Ohio’s joining the fight against dodgy concert organizer behavior – with a recent announcement published announcing Ohio Attorney General Dave Yost’s involvement in the anti-trust lawsuit, supported by twenty-nine other states and the Department of Justice.
The company, one of the world’s largest ticketing vendors and parent company of subsidiary Ticketmaster, is accused of illegal business practices that result in bad ticket outcomes for all Ohioans.
For the budding business manager completing your online MBA in Ohio, this anti-trust case provides valuable insights into how anti-trust legislation works, why it’s so important for every Ohioan, and what the consequences are of systems that are poorly regulated or run as monopolies. Let’s dig into these allegations, and understand just why Live Nation is facing a symphony of complaints.
The Allegations Against Live Nation
In 2010, Live Nation, one of the nation’s largest event promoters and venue operators, merged with Ticketmaster, a global leader in ticketing technology. At the time, the deal was criticized – as it was seen to be potentially anti-competitive.
Fifteen years later, the Live Nation/Ticketmaster merger appears to have had a chilling effect on market competition – engaging in behavior that allows the company to restrict and limit competition in the entertainment and events space.
The argument is fairly simple – Live Nation’s market power as both a venue promoter and a ticketing provider (through Ticketmaster) means that for many, it’s impossible to get tickets to an event without going through the two companies. This relationship is accused of being not only anti-competitive, but monopolistic – meaning outcomes that are poor for not only concertgoers but for band managers and other unaffiliated venues alike.
The Problem With Live Nation
Consider this – you’re a budding music producer and you want to hold a small concert in your local town. Initially, you have access to small bars, so your performers can go out and perform their acts.
What happens if the act becomes viral on TikTok, and as a result, they have become popular enough that they no longer fit into the small venues that were previously hired out? In that case, the producer might try and find a larger venue to hire – perhaps something that starts small but grows over time. While some acts aspire to hold stadium tours, for the vast majority of artists, something like Taylor Swift’s billion-dollar Eras Tour is often an anomaly, rather than the norm in stadium concerts.
Once interesting is that when you get to that level of success, and you’re looking to hire out stadiums or major events locations, the number of companies you engage with dwindles dramatically. Live Nation operates some 60% of the nation’s largest amphitheaters, according to research conducted by the American Economic Liberties Project. The next largest operator manages just 4%.
If you’re a large act, wanting to perform in many of the nation’s top venues, because of the dominance Live Nation has over the market. Major acts are inherently forced to cut deals with venue promoters. These may include only using venues that were ticketed by Ticketmaster, or face being locked out of some of the nation’s largest stadiums.
The Challenge of Monopolies
It wouldn’t be unreasonable to argue that to some extent, Live Nation and Ticketmaster’s relationship is somewhat of a monopoly. The concert sector is one of the most concentrated in the world. In theory, it seems like it would be a good thing to have a monopoly – when approving the 2010 merger between Live Nation and Ticketmaster, those spearheading the change noted that safeguards would be in place to encourage market competition, such as the divestment of the Paciolan self-hosting ticketing service, and the forced licensing of Ticketmaster’s platform to AEG for five years.
The problem, as it appears, was that these efforts to placate a potential monopoly failed. As an organization, Live Nation’s vertical integration with Ticketmaster (that being a promoter that controlled not just venues, but also ticketing services) could simply sign exclusivity agreements with artists.
The cycle works a little like this – our budding music producer from earlier gets on the phone to start organizing concerts – after all, the band’s on the rise and they would like to make sure they have the best venues available.
First, they get on the phone to Live Nation – knowing that they can be connected to dozens of venues perfect for the band’s needs. As with all bands, they have a diverse audience and supporters with all sorts of needs – and the band wants to celebrate that.
Live Nation picks up the call, speaks to the manager, and then goes and has a chat with their team. Of course, they can help get the venues that the band needs! There’s one small thing, though – if Live Nation helps them get the venues, as a measure of goodwill, they’d like the ban to sign onto an exclusivity arrangement – where for the next ten years, the band performs exclusively at Ticketmaster venues.
This may sound like a great deal for the band, but in reality, it’s a poisoned chalice. Ticketmaster is by no means a perfect system – it’s had many controversies in the past, including excessive fees, and failures for booking big events, and has earned the ire of many celebrities. Providing exclusivity means it simply has no incentive to change – with all these guaranteed contracts provided by Live Nation, Ticketmaster can simply sit on its laurels and provide the bare minimum to get things running.
How Could This Lawsuit Change The Concert Industry?
If this lawsuit is successful, it’s entirely possible that for the first time in nearly half a century, anti-trust law could be enforced to force Live Nation to break up into smaller entities, to help drive competition in the events and ticketing space.
Live Nation’s relationship with Ticketmaster highlights the worst parts of monopolies. Simply put, a monopoly limits the ability of a market to be truly open – breaking up the company would in part, help to address anti-trust issues while invoking valuable competition in the sector.
As Matchbox Twenty learned, if Live Nation doesn’t want to support a venue because they don’t have their ticketing system, they may well simply choose to bypass the venue altogether, as was seen during their 2013 stadium tour. This would effectively be impossible under correctly applied anti-trust breakups.
Ultimately, in a few years, we could see a very different events landscape compared to what we see today. Whether it helps put the cat back in the box – well, that’s another question entirely.
