By Evan Brown
Background
For those of you who do not know what has been happening with the live music industry, Ticketmaster—a leading ticket sales platform—has been alleged to constrain competition.[1]
Before we get into the details, you must know what occurred a little over a decade ago. Ticketmaster merged with Live Nation Entertainment in 2010, making Ticketmaster a subsidiary of Live Nation Entertainment, Inc.[2] The Justice Department tried to mitigate “the conglomerate’s” monopoly power by forcing the newly formed company to sell parts of its business and enter a settlement which “‘forbade Live Nation from threatening concert venues with losing access to its tours if those venues decide to use ticketing providers other than Ticketmaster.’”[3] Take heed because we will come back to this notable quote.
Now, back to business. In November 2022, Taylor Swift tickets were on pre-sale for “verified fans” to purchase on the Ticketmaster platform; however, vast amounts of people waited several hours and left empty-handed.[4] In order to become a verified fan, one must create an account with Ticketmaster—providing them with your email and interested concert dates—and Ticketmaster sends a confirmation email.[5] Ticketmaster had over 3.5 million “verified fans”, which 1.5 million received access codes to the presale.[6] Each access code allowed a maximum of six ticket purchases—meaning 9 million tickets could be purchased total.[7] Here is where things turned for the worst: Ticketmaster only allocated 2 million tickets for the presale, and in fact, only had 2.4 million tickets for the entire tour.[8] Some may say this was live music enthusiasts’ last straw when it comes to Ticketmaster’s reign of power within the live music industry.
The Justice Department has opened antitrust investigations, some of the investigation predates the “Taylor Swift incident,”[9] and Attorney Generals across the nation are investigating.[10] Pennsylvania’s Chief Deputy Attorney General, Sarah Frasch, stated the office received over 2,600 complaints—an amount they receive monthly—in just a few days due to the Ticketmaster debacle.[11]
There seems to be an overwhelming amount of support for these antitrust investigations and nominal support for the “world’s largest ticket marketplace,”[12] known as Ticketmaster. A billboard-charting music artist, Zach Bryan, added his two-cents by releasing an album titled ‘All My Homies Hate Ticketmaster,’ after exposing the monopoly of the live music industry.[13] The music industry urged the Justice Department to disprove of the Live Nation and Ticketmaster merger in 2010 for this very same reason—now hundreds of thousands, if not millions, are suffering from the high-demand and low supply of live music tickets.[14]
What are Antitrust Laws
States and the federal government have variations of antitrust statutes; however, they all share a common purpose. Title 6 Chapter 21 of the Delaware Code: Antitrust, delivers the legislative intent and purpose behind the antitrust statute, which states, “[t]he purpose of this chapter shall be to promote the public benefits of a competitive economic environment based upon free enterprise.”[15] The Delaware Code further states that a company violates Chapter 21 when “[e]very contract…or conspiracy, in restraint of trade or commerce of…[Delaware]…shall be unlawful.”[16]
The correlating federal statute can be found under the Title 15 of the United States Code: Commerce and Trade, wherein Chapter 1 specifically looks at monopolies and the combinations in restraint of trade. Section 2 states:
Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a felony, and, on conviction thereof, shall be punished by fine not exceeding $100,000,000 if a corporation….[17]
Known more commonly as the Clayton Act, the statute was created “to protect trade and commerce against unlawful restraints and monopolies.”[18]
How Does It Relate to Ticketmaster?
