Live Nation and Ticketmaster lawsuit: whatever happens, it won't lower concert prices – National

Selling a concert ticket should be easy. Essentially, a ticket is a contract between you and a promoter that allows you access to a specific venue on a specific date and time to see a show. In other words, it's something you buy to get you through the door. Yet selling and buying concert tickets constitutes one of the most opaque consumer experiences in the known universe.

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

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

At the heart of the trial are four main elements:

1. Live Nation is too big and too powerful. This was possible through the use of Ticketmaster and a series of exclusive ticketing deals with venues.
2. Live Nation enjoys an unfair advantage over its competitors thanks to its control of touring and the more than 250 venues it owns.
3. These conditions allowed Live Nation to maintain a de facto monopoly on the ticketing industry, allowing it to raise prices and fees.
4. Ticketmaster's dominance limits innovation in the ticketing industry, hurting potential competitors and driving up prices.

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

And yes, ticket prices have skyrocketed in recent years. And there's no doubt that extra fees and service charges are annoying. But the dissolution of Live Nation won't 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 that's the real world situation.

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

Live Nation then plugs it all into a spreadsheet and comes up with a break-even point and then ticket price levels that will make the tour profitable for the artist. Costs and expectations are adjusted before the artist is signed. Again, the singer/band has the final say on the price of tickets at face value.

Once this is settled, 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 necessary infrastructure and technology!) and allows it to make a profit. Ticketmaster is, after all, a business in itself. And aside from a few glitches, every site goes down from time to time because no technology is perfect. Ticketmaster is very good at selling tickets. Considering the volume it processes 24/7/365, no one does it better.

What about venue or facility fees? This money covers the costs incurred by the place (electricity, security, etc.) and allows you to make a small profit. These fees allow a building to economically host a concert. No fees, no presentation. 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. This makes them feel like they are on the fans side and that the big bad Ticketmaster and Live Nation are responsible for any financial pain on the fan's part. And when something goes wrong, remember the Taylor Swift Eras Tour debacle? the blame lies with Ticketmaster and Live Nation and not the act.

There have been requests for all-inclusive pricing. It wasn't long ago that airlines advertised fares that seemed incredibly low because they didn't include all taxes and service charges. By the time you received your ticket, the price could have been double the advertised price. Not anymore. Airlines must give travelers the actual price of the ticket, with everything built into it. In the music world, many artists have been reluctant to do this because they want to make it seem like the high ticket price isn't their fault.

What about Ticketmaster's exclusive contracts (usually lasting around five years) with venues? It's not much different than a venue signing exclusive pouring rights with a brewery or soft drink company. Margins can be so thin that venues want certainty and stability from their suppliers. Ticketmaster is just another provider.

What about Live Nation's vertical structure? Live Nation books and promotes shows sold through its Ticketmaster subsidiary, with some concerts taking place at Live Nation-owned venues. At first glance, this seems rather monopolistic. But it’s also very effective. If everything is done in-house, you can reduce costs.

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And again, neither Live Nation nor Ticketmaster have set the face value of the concert ticket. And since many artists benefit from a guaranteed per-show payment 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 cases where he owns the amphitheater. , a club or a theater, to generate profits for these buildings.

Did I mention that the artist has final approval of ticket prices? I did it? Just to be sure.

So let's say the DOJ orders Live Nation to be broken up. Ticketmaster should be sold. It's even possible that Live Nation will have to sell its stake in the venues it owns. So what ?

We could return to the days when multiple national or regional promoters bid on shows. The quickest way to get an act's attention is to offer the biggest guarantee. The winning developer will then be under financial pressure to cover the costs. The only way to do this is to explain to the artist that they will have to charge more per ticket if they want that big guarantee. Ticket prices go upnot down.

Live Nation is attractive to artists because it is a one-stop shop nationally and internationally. Of course, they could go to another promoter, but can they offer the same conditions and performance fee guarantees? Maybe, but I guess not. Ticketmaster has many revenue streams, such as sponsorships, that help cover costs and bolster collateral.

Other companies may want to take on Ticketmaster. Go for it. Innovation through competition is always a good thing. But becoming a competitor to Ticketmaster will require billions of investments in the new entity's software, infrastructure and promotion/marketing, all in an effort to launch into a low-margin business. They will also have to wait for the exclusivity contracts that Ticketmaster currently has in place with venues to end. When contracts are agreed, there will inevitably be bidding wars, the price of which will be passed on to the consumer through higher installation fees. Again, this will cause ticket prices to rise up.

Yes, it's possible that an orderly dissolution of Live Nation could help other potential promoters and ticket sellers. All “monopolistic practices” will be removed, which could benefit the ticketing industry. Maybe customer service, always a bugaboo with Ticketmaster, will improve. Maybe someone will find another way to simplify pricing without requiring new laws to be passed. Someone could find a way to effectively control ticket resale.

But who could buy Ticketmaster? The cost would be very, very high, so it's probably a play by a stock fund or some other Wall Street construct.

And will this help address the rise in concert ticket prices? No. Will this solve the problem of a million people trying to buy 100,000 available tickets, resulting in instant sales? No. Will it solve larger economic problems like inflation and the rising costs of putting on a tour? No. Will fans' unrealistic expectations (demands!) to buy a good seat for a big band for $50 come true? No.

What will be the benefit of a Live Nation breakup for the consumer?

I don't see any. Not one.

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

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