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Live Nation’s market dominance in the spotlight at Congressional hearing

By | Published on Wednesday 25 January 2023

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Live Nation and Ticketmaster came under fire from both sides of the political spectrum as the ticketing market was put into the spotlight in US Congress yesterday. As expected, the live giant urged law-makers to focus on regulating the ticket touts rather than worrying about the level of competition in a marketplace that it dominates. Though the most interesting testimony provided an artist perspective of all the issues across the entire live sector.

The US Senate Judiciary Committee decided to stage the session looking at ticketing following the problems that occurred last year when tickets for Taylor Swift’s upcoming tour went on sale via Ticketmaster’s Verified Fan system. The Live Nation-owned ticketing company’s platform struggled to cope with the unprecedented demand – from both fans and touts – causing all sorts of issues for those trying to buy tickets, resulting in lots of angry Swift fans.

The widespread media coverage of the Swift ticketing meltdown was unsurprisingly seized upon by those within the music industry and the political community who reckon that Live Nation – as a leading promoter, venue operator and ticketing platform – is far too dominant in the live entertainment business. Most of those critics reckon that the 2010 merger of Live Nation and Ticketmaster should never have happened, and some want it reversed.

With the Congress members who instigated yesterday’s hearing among Live Nation’s critics – and with most of those called to testify clearly hostile to the live giant – the firm’s President and CFO Joe Berchtold knew he was going to be in for a tough time while answering questions from the Senate committee’s members.

Berchtold’s strategy for the session was apparent before it had even begun though. Be super apologetic to all the Swift fans who struggled to buy tickets on the Ticketmaster site last year. But blame the ticketing meltdown on the touts who illegally used so called bots to try to access tickets from the presale to then resell for profit on the secondary market.

True, those touts may well have been planning to use Ticketmaster’s own resale platform, the live giant still being active in secondary ticketing in the US.

However, while the North American side of Live Nation may still endorse the principle of touting, Berchtold would stress that doesn’t mean it endorses the tactics employed by some touts. And, to that end, the company would gladly support beefed up regulation of ticket resale in the US similar to what has already been put in place in some other countries, especially in Europe.

“There was unprecedented demand for Taylor Swift tickets”, Berchtold said in his prepared statement. “We knew bots would attack that onsale, and planned accordingly. We were then hit with three times the amount of bot traffic than we had ever experienced, and for the first time in 400 Verified Fan onsales they came after our Verified Fan access code servers”.

“While the bots failed to penetrate our systems or acquire any tickets, the attack required us to slow down and even pause our sales”, he went on. “This is what led to a terrible consumer experience that we deeply regret. As we said after the onsale, and I reiterate today, we apologise to the many disappointed fans as well as to Ms Swift”.

Berchtold then added that Ticketmaster accepts that it has an important role to play in stopping touts from using devious tactics to gain access to tickets for resale, insisting that some valuable lessons had been learned from the Swift ticketing debacle that will help it better perform that role in the future. However, he went on, law-makers have a role to play too, as the dodgy touts employ ever more sophisticated tactics and technology to try to circumvent Ticketmaster’s systems.

“We are doing everything we can to fight the people who attack our onsales and steal tickets meant for real fans, but we need help passing real reforms to stop this arms race”, he said.

The 2016 BOTS Act which outlawed the use of ticketing bots in the US was a good first step, he went on, but “in hindsight the prohibition on bots is too narrow and there is not nearly enough enforcement”. For example, he added, “we think that private parties including Ticketmaster should be able to bring civil actions to enforce the BOTS Act”.

The Live Nation CFO then listed other ways in which US law could and should regulate ticket touting, including rules to stop touts from advertising tickets they don’t actually have yet, to stop both touts and touting sites from implying they are official sellers, and to ensure that the full cost of a ticket including any add-on fees is clearly stated from the start of any sales process.

These are all rules that have been considered and in some cases implemented elsewhere in the world. And, of course, plenty of people in the wider music community – not to mention politicians and consumer rights groups – will back Berchtold’s calls for better regulation of ticket touting in the US.

Some people have felt that, in the past, Live Nation/Ticketmaster has too often been too forgiving of a secondary ticketing market in which it also operates. So having a top Live Nation exec so forthrightly call for better regulation of resale in a country where touting is much more readily accepted as the norm will be welcomed by anti-touting campaigners.

But, of course, most of the other people gathered for yesterday’s session were there to talk about Live Nation’s dominant position in ticketing and the live sector at large, not the need for better regulation of the touts.

“Innovation in live event ticketing has been stunted because Live Nation Entertainment controls the most popular entertainers in the world, the ticketing systems, and even many of the venues”, said Jack Groetzinger, CEO of Ticketmaster rival SeatGeek.

“This power over the entire live entertainment industry allows Live Nation to maintain its monopolistic influence over the primary ticketing market”, he added. “As long as Live Nation remains both the dominant concert promoter and ticketer of major venues in the United States, our industry will continue to struggle with the challenges that face it today”.