A class action lawsuit against Live Nation (parent company) and Ticketmaster (subsidiary) was filed on December 20, 2022* in the United State District Court Central District of California, Western Division.[19] The complaint alleges eight different claims of relief, varying from unjust enrichment, false advertisement, intentional misrepresentation, and common law fraud, but we will focus our attention on the fifth claim for relief—Antitrust Violations.[20]
The Plaintiffs’ claims are that the Defendants:
coordinated illegal efforts to (a) force consumers to purchase and sell Tickets exclusively through Ticketmaster’s primary and secondary ticketing platforms; and (b) coerced artists, such as Taylor Swift, to exclusively market and promote Ticketmaster, has not and will not achieve legitimate efficiency benefits to counterbalance their demonstrated anticompetitive effects, including the supracompetitive fees Ticketmaster is able to charge for its ticketing services.[21]
Meaning, Ticketmaster, after getting a profit from their original sale of a ticket, will then limit the purchaser’s ability to transfer that ticket unless it is through their secondary platform.[22] This is how the platform creates a monopolistic-style fee collection scheme when they collect fees from the reseller and then also collect fees from the buyer—who has just bought a ticket for double, triple, or even decuple (ten times) what it originally sold for on the primary market.[23]
The complaint further alleges the Defendants’ actions of monopolizing the primary and secondary ticket services market is a violation of the Cartwright Act.[24] The Plaintiffs broke their fifth claim for relief, Antitrust Violations, into three separate claims. These claims are broken up by the following: (1) Unlawful Tying; (2) Exclusive Dealings; (3) Vertically-Arranged Boycotting.
The first Antitrust claim of unlawful tying alleges Live Nation monopolized the primary ticket service market via the 2010 merger—combining Live Nation’s promoting niche with Ticketmaster’s ticketing service specialization.[25] Remember the quote we were to hang on to from before. From this unlawful action, Live Nation is alleged of coercing concert venues—globally—to enter long-term exclusive contract deals for Ticketmaster to be their only primary source for tickets. This coercion was alleged to be by intimidating venues with claims of no more future Live Nation Tours.[26] This alleged threat would devastate local vendors on a global scale because Live Nation is the leading concert venue promoter in the world.[27] Second, Ticketmaster monopolized the secondary ticket service market by tying in a provision with all the concert venues long-term exclusivity contracts. As stated, Ticketmaster has a technological limitation on the primary ticket holder’s transferability power.[28] The complaint further claims that Live Nation has the economic power to conduct anticompetitive effects throughout the ticketing service market.[29]
The second Antitrust claim of exclusive dealings alleges Live Nation’s tactic on acquiring these long-term exclusive contracts with concert venues led to foreclosures of competing companies—which substantially effects the line of commerce when it comes to the ticketing service market.[30]
The third Antitrust claim of vertically-arranged boycotting alleges a combination of claims one and two. Both, i) coercion of copious amounts of music venues leading to competitor foreclosures and ii) a technological limitation which gives rise to monopolistic power in the primary and secondary ticketing services market, created Ticketmaster’s dominant position.[31] The facts in the complaint allege that Live Nation and Ticketmaster did not vertically-arrange this domination for the purposes of efficiency, nor did they try to make relevant markets surrounding them more efficient; rather, the complaint tries to point out the “obvious”––Live Nation was trying to create a monopoly.[32]
Conclusion
The estimated damages could be upwards of 10-30 billion dollars. How would this effect the live music industry in the future? Will artist be able to sell tickets from their own websites without going through Ticketmaster? Will this lawsuit open the gates for other live music ticketing service companies to expand their operations?
These are all question that will hopefully be answered soon with more pleadings attaching Live Nation Entertainment as a defendant. Ticketmaster, without the evidence of coercion, did not necessarily do anything wrong within the realm of “doing business.” Should they not have created limitations on how the original ticket buyer can sell his ticket on the secondary market? Possibly. However, baring everything else in mind, the Ticketmaster and Live Nation merger is no different than some of the, globally known, billion-dollar mergers between conglomerates. Are these multibillion-dollar mergers wrong and need to be restricted? That is for the court to decide.
*This complaint was used because it was the first one stemming from the Taylor Swift event. Several other complaints may have been filed by the time you have read this article.
[1] David McCabe and Ben Sisario, Justice Dept. Is Said to Investigate Ticketmaster’s Parent Company, The New York Times (Nov. 18, 2022), https://www.nytimes.com/2022/11/18/technology/live-nation-ticketmaster-investigation-taylor-swift.html.
