticketmaster’s business practices:
No action
It’s possible the DOJ will conclude there are no antitrust violations and drop the investigation without taking action. This seems unlikely given the widespread complaints.
Settlement
The DOJ could negotiate an out-of-court legal settlement with Ticketmaster requiring them to change specific practices like exclusive deals without a full lawsuit.
Antitrust lawsuit
If evidence of monopolistic behavior is strong, the DOJ may file an antitrust lawsuit against Ticketmaster seeking remedies like ending all exclusive contracts.
Break up
In an extreme case if antitrust violations are completely egregious, the DOJ could theoretically push to break up Ticketmaster into smaller companies by forcing it to divest assets.
Any substantive changes would help introduce more competition in the ticketing market and could bring significant consumer benefits.
Conclusion
In summary, the Department of Justice is investigating Ticketmaster for potentially abusing its dominant position in ticketing through anti-competitive practices like excess fees and exclusive venue contracts. The aims of this antitrust probe are to bring in more competition, provide consumers relief from monopolistic pricing, and give venues and artists greater freedom in how tickets get sold. Any meaningful outcome of this case could significantly transform the event ticketing landscape in the United States by cracking Ticketmaster’s stranglehold over this multibillion dollar market.