Opinion

In the Era of Stronger Antitrust, Look at the Ticket Market for Live Events

There is a lot of interest with monopolies in Washington. It should include, as it did a year ago, the live events ticketing market. If the market weren’t already hyper-concentrated under the behemoth Live Nation/Ticketmaster, the company’s ability to leverage its position and technology could leave sports teams, music artists, venues and other event organizers with few or no alternatives for selling, reselling and managing tickets. Everyone, especially fans, could pay higher prices as a result.

Sens. Amy Klobuchar, Richard Blumenthal and Cory Booker wrote to the U.S. Department of Justice last spring, warning that, “Even before the pandemic, industry participants had complained about Live Nation leveraging its significant presence up and down the live entertainment value chain to advantage its affiliate businesses. Under these unprecedented circumstances, which are threatening the entire industry, the Antitrust Division must continue to monitor these markets to ensure that Live Nation does not further entrench its market dominance at the expense of smaller rivals.”

Now chair of the Senate’s antitrust subcommittee, Klobuchar has introduced legislation that prohibits “exclusionary conduct” by large dominant companies that disadvantage their competitors. In her opening statement on March 11 at the first of what she says will be a series of hearings focused on competition, she stated, “America’s market power problem cuts across our entire economy,” noting that “we see it in the live event industry – where one vertically integrated company dominates ticketing, events sponsorships, and performance venue booking.”

Ticketing is ripe for such attention: Last year, the Department of Justice found Live Nation/Ticketmaster violated its merger consent agreement and, just three months ago, the U.S. Attorney fined Ticketmaster following a Federal Bureau of Investigation probe that found the company accessed a rival’s computers without authorization and used confidential information acquired from the act to attempt to dissuade venues and music artists from working with the competitor to sell tickets.

Concerns, including my own, over the anti-competitive practices of Live Nation/Ticketmaster are well-established. Many groups opposed the merger of Live Nation and Ticketmaster 10 years ago and today call for unwinding the mergerbetter enforcement of existing antitrust laws and passing new laws to protect the live events ticket market. Without improved market competition, Live Nation/Ticketmaster will continue to capture the vast majority of all ticket sales and charge high fees to consumers — an average of 27 percent of the ticket price, according to the Government Accountability Office.

But there is more. Ticketmaster is taking steps today that will result in the company’s becoming even more powerful and dominant, packaging technology within a COVID-19 bundle of services called “SmartEvent” that is capable of preventing other ticket sellers from competing for customers’ business. The technology, in addition to helping with social distancing and cashless concessions, repurposes tools initially created to prevent scalping for use in contact tracing.

Indeed, what has proven effective at live events so far are things like reduced capacity, social distancing and face coverings. Any potential public health benefits of restricting ticket transfer are dwarfed by the negative consequences of enshrining the Ticketmaster monopoly.

Every stakeholder involved in the live events industry unquestionably wants to reopen as quickly and safely as possible. To do this, there needs to be a way to manage ticketholders from the point of purchase through the date of their event. This much makes sense, and considering its size, Ticketmaster should play some role. But it does not mean the company needs to be the only ticket seller, nor should it be capable of using its technology to block fans from buying tickets from other sellers or prevent ticket holders from entering an event if their valid ticket was purchased from a rival company.

When Ticketmaster attempted to do this in the past, it has run into problems. Fortunately, laws in several states prohibit this kind of behavior and protect consumers when they purchase tickets elsewhere, but more needs to be done at the federal level.

Interest in Congress last year led to an oversight hearing and the introduction of legislation by Reps. Bill Pascrell and Frank Pallone. Whether through their BOSS Act, which is specific to ticketing, Klobuchar’s broad anti-monopoly proposal, or action by the Justice Department, Federal Trade Commission or state attorneys general, there are remedies capable of fixing this problem.

When there is only one ticket company in town, it is not difficult to imagine what happens to prices – for the independent venue, music artist, sports team, as well as fans seeking tickets. Everyone doing business with Ticketmaster – whether by choice or because of a lack of alternatives – could pay a higher price.

 

Mark J. Perry is a scholar at the American Enterprise Institute and a professor of economics at the Flint campus of the University of Michigan.

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