Congress is investigating Ticketmaster due to concerns over alleged anti-competitive practices in the ticketing industry. Ticketmaster is the largest ticket sales and distribution company in the United States, with a market share of over 80% for major concert venues. The House Energy and Commerce Committee opened an investigation in November 2022 into Live Nation Entertainment, Ticketmaster’s parent company, over complaints about high fees and website failures during ticket sales.
The investigation comes after a number of controversies for Ticketmaster. In November 2022, the sale of tickets for Taylor Swift’s upcoming tour, The Eras Tour, caused Ticketmaster’s website to crash and led to long wait times, error messages and inability to purchase tickets for many fans. There was outrage over dynamic pricing leading to high costs for tickets and Ticketmaster’s explanations were deemed unsatisfactory by many. Following the backlash, members of Congress called for hearings and investigations into possible anti-competitive behavior.
Background on Ticketmaster
Ticketmaster was founded in Arizona in 1976 to provide ticketing services for concerts and entertainment events. It initially focused on exclusive contracts with venues and promoters to be their official ticket vendor. In 1991, Ticketmaster bought their largest competitor Ticketron and thereafter dominated the primary ticket sales market.
In 2010, Ticketmaster merged with Live Nation, the largest concert promoter in the world, to form Live Nation Entertainment. This vertical integration gave Live Nation control over ticketing, promotions and the venues themselves. Today, Ticketmaster sells over 500 million tickets per year and partners with hundreds of venues and promoters globally.
The lack of competition in event ticketing and the integration with promoters has led to ongoing concerns about monopolistic practices. Ticketmaster has become known for exorbitant fees that can more than double the base price of a ticket. There are also concerns around pressure tactics used on venues and lack of incentive to innovate the consumer experience.
Anti-Competitive Practices
Congress and regulators have scrutinized Ticketmaster’s anti-competitive business practices for decades. Some of the main areas of concern include:
Exclusive contracts – Ticketmaster secures long-term exclusive contracts with major venues and promoters to be their only ticket vendor. This locks out competitors.
Bundling – Ticketmaster requires venues to use their ticketing services in order to book Live Nation promoted events and tours. This bundling prevents venues from choosing another ticketing provider.
Fees – Ticketmaster adds on substantial ‘processing’ and ‘service’ fees to ticket purchases, earning them over 25% revenue on top of the base ticket price. Consumers have little choice but to pay the fees.
Deceptive pricing – Ticketmaster is accused of deceptive pricing tactics such as advertising lower ticket prices upfront only to add egregious fees later in the purchasing process.
No resale competition – Ticketmaster owns secondary ticketing sites like TicketExchange which limits third-party resale competition. It also limits transfer abilities and imposes limits on ticket quantities to discourage resale.
Lack of innovation – With little market competition, Ticketmaster has few incentives to innovate their systems, websites or apps to improve the consumer experience. Their market dominance breeds complacency.
Live Nation Merger Issues
When Ticketmaster and Live Nation merged in 2010, it raised significant anti-trust issues given they controlled so much of the live event ecosystem. To get merger approval, the Obama administration’s Department of Justice (DOJ) required they sign a 10-year consent decree prohibiting certain anti-competitive practices. That consent decree expired in 2020 leading to the current scrutiny.
Some of the key anti-competitive issues with the Live Nation-Ticketmaster merger include:
Vertical integration – Previously, venues could choose their ticketing vendor and promoters for events independently. Now one entity controls it all resulting in far less competition and consumer choice.
Higher prices – Ticket prices have risen significantly since the merger due to the lack of competition in ticketing services and event promotion. Ticketmaster can charge higher fees with impunity.
Retaliation – There are concerns that Live Nation has retaliated against venues that use other ticketing services by not booking as many shows or top artists in those venues. Their combined power creates inherent pressure.
Barriers to entry – The high market concentration and Live Nation’s dominance in promotions/venues creates very high barriers to entry for any potential competitor in the ticketing market. Their entrenched position is hard to challenge.
Conflicts of interest – Ticketmaster now has financial interest in both keeping fees high and serving their parent company Live Nation’s interests, which may not benefit consumers.
Taylor Swift Tour Controversy
The public outrage over Ticketmaster’s handling of ticket sales for Taylor Swift’s upcoming stadium tour directly led Congress to act. In mid-November, Ticketmaster’s site experienced major failures during the pre-sale period for Swift’s tour due to insufficient capacity. Fans faced site outages, long wait times, error messages and inability to purchase tickets despite waits of 8+ hours in online queues. Ticket prices also fluctuated widely based on Ticketmaster’s demand-based ‘dynamic pricing.’
Despite 2 million tickets being sold on the first day of pre-sale, many Swift fans were left angry and empty-handed. Ticketmaster apologized and cited unprecedented demand as 3.5 million people pre-registered for the pre-sale, the largest registration in history. However, fans questioned why such an immensely popular tour went on sale before Ticketmaster could ensure their systems could handle the volume.
The system failures and the use of dynamic pricing led to bipartisan outrage from elected representatives. Several Senators wrote an open letter to Ticketmaster expressing concerns over lack of transparency in their dynamic pricing for consumers. Representatives also publicly called for investigation into possible anti-competitive practices by Ticketmaster as a monopoly player.
The Swift tour ticket debacle was seemingly the final straw that spurred Congressional action after years of complaints about Ticketmaster’s fees and practices. The sheer scale of consumer outrage and interest in the music superstar’s tour made the pain points with the dominant ticketing giant even more glaringly obvious to legislators.