[2] Yasmin Ahmed, Who owns Ticketmaster? Tennessee AG to investigate Taylor Swift concert ticket scandal, Sports Keeda (November 17, 2022), https://www.sportskeeda.com/pop-culture/who-owns-ticketmaster-tennessee-ag-investigate-taylor-swift-concert-ticket-scandal.
[3] Peter Cohan, Taylor Swift’s Ticketmaster meltdown: What happened? Who’s to blame?, The Washington Post (Nov.18, 2022, 7:34 p.m.), https://www.washingtonpost.com/business/2022/11/18/ticketmaster-taylor-swift-faq/.
[4] Julian Mark, Swifties’ Suit Seeks $2,500 Per Ticketmaster Antitrust Violation, Forbes (Dec. 6, 2022, 10:11 a.m.), https://www.forbes.com/sites/petercohan/2022/12/06/swifties-suit-seeks-2500-per-ticketmaster-antitrust-violation/?sh=79956bf23061.
[5] How do I register for a Verfied Fan event?, Ticketmaster, https://help.ticketmaster.com/s/article/How-do-I-register-for-a-Verified-Fan-event?language=en_US (last visited Jan. 30, 2023).
[6] Sterioff v. Live Nation Entertainment, Inc. Compl., Case No. 2:22-cv-9230, ¶ 34, lines 12-13 (hereinafter “Compl.”).
[7] Compl., ¶ 34, lines 14-15.
[8] Compl., ¶ 34, lines 15-17.
[9] McCabe & Sisario, supra note 1.
[10] Attorney Generals of states like Tennessee, North Carolina, Nevada, Pennsylvania, and others are opening investigations due to the number of complaints sent into their office surrounding the Taylor Swift tickets. Most of these Attorney Generals are investigating because the complaints involve music venues located in their respected state.
[11] Jon Delano, Attorney general’s office reviewing record number of Ticketmaster complaints for possible legal action, CBS Pittsburgh (Dec. 6, 2022, 8:28 p.m.), https://www.cbsnews.com/pittsburgh/news/pennsylvania-attorney-generals-office-ticketmaster-complaints-taylor-swift-legal-action/.
[12] Ticketing 101: Who Owns the Tickets to Your Favorite Live Events?, Ticketmaster, https://www.ticketmaster.com/ticketing101.
[13] Dan Heching, Zach Bryan drops surprise album ‘All My Homies Hate Ticketmaster,’ vows to combat high ticket prices, CNN (Dec. 27, 2022, 3:05 p.m.), https://www.cnn.com/2022/12/27/entertainment/zach-bryan-album-ticketmaster/index.html.
[14] McCabe & Sisario, supra note 1.
[15] 6 Del. C. § 2101.
[16] 6 Del. C. § 2103 (emphasis added).
[17] 15 U.S.C. § 2 (2004).
[18] 15 U.S.C. § 12 (2002) (the “Clayton Act”).
[19] See Compl.
[20] Id.; see Compl., pp. 21-26.
[21] Compl. ¶ 104, lines 15-20.
[22] Compl. ¶ 35, lines 23-25. Ticketmaster has a secondary platform that allows original buyers to then sell their ticket at a price set by the original buyer. This is what causes the inflation in the price of these concert tickets.
[23] Compl. ¶ 36; see Compl. ¶ 9.
[24] Compl. ¶ 105; see Cal. Bus. & Prof. C. § 16720(a) (2009) (“A trust is a combination of capital, skill or acts by two or more persons for any of the following purposes: (a) To create or carry out restrictions in trade or commerce.”).
[25] Compl. ¶ 108; see also Cal. Bus. & Prof. C. § 16727, et. seq.
[26] Compl. ¶ 110.
[27] WE ARE LIVE NATION, Live Nation Entertainment, https://www.livenationentertainment.com (last visited Jan. 30, 2023).
[28] Compl. ¶ 114; see Compl. ¶ 116.
[29] Compl. ¶ 111-113, lines 16-22.
[30] Compl. ¶ 125.
[31] Compl., p. 25
[32] Compl. ¶ 139.