Trainee Insights: Taylor Swift fans look to antitrust to fill the Blank Space

Viewpoints
February 7, 2023
5 minutes

Following widespread disorder and chaos during a November ticket sale, on 2 December 2022, Taylor Swift fans launched a lawsuit against Ticketmaster and its parent company, Live Nation Entertainment, for allegedly violating antitrust laws.

What happened?

A week prior to tickets for Swift’s 2023 Eras tour going on sale, over 3.5 million fans pre-registered for the pre-sale.  Around 1.5 million fans were granted the status of “verified fans” and given a code which allowed them to access the pre-sale.  However, during the pre-sale, the verified fans struggled through hours-long waits, website crashes, and were hit by Ticketmaster’s “dynamic pricing” system, where prices can skyrocket depending on ticket demand.  

Tickets quickly began appearing for resale in the tens of thousands.  A general sale for the remaining tickets was supposed to take place two days later for the general public, but Ticketmaster cancelled this, leaving the fans who had not gained the verified fan status no chance to buy tickets, unless they engaged in the resale market.

In the lawsuit filed in the Los Angeles County superior court, the plaintiffs make six antitrust complaints against Ticketmaster, alleging:

  • Unlawful tying whereby Ticketmaster is said to be tying the sale of Taylor Swift tickets supplied in the Primary Market (the first sale of tickets) to Ticketmaster’s Secondary Ticket Exchange services for the resale of Taylor Swift tickets at the exclusion of competitors in the Secondary Ticket Services Market.
  • Exclusive dealing whereby buyers and artists are forced to contract with Ticketmaster which controls over 70% of the Primary and Secondary Ticket Sales market, giving it “extreme power”.
  • Price discrimination whereby Ticketmaster’s dynamic pricing and manipulation of its Secondary Ticket Services Market for Taylor Swift tickets constituted price discrimination arising from comparable tickets being sold at radically different prices.
  • Price fixing with scalpers and venues.
  • A market division scheme whereby Ticketmaster has carved out small territories to award to competitors in an attempt to hide the level of monopolistic power and control Ticketmaster has.
  • Group boycotting behaviour.

In essence, they argue that the behaviour of Ticketmaster was anticompetitive and that the company has “strived and succeeded in removing competition from both the Primary and Secondary market” to “conspir[e] with stadiums to force fans to buy more expensive tickets that Ticketmaster gets additional fees from every time the tickets are resold.

A second class-action lawsuit, filed at a federal level on December 20 by a different group of plaintiffs, makes many of the same accusations.

It remains unclear how successful these claims will be when scrutinised by the courts. The mechanism by which the secondary market is allegedly monopolised is unclear, as ticket holders themselves are the ones who can decide when and where to scalp their tickets and have free choice of the secondary site to resell on.

Antitrust concerns 

Questions over whether Ticketmaster wields too much power in the live entertainment business are not new. In 2010, Ticketmaster and Live Nation merged, combining Ticketmaster’s ticketing business with Live Nation’s business as a venue operator and concert promoter.  In the UK, the Competition Commission provisionally ruled against the merger in October 2009, but then later reversed its decision in December.

In the US, the United States Justice Department (DOJ)’s approval for the merger was conditioned on Ticketmaster having to license its ticketing software, divest Live Nation’s nascent ticketing assets, and subject itself to anti-retaliation provisions. The terms were set to last for ten years, until 2020.

Despite this, in 2019, after receiving complaints from the marketplace, a DOJ investigation found that Live Nation had “repeatedly” violated that agreement.  It found the company guilty of using its dominant position in the live music industry to force artists and venues to use both its ticketing and concert promotion services. 

As a result, the consent decree was expanded, with modifications, to last until 2025.  It also added language to clarify that Ticketmaster could not retaliate against venues or condition the availability of Live Nation artists on using Ticketmaster’s services.

A current antitrust investigation of Live Nation by the DOJ is said to be under way – predating the Swift concert issues.  The investigation is focused on whether Live Nation has abused its power over the multibillion-dollar live music industry.

Scrutiny over Ticketmaster

Activist groups such as BreakUpTicketmaster argue that whilst on tour, artists will likely play a Live Nation venue.  Due to exclusivity contracts with these venues, artists are then compelled to sell their tickets on Ticketmaster.  With no competitor able to challenge its position, Ticketmaster is then “free to restrict sales or allow scalpers to buy, and then profit from, the price gouging in the secondary market”. 

If a venue opts not to use those services, Live Nation is accused of reacting by effectively boycotting the venue – e.g., by withholding top performers from venues that choose not to use Live Nation’s ticketing services.

With fewer effective competitors, Ticketmaster is said to retain little incentive to innovate, as there is no choice but for consumers to use its platform. It is argued that this leads to incidents such as the Swift episode where mass demand is unable to be handled by the platform. 

Venues have less negotiating power.  Artists have less bargaining power. Consumers pay higher prices and suffer a poorer service.  The company is said to have the “golden three”: a monopoly over venues, artists, and consumers.

Public debate

The ticketing fiasco has re-ignited calls for the 2010 Live Nation-Ticketmaster merger to be revisited, with the Senate Judiciary Committee recently holding a hearing on 24 January entitled, “That’s the Ticket: Promoting Competition and Protecting Consumers in Live Entertainment”.

Senators examined Live Nation’s influence, with competitors testifying how the merger has affected their companies. Jack Groetzinger, CEO of SeatGeek, a rival secondary ticketing platform, indicated that the only effective remedy was to dissolve the common ownership while the CFO of Live Nation defended their position and stated it was “simply not true” that the ticketing market was less competitive today than at the time of the Live Nation-Ticketmaster merger.

He alleged that Ticketmaster’s market share had shrunk since the merger and that the company had spent $1 billion since to upgrade Ticketmaster’s system.  Indeed, it’s not clear that any ticketing platform could have handled the unprecedented demand for Taylor Swift tickets, but the unproven assumption is that a more competitive live music ecosystem would have produced a better outcome.

With no official statement from the DOJ yet as to the effectiveness of the consent decree, the potential to re-revisit its terms, or DOJ’s willingness to pursue a broader case against LiveNation’s dominance, it remains to be seen what, if any, impact this ticketing episode will have on the live music industry.

But the level of outrage in the marketplace has shockingly led to bipartisan condemnation in the US and calls for action.  It is clear that, as worldwide demand for live entertainment resurges in a post-pandemic environment, consumers are ready and willing to take steps to directly pressure lawmakers where they believe a lack of competition has affected their rights.