Congressional Hearings
In mid-November 2022, the United States House of Representatives Energy and Commerce Committee announced it would hold a congressional inquiry into Live Nation Entertainment’s ticketing practices. They cited concerns over Ticketmaster’s service fees, website breakdowns, complaints about merged power with Live Nation and possible abuse of market position.
The Chairman of the Committee, Representative Frank Pallone Jr., criticized Ticketmaster in his call for a hearing, saying “It’s no secret that Live Nation-Ticketmaster is an unchecked monopoly.” Other legislators called for the DOJ to look again at undoing the Live Nation-Ticketmaster merger as part of the hearings.
The House Judiciary Committee also raised concerns over possible anti-trust violations and “lack of real competition in ticketing markets.” The hearings are expected to investigate areas such as:
– Ticketmaster’s technical failures and reasons for website breakdowns.
– Customer service shortcomings and major consumer frustrations.
– Anti-competitive exclusive deals with venues and retaliation practices.
– Bundling of ticketing with Live Nation promotions.
– Fees and lack of transparency around dynamic ticket pricing models.
– Necessity of the merger between Live Nation and Ticketmaster.
Executives from Ticketmaster and Live Nation will be called to testify before Congress and answer tough questions on these issues. Joe Berchtold, the President and CFO of Live Nation, has already pushed back and claimed in a statement that the government approved their merger and urged focus on increasing competition in ticketing instead. The Congressional hearings will put a spotlight on Ticketmaster’s controversial practices and could potentially lead to stronger regulatory actions if deemed sufficiently anti-competitive.
Potential Outcomes
There are several potential outcomes that could arise from Congress’ investigation into Ticketmaster’s practices:
– Breakup or greater restrictions on Live Nation-Ticketmaster merger – If the company is found blatantly abusing their market position, the DOJ could reopen the merger review and require Ticketmaster to split from Live Nation. Or increased restrictions could be imposed such as banning exclusive venue contracts. However, full unwinding of the merger is unlikely.
– Regulations to increase fee transparency – Legislation may require Ticketmaster to clearly disclose all fees upfront rather than surprising consumers later in the purchasing process. This could restrict their ability to tack on excessive fees.
– Limits to dynamic pricing for tickets – Given the backlash to Taylor Swift’s wildly fluctuating ticket prices, Congress could mandate some limits to demand-based pricing models to protect consumers.
– Fines for antitrust violations – If concrete anti-competitive practices like retaliation against venues are proven, Congress could refer Ticketmaster to the DOJ or Federal Trade Commission (FTC) for heavy fines reaching hundreds of millions. Criminal charges are unlikely.
– Commitments to improve customer experience – Congress may demand Ticketmaster make tangible improvements to their website, mobile apps, customer service and transparency around ticketing processes. Their technological and customer service failures have been major complaint areas.
– Greater scrutiny of future mergers – The lessons from the Live Nation-Ticketmaster merger and dominant market control will likely make Congress and regulators more skeptical of any future proposed mergers in the ticketing sphere.
While the investigation may not yield dramatic solutions, it applies public and Congressional pressure to Ticketmaster for change. It brings heightened scrutiny to their business practices at a time of great consumer dissatisfaction. Even if no major enforcement actions result, the inquiry alone could lead Ticketmaster to take steps to improve policies to avoid antitrust punishments. However, breaking up their entrenched market control fully will be difficult without concrete violations proven.
Competitive Options
Part of Congress’ concerns stem from Ticketmaster’s utter dominance in the primary ticket sales market with limited competitive options for consumers. Some alternative ticketing platforms include:
– Eventbrite – Primarily focused on smaller music venues, festivals, and niched events. Has about 10% market share of ticketing.
– AXS – Created by AEG venues as a ticketing option and used for AEG promoted concerts. Around 5% U.S. market share.
– SeatGeek – A mobile-focused ticket aggregator to compare prices across many providers. Doesn’t have own primary ticket sales platform.
– DICE – Specializes in electronic and club shows with fair/transparent pricing. Very small player.
– Universe – For online events and communities. Niche player.
– eTix – Provides white-label ticketing services for some venues. Small player.
However, none have made major inroads competing directly against Ticketmaster for big concerts and shows. Ticketmaster’s strong venue and promoter relationships, mergers, aggressive tactics and significant investment in technology make it hard for rivals to keep up. The lack of serious competition has contributed to Ticketmaster’s market power and ongoing dominance. But hopefully the attention from Congress will spur much needed innovation, options and consumer-friendly changes industry-wide.
Conclusion
Ticketmaster’s far-reaching control over event ticketing and its merger with Live Nation has led to increasing anti-competitive concerns. The debacles around Taylor Swift’s tour ticket sales combined with ongoing complaints around fees, lack of innovation and poor service seem to have finally spurred Congress to act.
Broad bipartisan Congressional hearings will closely investigate Live Nation Entertainment and Ticketmaster’s market practices. This could potentially lead to tighter restrictions, fines for antitrust violations, enforced breakups or commitments to improve the consumer experience. However, Ticketmaster’s entrenched dominance makes dramatic enforcements unlikely without clear proof of misconduct. Real change may only occur if public and government pressure incentivizes Ticketmaster to voluntarily reform policies and increase transparency around its fees and pricing models. Greater competition in the ticketing industry would also benefit consumers enormously.
Though the Congressional inquiry faces challenges in fully curtailing Ticketmaster’s power, the heightened scrutiny is positive for consumers. Americans are increasingly fed up with Ticketmaster’s practices, lack of innovation and poor service. By giving this ticketing giant’s market control a harder examination, Congress is responding to public frustrations. Perhaps these hearings can initiate gradual steps towards fairer ticketing markets, increased competition and improved consumer protections. At minimum, it sends a warning to Ticketmaster that substantive changes are required.