Live Nation and Ticketmaster lawsuit: Whatever happens won’t cut concert prices

Selling a concert ticket should be easy. At its essence, a ticket is a contract between you and a promoter that allows you access to a specific venue at a stated date and time to see a performance. In other words, it’s a thing you buy to get you in the door. Yet selling and buying concert tickets is one of the most opaque consumer experiences in the known universe.

Misinformation, frustration, and ignorance about how the system works — and needs to work — have created a situation where fans and governments are fed up and want something done about it. Good luck with that.

The latest salvo is an antitrust lawsuit filed by the U.S. Department of Justice against Live Nation, the owner of Ticketmaster, accusing the company of being mean, monopolistic and using illegal tactics to stifle competition. (Live Nation’s response to the lawsuit can be found on livenationentertainment.com.)

At the heart of the lawsuit are four main things:

1. Live Nation is too big and too powerful. It got that way by using Ticketmaster and a series of exclusive ticketing contracts with venues.
2. Live Nation has an unfair advantage over competitors thanks to its control of tours and the 250+ venues it owns.
3. These conditions allowed Live Nation to maintain a de facto monopoly over the ticketing business, allowing it to raise prices and fees.
4. Ticketmaster’s dominance limits innovation in the ticketing industry, harming would-be rivals and driving up prices.

Live Nation is certainly very, very big, thanks to the 2010 merger with Ticketmaster, something that was approved by the US Government. Last year alone, the company promoted 50,059 shows globally, a new record. Ticketmaster sells about 500 million tickets a year, and about 70 per cent of all tickets sold to major concert venues are processed through Ticketmaster, according to data in a federal lawsuit filed by consumers in 2022.

And yes, the price of tickets has skyrocketed in recent years. And there’s no question the added fees and service charges are annoying. But breaking up Live Nation isn’t going to change any of that.

Before you call me a Live Nation/Ticketmaster apologist, let’s look at some cold, hard, irrefutable facts about concert tickets. You may not like what you’re about to read, but this is the real-world situation.

First, when setting the price of a concert ticket, the buck always stops with the artist. An artist’s manager and agent will approach Live Nation (or any promoter for that matter) and say, “We want to go on tour. Our costs are projected to be X and we’d like to make a profit of Y. How many tickets do we need to sell at what price in how many cities to make that happen?”

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Live Nation then plugs everything into a spreadsheet and comes up with a break-even number and then tiers of ticket prices that will make the tour profitable for the artist. Costs and expectations are adjusted before the artist signs off. Again the singer/band has the final say on how much tickets will cost at face value.

Once that’s worked out, Ticketmaster is used to sell the tickets. It adds a fee (usually a percentage of the face value), which covers all its costs (think of the infrastructure and technology required!) and allows it to make a profit. Ticketmaster is, after all, a business unto itself. And aside from the odd glitch — hey, every site goes down once in a while because no technology is perfect — Ticketmaster is very good at selling tickets. Given the volume it deals with 24/7/365, no one does it better.

What about the venue or facility fee? This money covers the costs incurred by the venue (electricity, security, etc.) and to make a bit of a profit. These fees make it economically possible for a building to host a concert. No fees, no shows. Would you do all the necessary work for free?

Having these fees separate from the face value of the concert ticket makes the act look good. It makes them appear that they’re on the side of the fans and big, bad Ticketmaster and Live Nation are responsible for any financial pain on the part of the fan. And when something goes wrong — remember the Taylor Swift Eras Tour debacle? — the blame falls on Ticketmaster and Live Nation and not the act.

There have been demands for all-in pricing. Not that long ago, airlines used to advertise fares that seemed insanely low because they didn’t include all the taxes and service charges. By the time you got your ticket, it could have been twice the advertised price. No longer. Airlines must give travellers the true price of the ticket with everything baked in. In the music world, many artists have balked at this because they want to make it look like the high price of the ticket isn’t their fault.

What about Ticketmaster’s exclusive contracts (typically five years or so in length) with venues? This isn’t much different than a venue signing exclusive pouring rights with a brewery or a soft drink company. Margins can be so thin that venues want certainly and stability from their suppliers. Ticketmaster is just another supplier.

What about Live Nation’s vertical structure? Live Nation books and promotes the shows which are sold through its Ticketmaster subsidiary with some gigs happening in Live Nation-owned venues. On the surface, that does look pretty monopolistic. But it’s also highly efficient. If everything is done in-house, you can keep costs lower.

And again, neither Live Nation nor Ticketmaster set the face value of the concert ticket. And because many artists are given a guaranteed per-show payout by Live Nation, the promoter assumes all the risk when it comes to putting bums in seats, the cost of running Ticketmaster to sell tickets, and, in the cases where it owns the amphitheatre, club, or theatre, to eke out a profit for those buildings.

Did I mention that the artist has the ultimate sign-off on the price of tickets? I did? Just want to make sure.

So let’s say that the DOJ orders that Live Nation be broken up. Ticketmaster would have to be sold off. It’s even possible that Live Nation could have to sell its stake in the venues it owns. Then what?

We could return to the old days of multiple national or regional promoters bidding on shows. The fastest way to gain an act’s attention is to offer the largest guarantee. The winning promoter will then be under financial pressure to cover costs. The only way to do that is to explain to the artist that they will have to charge more per ticket if they want that big guarantee. Ticket prices will go up, not down.

Live Nation is attractive to artists because it’s a one-stop-shop nationally and internationally. Sure, they could go with another promoter, but can they offer the same terms and performance-fee guarantees? Maybe, but I’d guessing not. Ticketmaster has lots of revenue streams like sponsorships that help defray costs and to boost guarantees.

Other companies may want to take on Ticketmaster. Go right ahead. Innovation through competition is always good. But becoming a competitor to Ticketmaster will require billions in investment in software, infrastructure, and promotion/marketing of the new entity, all in an effort to get into a low-margin business. They will also have to wait out any exclusivity contracts Ticketmaster currently has in place with venues. When contracts come up, there will inevitably be bidding wars, the price of which will be passed on to the consumer through higher facility fees. Again, this will cause ticket prices to go up.

Yes, it’s possible that an ordered breakup of Live Nation will help other promoters and would-be ticket sellers. Any “monopolistic practices” will be quashed, which may be good for the ticketing industry. Maybe customer service — always a bugaboo with Ticketmaster — will improve. Perhaps someone will come up with another way to simplify pricing that doesn’t require new laws being passed. Someone might come up with a way to effectively police the resale of tickets.

But who could buy Ticketmaster? The cost would be very, very high, so it’s probably a play by an equity fund or some other Wall Street construction.

And will this address the rising cost of concert tickets? No. Will this solve the problem of a million people trying to buy 100,000 available tickets resulting in instant sellouts? No. Will it address larger economic issues like inflation and the rising costs of staging a tour? No. Will fans’ unrealistic expectations (demands!) of buying a good seat to a top act for 50 bucks be realized? No.

What will be the advantage of a Live Nation breakup to the consumer?

I can’t see any. Not one.

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Alan Cross is a broadcaster with Q107 and 102.1 the Edge and a commentator for Global News.

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