Ticketmaster, the largest ticket sales and distribution company in the United States, has recently come under scrutiny by the United States government for potential anti-competitive practices. Ticketmaster sells tickets for concerts, sports events, theater performances and more and dominates the ticket sales market. With high fees and service charges, near monopolistic control in the industry and other controversial business practices, Ticketmaster has prompted government officials to launch investigations into its operations.
Overview of Ticketmaster
Ticketmaster is a ticket sales and distribution company based in Beverly Hills, California. It was founded in 1976 and sells tickets for music concerts, sporting events, theater shows and other live entertainment events. Ticketmaster has contracts with hundreds of venues, theaters, arenas and stadiums across North America and globally. It sells tickets through its website, mobile apps and phone services.
With over 32,000 clients worldwide, Ticketmaster sells more than 485 million tickets per year. It has a market share of 80% or more in major entertainment event ticketing in the United States. No other ticket company comes close to Ticketmaster in terms of market share, revenue and number of clients. In 2010, Ticketmaster sold over 141 million tickets for concerts alone. It made $1.2 billion in revenue in 2021.
Ticketmaster has been the subject of criticism and controversy over its business practices, mostly centered around high fees and service charges. Ticketmaster’s fees can comprise up to 40% of a ticket’s face value. It charges fees to venues and also charges service fees to customers for ticket purchases. Other criticisms include lack of transparency on its fees, misleading advertisements on prices and difficulty getting refunds.
Why is the US government investigating Ticketmaster?
In recent years, Ticketmaster’s dominance in the ticket sales and distribution industry has prompted legal action and investigations into its business practices by the United States federal government. Here are some of the primary reasons why Ticketmaster is under scrutiny:
Anti-Competitive Monopolistic Practices
The core reason why Ticketmaster is being investigated is for potential anti-competitive business practices that stifle competition and establish Ticketmaster as a monopoly in the ticket sales market across North America.
Ticketmaster has exclusive ticket selling contracts with many major venues and artists. This makes it very difficult for any competitors to enter the market and reduces choices for consumers who want to buy tickets. Ticketmaster also faces accusations that it strong-arms venues into using them as their exclusive ticket vendor.
Government officials suspect Ticketmaster’s business practices and large market share may violate sections of antitrust laws on monopolistic behavior and anti-competitive conduct.
High Fees and Service Charges
Another reason for investigations by the government is Ticketmaster’s exorbitant fees and service charges, which have continued to increase over the years. Ticketmaster tacks on a wide variety of fees when customers purchase event tickets through them.
These include order processing fees, service fees, convenience fees and delivery fees. There are also facility charges imposed by venues. All these extra fees often add 20% – 40% to the base ticket price. Many customers and consumer advocates believe these fees are excessive and exploitative of a captive market.
Lack of Transparency and Misleading Pricing
Critics of Ticketmaster have accused it of purposefully lacking transparency in its pricing and fees. They allege Ticketmaster makes it very unclear what the final ticket price is by excluding fees when advertising ticket prices. The fees are only added at the very end of the ticket purchasing process.
Customers are often misled into thinking the advertised price is the full cost and are shocked when extra fees are added. The lack of transparency is considered anti-consumer behavior. It prevents customers from accurately comparing Ticketmaster’s prices to any competitors upfront.
Difficulties Getting Refunds
Another complaint about Ticketmaster’s business practices is extremely difficult and opaque refund policies. Customers who purchase tickets and need to cancel for any reason often find it very difficult to get a refund from Ticketmaster.
They have complained about arbitrary limits on timeframes for refunds, excessive deduction of fees when calculating refunds, being given only credits instead of cash refunds and unresponsive or unhelpful customer service.
Reselling of Tickets on Secondary Markets
Ticketmaster also faces criticism for enabling and profiting from ticket scalping and resales on secondary markets. Ticketmaster has ownership stakes in large ticket reseller sites like Vivid Seats and runs its own ticket resale exchanges.
Artists, venues and consumers criticize Ticketmaster for double dipping – it makes profits from ticket resales on top of original sales. The ticket resales also frequently occur at inflated prices over face value. Ticketmaster denies officially condoning ticket scalping activities.
