Sorry, folks – Live Nation's antitrust issues have nothing to do with how hard it is to get Taylor Swift tickets. These are expensive because there simply aren't enough for everyone who wants to see the show, and the antitrust lawsuit against Live Nation won't change that — and it might not even change the cost of the tickets. What it could do, however, is reshape how the US concert and ticketing businesses operate — and how they work together.
The suit, filed by the Justice Department and more than a dozen states, alleges Live Nation colluded with venue management firm Oak View Group, intimidated potential rivals, locked venues into long-term deals with Ticketmaster in a way that excluded competitors, limited supporters' access to its venues and acquired companies to reduce competition. There's a lot there.
Live Nation, at least according to the lawsuit, operates less as a concert promoter than as live entertainment platform — one that uses its dominance in some areas to secure or promote its dominance in others, making it difficult for other companies to differentiate its services. The most relevant comparison, at least from a legal point of view, may be the Microsoft antitrust case. Almost all of the conduct described in the lawsuit takes place out of public view, but the Justice Department argues that it reduces competition and indirectly raises ticket prices for consumers. The first of these seems most likely, at least based on the company policy descriptions in the lawsuit, but the second is less clear. Based on the thriving secondary market, concert tickets seem to be still there underinvoiced.
The common complaint about Live Nation is that it controls too many venues and that Ticketmaster has too much of a stake in the ticketing business, especially in ways that annoy consumers. However, these factors may be less important than they appear. Most areas only have so many venues, and it's not entirely clear how much sense it might make to have more than one ticket seller handling each show. (It's much easier to argue that companies in the primary market shouldn't enter the secondary market and vice versa.) And since a share of Ticketmaster fees end up going to promoters or venues anyway, their cut could simply pass the cost on to the face value of the tickets. I hate surcharges on budget airlines, but eliminating them would just make tickets more expensive.
The more serious issue is how Live Nation uses its market power. Ticketmaster signs long-term contracts with venues in exchange for exclusive ticketing rights, an issue since Pearl Jam took over the practice three decades ago. But the most damning parts of the lawsuit, which Live Nation will respond to before the end of the summer, involve issues that haven't received as much attention. The Justice Department alleges that Live Nation restricts artists from appearing at its venues unless they also use the company as a promoter and pressures venues to sign exclusive deals with Ticketmaster. This kind of behavior is an important part of what antitrust law is designed to prevent — the exploitation of leverage that comes from dominance in one market to gain an unfair advantage in others. However, the government will have to prove its case — and antitrust cases can be hard to win.
The lawsuit alleges that Live Nation operates this way by design. Refers to a 2019 CEO statement Michael Rapinoe that “we have to put the show where we make the most money,” and that venues used by other ticketing companies could be at a disadvantage. (Under the terms of an antitrust consent decree, Live Nation has a court-appointed inspector tasked with preventing this.) The question is whether Live Nation operates this way, and whether what might be considered as its platform is meant to do so.
Hence the comparison with Microsoft, which the Justice Department sued in 1998 for trying to use its dominance of operating systems and the resulting leverage over computer makers to control the web browser market. (Microsoft lost in district court; that decision was partially overturned by the court of appeals; and the case eventually settled.) In that case, however, the compatibility issues were intuitive and the harm to consumers obvious.
For years, antitrust law has focused on protecting consumers from higher prices, and it's not entirely clear that tickets would get cheaper — or that there would be more or better concerts — if Live Nation were curtailed or dissolved. Some judges and scholars now take a broader view, however, and it is easier to imagine that more competition would lead to more innovation.
Legal issues aside, the lawsuit portrays Live Nation as a conflict-of-interest minefield where the best side of a deal is both. To think about the company is to appreciate the important synergies between its different businesses, while also somehow believing that those different businesses can trade fairly with each other. Consider Live Nation's talent management function, where agents representing artists sometimes negotiate concert deals against another part of the company. Artists should be satisfied with the service they receive, but you also have to wonder if the House always wins.
This is just the first step in a long-running conflict — antitrust cases tend to be long and complicated, and this one could take seasons, like Swift. By the end of it, however, whichever side wins, Live Nation will either be limited to having its various divisions work together in a way that puts competitors at a disadvantage, or will have to make more sure that they don't — and that might just be something good for the rest of the business.
from our partners at https://www.billboard.com/pro/live-nation-antitrust-issue-understand-microsoft/
