Top of the Chain: Following the Department of Justice’s Newest Ticketmaster Lawsuit
Why has the price of concert tickets soared over the past few years?[1] Some may attribute this rise in prices to inflation, or an increase in demand for live music that soared after the pandemic.[2] In a lawsuit filed May 3, 2024, the Department of Justice puts the blame on major ticketing platform Ticketmaster for ticket fees that are significantly higher in the United States than in other markets.[3] The DOJ alleges that Ticketmaster and its parent company, Live Nation, violate Sections 2 and 1 of the Sherman Act by respectively unlawfully monopolizing the concert industry and entering into long-term exclusive agreements with venues. [4]
The DOJ first targeted Ticketmaster in 2010 when it was being acquired by Live Nation Entertainment, Inc.[5] Live Nation is the largest promoter in the United States.[6] Promoters are primarily responsible for connecting artists to venues and promoting their shows to the public.[7] When Live Nation sought to buy the Ticketmaster platform, the DOJ allowed the transaction to continue despite monopoly concerns under Clayton Act Section 7.[8] The acquisition continued pursuant to a consent decree that ruled Ticketmaster was not allowed to retaliate against venues for partnering with a different ticketing service.[9] A 2019 enforcement action found that Ticketmaster had violated this practice, and the DOJ subsequently filed a petition to modify and extend the decree for five years.[10] The court amended the decree in 2020 in accordance with the petition, adding an independent monitor among other safeguards to facilitate enforcement.[11]
In the 2024 lawsuit, the DOJ alleges that Live Nation and Ticketmaster have coercive power in the industry, violating the antitrust laws through systematic practices.[12] The biggest difference with this lawsuit compared to the 2010 lawsuit is that rather than target potential conduct resulting from a single transaction, the DOJ is targeting a pattern of Live Nation’s unlawful behavior.[13] The DOJ argues that Live Nation’s influence on artists, venues, and ticketing platforms throughout the country coerces these parties to partner exclusively and indefinitely with the company.[14]
Live Nation refers to their model as a “flywheel” operating in three major lines of business: promotions with 1.7% AOI margin, ticketing with 37.7% AOI margin, and advertising with a 61.6% AOI margin.[15] The DOJ alleges that this consolidation allows Live Nation to use the high profit margin in other businesses to sign unprofitable contracts with venues, making it hard for rival promoters to make competing offers.[16] They also argue that Live Nation’s large amount of consumer data acquired through ticket sales impedes competitors’ ability to target, market, and advertise shows on Ticketmaster’s scale.[17] Live Nation’s business in multiple markets itself is a large barrier to entry for rivals who do not have a competing portfolio of assets.[18]
The complaint states that Live Nation uses external pressure on concert venues to sign exclusive, long-term agreements with Ticketmaster.[19] This pressure is aided by Oak View Group (OVG), who owns or manages over 200 venues in the United States.[20] While Live Nation first viewed OVG as a rival, the two eventually transformed from competitors to partners.[21] The DOJ cites emails sent between the two companies’ CEOs in 2016 and 2022 as evidence of OVG’s deference to Live Nation in the promotions space.[22] Likewise, Live Nation deferred its arena consulting business to OVG, and the head of Live Nation Arenas now sits on OVG’s board of advisors.[23] Now, when ticket service providers submit bids to partner with venues, OVG uses its power as venue manager to choose Ticketmaster over its competitors.[24] In 2023, OVG successfully converted six venues to Ticketmaster.[25] As a result of their partnership, OVG has even threatened private equity company Silver Lake to sell off competitor TEG for entering the promotions space and selling tickets on StubHub instead of Ticketmaster. [26]
The complaint further alleges Live Nation uses various forms of retaliation to pressure venues to sign exclusive contracts with Ticketmaster.[27] For example, it is widespread knowledge in the industry that Live Nation threatens to re-route concerts away from venues that partner with other ticketing services.[28] Anschutz Spectacor Management, another venue management company, decided to keep Ticketmaster as its primary ticketing service in light of these fears, even after being acquired by Live Nation’s primary competitor Anschutz Entertainment Group (AEG).[29] Ticketmaster’s exclusive agreements cover more than 75% of concert ticket sales at major concert venues.[30]
According to the complaint, Live Nation and Ticketmaster’s control over venues extends to control over artists as well.[31] Live Nation has over a decade-long practice of denying use of its venues to artists that partner with a different promoter.[32] The DOJ states this is especially problematic because Live Nation has over 70% market share in amphitheaters, which are the perfect size for artists whose fanbase is well-established, but not big enough for stadiums.[33] As a result, the DOJ claims that Live Nation has entered into unlawful tying arrangements concerning the use of amphitheaters.[34]
In addition, Ticketmaster’s exclusivity agreement denies artists from selling tickets to fans or fanclubs directly, even when artists can control ticketing fees through this method.[35] Ticketmaster further disincentives fans from buying and selling resale tickets on secondary platforms like StubHub or SeatGeek due to its SafeTix program.[36] This program replaced a printable PDF ticket with an encrypted barcode, and Ticketmaster now decides how long before a concert the ticket is available to be transferred from one account to another.[37] This conduct further shuts out rival ticketing services and increases barriers to entry.[38]
In September, Live Nation filed a motion to dismiss the DOJ’s claim for unlawful tying.[39] They argue that not providing amphitheater use to artists is not tying, but instead a refusal-to-deal with rival promoters who happen to work with these artists.[40] Defendants continue to argue that the court should look at this conduct with a different scrutiny than they would place on unlawful tying agreements.[41] In response, the DOJ refocused the tying argument on artists as the third party harmed by Live Nation’s actions.[42] They also cite cases where courts have ruled the refusal-to-deal with rivals as anticompetitive conduct.[43]
Live Nation also previously moved to transfer the case to D.C., arguing a choice of law provision that was part of the 2010 settlement.[44] However, Judge Arun Subramanian of the Southern District of New York agreed with the Department of Justice that the claims in this case extend beyond the 2010 merger, and denied Live Nation’s motion.[45] As of October 21, the case is set to be heard in New York in 2026.[46]
Footnotes
