Why is Ticketmaster considered a monopoly?

Ticketmaster is the dominant primary ticket provider for major entertainment events in the United States. They sell tickets for concerts, sports games, theater shows, and more. Many consider Ticketmaster to have an unfair monopoly in the ticket sales industry due to their exclusive contracts with venues and lack of competition.

What is a Monopoly?

A monopoly exists when a company has exclusive control over a good or service in a particular market. There is little to no actual competition because the monopoly prevents other businesses from fairly competing in the marketplace. This lack of competition gives the monopoly power to raise prices and undercut consumer choice since buyers have nowhere else to purchase the good or service from.

Key Characteristics of a Monopoly

• Single seller dominates the market
• High barriers to entry for potential competitors
• Lack of close substitution products
• Price maker, not price taker

When a company exhibits these traits, they have monopoly control over the supply side of the market. This gives them outsized power over consumers who have little choice but to purchase from the monopoly if they want the product.

Ticketmaster’s Dominance in Event Ticketing

Ticketmaster first started selling tickets in 1976 and has grown to be the unchallenged leader in event ticketing. They sell tickets for over 500,000 events each year and partner with hundreds of venues and promoters across North America.

Here are some key stats about Ticketmaster’s dominance:

• They sell 70% of all primary event tickets in the United States
• They are the exclusive ticket provider for 80 of the top 100 arenas in America
• They have exclusive contracts with 70 of the top 100 concert venues
• Over 80% of major music tours are sold exclusively through Ticketmaster

Ticketmaster faces very little direct competition. Their main competitors include:

• AXS – Owned by Anschutz Entertainment Group, they are the second largest provider
• Universe – Sells tickets for just music concerts and events
• Vivid Seats – Primarily a resale marketplace for third-party ticket sellers

However, these secondary ticketing companies have nowhere near the reach, resources, and exclusive venues that Ticketmaster does. Ticketmaster’s exclusive contracts and deals with major venues lock out competitors from fairly competing for business in the primary ticket sales market.

Exclusive Contracts with Venues

One major anti-competitive tactic that Ticketmaster utilizes is signing exclusive contracts with venues and promoters to be their sole ticketing provider. They leverage their position as the dominant ticketing company to pressure venues into only working with Ticketmaster.

These exclusive contracts shut out other primary ticket sellers from selling tickets to events at the most popular venues. AXS, Universe, and other ticketing companies cannot sell any tickets for events held at venues locked into exclusive Ticketmaster contracts.

For example, Madison Square Garden in New York City has an exclusive deal with Ticketmaster. Any events held at MSG can only have tickets sold through Ticketmaster. This applies to New York Knicks games, New York Rangers games, concerts, shows, and any other ticketed event held at that venue.

This same arrangement applies for most major arenas, stadiums, concert halls, and theaters across the country. Ticketmaster maintains exclusive ticketing rights for the vast majority of major entertainment venues. Some examples include:

This far-reaching network of exclusive venue contracts significantly limits competitors’ abilities to break into the primary ticket sales market. Even if another ticketing company offered lower fees and better service, they are still shut out from selling tickets to the most popular concerts and events.

Mergers with Competitors

In addition to signing exclusive venue contracts, Ticketmaster has also consolidated control of ticketing by acquiring competitors. They have made major acquisitions over the past 15 years to expand their share of ticketing:

• In 2007, Ticketmaster merged with their largest competitor Live Nation. Live Nation previously competed in primary ticket sales.
• In 2008, they acquired Paciolan, which provided ticketing services for college athletics.
• In 2009, they acquired TicketsNow, which was a secondary ticket marketplace.
• In 2010, Ticketmaster merged with event software company Veritix.

Each of these mergers eliminated potential challengers to Ticketmaster in different live entertainment ticketing markets. It also provided Ticketmaster with control of different distribution channels like secondary ticket sales.

High Barriers to Entry for Competitors

Breaking into the primary ticket sales market requires huge amounts of capital investment, industry connections, technology infrastructure, and marketing resources. These high barriers to entry make it extremely difficult for new competitors to challenge an established company like Ticketmaster.

Key barriers to entry include:

• Exclusive venue contracts – Competitors cannot sell into venues contracted with Ticketmaster.
• Established relationships – Ticketmaster has decades-long relationships with venues, promoters, band managers which are hard to break into.
• Technology – Developing a secure, high-capacity online ticketing platform is very expensive.
• Consumer habits – Getting consumers to use a new ticketing provider over the familiar Ticketmaster requires lots of marketing.

The amount of capital required to overcome these barriers is likely too high for new competitors to fairly challenge Ticketmaster. Their exclusive venue contracts also legally block competitors from selling primary tickets to many top venues right out of the gate.

Lack of Substitute Options for Consumers

Consumers who want to buy primary tickets to events have no alternatives besides Ticketmaster for most major concerts and shows. Ticketmaster’s exclusivity agreements make them the only authorized primary seller for most venues.

For extremely popular events, tickets sell out immediately. This leaves fans with no option but to buy tickets at highly marked up prices on secondary resale sites. Many of these secondary sellers also have exclusive ticket distribution deals with Ticketmaster.

Between Ticketmaster primary sales and their control of inventory supply to major secondary marketplaces like Stubhub, consumers have little choice but to purchase from Ticketmaster’s network to gain access to in-demand tickets.

Ticketmaster Can Set Prices and Fees

Without any meaningful competition, Ticketmaster has free rein to charge service fees, convenience fees, and order processing fees on every ticket purchase. These fees can equal as high as 50% of the base ticket price.

Unlike a typical competitive market, Ticketmaster does not have to worry about being undercut on ticket fees. Consumers cannot choose a cheaper ticketing option for most marquee events.

In a monopoly, the company is a “price maker” that can set prices across the market. Ticketmaster certainly leverages this power by tacking on new fees over time and raising convenience fees on high demand events.

Government Antitrust Concerns and Actions

Ticketmaster’s business practices have caught the attention of government antitrust regulators over the years. However, no meaningful action has been taken to break up their effective monopoly in event ticketing.

Some key antitrust investigations into Ticketmaster include:

• 1994 – The Pearl Jam band filed a complaint about Ticketmaster’s fees. A federal investigation was opened but no action taken.
• 2009 – After Ticketmaster merged with LiveNation, U.S. Justice Dept and multiple State Attorney Generals opened antitrust investigations. They required Ticketmaster to license tickets to Anschutz Entertainment Group to create a competitor. This led to the creation of AXS Ticketing.
• 2016 – The U.S. Justice Dept began investigating whether Ticketmaster was using exclusive promoter contracts to maintain monopoly power. No charges were filed.
• 2018 – Several class action lawsuits were filed against Ticketmaster alleging collusion and racketeering to inflate ticket resale prices on secondary market sites.

While Ticketmaster has been the subject of recurring antitrust probes, no meaningful action has succeeded in opening up competition in the primary ticket market. Their exclusive contracts and dominant position continue to give them practical monopoly control.

Conclusion

Ticketmaster maintains a clear monopoly position in the primary event ticketing market in North America. Their web of exclusive venue contracts lock out competitors and give consumers little choice when buying tickets.

High barriers to entry, acquisitions of competitors, lack of substitute options, and full control over pricing enable Ticketmaster to leverage unchecked monopoly power. Antitrust regulators have so far failed to bring increased competition against this monopoly player.

Until Ticketmaster faces more competitive pressure, they will continue to dominate the live entertainment ticketing landscape and exert unfair pricing power over consumers.