Quick Thoughts on Live Nation/DOJ Settlement

Quick thoughts about this morning's Live Nation/DOJ settlement:

1. The fact that this settlement was announced on a Monday morning before half the country was awake means that it was going to be not bad news for Live Nation.

2. Live Nation will have to pay at least $200M in damages. (I've seen as high as $280M reported.) This is a high enough amount to get attention, without being a ridiculous amount that would make it seem like the DOJ is operating in bad faith.

3. It would appear that the "fan club carve out" that most exclusive licensing agreements between Ticketmaster and venues will now apply to almost anything. This means that a certain percentage of ticket inventory (around 8% based on contracts that I have seen) can be allocated to any third-party, without penalty, regardless of whether or not they are an official distribution partner of Live Nation or Ticketmaster. For the most part, this was something that only applied to artist fan clubs.

4. Sheds received a lot of attention in this settlement. This is not surprising if for no other reason than the "Live Nation and Ticketmaster control 70%-80% of 'the market'" comments were based on this specific segment, but opponents tried to apply this to everything. That said, Live Nation will need to divest 10-13 of their amphitheaters. (I've seen multiple numbers reported.) Also, will this give a competitor such as AEG the opportunity buy up the divested venues and then enact the exact same business model but with Goldenvoice and AXS?

5. The term limits on exclusive licensing agreements seem arbitrary and hard-to-enforce. Can Ticketmaster include first-right-of-refusal in these deals? If so, this limit is pointless. Maybe it curbs advance payments a little, but if venues really need revenue, they will negotiate more favorable service fee rebates for themselves which could lead to higher fees on tickets.

6. Breaking up Ticketmaster from Live Nation would have had exactly zero impact on ticket prices or the business model of ticketing. This settlement at least imposes some changes.

UPDATE: Live Nation has officially released a statement regarding the DOJ settlement and, as such, has provided new information:

The amphitheater divesture is only for those venues where they had exclusive booking agreements. All Live Nation owned and operated venues will continue as such. Earlier reports made it seem like Live Nation was going to be required to sell off some of their venues.

Live Nation will also allow independent promoters to distribute up to 50% of the tickets at their amps. This is a surprisingly high number and a pretty big compromise by Live Nation in my opinion. Certainly, a much larger number than the “fan club carve out” I had mentioned previously.

Ticketmaster will allow venues to sign non-exclusive deals if they so choose and "some portion" of tickets can be distributed through other primary marketplaces. This is a more flexible options than how they currently operate. Typically, most if not all Ticketmaster deals with venues require some sort of exclusivity clause.

The current consent decree with the DOJ is extended by eight years, which includes a retaliation clause that prohibits Live Nation from pulling shows from venues that do not use Ticketmaster as their ticketing platform. The General Manager of Barclays Center in Brooklyn alleged on Friday during the trial that Live Nation violated this policy when the venue switched over to SeatGeek in 2021. (They have since switched back to Ticketmaster.)

The $280M payout isn't "damages" per se, it's a settlement fund to address individual states concerns. Again, this is different than what was originally being reported earlier today.