Investigations and Lawsuits Against Ticketmaster
Given its monopolistic market position and controversial business practices, Ticketmaster has long been embroiled in various lawsuits, settlements and government investigations. Some of the major legal actions targeting Ticketmaster include:
Year | Investigation/Lawsuit | Details |
---|---|---|
1994 | Pearl Jam Lawsuit | Rock band Pearl Jam sued Ticketmaster for anti-competitive monopolistic practices that forced them to use Ticketmaster for their concert tours. They ultimately dropped the lawsuit after a costly legal battle. |
2009 | Class Action Lawsuit | Ticketmaster settled a class action lawsuit for $18.5 million over deceptive fees charged to customers. |
2010 | US Department of Justice Investigation | The DOJ investigated Ticketmaster-Live Nation merger over anti-trust concerns but ultimately did not block the merger. |
2019 | US Department of Justice Settlement | Ticketmaster and its parent company Live Nation settled DOJ antitrust charges over coercive and threatening behavior toward concert venues. They paid a $10 million fine. |
2022 | FTC Request for Information | The Federal Trade Commission sent an order to Ticketmaster requesting information about its business practices as part of an antitrust investigation. |
Despite all the previous legal action, Ticketmaster has managed to continue dominating the ticket sales and distribution market while its parent company Live Nation has grown into a live events giant. The latest FTC investigation indicates the government continues to have anti-trust concerns about Ticketmaster’s monopoly power and questionable business tactics in the industry.
Ticketmaster’s Response
Ticketmaster has denied allegations of anti-competitive behavior and monopolistic practices over the years. It defends its business by saying:
- Its market dominance is due to superior products and services that venue clients choose voluntarily.
- Its ticket selling contracts with venues are not exclusive – venues can sell anywhere else.
- Fees cover the costs of providing ticketing services and are not exploitative.
- Second-hand ticket exchanges like TradeDesk provide more options to consumers.
However, critics counter that Ticketmaster’s arguments do not justify its actions like blocking venues from going to competitors, misleading fee advertising, reselling tickets, and acquiring secondary ticket market companies. Ultimately, the FTC and DOJ’s antitrust investigations will determine if Ticketmaster’s defenses hold up and if any punitive action needs to be taken to improve competition in the ticket sales market.
Potential Outcomes of Current Government Investigation
The ongoing investigation into Ticketmaster and Live Nation by the Federal Trade Commission is still in its early stages. Based on previous antitrust investigations into monopolistic companies, here are some potential outcomes that may occur:
Forced Restructuring of Company
If the FTC finds irrefutable evidence of monopolistic and anti-competitive practices by Ticketmaster, it could force Ticketmaster to restructure and split itself into smaller separate companies. This would allow for more competition in regional markets.
Required Divestment of Assets
The FTC could require Ticketmaster to divest some of its assets like secondary ticket marketplaces it owns. This would take away elements that give Ticketmaster unfair competitive advantages.
Prohibiting Certain Business Practices
The investigation may lead to the FTC legally prohibiting Ticketmaster from continuing certain harmful practices like contractual barriers to competitors and deceptive fees.
Fair Pricing and Fee Disclosures
The FTC may force Ticketmaster to be more transparent about its fees and service charges upfront during advertising and ticket purchasing.
Issuing Fines for Violations
As in previous cases, the FTC could hit Ticketmaster with heavy fines (in the tens of millions of dollars) for antitrust violations as punishment.
No Action Taken
There is a possibility the FTC does not find sufficient hard evidence of antitrust violations and drops the investigation without taking action. However, this would seem unlikely given Ticketmaster’s history.
Impact on the Ticketing Industry
The investigation into Ticketmaster has broader implications for reforming the ticketing industry as whole. Here are some potential positive impacts for consumers if the FTC probe leads to remedies on Ticketmaster’s business practices:
- Lower Fees – Reduced service fees, processing fees, and other tacked on costs may lower ticket prices for consumers.
- More Transparency on Costs – Upfront disclosure of all costs can help consumers make informed decisions.
- Increased Competition – Breaking up Ticketmaster’s monopoly could bring more choices of ticketing platforms.
- Fairer Ticket Resales – Regulation of Ticketmaster’s resale marketplaces may reduce predatory scalping activities.
- Enhanced Consumer Rights – Rules that improve refund policies and consumer protections from mistreatment.
However, there is the risk that if the government probe does not bring about significant changes, Ticketmaster will continue unchecked with anti-consumer practices. Its monopoly power may grow even more, continuing to harm consumers through high ticket prices.
Conclusion
Ticketmaster has managed to dominate the event ticketing industry in North America for decades. But its widespread unpopularity with consumers and anti-competitive tactics have finally caught the sustained attention of government antitrust regulators. Previously lawsuits and investigations have merely slapped Ticketmaster’s wrists with minor fines and allowed its market control to persist.
This latest Federal Trade Commission antitrust probe into Ticketmaster seems the most serious yet after years of public complaints stacking up. If the investigation concludes Ticketmaster violated antitrust laws, the FTC has the power to bring about positive reforms. It can restore competition, consumer rights and fair pricing in the ticketing marketplace. However, the FTC will need to follow through with tough remedies and enforcement to prevent Ticketmaster from continuing its controversial practices that allow it to roll over consumers and competitors.