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Informed Citizens

are Better Citizens

by Emily Pecot

Seeing Taylor Swift live with thousands of other “Swifties” wasn’t supposed to be impossible. In November 2022, when tickets for Swift’s “Eras” tour went on sale, Ticketmaster customers encountered website crashes, sparse availability, unusable presale access codes, and outrageous prices.

Many fans, locked out of Ticketmaster, flocked to secondary sites to find tickets as high as $22,700 each, according to an article in The Guardian. After a flood of complaints, in January 2023 more than 300 fans (at last count) signed on to a lawsuit filed in California Superior Court against Live Nation Entertainment, Ticketmaster’s parent company. The plaintiffs allege the company engages in anti-competitive actions and predatory consumer practices, in violation of California’s Unfair Competition Law, which prohibits false advertising and illegal business practices. They are seeking $2,500 in damages for each violation of the California law.

The complaint reads, “Defendant’s [Ticketmaster] anticompetitive behavior has substantially harmed and will continue to substantially harm Taylor Swift fans, as well as competition in the ticket sales market and the Secondary Ticket Services Market.”

The Swift fans are also seeking to break up Live Nation and Ticketmaster, which holds more than 70% of the market for the $9 billion live events ticketing industry, according to a Yale University study. The U.S. Department of Justice (DOJ) is investigating potential antitrust law violations related to Ticketmaster’s $2.5 billion merger with the world’s largest concert promotion company, Live Nation Entertainment, in 2010. That DOJ investigation, though justified by the Swift ticket fiasco, was already in the works.

What is antitrust law? 

The first antitrust law in the United States—the Sherman Act—was passed in 1890. It was used to break up monopolies, at that time particularly in the oil industry. A monopoly is when one entity becomes the dominant option for buying a particular good or service. Little or no competition gives that entity an outsized economic power to control the availability and pricing of specific goods or services.

In 1914, Congress passed the Clayton Antitrust Act, which strengthened antitrust legislation, prohibiting anti-competitive mergers, predatory and discriminatory pricing and other forms of unethical behavior. While being a monopoly isn’t necessarily illegal, if an entity manipulates market conditions to significantly outperform its competitors, it can violate antitrust laws.

“The offense of monopolization in antitrust law requires two things: monopoly power and predatory/exclusionary conduct,” says Michael A. Carrier, a professor at Rutgers Law School in Camden and a leading authority in antitrust law with an expertise in the music industry. “It is not enough just to be big. The company has to engage in anticompetitive conduct as well.”

The purpose of antitrust laws is to prevent monopolization by regulating mergers and breaking up companies violating these regulations. When Live Nation and Ticketmaster announced plans to merge in 2009, some lawmakers, competing companies, fans, and artists like New Jersey rock star Bruce Springsteen opposed it. The DOJ approved the merger under a consent decree, which is an order approved by a court that has been agreed to by all parties involved.

“Sometimes the DOJ has concerns with a merger, but not enough to try to block it. So, it will allow the merger to go forward on the condition that the parties comply with certain conditions,” says Professor Carrier.

The consent decree required Ticketmaster to sell some of its assets and license its software to competitor Anschutz Entertainment Group (AEG). After five years, AEG could buy the software, use different software, or join another ticketing company. The decree also blocked Live Nation from retaliating against venues for using competing ticketing services under the 10-year court order.

“The DOJ agreed to the decree because it thought it would solve the problem of Live Nation leveraging its control over artists and promotion to require venues to use Ticketmaster, or requiring artists to use certain venues or Ticketmaster,” says Professor Carrier. “The parties violated these provisions, which is why the decree was extended in 2019 until 2025.”

Lawmakers take the stage

After the ticketing issues for the Eras tour, a congressional hearing—That’s the Ticket: Promoting Competition and Protecting Consumers in Live Entertainment—was held in January 2023.  Led by Senator Amy Klobuchar of Minnesota, chair of the Senate Judiciary Subcommittee on Competition Policy, Antitrust, and Consumer Rights, the inquiry into Ticketmaster garnered bipartisan support.

In testimony before the committee, Live Nation Entertainment President and Chief Financial Officer Joe Berchtold blamed a relentless onslaught of bots—automated software that replicates human activity—for the issues with the Taylor Swift Ticketmaster tickets. Ticketmaster, however, didn’t do much better with the Beyonce Renaissance tour tickets that went on sale in February 2023. Though not to the same degree, fans complained of the same issues that happened with the Swift tour. When Beyonce fans finally did score tickets from Ticketmaster, they came with hefty fees. According to an article in Rolling Stone, one customer took a screen shot of their Ticketmaster receipt, which showed a $43.90 service fee on a $162 ticket.