Live Nation’s “dominance in markets in the live entertainment supply chain creates strong incentives to exclude smaller rivals such as smaller or independent concert promoters and venues”, added Kathleen Bradish from the think tank American Antitrust Institute.

“Ticketmaster’s dominance in digital ticketing also creates incentives to limit competition from ticket resellers and brokers, thus impairing the functioning of the important secondary ticketing market”, she added. “Customers pay the price with higher ticket prices and ticket fees, lower quality, less choice and less innovation”.

Knowing the agenda of most of the other people gathered at yesterday’s hearing, Berchtold dealt with the competition controversies too in his statement.

He bigged up Live Nation’s investments in the live entertainment business, argued that critics routinely exaggerate his company’s market dominance, and insisted that there are plenty of strong competitors in concert promotion, venue management and ticketing.

As for ticket prices and ticket fees – perhaps the most important things as far as the Senate committee’s members are concerned, given that’s what annoys consumers and therefore voters – those things are not in Ticketmaster’s control, he insisted.

“Primary ticketing companies, including Ticketmaster, do not set ticket prices, do not decide how many tickets go on sale and when they go on sale, do not set service fees”, he said. “Pricing and distribution strategies are determined by artists and teams – and while Ticketmaster provides support for these decisions, we do not use algorithms to set prices”.

“In most cases venues set service and ticketing fees, and the majority of those fees go to the venue, not to Ticketmaster”, he added. “Indeed, for as long as Live Nation has owned Ticketmaster, the portion of the service fee that Ticketmaster retains has been falling and the venue’s share has been increasing”.

You can read Joe Berchtol’s full statement to the hearing here.

Only one artist was invited to speak at the session – Clyde Lawrence of the New York-based band Lawrence – though he gave perhaps the most interesting statement. Expanding the remit of the hearing even further, he provided a comprehensive overview of how artists interact with the live business at large, outlining the various frustrations he and other artists face.

Although he stressed that many of those issues are not unique to Live Nation, when you end up with a show where the live giant is the promoter, the venue and the ticket agent, the frustrations increase. And, some would argue, given its dominance in the US market, it can be tricky for many artists to avoid having shows where Live Nation is performing all three of those roles.

“In the live music market, our promoter should be a true partner to us”, he noted. “Since both our pay and theirs is theoretically a share of the show’s profits, we should be aligned in our incentives: keep costs low while ensuring the best fan experience”.

“But with Live Nation not only acting as the promoter but also as the owner and/or operator of the venue, it complicates these incentives when looking at line items in a show’s settlement sheet”, he went on, “which ultimately determines how much each party gets paid”.

“Think about line items like ‘rent’ for the venue, or other more opaquely named fees like ‘house nut’ or ‘facility fee’. In a world where the promoter and the venue are not affiliated with each other, we can trust that the promoter will look to get the best deal from the venue. However, in this case, the promoter and the venue are part of the same corporate entity, so the line items are essentially Live Nation negotiating to pay itself”.

As for the specifics of ticketing, artists often have little control over that, Lawrence said. In fact, artists have “zero say” over the ticket fees that are charged on top of the main ticket price. Indeed, he added, artists are rarely even told what those fees are. “Put simply, we find out the same way as everyone else”, he said, “by logging onto Ticketmaster when the show goes on sale, and seeing as much as a 40% fee or more”.

Elsewhere Lawrence discussed other issues that artists face when touring, such as venues charging commissions on merch, and ticketing companies keeping all the data in relation to people who came to any one show.

He concluded by again stressing that not all of these issues are unique to Live Nation, and that he and his bandmates have had many great experiences playing Live Nation managed venues. However, the live giant’s “powerful position across the industry makes it a leader in setting standards”.

Plus, he mused, the dominance of Live Nation and Ticketmaster makes it tricky for rivals to innovate in a way that might address some of the issues he raised. “Competition is beneficial for many reasons, but innovation is one of the most important”, he said.

“For example, companies in the ticketing space might bring major innovations that allow for lower fees, greater transparency and analytics for artists, and advancements in handling the problematic secondary ticketing market”.

“But it doesn’t matter how innovative these other ticketing companies are – if every Live Nation show needs to be ticketed exclusively through Ticketmaster, there’s no chance for them to break through”.

You can read Clyde Lawrence’s full statement here.

It remains to be seen whether the renewed interest in the dominance of Live Nation and Ticketmaster in the US ultimately results in any changes, whether to secondary ticketing rules, or the workings of ticketing and the live business more generally.

Certainly it has rallied the live giant’s existing critics. Who, if nothing else, will be putting ever more pressure onto the US Department Of Justice – as the country’s competition regulator and overseer of the consent decree agreed when Live Nation and Ticketmaster merged – to again scrutinise how the different strands of Live Nation interact.

In the meantime, you can watch a recording of yesterday’s hearing here.

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