DOJ Sues Live Nation; No, It Has Nothing To Do With Taylor Swift

If you’re involved in the live event industry, or even if you’re just a regular concertgoer, you are probably aware that the Justice Department has officially filed a lawsuit against Live Nation, alleging that the company is a monopoly. As has typically been the case over the last few years with news about Live Nation, or more specifically its Ticketmaster division, there is a lot of misinformation and misinterpretations out there, which lead to narratives that contain a significant amount of falsehoods. Let’s dive into what is happening.

First, the case. The Justice Department, along with 30 individual states, is accusing Live Nation of ”engaging in a slew of practices that have allowed it to maintain a stronghold over the live music scene. They accused it of using long-term contracts to keep venues from choosing rival ticketers, blocking venues from using multiple ticket sellers and threatening venues that they could lose money and fans if they don’t choose Ticketmaster.” Also noted in the complaint is how Live Nation acts as a “flywheel”; a self-reinforcing business model that is so vertically integrated it can manipulate how revenue is captured and distributed through its various segments such as artist management, touring, venue management, sponsorship and ticketing.

In their defense, Live Nation issued the following statement: “The DOJ’s lawsuit won’t solve the issues fans care about relating to ticket prices, service fees, and access to in-demand shows. Calling Ticketmaster a monopoly may be a PR win for the DOJ in the short term, but it will lose in court because it ignores the basic economics of live entertainment, such as the fact that the bulk of service fees go to venues, and that competition has steadily eroded Ticketmaster’s market share and profit margin. Our growth comes from helping artists tour globally, creating lasting memories for millions of fans, and supporting local economies across the country by sustaining quality jobs. We will defend against these baseless allegations, use this opportunity to shed light on the industry, and continue to push for reforms that truly protect consumers and artists.”

Aside from the actual case filing and defendant response, there have been multiple media outlets attempting to tie this case to Taylor Swift and the botched onsale of her Eras tour in November of 2022. While it may be true that this widely publicized situation may have exposed the live event ticketing industry to more people unlike anything else ever has, the Justice Department’s case and the onsale are two, mutually exclusive things. One would think that the setup of that tour was the exact opposite of a monopoly. The artist management/promoter was a separate entity from the venues, which were separate entities from the primary market ticketing companies, which did not offer resale for the tour. I'm not a lawyer or an antitrust expert but it seems silly for this to be main reason for the Federal government to bring legal action against Live Nation.

In fact, this antitrust case has been a possibility since December of 2019 when the Justice Department extended Live Nation’s consent decree from the 2010 merger with Ticketmaster

My comments:

1. The so-called “long term contracts”, called exclusive license agreements in industry jargon, are not the problem. Essentially, the Federal government is arguing that venues and/or event organizers should not be allowed to select their point-of-sale systems for tickets. Ticketing platforms do not set prices, control available ticket inventory, require policies like no resale or transferability, and the controversial service fees are mostly distributed to the venues and event organizers. I have wrote a blog post about exclusive licensing agreements in ticketing in 2023. Check it out for more detailed information.

2. Separating Ticketmaster from Live Nation is going to have absolutely zero effect on ticket prices, or anything else really, other than Live Nation’s corporate structure. It’s not like there is going to be a mass exodus of clients from Ticketmaster if this goes through. Ticketmaster’s business model is the same for Live Nation venues as it is for any other venue.

3. The idea of Live Nation retaliating against venues that don’t use Ticketmaster is bogus. Live Nation promotes thousands of shows in venues that use other ticketing platforms. Live Nation has also been under scrutiny from the Justice Department ever since they signed a consent decree during the 2010 merger with Ticketmaster. A major part of that decree is that Live Nation is not allowed to use content as a factor in establishing ticketing deals. After almost 15 years, there has been ONE instance out of thousands of deals that kinda, sorta, maybe fits into this. Barclays Center in Brooklyn was a Ticketmaster client when it opened in 2012, switched to SeatGeek in October 2021 and then a year later surprisingly went back to Ticketmaster. Their Live Nation promoted concerts dropped almost in half from 25 to 13 during that time with SeatGeek, however a new arena located just 20 miles away on Long Island was also opened. Despite an 18-month investigation by the Justice Department, no evidence of wrongdoing was found.

4. The one part of the suit from the Justice Department that has teeth, in my opinion, is regarding the “flywheel” concept mentioned above. It is technically possible for Live Nation to act as the artist manager, touring manager, tour promoter, venue operator and/or talent booker, ticketing platform and marketing/sponsorship agency for an event. Is this every event? Certainly not, not even close, but it does happen. To be fair, there is currently nothing legally stopping any other companies from doing this and Live Nation’s main competitor, AEG, operates in almost the same exact manner. That said, the barrier to entry for other companies is high, and artists may not wish to sign with a company that is not as vertically integrated. Other facets of the entertainment industry have strict guidelines as to who can do what. For example, in Hollywood, talent managers are not allowed to be booking agents, booking agents cannot be movie studio executives and, until very recently, movie studios could not own movie theaters. Does there need to be a strict separation of duties in the live event business? Should artist managers and tour managers be separated from promoters, venues and ticketing companies?

At any rate, this case is likely to take years to resolve. If the initial ruling is against Live Nation and they are ordered to break up, there will be an appeal which will push the timeline even further down the road. The bottom line is nothing will be changing in the short term.