In Rolling Stone, Senator Klobachar said of Live Nation, “They book the concert, sell the tickets, and own the venue. That makes for little competition. And despite the consent decree, which they agreed to extend, we don’t see the competition that we should. We’ve seen evidence of violations of them using monopoly power to cut out competition.”

Spotlight on state and federal regulations

The ticketing industry has been regulated by consumer protection laws in some states, as well as federal laws like the 2016 Better Online Ticket Sales or BOTS Act. The law bars secondary ticket sellers from using bots to buy up tickets and resell them at inflated prices. The law has only been used once, when the Federal Trade Commission imposed $31 million in fines against three New York ticket brokers in 2021.

State lawmakers have recently introduced legislation further cracking down on secondary sellers and excessive fees. The Save Our Swifties Act, signed in May 2023 by Texas Governor Greg Abbott, fines those using bots and hoarding tickets.

In August 2022, New Jersey State Assemblyman Craig Coughlin led hearings following complaints by Springsteen and his fans about Ticketmaster’s dynamic pricing, which resulted in some tickets selling for as high as $5,000 for the Boss’s 2023 tour. Dynamic pricing is when an algorithm determines the price of a ticket based on consumer demand. It is typically used in the airline and hotel industries.

On the federal level, in May 2023, two representatives from the Garden State—Congressmen Frank Pallone Jr. and Bill Pascrell Jr.—introduced the BOSS and SWIFT Act.  Among other things, the legislation would require mandatory all-in pricing, where the price consumers see upon selecting tickets reflects the final price with all fees included. The legislation was introduced in the House of Representatives in May 2023 and referred to the Subcommittee on Innovation, Data and Commerce.

Amid mounting pressure, Live Nation countered with its own proposed legislation—FAIR (Fans & Artists Insisting on Reforms) Ticketing Act. The FAIR Act calls for more stringent oversight on scalpers, increased transparency, and gives artists more control over secondary ticket sales. So far, no one in Congress has taken up the legislation; however, it does have the support of several entities in the entertainment business, including Universal Music Group and the four major music talent agencies.

Artist and consumer opposition

Taylor Swift and her fans are not the first to challenge Ticketmaster’s practices. In 1994, Seattle-based rock band Pearl Jam confronted Ticketmaster, drawing attention to its dominance in the live music industry and its business practices. Following a charity concert in Chicago, the band discovered Ticketmaster added fees, cutting into charitable profits.

Pearl Jam challenged Ticketmaster in a 14-month boycott during their much anticipated “Vs.” tour, seeking alternative venues and ticketing companies; they capped their ticket prices well below Ticketmaster’s pricing. This prompted a DOJ investigation, and band members testified before Congress in 1995 in support of a bill dubbed “The Pearl Jam Bill.” The legislation would have required service fees to be printed on tickets by Ticketmaster and other ticketing services. The bill never passed, and the DOJ investigation closed with no action taken.

The show goes on

Despite calls for breaking up Ticketmaster and Live Nation, Professor Carrier says that is unlikely.

“It is hard to break up a company, but if the DOJ is convinced that no other remedy would work, it could try to do this,” says Professor Carrier. “It also could keep extending the consent decree or impose penalties for violating the decree.”

In his February 2023 State of the Union address, President Joe Biden called out Ticketmaster’s so-called “junk fees,” miscellaneous fees added to ticket prices revealed just before a customer completes their purchase. Biden’s comments prompted Live Nation to announce it would be instituting a new all-in pricing policy.

Live Nation’s grip on ticketing via Ticketmaster shows no signs of loosening. Ticketmaster reported revenue of $16.7 billion in 2022, with more than 550 million tickets sold, according to the trade magazine Variety. For fans and artists, the show must go on.

Discussion Questions

  1. Based on what you read in this article, do you think Ticketmaster qualifies as a monopoly? Why or why not?
  2. If you were to draft legislation regulating the live events ticketing industry what rules would you include? Explain your answer.

Glossary Words
algorithm
—a set of rules to be followed in calculations.
bipartisan — supported by two political parties.
plaintiff — person or entity that initiates a civil lawsuit.
predatory pricing—a strategy used to drive out competition by undercutting prices.

This article originally appeared in the fall 2023 edition of The Legal Eagle.