Anyone who’s been to a concert in the last decade has almost certainly purchased tickets through the live entertainment industry’s biggest company, Ticketmaster. As Ticketmaster maintains its near total control on ticketing and live events – with more than 80% of the marketing for primary tickets since 1995 – consumer experience has suffered and artists have lost control over ticket prices. This blog post examines how Ticketmaster gained a monopoly in the live entertainment industry, the consequences of its monopolistic control, and the need for policy reform within the industry.
Understanding Antitrust Laws
Antitrust laws date back to the passage of the Sherman Antitrust Act of 1890 which Teddy “the Trust Buster” Roosevelt used to break up monopolies in the oil and rail industries. Antitrust laws prevent unlawful mergers and business practices in order to promote fair competition and prevent monopolistic control. During this period and much of the 20th century, America’s antitrust laws were effective in slowing the “cutthroat competition” of the era. The antitrust laws from the Roosevelt era were significantly weakened during the Reagan administration when the Department of Justice and Federal Trade Commission, the two main enforcers of federal antitrust laws, remade the existing philosophy of antitrust laws to promote mergers and discourage practices that led to the limited availability of goods.
The Ticketmaster Monopoly
By the pre-Reagan era definition, Ticketmaster is the definition of a monopoly. In addition to the company’s dominance in the ticketing industry, Ticketmaster also owns a significant number of major venues across the U.S. and has exclusive contracts with event organizers that prevent them from selling on any other ticketing platform. Ticketmaster charges higher service fees than its competitors. It splits the profits from these service fees with the venues and in exchange the venues sell tickets exclusively with Ticketmaster.
Ticketmaster’s road to success came from a series of mergers and buyouts. In 1991, the company acquired their biggest rival, Ticketron. This is an example of horizontal integration with a direct competitor. While it secured their monopoly on ticketing, the company was limited to this one component of the live entertainment industry. In 2007 LiveNation, the largest concert promoter and owner of venues with exclusive contracts with huge artists such as Miley Cyrus and Madonna, launched its own ticketing business. In 2010, the two companies merged to form Live Nation Entertainment, an industry giant now worth nearly $20 Billion. This merger, which represents a vertical integration along different stages of the value chain, solidified the company’s control over multiple levels of the live entertainment industry. The Ticketmaster and LiveNation merger raised concern regarding competition and market practices within the live entertainment industry. Nonetheless, it was approved by the Department of Justice with limited modifications that aimed to maintain competition within the industry. In 2019, Ticketmaster was found to have repeatedly violated many of the terms of the agreement.
The company’s market position allows it to engage in anti-competitive behavior. With their exclusive deals with major venues and no significant market competitors, consumers who want to purchase tickets to live music and shows have no choice but to purchase through Ticketmaster’s website. This level of control prevents small and new ticketing companies from succeeding in or even entering the industry.
While Ticketmaster has control over nearly the entire market for the ticketing industry, it is not equipped to handle the full load of demand from consumers. Ticketmaster’s shortcomings gained major public attention when issues arose during the presale for tickets to the U.S. Leg of Taylor Swift’s “The Eras Tour.” Swift fans experienced hours-long waits and repeated website crashes. If they were lucky enough to get tickets, they were forced to pay excessive fees and were subjected to Ticketmaster’s dynamic pricing strategy.
Other fans have complained of similar experiences with Ticketmaster over the years. Frequent complaints include excessive fees and an inability to function during high demand. In a competitive industry, consumers and artists would gravitate towards another platform with more reliable service and the best user experience for the lowest fees. Unfortunately for live music fans, another platform does not exist. AEG, the company promoting Taylor Swift’s tour, said they were forced to sell Eras Tour tickets on Ticketmaster because “Ticketmaster’s exclusive deals with the vast majority of venues on the Eras Tour required us to ticket through their system.”
Ticketmaster’s so-called “junk fees” have also been a talking point among critics. These hidden fees contribute to an overall lack of transparency from Ticketmaster and prevent consumers from making informed choices. Artists have little to no control over the price of their tickets because of this (and other) Ticketmaster adjustments. Another problem with Ticketmaster’s current pricing strategy is dynamic pricing, which automatically adjusts pricing based on demand. Dynamic pricing, while not a problem in more competitive markets, is particularly detrimental to customer experience in the ticketing industry because of Ticketmaster’s monopoly. Consumers can’t make informed decisions because prices are subject to change until a ticket has been purchased.
Policy Reform
Over the past decade there have been several significant legal challenges to Ticketmaster’s monopoly. Schlesinger v. Ticketmaster, settled in 2013, accused Ticketmaster of deceptive fees and violation of antitrust laws. In Songkick v. Ticketmaster (2020), Ticketmaster was accused of similar anticompetitive behavior after hacking into their rival company’s computer systems. Both these lawsuits were settled out of court with Ticketmaster agreeing to pay damages and issue vouchers to affected customers.
In recent years, the federal government has signified an interest in adjudicating monopolies, with prominent ongoing court cases against Google and Meta. Ticketmaster hasn’t escaped federal scrutiny either. After the debacle with Taylor Swift tickets, the Senate Judiciary Committee held a three hour hearing questioning Ticketmaster over their monopolistic practices. Lawmakers from both parties criticized the entertainment company calling it a “monopolistic mess.” Many lawmakers used Swift’s lyrics against Ticketmaster suggesting that Ticketmaster “look in the mirror and say, ‘I’m the problem. It’s me.’”
So far, the majority of successful reforms have been on the state level with New York, Texas, Massachusetts, and California outlawing scalper bots and regulating pricing models after Ticketmaster’s mishandling of sales for “The Eras Tour.” On the federal level, several bills have been proposed, but none have been passed through Congress. Proposed reforms include granting the Federal Trade Commission authority to regulate exclusive contracts with venues, requiring ticketing platforms to disclose the total ticket prices, and preventing promoters and venue employees from reselling tickets exorbitantly.
Ticketmaster got to the top by merging with its biggest competitors. However, without competition, Ticketmaster has failed to innovate and adjust to changing circumstances. Its model for ticket sales is dysfunctional and with no competition, Ticketmaster has no motivation to improve. The live entertainment industry is in desperate need of government regulations to protect consumers and prevent the manipulation of the market through monopolistic practices. Policymakers should target Ticketmaster’s monopoly and aim to foster innovation, promote competition, and protect consumers.
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Patel, N. (2023, March 21). Taylor Swift vs. Ronald Reagan: The ticketmaster story. The Verge. https://www.theverge.com/23645057/taylor-swift-ticketmaster-eras-tour-beyonce-antitrust-monopoly-reagan-senate-hearing-congress
Rouhandeh, A. J. (2023, January 25). Ticketmaster draws bipartisan fire from Congress in Taylor Swift hearing. Newsweek. https://www.newsweek.com/ticketmaster-draws-bipartisan-fire-congress-taylor-swift-hearing-1776257
Sisario, B., & Kang, C. (2019, December 19). Citing violations, U.S. to toughen live nation accord on ticketing. The New York Times. https://www.nytimes.com/2019/12/19/arts/music/live-nation-ticketmaster-settlement-justice-department.html
